Ethics and the Pharmaceutical Industry / Edition 1

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Despite the pharmaceutical industry's notable contributions to human progress, including the development of miracle drugs for treating cancer, AIDS, and heart disease, there is a growing tension between the industry and the public. Debates are raging over how the industry can and should be expected to act. In this volume leading figures in industry, government, NGOs, the medical community, and academia discuss and propose solutions to the ethical dilemmas of drug industry behavior. They examine such aspects as the role of intellectual property rights and patent protection, the moral and economic requisites of research and clinical trials, drug pricing, marketing and advertising. . Michael Santoro is Associate Professor with tenure in the Business Environment Department at Rutgers Business School, where he teaches courses on business ethics, public policy, labor and human rights, law, ethical issues in the pharmaceutical industry and China business strategy. As a Research Associate at Harvard Business School, he wrote or co-authored nearly thirty case studies and teaching notes on ethical and legal topics such as global protection of intellectual property, insider trading, the Federal Sentencing Guidelines and Fair Credit Reporting Act. Thomas Gorrie is Corporate Vice President, Government Affairs & Policy, at Johnson & Johnson, with responsiblity for all federal, state and international government affairs and policy. He completed post-doctoral studies at the Swiss Federal Institute of Technology in Zurich, following the receipt of his doctorate at Princeton University. Gorrie has over 30 years of worldwide health care experience and has worked with various Johnson & Johnson companies in research and development, marketing and sales, business development, strategic planning, general management, international, venture capital, and health policy.

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Editorial Reviews

From the Publisher
"Santoro and Gorrieas book tackles one of the most controversial issues affecting our society 'healthcare: an economic commodity or basic human right?' At the heart of this debate is the role of the pharmaceutical industry. The book highlights effectively the opposing forces underlying the tension between the need for financial incentive for drug discovery and the global need for affordable medicines. It succeeds in providing provocative yet balanced perspectives from leaders of industry, government, ethics, business and healthcare. This book is a must read."
-Dr. Victor J. Dzau, President and Chief Executive Officer, Duke University Health System and Chancellor for Health Affairs, Duke University Medical Center

"For intelligent debate on the crisis of confidence in Big Pharma, this volume is unsurpassed. Santoro and Gorrie have assembled an impressive array of voices to tackle contentious issues plaguing the industry, from physician professionalism and research integrity to drug pricing, direct-to-consumer advertising, and intellectual property rights. Combining rigorous analysis with provocative proposals for change, this timely volume should be prescribed reading for industry leaders, policy-makers, and citizens alike."
-Lynn S. Paine, John G. McLean Professor of Business Administration, Harvard Business School

"This book provides thoughtful dialogue from diverse viewpoints on some of the most significant issues in health care — we need this kind of meaningful dialogue to happen more often."
-Tommy G. Thompson, Former Secretary of Health and Human Services and Former Governor of Wisconsin

"Michael Santoro and Thomas Gorrie have compiled a series of essays that provide a fair, balanced, and insightful examination of an increasingly troubled relationship between the pharmaceutical industry and society."
-Henry Thomas Stelfox, Journal of the American Medical Association

"Ethics and the Pharmaceutical Industry is a timely and thoughtful addition to the growing literature on this controversial subject...I highly recommend this collection of essays as a beginning of a pathway for all parties involved in healthcare."
-Alan T. Kaell, Pharmacy and Therapeutics

"Suffice it to say the book has something in it for almost everyone interested in health care, ethics, and pharmaceuticals. You will learn something from some of the authors, while others will likely make you mad. But they all make you think."
-Merrill Matthews, Journal of the National Association for Business Economics

"Santoro and Gorrie have woven together a rich collection of perspectives in Ethics and the Pharmaceutical Industry, with contributors ranging from activists and academicians to regulators and representatives from the industry."
-Jeremy Sugarman, Johns Hopkins University, The New England Journal of Medicine

