Isolationism, the Antithesis of Innovation

Isolationism & global health: an artificial zero-sum game that no one can win

 

As the name might suggest, global health threats are best addressed with a global coalition of support. This clear, logical approach is directly threatened by the recent political trends towards isolationism. ViiV Healthcare in particular faces these threats. ViiV Healthcare is a global specialist HIV company formed as a joint venture between GlaxoSmithKline, Pfizer, and Shionogi, combining each firms’ respective HIV expertise. This was a savvy move – as Michelle Hoffman, editor of Pharmaceutical Technology, puts it “if it takes a village to raise a child, it seems to take a world to manufacture a drug” and combining teams from GSK, Pfizer, and Shionogi united top talent across the globe.1

 

ViiV Healthcare’s current global footprint.2

 

By this logic, political isolationism inherently threatens ventures like ViiV Healthcare across three broad, interrelated metrics: research, human capital, and funding. Isolationist immigration policies de facto limit the pool of talent available to firms by incentivizing highly-educated, talented scientists to travel across borders.3 This limits not only the candidate pool for healthcare initiatives but can also limit the wealth of ideas and research available. Examples of this exist across both borders and industries, but we’ve seen this nationalistic stifling of ideas in HIV/AIDS before. In the early 2000s the WHO published a report detailing the use of both biomedicines (traditional pharmaceutical solutions) and “traditional medicine” or “complementary alternative medicine”. Subsequent research here found that nationalistic ideas led to lower adoptions of and acceptance for non-native treatments of HIV/AIDS in India.4 In 2014 and 2015, the UN mandated supporting efforts to “rationalize resources, provide the strategic framework for a regional approach, as well as to ensure that our borders do not make it easy for the disease to escape.” The successful elimination of the Ebola outbreak serves to further underscore the power of global cooperation in facing global health threats and undermining isolationist arguments.5

 

Countries included in Trump’s most recent travel ban.6

 

Isolationist economic policies further exacerbate this by penalizing companies for maintaining a global supply chain. Donald Trump’s rhetoric berating pharmaceutical companies for moving production overseas [served as merely a harbinger to the truly biting GOP tax bill calling for implementation of 20% taxes on payments to offshore affiliates of multinational firms. 7,8 Financial penalization of firms working globally only encourages these private sector firms to leverage the power of globalization, pushing them to move entirely offshore.

 

At a higher level, the research that is fundamental global health initiatives is often jointly funded by private firms and public entities. Donald Trump’s proposed budget includes deep cuts to the Presidential Emergency plan on AIDS Relief (PEPFAR), a source of funding accessed by ViiV Healthcare.9 Trump justifies these funding cuts by citing isolationist rationale similar to his stance on NATO – the US has done more than its fair share and no longer will support other countries ventures.  This is precisely the tit-for-tat, zero sum mindset that Dean Nohria explains the United States must transcend to be an effective global leader.3

 

Thus far, ViiV Healthcare mitigates the effects of isolationism in two key ways to various degrees across the short and medium term: diversification of funding and the government lobbying efforts of its parent companies.10 ViiV Healthcare’s collaboration with non-governmental organizations and private philanthropies such as the Clinton Health Access Initiative insulates it from any volatile policy making decisions at the federal level.11 The stability provided by sourcing funding from such a wide variety of entities provides an element of permanence and stability that is necessary to accomplish the largescale healthcare overhauls necessary to impact a disease space as complex as HIV/AIDS. Additionally, ViiV benefits by design from having aligned globalization incentives with its parent companies, GSK, Pfizer, and Shionogi. The lobbying power these firms bring to the table is a force to be reckoned with in the United States, and has already successfully persuaded Trump’s choices in both policy making and cabinet appointments. 12,13 While specific reactions to the proposed affiliate taxes from these industry power players have been muted thus far, action is expected prior to further congressional action. 8

 

In order to combat the harmful implications of isolationist political sentiment, ViiV (and pharmaceutical companies at large) should lean into globalization by leveraging supply chain digitalization. This is a particularly viable solution for ViiV given how much of their supply chain not only relies on transfer of information but is transfer of information. 14This paradign makes ViiV and other pharmaceutical companies uniquely positioned to be offshored in Alan Blinders’s “Third Industrial Revolution”. 15 Doing so allows ViiV to better survive any cost pressure as a result of increased taxes or decreased funding from their United States operations by realizing the cost efficiencies of a digital supply chain. Additionally, technological advancements in telecommunication will allow ViiV to work around the human capital limitations put into motion by isolationist immigration policies.

