MINUTES OF THE FLOOR MEETING OF

THE YALE POLITICAL UNION

14^th OCTOBER 2009

The Floor Meeting of the Yale Political Union held on Wednesday 14^th October 2009 was called to order at 7:41 pm in LC 101 with the Speaker, Mr. David Porter, presiding.

The Speaker calls the floor meeting to order. Announcements follow from the Chair of the Liberal Party, the Chair of the Party of the Left, the Chairman of the Progressive Party, the Chairman of the Independent Party, the Chairman of the Conservative Party, the Chairman of the Tory Party, and the Chairman of the Party of the Right.

Pres (commencing with marshmallow greetings and shameless self-promotion about the 75th): Now I can introduce our guest. He has had an illustrative career, from research in labs and the upper echelons in corporations. A graduate of UPEN and its medical school, he is recent critique of today's pharmaceutical companies, with a fixation of profits over saving lives? Some questions to consider are: What are corporations? Do they have obligations beyond the law? How much of a burden do we want to put on the productive output of a corporation?

l The President moves: "Resolved: Corporations should be responsible to more than their share holders."

Dr. Vagelos: I am happy to be here and to discuss the topic. You may recall that the pharmaceuticals years ago were highly regarded. We heard that these companies saved lives, prolonged lives, made people better. It had a high reputation. Now five or seven years ago, this status began to slip.

There are primarily three reasons for the phenomenon: The first is that prices are too high. Second, the industry was not paying attention to medicine for the developing world. Third, the credibility of the industry had folded. I would like to talk about these issues and others and in relation to my experience with Merck, beginning in the 1970s.

Now at the time, people wanted to focus on deaths from heart attacks. There was cholesterol which we discovered when we dissected arteries and found that they were filled with plaque. Next, there was the epidemiological factor. In Asia, the percentage of people dying from heart attacks was low. Compared to the Finnish, they had a fourteen times higher chance of dying from heart attacks, and of course their arteries were full of plaque. Across the world, there was a linear line correlating cholesterol and lethal heart attacks. We additionally knew the biochemistry of what was happening. I am a biochemist. Out! goal was to identify a protein that could slow the process, and we were successful. It was an enzyme. Our lab and another lab in Japan discovered the retarding factor. The Japanese drug was compactin, which worked beautifully. Merck worked on their own separate product and came up with their own chemical, which has a great Latinate name. But the idea is that the two labs were racing along to see which could find the drug that could reduce heart cholesterol.

Suddenly, however, the Japanese stopped their study. The rumor was that compactin caused cancer in animals. They were in a dilemma, as were we. We did not know if every drug that targeted the enzyme would cause cancer; or was it there drug uniquely, and not ours? It was a problem to be sure. However, that day, Merck testing was stopped. Why? There was a fear that our drug could cause cancer. Moreover, we could not verify the Japanese findings because they refused to release data due to strategic corporate secrets. We finished our work was in process, suspending the rest. It was released, and it was safe. All the scientists of course were very excited.

Next, there was a second drug that was more potent than the first heart attack reduction drug. Now we had a study. It was a five-year, double-blind study with a placebo vs the Synvastatin. This experiment was a great research breakthrough, pivotal in studying and tracking the disease. Now we were concerned about the implications. We had to worry about where we wanted to go. These are the questions. Now you can get a statin for $1200 per year, branded or unbranded. Why all this talk of pricing? Well consider the price of Starbucks coffee. (You could easily spend the same amount of money for a year's worth of coffee on a drug for heart disease.)

Most drugs that are very effective are for a bargain. The problem that we have now is that in the last dozen years or so, the cancer drugs have rather unusual prices. Par exemple, Avastin, first introduced with metastatic colon cancer, was $50,000. What is the benefit? This drug increases life for an additional four months; that is all. If you consider value and price, this is not sustainable. The additional fear is government control, which has serious problems for the research industry.

The second major critique is drugs for the developing world or the lack of attention thereof. We had a drug that killed all kinds of parasites, including worms. (Hmmm; we need this for some parasitic people.) However, this drug was not meant for people, not for hook worms or tape worms, which, as you know, infest human hosts. A few years ago, I had an employee come to me and say there was a disease, river blindness, in sub-Saharan Africa. One contracts it when a black fly bites a human, infesting larva in the skin. The larva grows into worms which live in the bitten skin. Worst of all, these worms migrate, go to the eyes, and cause inflation of the eye. (Forget the blindness. Ocular inflammation is the most painful sensation ever. The Secretary would know, having experienced both.)

