Why it's never too early for ethics

If your brain disengages when you read the word 'ethics', perhaps you'd better switch it on again, writes Iain Scott -- there's a lot you haven't heard on the subject.

If you're a biotech CEO, the last time you had anything to do with ethics was probably when you were dealing with NHMRC committees, back when you were an academic. Well, David Finegold wants you to take another look at the subject.

Finegold, a professor at the Keck Institute in California, believes ethics should be built into all bioscience companies' strategic decision-making, whether you're a global giant like Merck & Co or a start-up minnow. And when he explains why, as he did at the AusBioNSW conference last week, you have to concede him the points.

"This isn't just an issue that makes people feel good," Finegold says. Poll data from the US show that big pharma is on a par with the tobacco industry when it comes to people's beliefs about their ethical responsibility. "How did it lose the public's trust? Merck & Co is possibly the most ethical all the big pharma -- it gives away free drugs for river blindness. But it could go bankrupt on strength of one product recall."

And it's not just Vioxx and other phase IV drug recalls. The broad lack of trust in life science comes from the stem cell debate, mishandling of the GM crop issue and even general reporting of scientific results.

Research into the issue by Finegold and others has resulted in a book, BioIndustry Ethics, which he defines as occupying the crossover area between bioethics, business ethics and business strategy. And don't be alarmed if you haven't given it much thought -- you're not alone. Finegold provides a few of the typical responses he gets when he raises the subject, and how he counters them:

• 'Ethics sounds nice, but we're not sure we can deal with it at this point in time.' Don't forget that investors are concerned about minimising risk. That's particularly obvious when you look at the GM debate, and Merck. Thinking through ethical issues can be vital when preparing your business plan.
• 'We're 10 years away from getting a drug to market -- we're too small to care about ethics.' Be warned, decisions are profoundly shaped by what happens in the early stages, and ethics are harder to implement later when you're also dealing with pressure from shareholders and the market.
• 'What do you mean, ethics? The whole reason I'm doing this is to help people.' That was Monsanto's problem -- its scientists were so convinced that what they were doing was good for people, that they couldn't understand why anyone would be concerned.
• 'We're following the law, and the regulator's rules. Watch out here -- the FDA is not as up to date as you think. In the case of Vioxx, Merck had an issue with the drug long before the FDA, and pulled it off the market voluntarily.

So why should you care about ethics? Apart from knowing that it's "the right thing to do", says Finegold, there are less obvious reasons that can go right to a company's bottom line. An ounce of prevention can prevent costs to the company later. An ethics plan can also be a powerful motivator for attracting top talent, and there's no doubt that better corporate governance -- including ethical -- is linked to shareholder value.

And on a bigger scale, a company's adherence to ethics could determine a whole industry's licence to operate in the future. Effective bioindustry ethics can bring big benefits to the whole sector, addressing public opinion without being merely a PR exercise.

Finegold has spent time looking at Australian biobusiness, and its place globally. We have a role to play in biobusiness ethics, he believes - at home, firstly, to encourage more informed public debate, from school children upwards. And we could take a leadership role on ethics throughout Asia. But first of all, bioindustry ethics needs to start on an even smaller scale -- with individual companies.

Case in point: Genzyme

To illustrate the some of the ethical issues that affect biotech, Finegold likes to use the example of US firm Genzyme. It's a leader in the development of 'ultra-orphan' drugs, for lysosomal disorders affecting only a few thousand patients worldwide, and its ethos attracts the best and brightest young researchers. But ethically, it's right at the pointy end of the scale.

Its first ethical challenge is that each drug costs its users between $150,000 and $200,000 a year -- for life. "Before Genzyme, these kids never made it to adulthood," Finegold says. And the company sees the supply of its drugs to those who need it as a moral responsibility -- they either cost full list price, or they're free to those who can't afford it.

The sticky part, Finegold says, comes when Genzyme goes supplies a drug for free to the five or so patients who need it in, say, Poland or Egypt. But when the company later goes to the Egyptian government, pointing out that it can't supply free drugs forever, forcing the government to wonder whether it can pay $1 million for the treatment -- is that akin to the proverbial drug pusher who hangs around the playground, giving out free drugs and getting the kids hooked?

Genzyme's case is extreme, but others are more widespread: balancing the needs of short- and long-term shareholders, deciding which products to develop, and globalisation (such as pricing, or where to stage clinical trials), up to privacy issues, insurance risks, availability of information, and 'publishing versus patenting'.

Ethics made simple

Here are David Finegold's 10 easy -- and cheap -- steps for building ethics into your business.

• 1. Focus on the needs of your end-user -- not 'customer', but the patient or consumer.
• 2. Start early -- if you don't, it's almost impossible to build ethics in later.
• 3. Lead by example.
• 4. Figure out how to get expertise, such as an ethics advisory board, which is not a binding or governing board, but adds value.
• 5. Integrate ethics with business strategy. For example, Steven Holtzman, Millennium Pharmaceuticals' spectacularly successful former chief business officer, had a degree in moral philosophy from Oxford.
• 6. Communicate, internally and externally. This is a vital step, and it's where Merck broke down with Vioxx, Finegold says: when critics from very reputable places were pointing to problems with the drug, Merck's approach was to mount an unsuccessful counter-campaign.
• 7. Build structural protections for ethical behaviour, such as a reporting procedure or a helpline.
• 8. Treat ethics as a process, not a plaque to be hung on the wall.
• 9. Extend ethics to your business partners -- you need to think about the ethics of who you're partnering with.
• 10. Measure your ethical effectiveness. Novo Nordisk, for example, introduced a triple bottom line -- financial, social, and environmental.