Saturday, 13 October 2012

Bad Pharma meets the Good Regulation Fairy. Why the drugs aren't about to start working

“It’s easier to imagine the end of the world than the end of capitalism,” everyone’s favourite Marxist film critic, Slavoj Žižek, once remarked. Perhaps a sudden fleeing of the imaginative capacity explains the strangely brain-dead reaction of the science writer Ben Goldacre to the idea that the pharmaceutical industry should, for the good of humanity, not be conducted on a capitalist basis.

The question, posed by the economist Harry Shutt, whose books have been admiringly reviewed in this blog, was not complicated. Given that the pharmaceutical industry appears totally unsuited to being run on a profit-maximising basis in shareholder-owned companies, Shutt asked in The Observer, wouldn’t its functions be better carried out by non-profit or publicly-owed enterprises?

Goldacre is clearly a very intelligent person, whose Bad Science columns are oases of un-credulity refuting the claims of corporate science. His book Bad Pharma says that drugs companies deliberately put dangerous or useless drugs on the market. He’s no fool and no shill so why did this obvious question precipitate such confusion?

Niall Ferguson has invaded my head

First, Goldacre said he was a realist, clearly implying that he’d like a different way of running the industry but that wasn’t possible. But by the next sentence, he revealed that he didn’t want a “central command state economy” (Help! Niall Ferguson has invaded my head), a very jaded straw man and definitely not what Shutt was advocating. This was followed, most bizarrely, by the assertion that people in the drugs industry perpetuate acts of great evil, not because they are innately evil, but because they work in a badly designed system. This is precisely what Shutt was saying – it’s a badly designed system, its acts are not the “fault” of the individuals working in it, so change the system. As an answer, that lacks something. It’s like saying 2+3 isn’t 5, it’s 5.

Finally, Goldacre says what he thinks should happen – a “competent regulatory framework”. Are you still awake? Don’t worry, the boogie man won’t get you because the good regulation fairy will stop him. Spoiler alert. She won’t.

(Imagine, as an experiment, the reaction if state pharmaceutical agencies were guilty of the foisting dangerous or dysfunctional drugs on the market. There would be immediate and deafening calls for privatisation. You get an insight into the balance of power, intellectual and otherwise, by the fact that critics of the misdemeanours of corporate drug companies call merely for better regulation.)

Let’s set aside for one moment the integral problem that western “democratic” political systems, and frequently the politicians in them, have been bought by corporations so that regulation is not remotely competent or effective. (This is the Jeremy Grantham and Stewart Lansley problem. Just because something should happen doesn’t mean it will).


For the sake of argument, imagine an ideal world where the state sits benevolently above the fray and government regulation can do its job unimpeded. What would regulation actually do?

Bear in mind the recent claim by two eminent French specialists that over half of the medicines prescribed in France are either useless or dangerous. 20,000 people die annually as a result, they say. Goldacre’s  book, Bad Pharma, is specifically about the dangerous medicines that shouldn’t be out there, but are. “… for several of the most important and enduring problems in medicine, we have no idea what the best treatment is, because it’s not in anyone’s financial interest to conduct any trials at all," he writes. And that doesn’t take into the account the drugs, that while not harmful, do not serve any medical purpose. “If you can get on to the market by making a me-too copycat drug that represents little or no therapeutic advance and is even less effective than the drugs that it copies, then you will,” says Goldacre.

So competent and effective regulation will, if it does anything, radically reduce the number of pharmaceuticals that are allowed to go on the market. Thereby massively hitting drug company profits (they are currently the darlings of stock markets worldwide because they are so profitable) and, in turn, the number of people they employ.

Thus, you are soon face to face with a fundamental conflict of our capitalist system. An unavoidable collision between the impulse most decent people share for reducing the anti-social effects of capitalism, against the need for capitalism to prosper so that everyone can have good jobs and incomes. We are, whether we like it or not, materially dependent on the system’s success. But a successful system causes results, such as global warming and prescribing dangerous medicines, that are inherently destructive.

Planned Regulatory Obsolescence

If regulation of the pharmaceutical industry were actually competent, as Goldacre wants it to be, it would prevent capitalism from working (actually it’s not working well anyway but effective regulation would be another drag on profits). A 2009 UN report found that a third of the profits of the world’s biggest 3,000 companies would be wiped out if firms were forced to pay for the use, loss and damage to the environment they cause. In other words, truly effective environmental regulation would render capitalism impossible.

So regulation is, quite deliberately, not effective. It allows, as research has found, just enough reform to buy off critics without seriously impeding corporate priorities. In the end, Goldacre’s vision of a “competent regulatory framework” is far more utopian than changing the system so that profit maximization is not the modus operandi of pharmaceutical companies.

And you don’t need to be Albert Einstein to work that out.


  1. I'm so glad you tackled this - I read Ben Goldacre's response to Harry Shutt in the Guardian letters page and was very disappointed.
    Who's going to write to the Guardian letters page and point them towards your post? Perhaps I will try. I love the way you've shown the paucity of his proposed solution of better regulation', and shown how truly effective regulation is incompatible with large scale corporate capitalism. Need it be incompatible with small scale business though? The kind which don't need to achieve these ludicrous profit margins to remain competitive? In other words, could a small scale form of capitalism (say which banned massive global enterprises)work? I feel sure you will tell me no!

    1. Thanks for the feedback. I heard somewhere, possibly Richard Wolff economic update radio show, that big pharma companies outsource research to v small enterprises because it's more effective that way. I think the way enterprises are organised is more important than size but companies can be too big.
      The problem with this economic system is that you start off small companies that get taken over by big ones. Thus monopolies and oligopolies and all the faults of corporate capitalism.

    2. I did notice that the conservative response (where there is one) to bankign failure and energy companies ripping people off, is to say you need more competition and smaller enterprises. But even if that happens, ironically enforced by the state, those small fish will soon be eaten by big fish, and you'll be back where you started. I think ultimately what Ben Goldacre and Louisa Dilner are saying is that the effectiveness of pharma companies to research and come up with new products is unavoidably related to profit maximisation and share-holder ownership. That is one of the basic justifications for capitalism - if you radically alter it you'll throw out the baby with the bathwater so to speak - but I just don't buy it

  2. Goldacre admits this sytem is corrupt but dare not believe another is possible. More than his job and his sanity are worth. Like all liberals, he is afraid of the bogeyman of totalitarianism. This will go to the wire before they dare think and act again.

    1. I agree. His excuse that's it's not his field is lame -

      Presumably, we should just leave economics to professional economists and banking reform to bankers. They, after all, have the practical experience. It's "their" field.