Tragedy of malicious decisions in business
UNDERSTANDING CONSEQUENCES
BUSINESS is a powerful force for positive social change if done properly. It creates employment, designs new products and services, and gives us the freedom to escape from subsistence living. But, unfortunately, there are still a lot of people doing it wrong.
In early September, Martin Shkreli – a 32-year-old US hedge fund manager and founder of Turing Pharmaceuticals – obtained the manufacturing licence for Daraprim and raised its price from $13.50 (R194.27) to $750 per tablet. Daraprim – the brand name for Pyrimethamine – is used in the treatment of toxoplasmosis, malaria, Aids and some cancers.
Shkreli’s business reasoning is that Daraprim was under-priced relative to its use. As he explained, to save your life from toxoplasmosis cost less than $1 000, whereas many other life-saving drugs are up to 500 times more expensive.
Shkreli claims that they will never restrict someone from obtaining the drug if they cannot afford it – providing them with a discount or giving it away for free. The burden of price increases will only be placed on medical insurance.
He also assured concerned followers that the money would be invested into making a better drug, providing a net benefit to the medical community.
The problem is that Shkreli’s business reasoning is wrong. Where the incentive to produce many specialised, life-saving drugs wouldn’t exist without exorbitant prices, Daraprim is a simple product that already works at low cost. Shkreli’s purely profit-driven turnaround shows a complete detachment – either physical or emotional – from the people who will suffer as a result. He is so trapped in the non-human side of business that he cannot engage with the impact he will cause.
While Shkreli made a lot of noise, his actions are a drop in the ocean compared with the Volkswagen (VW) scandal.
VW admitted to installing a secret code into the on-board computer of its diesel cars to deliberately change the performance of the vehicle whenever it was being tested for emissions. VW was able to meet the regulatory requirements and market its cars to environmentally conscious consumers as a greener alternative.
Meanwhile, as soon as the test was finished, the engines pumped back up to full performance and emitted between 10 to 40 times the permitted levels of nitrogen oxides (NOx). NOx react in the presence of heat and sunlight to create smog and are a key component of acid rain. They are responsible for lung diseases, are a proponent of global warming and they starve rivers and lakes of oxygen. Emission caps are strict for good reason.