 

In light of how applicable this megatrend is across industries, I pose the following questions to ViiV Healthcare:

  1. To what extent do you consider yourself and other private sector companies to have a responsibility to influence public policy decisions?
  2. To what extent do you feel you have the ability to do so?

 

End notes

1 Hoffman, Michelle. “It Takes a World.” Pharmaceutical Technology, 2010, pp. 1, Business Premium Collection, http://search.proquest.com.ezp-prod1.hul.harvard.edu/docview/893419866?accountid=11311.

2 ViiV Healthcare Corporate Brochure. https://www.viivhealthcare.com/media/113677/viivhealthcare-corporate-brochure.pdf

3 Nitin, Nohria. “Isolationism Is Killing the American Dream.” Financial Times, 31 July 2017.

4 Alter, Joseph S. Asian Medicine and Globalization. University of Pennsylvania Press, 2013.

5 “UN Stresses Need for Ebola Surveillance in Border Towns .” United Nations, 26 Jan. 2015, ebolaresponse.un.org/un-stresses-need-ebola-surveillance-border-towns.

6 Gerstein, Josh, et al. “These Countries Are on Trump’s New Travel Ban List (+ Map).”POLITICO, 25 Sept. 2017, www.politico.com/interactives/2017/trump-travel-ban-country-list-map/.

7 Bradsher, Keith. “Trump’s Plan to Cut Drug Imports Could Raise Prices, Not Lower Them.” The New York Times, 12 Jan. 2017.

8 Browning, Lynnley. “ Multinationals Scurry to Defuse House Tax Bill’s ‘Atomic Bomb.’” BloombergPolitics, 7 Nov. 2017, www.bloomberg.com/news/articles/2017-11-07/multinationals-scurry-to-defuse-house-tax-bill-s-atomic-bomb.

9 Sampathkumar, Mythili. “Africa’s New Affordable HIV Treatment Deal under Threat from US Budget Cuts.” The Independent, Independent Digital News and Media, 21 Sept. 2017, www.independent.co.uk/news/world/africa-hiv-aids-drugs-treatment-deal-under-threat-us-budget-cuts-a7960391.html.

10 GlaxoSmithKline Annual Report 2016.  https://www.gsk.com/media/3609/annual-report-2016.pdf

11 “ViiV Healthcare — What We Do.” ViiV Healthcare, www.viivhealthcare.com/what-we-do/we-research-and-develop-new-hiv-medicines.aspx.

12 Katz, Celeste. “Watchdog Group Sues Trump Administration for Details on Drug Lobby’s Role in Prescription Pricing.” Newsweek, 13 Oct. 2017, www.newsweek.com/drug-companies-pharmaceuticals-drug-pricing-trump-administration-omb-lobbyists-685002.

13 Mukherjee, Sy. “Trump, Who Trashes Drug Makers, Just Picked an Industry Vet to Run U.S. Health Care.” Fortune, 13 Nov. 2017, fortune.com/2017/11/13/trump-alex-azar-hhs-eli-lilly/.

14 Mars, M., and R. E. Scott. “Global E-Health Policy: A Work In Progress.” Health Affairs, vol. 29, no. 2, Jan. 2010, pp. 237–243., doi:10.1377/hlthaff.2009.0945.

15 Blinder, Alan S. “Offshoring: The Next Industrial Revolution?” Foreign Affairs. Council on Foreign Relations. http://www.jstor.org/stable/20031915

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8 thoughts on “Isolationism, the Antithesis of Innovation

  1. I had no idea that these major drug companies were collaborating on public health issues! While isolationist movements most definitely jeopardize multinational collaboration like this, the fact that the private sector has been able to enter into joint ventures such as ViiV gives me a lot of hope looking forward as to what’s possible when the private sector looks beyond balance sheets and towards public good.

    When I think of how ViiV could overcome the challenges posed by increasing numbers of isolationist movements, I wonder if they’ve considered bypassing borders all together via technology. Would remote collaboration allow these initiatives to continue without the need to actually cross borders or move offshore? Perhaps AI will help to solve for cross-national teams and they would be wise to consider exploring alternative communication and collaboration platforms.

    It seems like ViiV is already flexing some of its composite companies’ (enormous!) lobbying muscles, but I wonder if they could do so even more – not only to help influence U.S. policies but also to pressure international governments. Have they considered moving operations (or at least threatening to move operations!) to places with more lenient immigration policies?

