By- Abhishek Rohatgi
“Profit is the payment you get when you take advantage of change”-Joseph Schumpeter
The spread of SARS-CoV-2, or what is now popularly known as the COVID-19 pandemic has gripped the whole world, unlike any other major event since the end of World War II. There is hardly any country that has been left untouched or which has been able to control the spread of the virus. As a consequence result, many hundred thousand  of people have already lost their lives, and many million may potentially lose their lives if no vaccine for COVID-19 is discovered in the near future.
The outbreak of this pandemic has brought the role of Pharma companies in limelight. When the health care systems around the world have crumbled before the virus, the focus is now on the Pharma companies to come up with an effective solution- and that too fast. COVID 19 brings opportunity and threat to the Pharma industry at the same time. Although this pandemic has spelled a death knell for various industries, the Pharma industry largely remains untouched due to the role it has to play in this fight against the pandemic.
Pharma industry will be playing a crucial role throughout the course of the pandemic, be it Diagnostics, Treatment, or Vaccine Development. The Pharma industry has contributed to this fight against Corona by developing efficient and affordable diagnostic techniques, like the rapid testing kits which have been put to use around the world to diagnose people who have been infected in the shortest time possible. The Pharma companies have also come up with potent treatment plans for treating the infected with the help of various combinations of pre-existing antiviral drugs.
But in midst of all this light and glamour, there have been accusations against the industry – including the Manufacturers, Suppliers, and Distributors, that they have been trying to spin off profits from the misery of people by shooting up the prices of their offerings.
Many international pharmaceutical companies, including Indian Pharma companies, are working to develop a vaccine for this deadly virus. According to WHO, as of 31st July 2020, there are total of 26 Vaccine candidates around the world. These Pharma companies have been directing efforts to find a vaccine since the first alarms went off after the world came to know of an ‘unknown’ infection explosion in Wuhan, China.
The intention of this Blog is to bring before its readers, the moral dilemma that the Pharma industry is facing right now – To earn profits or not to earn profits during the Pandemic!
The long term (or traditional) understanding of a business entity is that it has been set up to earn profits for its owners and shareholders. The Pharma Industry, like any other company, operates on the same principle. However, this long-standing concept has come under fire due to the present-day pandemic. It must be stated that this is not the first time that the Pharma industry has to grapple with this concept; there have been previous instances where the Pharma industry has been lambasted for charging exorbitant prices for their drugs.
In a recent interview, Pfizer CEO – Albert Bourla, said that forgoing profits on the Novel Corona Virus Vaccine would be ‘RADICAL’ (). However, opposite views have also been voiced by Pharma Giants like Johnson & Johnson, and AstraZeneca. They have pledged not to earn profits at least during the period of the Pandemic. This brings us to the moral predicament that the Pharma Industry is facing, whether to earn profits or not.
Before jumping into the moral dilemma that this question poses to the readers, some important facts must be introduced so as to enable the readers to form an informed opinion.
The Pharma Industry, unlike other industries, is a Research and Development oriented industry. Development of any vaccine entails an R&D phase, a pre-clinical trial, a clinical trial stage, and finally, the regulatory stage, setting back the companies by a few million US Dollars. This makes the whole process quite expensive. This has to be coupled with the fact that a large proportion of drugs fail during different stages of their trial. This adds to the cost and increases the financial burden that the company faces. The sole motivation for the Pharma companies to incur such a high cost and high-risk proposition is the lure of high profits that the company might earn if it is able to successfully discover the vaccine. The present COVID-19 pandemic provides an excellent opportunity for the Pharma companies to earn profits, largely due to the following two reasons –
- No Pre-existing vaccine for the Corona Virus
- High Demand due to high rate of infections.
This has pushed all the major Pharma companies around the world into the race for finding the vaccines first and in turn spin off high profits.
Having said this, several people have voiced their concern that the endeavor of the Pharma companies to earn a profit during the pandemic is opposed to the interest of the public at large. This contention is also based on the concept of Corporate Social Responsibility, which has largely been accepted by corporates giants around the world. This concept states that the corporate entity must not limit itself to protecting the interest of its owners and shareholders, their responsibility also extends to their customers, and other members of the society, under a ‘Social Contract‘. In other words, profit maximization is not the sole purpose of a corporate entity, its purpose also includes – ‘SOCIAL WELFARE’.
If the Pharma companies price their vaccines exorbitantly, a large majority of the world population would be deprived of their basic Human Rights. This deprivation would not be limited to just Under Developed and Developing Countries, but will also extend to the poor in the Developed countries. The inability of customers to access expensive vaccines and other therapeutic drugs has been a long-standing bone of contention between Pharma industry and Consumer Rights Groups.(A great illustration would be pricing regard to HIV/AIDS drugs).
This inability to access has now been even more intensified in light of the global economic slowdown induced by the COVID-19 pandemic. Millions of people have lost their livelihood and are even unable to afford necessities of daily life to sustain themselves. It cannot be expected that these people would be able to afford to pay for an expensive vaccine. Various Demographic, Social, Economic trends in underdeveloped and developing countries contribute to this inability to afford. These people, even if they intend to, under no circumstances can afford expensive vaccines even if their life is on the line.
Having laid down the facts before you, the author understands that a balance will have to be achieved between the profit-earning motive of Pharma industry and the Social responsibility it owes to the community. Further, the author believes that external intervention in the form of government regulation is necessitated to balance the equities between the stakeholders on one hand, and the society on the other. The decision of the Pharma industry can either save millions of lives or be a potential death sentence for millions of poor around the world. The decision taken by the Pharma industry today will be remembered the posterity tomorrow.
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