"Santoro, Gorrie and their contributors succeed in assembling a text that presents the key issues of business conduct for multinational pharmaceutical corporations, in a spirit of dialogue and respect for truly diverse perspectives."
-William Avery Hudson blog

"A timely and fair-minded overview of many drug-related issues."
-Future Survey

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Product Details

  • ISBN-13: 9780521708883
  • Publisher: Cambridge University Press
  • Publication date: 7/31/2007
  • Edition description: New Edition
  • Edition number: 1
  • Pages: 528
  • Sales rank: 1,353,032
  • Product dimensions: 5.98 (w) x 8.98 (h) x 1.18 (d)

Meet the Author

Michael A. Santoro is Associate Professor with tenure in the Business Environment Department at Rutgers Business School, where he teaches courses on business ethics, public policy, labor and human rights, law, ethical issues in the pharmaceutical industry, and China business strategy. Professor Santoro holds a Ph.D. in Public Policy from Harvard University and a J.D. from the New York University School of Law. As a Research Associate at Harvard Business School, he wrote or co-authored nearly 30 case studies and teaching notes on ethical and legal topics such as global protection of intellectual property, insider trading, the Federal Sentencing Guidelines, and the Fair Credit Reporting Act. Professor Santoro has also published numerous journal articles, op-ed articles, and book chapters on these topics in publications such as Foreign Policy, and Human Rights Quarterly. He is the author of Profits and Principles: Global Capitalism and Human Rights in China (2000).

Thomas M. Gorrie is Corporate Vice President, Government Affairs & Policy at Johnson & Johnson, with responsibility as Corporate Officer for all federal, state, and international government affairs and policy. He has over 30 years of worldwide health care experience. He has worked with various Johnson & Johnson companies in research and development, marketing and sales, business development, strategic planning, general management, international venture capital, and health policy. Dr Gorrie received his Ph.D. in chemistry from Princeton University. He completed post-doctoral studies at the Swiss Federal Institute of Technology in Zurich. He serves on numerous non-profit boards, including Duke University Health Care System, Robert Wood Johnson University Hospital, the Dean's Advisory Board of the Rutgers Business School, and the Hun School of Princeton.

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Read an Excerpt

Cambridge University Press
0521854962 - Ethics and the Pharmaceutical Industry - Edited by Michael A. Santoro and Thomas M. Gorrie


Charting a Sustainable Path for the Twenty-First Century
Pharmaceutical Industry

Michael A. Santoro

This industry delivered miracles, and now they're throwing it all away. They just don't get it.1
Dr. Roy Vagelos, former Chairman, Merck & Co.


Perhaps no business engages the worlds of science, medicine, economics, health, human rights, government, and social welfare as much as the pharmaceutical industry. As the twenty-first century begins, however, there is growing controversy and even hostility in the relationship between the pharmaceutical industry and the public. The millions of individuals, families, and communities throughout the world that have been stricken by the scourge of AIDS offer the most tragic human face to this controversy, but it is no overstatement to say that the pharmaceutical industry impacts the life of virtually every person in the world.

What we are witnessing is the unraveling of a "grand bargain" between the pharmaceutical industry and society. This grand bargain was a complex, implicit social contract that allowed the modern global pharmaceutical industry to emerge in the second half of the twentieth century. Although the industry prospered immensely, society also enjoyed a bountiful array of life-saving and life-enhancing drugs. As the twenty-first century begins, however, this grand bargain is in tatters and public mistrust and resentment of the industry run feverishly high. Many feel that the enormous industry profits are not sufficiently matched by contributions to the common good. What factors are behind this growing tension between the pharmaceutical industry and society? Which of the criticisms of the industry are warranted and what reforms of the industry make sense? How can the fragile relationship between the pharmaceutical industry and society be repaired? Will a new social contract develop in the twenty-first century? These are the broad questions addressed in this book from a diverse array of perspectives.

