Shareholders versus patients: Who is more important?


  • There is one and only one social responsibility of business–to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud. Milton Friedman
  • A newly approved drug to treat Alzheimer’s disease is expected to become a multibillion-dollar expense for Medicare. By one projection, spending on the drug for Medicare patients could end up being higher than the budgets for the Environmental Protection Agency or NASA. (New York Times)
  • If you spend any time reading pharma PR releases, you’ll see over and over again corporate managements stressing the importance of the shareholder. When a new drug is derailed the first thing that pops out is the effect on the company’s stock price, not patients.
  • Can a pharma company serve both shareholders and patients?

“Many people want the government to protect the consumer. A much more urgent problem is to protect the consumer from the government.” 
― Milton Friedman

According to JAMA “a substantial proportion of 2016 Medicare Part D spending was for drugs with absent or low-quality cost-effectiveness analyses. The lack of quality analyses may present a challenge in efforts to develop policies addressing drug spending in terms of value”. That’s a very bold statement but it’s based in analysis and truth.

Today’s pharma CEOs are interested in one thing; did we hit the sale number? Making numbers” is squarely focused on exponentially increasing a single-bottom line of profits for shareholders. Growth in and of itself is natural and justifiable in terms of helping a business stay sustainable. But when a corporation feels the pressure to make their fiscal numbers grow exponentially, this is where humans and the planet lose by always being deprioritized. I believe this is partly the case with Biogen’s new drug.

As Sarah Kliff said in her Times article “there’s little evidence that the drug, Aduhelm, slows the progression of dementia, but the Food and Drug Administration approved it this month. Analysts expect that Medicare and its enrollees, who pay a share of their prescription drug costs, will spend $5.8 billion to $29 billion on the drug in a single year.

Make no mistake about it; all of us will be eating for a drug that largely doesn’t work and costs a small fortune. If this drug were not approved, Biogen would have been in deep financial trouble. Their CEO said he believes this drug is needed for Alzheimer’s patients. Still, given the poor data and the fact that the advisory board members rejected the product, it’s hard to believe he really believes in that statement.

Mr Merck said long ago “we try to remember that medicine is for the patient. We try never to forget that medicine is for the people. It is not for the profits. The profits follow, and if we have remembered that, they have never failed to appear. The better we have remembered it, the larger they have been”. That is not largely true today.

Most pharma CEOs are graded on the company’s financial performance. There are no measurements on patent centricity. What’s often good for the company’s bottom line is not good for patients. The number of cancer drugs, for example, that have marginal efficacy yet are approved is staggering. Some small biotech startups’ primary goal is to develop a drug that “may” work so that big pharma and Wall Street will scoop in and reward initial employees with huge financial windfalls.

In the meantime, patients are left to fend for themselves. Research has indicated that patients don’t get all the information they want or need from their doctors, and the online health seeker is bombarded with misinformation that they are left to sort through.

Right now, the power is with shareholders, not patients. I’ve personally witnessed decisions being made based on bottom-line results even though it was good for the patient or caregiver. Don’t get me wrong, there are people in the industry who always try and put the patient first, but too often, their voices are muted by the dreaded “ROI.”

Frankly, if I were the CEO of Biogen, I would have said, “we need to win over the advisory panel with more data from ongoing clinical trials,” but that would have offended shareholders, and that’s what it’s all about.