Healthy Skepticism Library item: 18630

Warning: This library includes all items relevant to health product marketing that we are aware of regardless of quality. Often we do not agree with all or part of the contents.

Publication type: Journal Article

Annas GJ
Corporations, profits, and public health
The Lancet 2010 Aug 21; 376:(9741):583 - 584
http://www.thelancet.com/journals/lancet/article/PIIS0140-6736(10)61282-2/fulltext

Abstract:

Shortly after taking over as CEO of British Petroleum (BP), Tony Haywood said, “We have too many people [at BP] who want to save the world…we need to concentrate on our primary goal: creating value for our shareholders.” Similarly, a well known anti-tobacco advert features an actor playing a tobacco company executive saying to its customers: “We’re not in business for your health.” Tobacco and oil companies are easy targets, the first causing completely preventable disease and death, the latter consistently befouling the environment and killing endangered species as an integral cost of doing business. Public health, by contrast, is in business “for your health” and in the context of global health, “to save the world”. Are these two enterprises totally incompatible, as editor William Wiist suggests in the title to this collection, or is it possible that the energy of corporations can be directed and managed in ways that can protect and promote the health of the public in a meaningful way?
Public health is a pretty self-defining term that describes government action to protect the health of populations and prevent disease. One such government action is to regulate corporations whose activities affect health. Under threat of global recession, most governments decided that there are corporations that are “too big to fail” and when their collapse threatens the economy, they will be “bailed out” by government. Indeed, relations between government and corporations have always been complex, as President Eisenhower observed more than a half century ago in describing the “military-industrial complex”. Health-related corporations are no exception. The pharmaceutical industry is regulated in the USA by a government agency, the Food and Drug Administration, which must certify its products as “safe and effective” prior to marketing. Yet the government has never challenged monopolistic pricing by pharmaceutical companies and Congress has even prohibited the federal government itself from bargaining for lower prices for drugs prescribed for patients on government health insurance programmes (Medicare and Medicaid).
Corporations also have the power to create their own baby corporations (subsidiaries) for their own purposes, even to escape accountability for criminal acts. For example, Pfizer was fined US$1·2 billion for fraudulently marketing valdecoxib. Federal law requires that any company found guilty of such a crime be automatically excluded from Medicare and Medicaid. But government prosecutors decided that this exclusion would lead to the collapse of “too big to fail” Pfizer. Accordingly, they approved a plan in which a Pfizer subsidiary, Pharmacia & Upjohn Co Inc, would plead guilty to this crime. The subsidiary, which had never sold a drug, paid the fine, and was excluded from Medicare and Medicaid. The parent company, Pfizer, went on doing business with Medicare and Medicaid as usual.
In The Bottom Line or Public Health, Wiist accepts the view that making money for its shareholders is the sole purpose of the corporation. Although a common belief, this is simply not true. And treating it as true makes meaningful government regulation more difficult and lets the managers and boards of directors off the public health hook in terms of their responsibilities. As John Kenneth Galbraith and others have accurately noted, corporations have many more stakeholders than their shareholders, including their customers, managers, employees, suppliers, and even society at large. Many corporations may act as if the only value they care about is their stock price, but there is nothing in the law or the theory of corporations that mandates this obsession with stock price and short-term financial gains. A private-public dichotomy that places corporations in the private sphere also cannot adequately account for the activities of corporations that are entirely owned by governments, such as global Chinese corporations and almost all oil companies, or transnational corporations that are largely owned by government-run investment funds.
There are also general characteristics of corporations that make them both especially powerful and potentially troublesome. First is our tendency to treat these entities like real people. In the USA this has most recently led to the Supreme Court affording corporations almost the same free speech rights as individual citizens. Second is the reason corporations were created in the first place: to provide investors with a place to invest money without risking everything they own. But even more important are the characteristics that make corporations different from people, specifically, potential immortality, and the ability to create an unlimited number of children (subsidiaries) and siblings (joint ventures). These characteristics turn out to be most important in the global sphere where transnational corporations can dictate to the governments that should regulate their activities. Although inanimate, corporations have paradoxically become the dominant life form on the planet. And this is why they are important to public health-not only to the health of global populations, but to the health of their customers, employees, suppliers, and the people living in areas affected by their activities. …