While it is impossible to discuss all the controversies involving the modern pharmaceutical industry, the essays in this book attempt to address the most significant moral, scientific, and public policy issues that underpin the industry's complex relationship with society. Accordingly, the book is divided into four sections encompassing these broad themes. Section Ⅰ is concerned with the research process by which drugs get discovered and developed. Section Ⅱ casts an analytical and critical eye on the marketing of drugs directly to consumers and to physicians. Section Ⅲ contains essays that critically assess the intellectual property rights protecting these discoveries and the related pricing policies this intellectual property regime allows both in developed economies and in third world countries. Finally, Section Ⅳ looks to the future and contains essays that reflect on a sustainable path for the pharmaceutical industry to thrive economically while serving the needs of society.

Many of the essays in this book address hot-button issues such as pricing for AIDS drugs and stem cell research. Indeed, several of the authors in this volume press these hot buttons quite deliberately because they believe passionately in the moral and scientific force of their positions. Such passion and commitment are only natural and understandable given the momentous human impact of these matters. When read together, however, the various essays in this book are intended to offer a fair, balanced, and insightful consideration of the troubled relationship between the pharmaceutical industry and society. Given the divergent ends of a for-profit industry and a product with immense public health implications, there will always be some tension in the relationship between the pharmaceutical industry and society. The hope is, however, that this book can help point to a more sustainable path where these divergent interests are better aligned and the inevitable residual tensions are better managed.


In recent years, drug companies have operated in the glare of the global court of public opinion. The verdict has been decisively negative. It is difficult to pick up a newspaper or a magazine these days without reading about some controversial issue presenting the pharmaceutical industry in an unflattering light: ever-rising drug prices in the United States and around the world; egregious overcharging for drugs sold to public health programs such as Medicaid; never-ending vitriolic trade negotiations over intellectual property and generic drug manufacturing in third world countries; sympathetic pleas by senior citizens and others to import drugs from Canada where government controls keep prices low; concerns about the rights of patients participating in clinical trials; troubling revelations that clinical trials are sometimes selectively published in scientific journals to overstate effectiveness and efficacy; the seemingly ubiquitous emergence of consumer advertising; revelations of shockingly large-scale bribes to physicians to prescribe particular drugs; and the international debate over the role of the industry in providing AIDS drugs to third world countries.

Among observers outside the industry, the greed and moral failings of the industry approach the status of a truism. Many observers, moreover, have come to question the industry's economic vigor and innovative vitality. Consider the following passing comment in a New York Times article: "[The pharmaceutical industry's] profits rely almost entirely on laws that protect the industry from cheap imports, delay home-grown knockoffs, give away government medical discoveries, allow steep tax breaks for research expenditure and forbid government officials from demanding discounts while requiring them to buy certain drugs."2 What is remarkable about this quotation is that it comes from a news article, not an opinion piece. Moreover, the author did not even feel the need to cite a source for his damning conclusions!

Predictably, the barrage of negative media coverage has taken its toll on public perception. According to the Harris Poll, between 1997 and 2004 the percentage of adults believing that the pharmaceutical industry was adequately serving its customers declined from 79 percent to 44 percent.3 Less than 14 percent described pharmaceutical companies as "generally honest and trustworthy." Fifty-six percent believed that drug prices were unreasonably high and that there should be more government regulation of the industry. Indeed, public contempt in the United States for the pharmaceutical industry sometimes reaches startling heights of vitriol. A 2003 Gallup Poll revealed that Americans rate the public image of the pharmaceutical industry among the bottom five.4 Some critics even go so far as to compare the pharmaceutical industry with the tobacco industry.5

For pharmaceutical executives, their declining public image is a bitter pill. Despite the fact that the industry has developed many life-saving and life-enhancing products over the last half-century - including so-called "miracle" drugs for treating cancer, AIDS, and heart disease - public trust and confidence are spiraling downward. Most pharmaceutical executives are bewildered by the public's contempt. Typical is the view of one executive who remarked, "We find it quite incredible that we could be equated with an industry [tobacco] that kills people as opposed to cures them." Others, however, are realizing that the industry needs to change quickly and radically to adapt to a fundamentally new political and social environment. Even an industry stalwart such as Roy Vagelos, the former CEO of Merck, has begun to complain about the high prices of drugs and to warn about the inevitability of government price controls.6


