Pharma - too big to fail?

'Mal Bernard' returns to eyeforpharma to question the ethical issues our industry faces as well as to examine what would happen to pharmaceuticals if it faced a recession-style meltdown...

The world faced one of its greatest economic challenges back in 2008; the financial crisis that engulfed world economies saw the collapse of Lehman Brothers and now threatens entire countries. Confronted with the possibility of a total collapse of our banking system, world governments stepped in, saving the financial industry to the tune of several trillion dollars of taxpayers’ money. While the trillion-dollar life raft offered up by Western World Inc. didn’t resolve all of our issues, I shudder to think about what might have happened had that support not been there.

I am not alone in thinking that we simply cannot allow the financial industry to fail, and so we groan under the weight of this bloated industry in the knowledge that if we buckle, life as we know it could end.

Now let me put this to you – what if it happened again? Only this time instead of our financial markets, the companies to collapse were those that provided us with chemotherapy, or insulin, or a number of other lifesaving treatments. What then? We already know that the spiralling cost of drugs is threatening the sustainability of pharma – so what would happen if a major company was on the brink of collapse? Could we cope? Would we prop them up?

The answer to the above question is obvious – we could not afford for even a single major pharma company to fall. Despite the negative press and the public’s somewhat misguided perception, the pharma industry performs a vital role in our world, and were it to face collapse it would literally be a life or death situation.

Of course, I’m not saying we’re on the brink of collapse – not even close, at all. However for all our talk about sales force effectiveness, e-detailing, KAMs, has anyone ever discussed the worst case scenario? Let’s look at this and ask, hypothetically, what would happen if pharma failed?

Looking back in history there were plagues that wiped out entire generations. Today you switch on the news and here about pandemics, swine flu, avian flu, this pandemic and that pandemic. If it ever came to the worst, our defence against that potential tsunami is pharma. We cannot do without pharma; it is intrinsically linked with who we are.

This brings us to another question. There is an ethical dilemma which is more critical within pharma than it is in other sectors, and it is this:

“If we cannot afford for pharma to fail, and if the industry is aware of this, does it have a moral obligation to conduct itself responsibly?”

Or, to put it another way, can we afford for them to be as reckless as our financial institutions have been in recent years?

At the end of the day, for all of the miraculous and life-saving solutions the industry can give us, they are in the business of making money. And without that money, they won’t produce the life-saving drugs we need.

Let’s be clear here, there’s a reason that pharmaceutical products are called “drugs”, there is a dependency on pharma products like no other. If Coca-Cola went bust tomorrow, we might miss it, but we’ll live without it. If Apple went down, we might not get our shiny new toys, but we’ll live. But if Roche, GSK or Janssen went tits-up?

In studies which have previously ranked pharma’s reputation, it frequently finds itself sharing a space next to tobacco companies. The reasons are rarely out of the public eye but ultimately, it's an issue of dependency. When the public are dependent on your product you have to work hard to demonstrate you're not taking advantage of your position.

I’m not looking at our industry through rose-tinted glasses (have you ever known me to do that?). We’re far from perfect. As pipelines and margins continue to dry up, the industry is starting to panic. And staff retreat to what they know. So, despite the need for change, it comes slowly, if it comes at all. So big are these companies that they’re tripping over their own red tape. No one is enacting the required changes quick enough and I imagine some never will.

A few months ago, eyeforpharma hosted a dinner in London with some of the industry’s most interesting minds. After being asked what one single change he’d like to see, Dr Leandro Herrero (CEO of the Chalfont Project) responded: “I’d like to try to see if I could create a Lehman Brothers situation”. You can see him say this here. The point is, it would take a collapse on that scale to bring about any real change.

Here’s another question for you – are we even in a position to save the industry if we had to? Could we afford it? As mentioned in the opening paragraph, after realising that bailing out banks wasn’t good enough, we had to move onto entire countries. And we still have several nations on the sick list. Before you know it every major government will be maxing their credit cards to save struggling EU countries. So if it ever happened I ask you, where would the money come from to bail out another struggling industry? Do we have the resources to cover a pharma collapse?

The point to all of this is that yes, pharma is too big to be allowed to fail. But pharma as an industry knows this. Two phrases come to mind – “knowledge is power” and “with great power comes great responsibility”.

Meanwhile, all we can do is speculate. Until the “powers that be” see that a fundamental shift in our industry is needed, we’ll continue to ask the same questions, continue to receive the same answers, and continue to procrastinate and do nothing. Surely that's just as irresponsible isn't it?

blog comments powered by Disqus