There’s a few ways to spin this story from CNN/Health:
A pharmaceutical company executive defended his company’s recent 400% drug price increase, telling the Financial Times that his company had a “moral requirement to sell the product at the highest price.” The head of the US Food and Drug Administration blasted the executive in a response on Twitter.
Nirmal Mulye, founder and president of Nostrum Pharmaceuticals, commented in a story Tuesday about the decision to raise the price of an antibiotic mixture called nitrofurantoin from about $500 per bottle to more than $2,300. The drug is listed by the World Health Organization as an “essential” medicine for lower urinary tract infections.
“I think it is a moral requirement to make money when you can,” Mulye told the Financial Times, “to sell the product for the highest price.”
We could begin with the basic purpose of capitalism, which is not to make money, as Lehman Bros amply illustrated, but instead to participate in the activities of the private sector in order to supply useful products and services to consumers, both corporate and individual, and by doing so in an efficient manner earn some money. No mercantilism (the selection of winners and losers by an elite), just a form of meritocracy. Mr. Mulye clearly doesn’t understand these subtleties, but then many capitalists clearly do not, so he shouldn’t be particularly embarrassed. Generally, we hope that karma will kick in on people like him, and boot him in the head at some point have him discover, the hard way, that companies which take advantage of the vulnerable do not earn the love of the marketplace – and the marketplace is not the center of rationality that many like to think it is.
We could ask if pharma companies are really private sector companies, or if they’re medical sector entities operating with private sector optimizations to their operationality, which, as I’ve discussed over the years, are often less optimizations than distortions once they stray from their home sectors. This link may help the new reader. However, I think it’s important to realize that private sector health companies have provided many useful drugs, therapies, and devices over the years, and that the profit motive which I was just maligning does play a real role in pharma research, especially financing the expensive path from concept to final product.
Suggesting the banning of profit for pharma companies should be accompanied by suggestions for keeping these companies adequately financed and motivated. I suspect there’s a lot of academic research into just this problem, but I fear I have not the time to discover that research. A couple of problems immediately present themselves, one being the report motivating this post, another being the selection of problem to solve. Libertarians and others assume that demand will result in the proper problems being solved in the proper order, but my experience with the corporate world is that the cancerous idea that profit is all can result in corporate research strategies that are sub-optimal to the use of society. We’ve seen this in the abandonment of the production of anti-venom treatments because of the lack of profits in the area.
I’m not trying to suggest that everyone is motivated by the profit motive; there are many researchers who simply want to make a contribution to the overall health of the populace. But, taken as a conglomerate, it is how we operate, and we need to decide if that’s still how we should be doing things. Mr. Mulye is simply another step along the way to that debate.
Another spin would be to consider these opinions are symptoms of the ultimate sickness of capitalism. Again, mercantilism is an even worse system, infinitely more open to corruption and manipulation.
That’s enough for now.