We went into the field and performed an experiment. We just took a pinch of skin, cured it, or used a placebo there. The treated skin was worm-free. Though international organizations refused to cooperate with us, we continued research. And we continued work on this drug, knowing that our target was for some of the poorest people of the world. Next the African government refused to buy the drug because their leaders contested there were weighty issues with which to grapple. River blindness was not a priority. The American government was excited but did not have a budget to export the drug. The French were promising, but receiving a stamp of approval in France for pharmaceutical products is very difficult. Their guidelines are tough. You need to know your allies and ... your others. They were attracted. So here we had a drug that was almost magical, and so we decided to give the once-a-year pill free to people as long as it is required. (tapping) We shall continue to distribute this drug, increasing it, so the disease may be eradicated. The idea is to kill all the parasites and make the flies sterile. Now what is the concern? This all happened in 87, and in the early 2000s, AIDS were the fashionable new medical chic. There was a call to develop an HIV drug at a reduced price. But every company, including Merck, refused. Meanwhile, an Indian company came up with a generic, combination drug. It worked pretty well, so then of course companies in America and elsewhere were embarrassed. Merck and others worked assiduously to develop their own HIV drug.

And now the third item is credibility. As you know, many drugs have side-effects. Some of them are quite serious. The big questions to ask are whether those side-effects were hidden, whether the company knew about them, whether they were repressed. There was a problem, additionally, between the companies and the FDA. There was Fen-phen which causes heart disease and pediatric anti-depressants, which increase the tendency of suicide. Now the idea is to work with situations that are simple: no other diseases, no other drugs. Next, if the side-effects are severe, you have to weigh the effects with the benefit. Moreover, working with diseases, you have to learn about the potential problems and inform people as promptly as you can.

Lastly, how is information transmitted from clinical studies to doctors? In recent times, there are sales representatives who have graduated from universities, like this one perhaps. They know something about medicine but do not understand science. These sales representatives come with a drug sampler, warm meals, cards, pens, mugs, etc. Some universities, including Yale and Stanford, are working to limit sales representatives.

Mr. Walker: What about the relationship between capital and your altruistic endeavors?

Yes, that is a challenge when you are a new company. Your venture capitalists are concerned with one thing: potential profits which drive up the stock prices. Now these companies should not be working on philanthropic endeavors. They are trying to build their reputation. When you are poor, you are not philanthropy-driven. Successful companies, however, do have this luxury.

Ms. Lewis: Who is responsible for overprescription of drugs: companies or doctors?

Doctors rarely prescribe drugs for a disease for which there is less information. They will be sued otherwise for malpractice. Now they may know about a study that may be relevant, but there is not enough data. What may happen--and I hope it is not prevalent--sales representatives may promote these ideas from these initial studies because they want to sell the drug. But really, you want to avoid prescription sans scientific information. Recently, there are some bad situations involving doctors who are paid by the companies ... But when they are caught, they are punished severely.

Ms. Karras: What are your feelings about FDA regulations?

They are good. They ensure the drugs are safe. What could be improved is the handling of the data, especially if the drugs are important. HIV is an example, which went through in six months. An antibiotic may take a year, but this antibiotic is still needful. The problem is that the FDA is undermanned and has antiquated equipment. The current head is great though and much better from the one who was under the Bush Administration.

Pres: How do you change corporate culture to be more responsible?

That is hard. First you have to begin with having a successful company. It is hard to be a philanthropist if you are poor, so you need great technology. Second, you need to have the mindset. Biotechnology and health are dealing with human health, where there is obligation. When you are working with something important, you need to ensure it gets there out efficiently to the people who require it.

Mr. Ramey: Can we expect change in the pharmaceutical industry from more evil industries, IE genericide?

The generic industry is important. The patent is there for 10, 12, 20 years. When the drug is genericized, the price reduces 20%. To combat that, you need a series of products to succeed that. I believe that good companies can stay ahead. The second manage care; when you start on a drug, like the cholesterol drug, 50% of the people who take this drug stop. They do not feel any better. Plus they do not want to hear that they have a serious health problem. And if our management care actually worked, that could lead to a healthier society.

(Ladies and Gentlemen of the Union:

(It is custom that after the guest speaker has delivered his or her address and answered questions, student speakers on the docket take the floor. Though it is not custom for the Secretary to provide cultural or intellectual critique, the Secretary, as an officer of the Union, has an obligation to ensure the Union is reflected in a maximally positive light in the minutes and in the panlist online. One of these ways of preserving stature is through self-examination. The notion of the esprit critique, to employ Gide's words, indicates a certain level of sophistication and maturity in a body, which does not fear the knowledge that it may be wrong, that it may not be producing nuanced enough ideas, or that it may be growing inattentive to the excellent habit of careful deliberation.

