Corporations: Human Lives vs Profit? Winner: Profit

In a classic example of how the basic nature of corporations - pathological greedy, explotative person - comes into play in day-to-day decisions they make, the Abbott case demonstrates that corporations will go to a huge extend for their profits without caring even about human lives. In this piece from the Wall Street Journal, Abbott - a pharmaceutical giant - was faced with question of how it should increase sales of its new AIDS drug, Kaletra, which were decreasing as a result of its own older AIDS drug, Norvir, which when used in combination with drugs from competitiors was working well for patients. The options considered were

"removing Norvir pills from the U.S. market and selling the medicine only in a liquid formulation that one executive admitted tasted like vomit. The taste would discourage use of Norvir and competitors' drugs, the executives reasoned, and Abbott could claim it needed Norvir pills for a humanitarian effort in Africa. Another proposal was to stop selling Norvir altogether.

A third proposal carried the day: quintupling the price of Norvir. One internal document warned the move would make Abbott look like a "big, bad, greedy pharmaceutical company." But the executives expected a Norvir price hike would help Kaletra sales, and they bet any controversy would eventually die down.

They were right. Kaletra sales in the U.S. rose 10 percent over the next two years"

These all plans are captured in emails and internal presentatios:

"A slide presentation titled "HIV Communications Plan" and dated Sept. 24, 2003, reviewed the two options and added a third: pulling all formulations of Norvir from the global market. This radical step, the presentation said, would remove "pricing from public debate" and render moot any discussion of the liquid's taste. However, it noted that Abbott's "corporate reputation" would suffer. As for the price-increase scenario, the document listed as a "Pro" that health insurers might stop covering Norvir, which would hurt sales of other protease inhibitors and force patients to use Kaletra."

This was done even though most of Norvir's intial research was funded by a grant from government - which is typical of all major drugs.

(John Erickson, a former Abbott scientist who did much of the research work on Norvir) "testified that it was unlikely Abbott would have funded Norvir's early development without a $3.5 million grant it received from the NIH in 1988."

Drug companies usually fund the drug at a later stage when chances of its approval are more certain like at the clinical trial stage when Abott spent $300 million. Though NIH had legal right to grant rights for generic production of drugs it didnt do so - in a world where corporations control and lobby the government this would have been too much to expect.

And the decision taken by Abott was this:

"In December 2003, Abbott implemented its final decision: a 400 percent price increase. Norvir's U.S. wholesale price rose to $257.10 from $51.30 for 30 100-milligram capsules. The move made Kaletra a cheaper option for American AIDS patients. It raised the cost of using a Reyataz/Norvir regimen by $2,504 to $11,187 a year. In the case of regimens requiring more than once-daily Norvir boosting, the cost rose by $5,000 or more a year. Kaletra at the time cost about $7,000 a year."

So it used its monopoly power in norvir to increase sales of Kalitra, sales have incresed 27% since then without a iota of concern or thought about the patients who would have to pay higher costs - in terms of higher deductible costs or those who would not be able to afford the drug at all. All throughout the decision making the most important concern for Abbott executives was about company image not about patients.

This is a not an isolated case of corporate power play, it happens almost daily on some level because corporations are designed to care only about profits. I will try to demonstrate through various case studies the patters of such behavior. As Milton Friedman puts it "there is one and only one social responsibility of business–to use it resources and engage in activities designed to increase its profits". Corporations try to talk about "social responsibility" and that is only as a brand/image building excercise as shown in news release on Abbott's website, which talks about new program for reducing AIDS amonf blacks which at the same time when decision time comes Abbott favors profits.