    On an aside, I am also curious to know if Viiv – and its composite companies – should more publicly acknowledge the work they’re doing together. The pharmaceutical industry in the U.S. gets such a price-gauging bad wrap. Do you think putting a spotlight on this work would not only help to assuage the left who often see “big pharma” in its worst light, but also could help to foster bi-partisan support for their work?

    Also: I would love to know more about Alan Blinders’s “Third Industrial Revolution” – I wasn’t familiar with this prior to a quick Google search!

  2. I love that you did a post on this topic. Really enjoyed reading your piece, and not just because I’ve worked in this space and its thus near and dear to my heart 🙂

    Viiv is a super interesting organization and an exciting model for how private sector companies can join together in addressing global health challenges. Viiv definitely leaning into innovation and the digital space. They’ve recently started a Viiv innovation unit called the “hive” that uses design thinking sprints (think Ideo-esque approach) to solve problems along the value chain for HIV service delivery. While some of these might be more focused engagement with HIV populations, improving adherence, and other customer focused areas, I imagine some projects are also focused on supply chain improvements.

    I wouldn’t really consider CHAI a philanthropy. Gates Foundation (for example) is a philanthropy that has funded a lot of work in the HIV. While CHAI may accept direct donations, my vague understanding is that most of its work (which includes doing a lot of work partnering with business and governments to help build more efficient supply chains) is almost entirely funded by large grants from philanthropies (like an organization like Gates) and aid organizations from countries around the world.

    The point you make about Trump reducing PEPFAR funding is a serious problem but I think one that did not come as unexpected to the HIV community. Globally what tends to happen is that funding for diseases tends to plummet as soon as incidence rates flattens or starts to decrease. There is a sense that “we’ve conquered” a certain challenge and so aid and philanthropy dollars move onto other issues (which is often premature…but that’s a whole other discussion). HIV incidence peaked back in 2010 and since they my understand is global funding has started to fall. It makes sense that eventually PEPFAR would wind down as the name suggests it was an “Emergency” fund for AIDs relief. HIV is now really a chronic condition (people can live nearly full lives on HIV treatment) and the biggest challenge I see facing the world is how to integrate it effectively into health systems as a chronic disease management and not be treated in a silo. Additionally, with so many millions of people now on HIV treatment, ensuring adherence and thus preventing the development of drug resistance is essential. The big challenge I see how governments are going to build sustainable supply chains (operationally and financially). While the international emergency funding push was essential to address HIV/AIDS at the time, the large amount of aid and philanthropy dollars built a dependence in countries with the largest HIV burden on that aid funding. So while I think its good that PEPFAR is winding down I worry that it might happen too suddenly and leave the in country supply chains struggling to manage on their own without direct aid funding and aid-funded organizations/nonprofits there to help them.

    Your piece reminded me of a recent news article I saw that the companies developing the Ebola vaccine were set to miss the deadline for FDA submission. Ebola is another condition like HIV that threatens global health but is currently concentrated in developing countries. I wonder the extent to which Trumps isolationist / nationalist policies has contributed to this. I don’t know much about the Ebola vaccine development but I imagine the U.S. might have been both a large funder of research and the likely primary buyer of the vaccine (through CDC, or USAID) and Trump may be changing that unfortunately. Luckily there are still many other governments around the world with development/aid organizations committed to furthering global health. So it is not a lost cause!

    Would love to discuss further and get your thoughts!

  3. Really interesting piece – thanks for writing it! In response to the questions you pose, I think that the question for Viiv and many private organizations is not what responsibility they have towards speaking out on and influencing public policy but how to best do it. The magnitude of the impact of protectionist policies on multinational organizations is too large for them to not be involved. As a piece entitled “The Retreat of Globalization” in the Wall Street Journal Asia noted, globalization has led to a world-wide surge in economic production for the past 3 decades. Perhaps even more importantly for a company like Viiv, globalization has brought hundreds of millions of people out of poverty and this collaboration is just one example of how connecting, ideas, people, and resources across borders can unlock so much potential.

    In terms of “how” to influence public policy, Viiv needs to look at who the most important decision-makers and speak to them in their own language through as many mediums as possible. This is a tactic that Bill and Melinda have been employing for the past several years as they worry about the impact of foreign cuts on international development. For example, in a March opinion article for Time, Bill argued that foreign aid helps make America safer – a message intended to appeal to even those with traditionally nationalistic tendencies. He also published a piece in the Guardian in September of this year making the argument that even a giant philanthropic organization like the Gates Foundation can’t plug the gaps created by foreign aid cuts and that this aid is critical to global security and stability. This was a message meant to take away politicians’ excuse that the responsibility should fall on other global players and to resonate with those in Europe who live next door to some of these “less stable” neighbors.