(It is a heavy and a regrettable task which the Secretary has tonight, but she feels she must inform the Union that some of the student speeches below Dr. Vagelos' introductory remarks deserve an especial, critical notice because often times the truism that the chief purpose of a corporation or business is to increase profits, to accrue wealth, or to become rich has been repeated to a dangerous degree. The Secretary respects and esteems the economists in the Union, knowing that their expertise lies in a domain very much removed from her own. However, the Secretary would like to think she is a thoughtful, well-read individual and posits that, for the present moment, the economists have neglected their Drucker and Levitt; and in doing so, they embark on a voyage of modern mythology and an object-person misunderstanding which, in the context of a discussion about corporations, puts a premium on money and commodities rather than on people.

(The two writers whom the Secretary cites both advocate the stance that how much profit a corporation accumulates is an impertinent question. It is a distracting question since it diverts attention from the nature of the corporation. Asking how much revenue was generated during the third quarter, or the percentage increase of profits from last year to the present focuses too much on a small part of the corporation. Money and its amounts do not reveal anything about the corporation, what it does, why it does what it does, or how it does what it does.

(Drucker proposes that the purpose of a business, contrary to the student speakers whose thoughts fall within today's heuristics, is not to maximize profits but to create a customer. It is Levitt who furnishes an analogy to make such an assertion more digestible. He recommends considering living life and the breathing of a living being. Most would agree that breathing is not the main purpose to life, especially for homo sapiens. The Secretary is not about to supply the real purpose of life because that would deny all the amusement of finding the answer for everyone else in the Union, but she does likewise suggest breathing for a human is analogous to the profit of a corporation. While not the telos of a corporation, profits serve as a sort of test or monitor, demonstrating that it is still alive and, vital signs assured, at liberty to pursue its goal, which is creating a customer or market. Worded differently, lack of profits signify a business is dead, like metabolic zero signifies an organism is dead; and these macabre states, while inspiring great music, prevent both the corporation and the human being from flourishing.

(Using this approach, the more appropriate question makes itself apparent: In what kind of business is one engaged? Concentrating on the customer directly speaks to what, why, and how the corporation does because it shifts the focus from money to the people who use a certain product or service. Such a perspective grounds discussion of corporations into a concrete realm discriminating enough to look beyond dollars. And for the debate in question, to give Dr. Vagelos his just due, the purpose of Merck is not to amass billions; rather it is to perform those roles which he mentions in the beginning of his speech, namely saving lives, prolonging lives, or making lives better. The Secretary will also reiterate that such roles are life-centered, not breathing-centered, similar to how Dr. Vagelos' advocacy of a people-centered paradigm over a profit-centered one.)

Mr. Jake McGuire: Merck and Dr. Vagelos have done something great. It is good work. Worms suck; we are all fine with that. Also corporations are not just responsible to the share holders. They are responsible to others, like the law. The distinction we need to make is whether it is the company or an individual who is being philanthropic. The important thing is that corporations are inanimate objects. We create them. We cannot input moral qualities into an object. That is like my mailbox failing to answer why Camembert is better than brie; that is both an irrelevant question and an irrelevant function of my mailbox. My mailbox holds mail. Corporations accrue wealth.

Next, are farmers obliged to grow food? Are developers supposed to build houses? These organizations are functions within our amoral, capitalistic system.

I do have a more cynical argument. It is just good business. It is a great advertising ploy. We are so profitable that we can indulge in this philanthropy. It is just disingenuous. Consider green washing. Hotels employ this method so a Mexican woman--or Guatemalan, what have you--does not have to wash your sheets as often as she does, allowing the hotel to pay her less.

Dr. Vagelos: What was the biggest contribution by Merck with regard to the river blindness drug? ... That one decision in that program had a great recruiting thrust. Merck could get anyone it wanted; people would love to work with a company like that.

I think there are gray areas between social justice and good business.

CIP: If a farmer or carpenter incorporate themselves, are they still morally bound?

Again, this is good business. Suppose if we use cheap lumber and shaky houses, and we were free ... I think it is great reputation-building. Folowing the law is good, but it does not have to be moral.

Mr. Lawton: If it is good business, why are companies using a lobby?

And Ms. Karras provides a further explication to Mr. Lawton's beef example. (Since the Secretary does not consume beef, this discussion is not only revolting but quite foreign to her.)

... I am glad we can learn a little something about beef this evening. But I am not defending corporations or small businesses. I am saying they are built to fulfill a certain task, and we should not be upset if they fail to act morally.

Mr. Gonzalez: Is there an obligation given the share holder relationship?

