Roberto Viezaga, a 38-year-old Bolivian farmer, was on the verge of death when the medical device maker Medtronic stepped in with a donation that would save his life. Viezaga had arrythmias caused by Chagas disease, a parasitic infection that can affect the heart, and he was passing out so often that it threatened his ability to work the family’s potato, corn, and wheat farm. His wife and six young children depended on his work for their survival. So when Medtronic gave him a free pacemaker, it helped his entire family. The surgery made a world of difference: A picture of Viezaga after implantation shows him smiling, healthy, and surrounded by family.
But was this an act of disinterested corporate benevolence, or was it something else?
Charity is generally described as the act of giving money, goods, or time to the unfortunate. Two players are involved: the giver, who gives without expected payment in return, and the receiver, who is in need. Increasingly, philanthropy in the medical industry is failing on both counts. Givers don’t just hope for a return on investment, they demand it; if a philanthropic venture isn’t projected to generate a profit, it is abandoned. And the recipients of corporate largesse are often doctors and hospitals, not patients. Indeed, recent history tells us that when a corporation does take on a philanthropic project, not only does their largesse rarely improve our collective public health; it often leaves us worse off.
This “philanthrocapitalism” is not a new phenomenon. In 2002, Michael Porter and Mark Kramer wrote an article for the Harvard Business Review touting the use of philanthropy to increase profits. “Increasingly, philanthropy is used as a form of public relations or advertising, promoting a company’s image or brand through cause-related marketing or other high-profile sponsorships,” they wrote. Porter and Kramer cited favorably Milton Friedman’s famous 1970 New York Times Magazine article titled “The Social Responsibility of Business is to Increase its Profits,” and they dubbed the mandate to derive financial profit from charity as “strategic philanthropy.” Citing Friedman, they asserted that any philanthropic project that fails to drive profits is a betrayal of shareholder interests.
Acknowledging the charge that corporations use charity as a tax-dodge, Porter and Kramer pointed out that many purportedly charitable projects, with their clear promotional intent, may be “hard to justify as charitable initiatives.” But they added that CEOs need not despair, since all such expenses are tax-deductible as “reasonable corporate expenditures.” The public, unaware of the profit motive behind these philanthropic projects, may be lured into donating to them, thereby further enhancing the company’s bottom line — but not necessarily contributing to the public welfare.
Take, for instance, Medtronic, which recently partnered with the Red Cross Hospital in Tijuana, Mexico to provide the cash-strapped facility with a new cardiac suite and other state-of-the-art medical equipment. The hospital released promotional material stating that the partnership with Medtronic will help serve the underserved. The implicit message was: Help us and you help the poor. However, in a recent investigation for the international medical journal The BMJ and the International Consortium of Investigative Journalists, I showed that the poor have not been the beneficiaries of the Medtronic partnership.
Dumping devices into developing countries is especially pernicious. The humanitarian relief agency Medical Teams International encourages device makers to off-load excess product in order to save money and improve their public relations, stating that companies can use “section 170 (e) (3) of the Internal Revenue Code” for a tax write-off of “up to twice the cost of donated inventory.” But most donated devices end up unused or unusable. A report by the World Health Organization found that only 10 to 30 percent of donated equipment becomes operational in developing countries. Robert Malkin, a professor of biomedical engineering at Duke University, told Scientific American in 2013, “I think there is a great risk for every medical device donation that it’s going to hurt the recipient.”
The humanitarian organization Doctors Without Borders learned a hard-knock lesson about how corporate largesse can betray the public interest. In 2014, the organization received a donation of pneumonia vaccines from the pharmaceutical companies GSK and Pfizer. But donor demands — including restrictions on which patients, in which geographic regions, could receive the vaccines — made it impossible to deploy the vaccines in emergency situations, according to Kate Elder, a policy advisor for Doctors Without Borders. As a result, the nonprofit stopped accepting in-kind donations of medical products and health technology — a decision that caused confusion and consternation in 2016 when the organization turned down a donation of one million pneumonia vaccine doses from Pfizer.
Elder cited a number of problems that arise from such donations: They can be used to saturate the market and discourage competition, they allow companies to monopolize supply chains, and they provide cover for exorbitant prices. In the case of Doctors Without Borders, donors cut off supplies at their own choosing, interfering with the care the organization provided.
Perhaps the biggest problem of philanthrocapitalism, however, is that it fundamentally distorts health care priorities. As Iona Heath, former president of the U.K. Royal College of General Practitioners, explains, the device manufacturing industry tends to focus on what’s known as vertical care — facilities like a cardiac catheterization lab or a diabetic unit that are designed to treat a single disease. That diverts attention away from so-called horizontal services, such as comprehensive primary care, which focus on the context, complexity, and multiple morbidities of individual patients.
“A vertical program starts with a disease and says we must get rid of malaria, nothing else,” Heath explains. “Primary care is completely destabilized by these single-disease approaches.”
A case in point: An investigation by the Los Angeles Times into an AIDS initiative promoted by the Gates Foundation found that it “increased the demand for specially trained higher-paid clinicians, diverting staff from basic care. The resulting staff shortages have abandoned many children of AIDS survivors to more common killers: birth sepsis, diarrhea, and asphyxia.”
For patients like Viezaga, the Bolivian farmer, illness can often be traced back to deficiencies in horizontal care. Chagas, the condition that caused Viezaga to need a pacemaker, is carried by a parasite that typically lives in the wall or roof cracks of poorly-constructed homes made of mud and straw. Heath notes that, although Medtronic’s pacemaker restored normal heart function, the root cause was left unaddressed, and the rest of Viezaga’s family and community remain at risk. Rather than waiting until late complications caused Viezaga to need a pacemaker, it would have made more sense to concentrate on early curative treatment or on improving the poor housing conditions associated with the disease, says Heath. But addressing the social determinants of health, such as poverty and housing, will not make money for Medtronic and its shareholders, she adds.
Still, though we might fault industry for its failure to honor the true spirit of charity, it isn’t the job of for-profit companies to solve social problems — nor should it be. It’s up to us as a society to insist on adequate public funding for health care and to address the societal ills that threaten public health. In failing to do so, we have created the very problem that drives the medical industry’s uncharitable charity.
Jeanne Lenzer is an award-winning medical investigative journalist, a former Knight Science Journalism fellow, and a frequent contributor to the international medical journal The BMJ.