A new way to create new drugs
I noticed this piece on Ethical Insight. It points toward interesting new directions in the realm of high-stakes philanthropy:
Essentially, the Gates Foundation is stepping in and directly stimulating pharmaceutical research that would not happen otherwise because of its conflict with the profit motive. (Drug companies cannot justify spending billions of dollars developing a drug that will not recoup its costs-- say, a drug that will mostly be used in poor countries). Throwing $60 billion around can alter this attitude, however.
I find this interesting for a number of reasons. It used to be the government that encouraged research in areas that might not turn out to be profitable. But with the rising cost of some types of research-- especially drug research-- the government's pockets are hardly deep enough to fulfill this role along with all its other duties. Now a private foundation has gotten large enough to play this role. It's definitely a shift in the R&D players and landscape.
We are discussing "social entrepreneurship" in my Business and Social Justice class right now. This is like regular entrepreneurship, but includes a dimension of social benefit. In fact, the social purpose of the venture outweighs the profit motive in cases where the two conflict. I find this is exciting new direction for entrepreneurship to be going in because it (1) challenges the notion that economic profit is the only worthy goal, and (2) also challenges the notion that money-making is inherently opposed to charitable work. Social entrepreneurs may be non-profit, but they may also be for-profit and simply willing to accept lower profits than the absolute maximum possible.
This is a surprisingly radical notion. Our current capitalist system actually legally requires a corporation (at least a public one) to seek the greatest profit above all other considerations. There is no model for wanting some profit, but not the maximum if that involves too much other harm (say, to the environment or to social well-being). The current system seems quite restrictive to me. After all, in my own life I can choose to work at a lower-paying job if I want to. I have no "duty" to make the maximum amount of income possible, much less profit! Instead, I make a balanced choice based on myriad considerations (and available opportunities). Why can't businesses do the same?
Back to the Gates Foundation. It is not quite social entrepreneurship-- it's basic philanthropy-- but I like the innovation Gates is introducing into the funding landscape. And the way it is actually reshaping some of the structure of the pharmaceutical industry. Maybe we can start some new habits.
The Bill and Melinda Gates Foundation was already a multi-billion dollar enterprise when Warren Buffet, then the world’s second richest man after Gates, turned over the bulk of his fortune to the Gates Foundation. The Buffet donation will eventually increase the foundation’s current endowment of US$33 billion to over US$60 billion. One of the Foundation’s major causes in developing countries focuses on improving health. According to a report by pharmaceutical information group IMS Health Inc, the money available from Gates Foundation for developing new medicines and cures is changing the way the pharmaceutical industry operates. Companies in the sector are likely to find it more practical and better for public relations to cooperate with a foundation that has the resources to compete with both government-funded institutions and commercial pharmaceutical firms. As an example, the report cited the program proposed by the Gates Foundation in July 2006 to create an international network of 16 laboratories to develop new approaches to finding a vaccine to combat AIDS. The Foundation offered US$287 million dollars to the laboratories that successfully developed an innovative idea. The idea of rewarding success also encourages companies to collaborate with rivals to develop a vaccine. Indeed, the IMS report suggests that pharmaceutical companies might even face pressure to collaborate with the foundation, even if it impacts their bottom line. "The alternative is for pharma to allow itself to be perceived as indifferent to global health concerns – or to be unseated in the pursuit of advances in world health," IMS said.
Essentially, the Gates Foundation is stepping in and directly stimulating pharmaceutical research that would not happen otherwise because of its conflict with the profit motive. (Drug companies cannot justify spending billions of dollars developing a drug that will not recoup its costs-- say, a drug that will mostly be used in poor countries). Throwing $60 billion around can alter this attitude, however.
I find this interesting for a number of reasons. It used to be the government that encouraged research in areas that might not turn out to be profitable. But with the rising cost of some types of research-- especially drug research-- the government's pockets are hardly deep enough to fulfill this role along with all its other duties. Now a private foundation has gotten large enough to play this role. It's definitely a shift in the R&D players and landscape.
We are discussing "social entrepreneurship" in my Business and Social Justice class right now. This is like regular entrepreneurship, but includes a dimension of social benefit. In fact, the social purpose of the venture outweighs the profit motive in cases where the two conflict. I find this is exciting new direction for entrepreneurship to be going in because it (1) challenges the notion that economic profit is the only worthy goal, and (2) also challenges the notion that money-making is inherently opposed to charitable work. Social entrepreneurs may be non-profit, but they may also be for-profit and simply willing to accept lower profits than the absolute maximum possible.
This is a surprisingly radical notion. Our current capitalist system actually legally requires a corporation (at least a public one) to seek the greatest profit above all other considerations. There is no model for wanting some profit, but not the maximum if that involves too much other harm (say, to the environment or to social well-being). The current system seems quite restrictive to me. After all, in my own life I can choose to work at a lower-paying job if I want to. I have no "duty" to make the maximum amount of income possible, much less profit! Instead, I make a balanced choice based on myriad considerations (and available opportunities). Why can't businesses do the same?
Back to the Gates Foundation. It is not quite social entrepreneurship-- it's basic philanthropy-- but I like the innovation Gates is introducing into the funding landscape. And the way it is actually reshaping some of the structure of the pharmaceutical industry. Maybe we can start some new habits.
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