Corporations, profits, and public health

Shortly after taking over as CEO of British Petroleum (BP), Tony Haywood said, “We have too many people [at BP] who want to save the world…we need to concentrate on our primary goal: creating value for our shareholders.” Similarly, a well known anti-tobacco advert features an actor playing a tobacco company executive saying to its customers: “We’re not in business for your health.” Tobacco and oil companies are easy targets, the first causing completely preventable disease and death, the latter consistently befouling the environment and killing endangered species as an integral cost of doing business. Public health, by contrast, is in business “for your health” and in the context of global health, “to save the world”. Are these two enterprises totally incompatible, as editor William Wiist suggests in the title to this collection, or is it possible that the energy of corporations can be directed and managed in ways that can protect and promote the health of the public in a meaningful way?

Public health is a pretty self-defining term that describes government action to protect the health of populations and prevent disease. One such government action is to regulate corporations whose activities affect health. Under threat of global recession, most governments decided that there are corporations that are “too big to fail” and when their collapse threatens the economy, they will be “bailed out” by government. Indeed, relations between government and corporations have always been complex, as President Eisenhower observed more than a half century ago in describing the “military-industrial complex”. Health-related corporations are no exception. The pharmaceutical industry is regulated in the USA by a government agency, the Food and Drug Administration, which must certify its products as “safe and effective” prior to marketing. Yet the government has never challenged monopolistic pricing by pharmaceutical companies and Congress has even prohibited the federal government itself from bargaining for lower prices for drugs prescribed for patients on government health insurance programmes (Medicare and Medicaid).

Corporations also have the power to create their own baby corporations (subsidiaries) for their own purposes, even to escape accountability for criminal acts. For example, Pfizer was fined US$1·2 billion for fraudulently marketing valdecoxib. Federal law requires that any company found guilty of such a crime be automatically excluded from Medicare and Medicaid. But government prosecutors decided that this exclusion would lead to the collapse of “too big to fail” Pfizer. Accordingly, they approved a plan in which a Pfizer subsidiary, Pharmacia & Upjohn Co Inc, would plead guilty to this crime. The subsidiary, which had never sold a drug, paid the fine, and was excluded from Medicare and Medicaid. The parent company, Pfizer, went on doing business with Medicare and Medicaid as usual.

In The Bottom Line or Public Health, Wiist accepts the view that making money for its shareholders is the sole purpose of the corporation. Although a common belief, this is simply not true. And treating it as true makes meaningful government regulation more difficult and lets the managers and boards of directors off the public health hook in terms of their responsibilities. As John Kenneth Galbraith and others have accurately noted, corporations have many more stakeholders than their shareholders, including their customers, managers, employees, suppliers, and even society at large. Many corporations may act as if the only value they care about is their stock price, but there is nothing in the law or the theory of corporations that mandates this obsession with stock price and short-term financial gains. A private-public dichotomy that places corporations in the private sphere also cannot adequately account for the activities of corporations that are entirely owned by governments, such as global Chinese corporations and almost all oil companies, or transnational corporations that are largely owned by government-run investment funds.

There are also general characteristics of corporations that make them both especially powerful and potentially troublesome. First is our tendency to treat these entities like real people. In the USA this has most recently led to the Supreme Court affording corporations almost the same free speech rights as individual citizens. Second is the reason corporations were created in the first place: to provide investors with a place to invest money without risking everything they own. But even more important are the characteristics that make corporations different from people, specifically, potential immortality, and the ability to create an unlimited number of children (subsidiaries) and siblings (joint ventures). These characteristics turn out to be most important in the global sphere where transnational corporations can dictate to the governments that should regulate their activities. Although inanimate, corporations have paradoxically become the dominant life form on the planet. And this is why they are important to public health—not only to the health of global populations, but to the health of their customers, employees, suppliers, and the people living in areas affected by their activities.

So Wiist is especially persuasive in arguing that “externalization of costs is a major corporate activity with a direct effect on human health and the natural environment” from effects as diverse as air and water pollution, to causing specific diseases, to avoidance of taxes and corruption of government officials. The book’s contributors focus on five major corporate sectors that seem to have been especially damaging to the public’s health: tobacco, alcohol, agribusiness, automobiles, and the pharmaceutical industry.
Protecting and promoting the public’s health is predominantly a function of governments, but governments have been joined by others, especially non-governmental organisations (NGOs), in this activity. So it should not be surprising that corporations themselves have tried to co-opt NGOs and use them, and their “halo effect”, for their own purposes. BP, for example, gave millions to the Nature Conservancy over the years, many of whose members now express horror at these gifts in the wake of the Gulf oil spill. Private-public-NGO cooperation can make sense; but such cooperation is not necessarily consistent with public health goals, and each joint project should be judged on its own merits. The working assumption should probably be that corporations are much more likely to corrupt NGOs than NGOs are likely to get corporations to engage in meaningful public health activities.

Seeing the corporate world as inherently evil, and public health as universally good, however, leads Wiits and many of his contributors to some rather extreme suggestions, such as eliminating or reducing limited liability for shareholders; removing corporations’ right to sue; making voluntary codes legally enforceable; establishing an alternative organisation to the World Trade Organization; and disentangling universities from corporate influence. Nonetheless, four of the suggestions in this book seem reasonable to me, albeit not easily accomplished: banning all corporate political activity; strengthening government regulatory agencies; enforcing corporate adherence to the UN Global Compact on Human Rights; and finally, as suggested by corporate lawyer Robert Hinkley, adding these words to the purpose in all corporate charters: “…but not at the expense of the environment, human rights, public health and safety, dignity of employees, and the welfare of the communities in which the company operates”.

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