  4. Private sector companies have the responsibility to influence any public policy decisions that affect that companies triple bottom line. In the case of ViiV Healthcare, there is both a social and financial responsibility to promote globalization. As noted in the post, information flow across borders is critical to solving problems related to complex diseases. Isolationism limits information flow such as research and development, resulting in significant social consequences. Isolationism also prevents the best talent from flowing across borders to solve tough, “border-less” challenges, further suppressing innovation in this space. Financially, suppressing innovation translates to delaying or missing out on the next breakthrough drug, which could impact the financial bottom line substantially. When public policy has such potential consequences such as those described above, it is the companies obligation to do everything in its power to influence public policy decisions.

  5. Really interesting topic and piece! The fact that these companies collaborated to form Viiv gives me hope that they could overcome policy headwinds from the current US administration. It is rare to see competitive private firms bind together and dedicate significant resources to a common goal that could have significant economic consequences down the road. They have demonstrated a commitment to innovation and to eradicating a horrible disease; these efforts should not be suppressed by isolationist policies. I understand how isolationist policies may limit the flow of human capital, but I am a bit confused as to how information flow would be slowed…

    At the end of the day, I do trust that these firms have well established lobbying channels and should be able to continue carrying out this humanitarian mission

  6. Really interesting article; thank you for sharing! It is so ironic that something so universal as human health, in which disease can flow from one individual to another across countries and continents, now has people attempting to impose boundaries on it through isolationist measures. It is especially sad that advancement in a field in which more minds and collaboration are perhaps most important is being limited by intangible, man-made obstacles such as government policies. The article also reminded me of the role of bioethics in healthcare and research. Statements such as “the US has done more than its fair share” raise the question of whether nationalistic policies targeted at healthcare suggest that certain lives are valued more than others, when they should be valued equally. The key decision makers in this field and in government need to step back and think about what the true incentives are behind a nationalistic policy limiting knowledge sharing. In the end, everyone stands to lose from limited knowledge sharing because of the fluid nature of disease.

  7. Thanks for this very interesting analysis on a meaningful topic. To your question, I do believe that private corporations should feel a responsibility to assist in managing global health issues. Even outside of the clear social benefits, it is in their profit motivations to do so. We are living in a rapidly globalizing world and economy (this trend continues in general despite the recent isolationist policies of certain western countries). The success of even national or regional companies will be inextricably linked to managing and optimizing a global talent pool and in engaging with foreign markets (both with suppliers and customers). While isolationist policies clearly serve a detriment to such business needs, global health threats pose risks to companies ability to manage talent and partnerships in a similar vein.

    I think that individuals and private companies will need to think about how we can engender the underlying factors or practices that fuel global health advancements despite the political realities of isolationist policies and underfunding. What are the economic synergies derived from collaboration and how we can allow those synergies to incentivize collaboration in other ways (whether in terms of business partnerships or knowledge transfer) despite regulations that mitigate them? I believe that the solutions will come from interested parties who are able to identify these continued synergies and communicate their merit effectively to a broader ecosystem.

  8. Thank you for highlighting such an important topic! Like ABW said in the comment above, I had not realized that these large pharma companies had joined forces on fighting HIV, and I find this collaboration really encouraging. The question you pose on the “responsibility” of private companies to influence public policy is an interesting one – I have typically taken a more cynical view on this question. I would argue that private companies’ involvement in public policy is more often driven by a profit motive, as in the case of tobacco lobbyists and ongoing fights on whether the tobacco industry will be required to cut nicotine levels in cigarettes (https://www.bloomberg.com/news/articles/2017-08-03/big-tobacco-won-t-let-the-fda-cut-nicotine-without-a-fight). Fortunately in the case of ViiV Healthcare, even if the major pharma companies backing its HIV-related efforts are driven by a profit motive, the end results should have a positive net impact on society.

    But to answer your second question, what worries me about the ViiV Healthcare’s ability to shape public policy is that none of these major organizations seem particularly focused on fighting for it, based on your point that their reaction to taxes has been “muted.” My concern is that ViiV Healthcare is a smaller organization with multiple stakeholders and backers that are being pulled in many directions. This shared responsibility may ultimately dilute the degree of individual responsibility or urgency that each of these funders may feel toward ViiV Healthcare, which could ultimately lead to a stagnation in progress in the face of isolationist policies. In response, ViiV Healthcare should aim to develop its own dedicated lobbying efforts and greater presence in the UN, to increase its defensibility.

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