Lying as Business Strategy

Those of you who take The Wall Street Journal probably caught Wednesday’s story about the efforts of Abbott Laboratories, a pharmaceutical company, to sell more of a very lucrative AIDS drug. The challenge for Abbott was that one of their lower-margin drugs was widely used in conjunction with a competitor’s drug, in lieu of a more expensive Abbott uber-drug. The Journal obtained documents revealing some of the strategies Abbott considered for reducing use of its lower-margin drug.

I’ll say up front that I’m not someone who thinks drug companies make too much money — quite the contrary, it’s precisely in critical fields like medicine that we want to see large profits, so that more brains and resources are attracted to them. So I have no problem with a company trying to make a buck, or a billion bucks.

According to memos obtained by the Journal, however, Abbott executives considered ideas like taking the lower-margin drug off the market and telling people that they had to do so in order to ship it to poor countries in Africa. Another alternative was to convert the pill form to a syrup that they described as tasting “like someone else’s vomit.”

Caught out by the press, Abbott did the usual corporate spin, claiming that the executives were “just brainstorming.”

Apparently, lying is a plausible enough option at Abbott Laboratories that its executives feel comfortable considering it as a possible action item. That’s what Abbott admits, in effect.

I’m not sure how one cuts out such a cancer once it has permeated an organization’s culture. And if anyone doubts that Abbott’s culture is threatened by a lack of integrity, consider the coda to this tale: after settling on a strategy of raising the price of its lower-margin drug by 400%, Abbott tried to counter outcries by posting on its website misleading data about the drug’s cost compared to alternatives. The FDA later ordered it to take the misleading information down.

To be fair, one never knows, when reading a newspaper account, whether all the relevant facts are being presented. What seems clear, however, is that Abbott executives considered telling a disgusting lie about helping poor people in Africa, and that they see no problem contemplating such a lie.

People like this are a far greater enemy to markets and liberty than anyone in the hapless Democratic party, because they reinforce stereotypes of corporate executives as unprincipled brigands. They should be ashamed of themselves. Unfortunately, that’s probably unlikely.