Because they do have a special relationship, then it is okay if we tax them higher. There is a point when doing this too much is harmful, and we should be attentive to that ...

Mr. Davis (who does not believe in pants): Did the gentleman specify if it is a good or bad thing?

I would love to disapprove Marxism tonight, but otherwise I would think it is good. We depersonalize the corporation. But sending a CEO to jail for good business decisions is not a good thing. If they cook the books, definitely.

Mr. Broockman: Who has the power to exercise moral agency in Mr. McGuire's framework? No one? This is scary. However, that is entirely correct. Welcome to capitalism. Nobody, no one person, is not responsible. You cannot find a quicker way to destroy the earth. Now destroying capitalism is not an option. (That is good to know.) We instead need to assign responsibility. Share holders are the answer. There is a capitalistic, competitive force. There is a legal factor. So where is accountability. History provides an example where everyone and nobody was responsible: Adolf Eichmann. (This was not exactly the historical example the Secretary had in mind, and she is worried how far this analogy will go.) Modern companies are an Eichmann apparatus. (Never mind, the Secretary is shocked and appalled.) Like Eichmann, the individuals who do this likewise in a corporation should be punished. (not at the Hague, though). Are our corporate employees responsible? No. But somehow they should be.

Ms. Karras: Did the gentleman just compare Merck to Nazi officers, or "Nicola, you have been taking something for the last five minutes."

(with plenty of prevaricating) There is nobody exercising moral agency.

Mr. Stempel: When we prosecuted Eichmann, there was no catharsis. ... How are we to change the system? How not?

We have a war crimes tribunal not because we believe the world will be metaphysically better. We imprison people because it is a deterrent.

Dr. Vagelos: This is more a comment than a question, but if you look at corporations, there is a high correlation between CEOS and the success of a company. Sans Hitler, you would not have Eichmann. Leadership is pivotal. A company may be doing poorly, but then when you change one person, the company could turn around. Do not look at the board of directors because they are dysfunctional.

...' (Mr. Broockman is bothering to react to this, which baffles the Secretary because Dr. Vagelos just announced his little aside was not a question.) ... We live in a global world, and so these global CEOS, including good ones, should work in that framework?

Mr. Marshall: Should Yale not build a wind farm in VT because it would make the locals unhappy? ...

Corporations should be responsible to everybody. I mean, David Broockman does think '' that people in VT should have ability. (Why is Mr. Broockman talking in the imperial third person, à la Caesar, when he is on the Left and does not believe in the royal third person, or is he suffering from a temporary lapse of dissociative identity disorder?)

Speaker: The gentleman is reminded that the third person is used to refer to other people.

The Gentleman: The Nazis bombed Germans, too. Could the gentleman comment on that?

Okay, sure. Limited liability was good for world development. While I see an argument for that, I do not think that share holders can act with collective agency.

Mr. Joshua Robbins: These "greedy" profiteers are the same who provide the wealth for private philanthropic groups and to fund the massive welfare state under which Mr. Broockman would have us live. (This is followed by an elementary economics review available in any textbook.) We cannot make policy decisions based on what we desire. And at the end of the day, these policies need money. These corporations do that. They also provide an economic boost, yes, through their exploitation in developing nations.

An individual share holder is responsible. They are the owners. They are the ones to whom the officers are accountable. To do it another way is harmful.

Mr. Fischer: If we get rid of corporations, could we raise 1.3% to lift the world if America falls 98.7%?

I do think our economy would fall apart if we got rid of our corporations.

Pres: If share holders have a removed or transient connection to a company, should those people be responsible?

Again, I am not talking about small time, lay investors, but people, like Steve Jobs who own 10% of Disney, should be responsible.

VP: Why is charge or share holders changed?

I am not opposed to the government saying you cannot sale tainted milk to poor people. That seems perfectly reasonable. We could go back and forth about bad corporate models, but overall this is a good way to conduct things.

CIP: How far does a company go in bad effects before the company feels responsible enough to know it should stop.

That is hard to answer in the abstract. But to confront questions like that and to hold people accountable, you need to decide what is morally right. I do believe that the members of the board of directors and the share holders are each responsible.

Mr. Prasad: Let us make an uncontroversial assumption: Humans have obligations to other humans. (much zoological hissing) The next uncontroversial assumption is that the CEO of GE, Wal-Mart, et alii are also human. All corporate decisions can be tracked back to a human or group of humans. If corporations have negative obligations, they have positive ones as well. And just to use econ jargon, the opportunity cost is equal to the out of pocket cost.

The Gentleman: What about competing promises/obligations?

I advocate looking at each obligation case by case.