Although the essays in this volume are diverse and far-ranging, two core themes emerge in charting a sustainable path for the pharmaceutical industry. One issue that cuts through virtually all the chapters in this book is the imperfect alignment of private profit-maximizing objectives with public health needs. The central paradox of the public policy debate over the pharmaceutical industry stems from the fact that private enterprise drives creativity and innovation, while simultaneously it restricts access and distorts medical priorities. Important life-saving and life-enhancing drugs, such as protease inhibitors for HIV patients, are invented, but many can't afford those drugs, especially in the third world. Some conditions, such as heart disease and hypertension, which are prevalent in developed economies, offer doctors multiple options for treatment, whereas doctors in third world countries have few options for treating the scourge of malaria. The airways are filled with ads for erectile dysfunction drugs that make them seem curiously akin to a recreational drug, whereas working-class families wonder how they are going to afford life-saving asthma medication for their children. The disconnect between the profitability of drug companies and the public health manifests itself in a seemingly endless array of such ironies. What are the root causes of this misalignment? How big is the gap between profits and public health? What must be done to bridge this gap? In the process, how do we balance the intellectual property rights of pharmaceutical companies with the basic human right to healthcare? These questions are addressed by numerous thoughtful and knowledgeable authors in this volume.

A second theme that emerges in these pages is the pressing need for the pharmaceutical industry to increase dialogue and cooperation with various stakeholder groups. A number of authors in this volume, including those from within the industry, emphasize that to repair their relationship with society in a sustainable manner, drug companies must learn to think of diverse groups as active partners in the process of drug development and sales. If the pharmaceutical industry is able to adapt and change in this way, it will come to see advocacy groups, the medical and scientific community, governments, NGOs, and international institutions as essential partners in developing useful drugs to solve medical problems that often have social and transnational implications. If the industry is not able to make this transition, it will continue to be vilified and find itself increasingly isolated.

Inaction is not an option for the pharmaceutical industry. The void from the absence of cooperation and partnership with stakeholder groups will be filled ineluctably by increased government regulation, including the specter the industry probably fears most - price controls. The loser in this eventuality will not be just the pharmaceutical industry, which will inevitably be less profitable. Society, too, will lose because the heavy hand of government regulation and bureaucracy, although sometimes necessary, can rarely function as efficiently and creatively as coalitions of diverse groups, including government, working together. Therein lies the moral imperative for change in the pharmaceutical industry - the hope for a future where society continues to enjoy a steady stream of drugs to improve health and wellbeing and where these fruits are broadly distributed among rich and poor, and throughout the globe.



The Ethics of Clinical Research Conducted
in Private Enterprises

Introduction to Part I

Michael A. Santoro


Pharmaceutical research is a complex social enterprise. It involves persons, commerce, and the advancement of medical knowledge, and it raises a broad array of ethical, scientific, and public policy issues. The chapters in this section analyze and suggest reforms in a number of these areas, including (1) the conflicts that arise between the profit maximization objectives of pharmaceutical companies and the ethical requirements of scientific research and medicine, particularly in regard to safety concerns and the diseases that are targeted; (2) the ethical safeguards for conducting research involving human subjects, particularly vulnerable subjects such as children and citizens of third world countries; (3) the patient's right to be included in drug trials that offer hope for terminal medical conditions, as well as the public health implications of including minority populations in drug trials; and (4) the scientific and ethical issues underlying stem cell research.


The dictates of medical and scientific ethics are sometimes at odds in clinical research, as for example in the administration of placebos to patients in control groups.1 Such conflicts arise because physicians are trained to cure and treat patients by administering therapeutic remedies, whereas scientists seek to establish facts and advance knowledge. For the most part, however, the advancement of knowledge and the betterment of patients ultimately are complementary goals.