Mr. Pagliarella: Do you believe in diminishing obligations?

Sure ...

Mr. Walker: (invoking the example of a con man and plenty of deconstructionist language ... does not really ask a question but furnishes a scenario and wishes the gentleman to give his commentary on it.)

No, hitmen should have qualms about killing people.

Mr. Cugini: I am going to be loud, if that is cool. So first, we specify the wrong actor. The problems that we bring up are not the corporations responsibility. They have to build profits. That is our role. Now maximizing profits allows for more wealth. And more wealth allows more production and transfer of products. And then these profits can make things happen with NGOS.

Next share holders who do not see results are not fulfilling their moral agency. (The Secretary is wary.) I say we correct price extortion with governments who can regulate that. Capitalism can regulate for that. This could happen for drugs going to Africa.

Maximizing wealth creates resources elsewhere.

Mr. Darini: Is a corporation acting as the middle man, which is inefficient?

No, it is part of the same process.

CIP: Are moral constraints part of the framework that factor into profit-making?

Moral responsibilities would constrain profits. It would be better served for the state of the NGOS.

CIP: (The Secretary is delighted because the CIP is happy and excited which does not seem to have been the case previously.) I think we can do more to improve things than we can. First, I want to bring up two points. Corporations do not have responsibilities because people have those. Now I know people in DS are reading Aristotle. But mailboxes are irrelevant. (The Secretary agrees.) A mailbox is not morally aware. People in corporations have this same phenomenon. They cannot amputate this. Next most people would like to see a company to be decent. Really; they would. And so the government can step in. The U.S. government is working on a new law that makes the countries which receive the products, the executives, and the American share holders cooperate better.

Mr. McGuire: Are corporations responsible above and beyond government mandates.

Yes because I am both an idealist and a pragmatist.

Mr. Stempel: Is a corporation less or more likely to make a moral choice if there are regulations?

I see the gentleman's point, but I totally disagree with it. I feel strengthening regulation improves culture. (The Secretary thought that patronage and genius did that..

The Gentleman: Are these regulations inciting corporations to be more responsible than their share holders?

Yes.

Mr. Stephen Marsh: It is an odd phenomenon tonight because I have been listening to things being said, and ... I actually agree with the Right. (Why is this surprising?) Corporations are not people. They have great resources and can move things. So what are they? They are tools and machines. And if laws stem from a moral basis, if not to be arbitrary, corporations cannot have legal rights. And if that is so, corporations cannot be socially responsible. So then what provides the social aspect? The government does that. The idea is not that corporations cannot enjoy responsibilities but should be regulated to the ground.

Mr. Jacobson: So it seems governments are not people either. Are they responsible?

They do because that is their function. They are built for that purpose.

l The previous question is moved. The motion carries.

Dr. Vagelos: "Resolved: Corporations should be responsible to more than their share holders." It is best for share holders when they have a broad responsibility with the understanding that these bodies will persist for a long-term and should have a long-ranging plan. That means finding people with high ability, who are loyal, and who work like Hell to novate. (The Secretary agrees.) But doing the right thing, being a good citizen, it is done. Some companies make environmental rules that are good for everyone and reflect positively on the share holders. And finally good corporations do good things for us.

l The topic "Resolved: Corporations should be responsible to more than their share holders," with a vote of 26 in the affirmative, 10 in the negative, and 3 abstentions, clearly passes.

Interlude:

l Ms. Homans-Turnbull decides to introduce a new resolution: “Whereas energy company Sithe Global plans to construct three new coal-burning power plants in Nevada, New Mexico, and Pennsylvania;

whereas these plants would put out an estimated aggregate one billion
tons of carbon dioxide over their projected fifty-year lifespan, and
significantly degrade local air and water quality;

whereas at least two of the three proposed sites fall within the areas
of the US with the highest concentrated solar incidence, and at least
one falls within valuable territory for wind energy capture;

whereas Sithe Global is currently owned by Blackstone Group, and
Blackstone Group is responsible for investment in the plants; and

whereas the CEO of Blackstone Group is Stephen Schwarzman, a Yale
alumnus and adjunct professor at the School of Management;

Resolved: Blackstone Group should not invest in new coal-fired power
plants.”

l The previous question is moved and carries; there are no speeches on the topic. The Speaker then conducts a vote on the topic. With 21 in the affirmative, 11 in the negative, and 3 abstentions, it clearly passes.

l The Pres moves to adjourn. It carries sans objection.

This Floor Meeting of the Yale Political Union is adjourned at 9:49 pm.

Respectfully submitted,

Nikki Singh

Secretary of the Yale Political Union