It is the interjection of profit motivation into drug research that creates the greatest ethical challenges. In a sense, these challenges are endemic to the free market system. The power of the free market is that by appealing to self-interest it unleashes powerful incentives that spur creativity and productivity. Bolstered by the added incentive of patent protection - a subject discussed in Part III of this book - the pharmaceutical industry has attracted vast sums of private investment and it has employed these funds to invent and bring to market a wide array of life-saving and useful drugs. The problem with the market, however, is that it does not perfectly correspond to human medical needs. The market responds to consumer demand, which reflects wealth and ability to pay. Human medical needs, however, exist even where consumer markets don't. Conversely, as discussed in Part II of this book, the pharmaceutical industry sometimes attempts to create consumer markets for drugs that do not optimally serve medical needs.

When one considers the disjunction between medical needs and the dictates of capitalism in a global context, the gulf between commerce and medicine grows wider. On purely medical grounds, the needs of a poor child suffering malaria in sub-Saharan Africa should have priority over a middle-aged American man suffering from hair loss. Through the prism of capitalism, however, the balding man is a valued, potential customer and the African child barely exists. The numbers tell the story. Malaria research attracts 20 cents in research dollars for each infection, whereas ailments that are prevalent in developed countries attract hundreds of dollars per case.2 As a result of such stark economic realities, many of the world's most pressing medical needs will remain unmet without resort to nonmarket solutions.3

Jürgen Drews, a physician who has been the research director of a major global pharmaceutical company, is uniquely qualified to examine the interrelationships among medical ethics, scientific ethics, and the profit motive. Drews argues that in recent years an obsessive, and ultimately self-defeating, focus on the bottom line, and the increasing costs of launching a new product, have led pharmaceutical companies to devote their research efforts increasingly to so-called "me too" remedies for conditions such as high cholesterol and hypertension for which useful therapies already exist.

© Cambridge University Press
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Table of Contents

Introduction : charting a sustainable path for the twenty-first century pharmaceutical industry 1
Pt. I Profits, patients' rights, and scientific progress : the ethics of clinical research conducted in private enterprises
Introduction to part I 9
1 Drug research : between ethical demands and economic constraints 21
2 Emerging international norms for clinical testing : good clinical trial practice 37
3 The regulatory and ethical challenges of pediatric research 48
4 Including children in research : participation or exploitation? 68
5 Racial and ethnic inclusiveness in clinical trials 80
6 The rights of patients to participate in clinical research 97
7 How should government regulate stem-cell research? : views from a scientist-legislator 109
Pt. II Marketing and the efficient utilization of healthcare resources : ethical and public policy challenges
Introduction to part II 127
8 Ethics and prescribing : the clinician's perspective 136
9 The regulation of prescription drug promotion 153
10 Direct-to-consumer advertising of prescription drugs : a policy dilemma 169
11 Off-lable communications and prescription drugs 184
12 The need for better health information : advancing the informed patient in Europe 196
13 Who should get access to which drugs? An ethical template for pharmacy benefits 206
14 The application of cost-effectiveness and cost-benefit analysis to pharmaceuticals 225
Pt. III Patents, pricing, and equal access
Introduction to part III 251
15 Intellectual property rights, access to life-enhancing drugs, and corporate moral responsibilities 260
16 A future agenda for government-industry relations 282
17 AIDS activism and the pharmaceutical industry 300
18 The campaign against innovation 326
19 Third world perspectives on global pharmaceutical access 336
20 The promise of vaccines and the influenza vaccine shortage of 2004 : public and private partnerships 352
Pt. IV Concluding thoughts : charting a sustainable path for the twenty-first century
Introduction to part IV 363
21 Evolving approaches to healthcare challenges 369
22 Property rights in crisis : managers and rescue 379
23 Blurring the lines : public and private partnerships addressing global health 386
24 Renegotiating the grand bargain : balancing prices, profits, people, and principles 393
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