CHARLIE MUNGER—who along with Warren Buffett turned a failing textile company called Berkshire Hathaway into one of the United States’ largest corporations—once gave a speech at Harvard University where he talked about how humans mislead and get misled. One of the elements in it was the power of incentives leading to bad outcomes. He cited the example of Xerox, which had a great new machine that was actually selling less than its old outdated one. The company found a simple answer—its salesmen were getting better commissions on the old one. In the speech Munger also pointed to the bias caused by incentives, noting, “It’s present in every profession and in every human being. And it causes perfectly terrible behaviour. If you take sales presentations and brokers of commercial real estate… I’m 70 years old, I’ve never seen one I thought was even within hailing distance of objective truth.”
This might be tolerable in most fields but in some areas it is more than problematic. The medical profession is among them. The Times of India on 6 July had a report which said that the pharma company GlaxoSmithKline had a new ethical marketing code by which it won’t set target-linked incentives for its sales force. A company executive was also quoted as saying that direct payments to doctors would be stopped for speaking engagements. This is a principled policy and hopefully the rest of the pharma industry will follow suit. Making people buy medicines through pliant medical practitioners means that it is neither the illness nor economic status of the patient that decides the prescription, but the degree of benefit for the doctor.
If the pharma industry is correcting itself, it also raises the question of what the other party in the transaction, the doctors, are doing about ethics. When hospitals appraise doctors by the number of surgeries they do, they always have the choice of either taking a pay cut or slicing open a human being’s body pointlessly. A doctor who chooses the latter is no better than a criminal. And yet this is the standard practice in many hospitals. For a neurosurgeon, one more brain surgery seems ordinary, but to the patient it is a different story. In India, the problem is compounded because most doctors just refuse to entertain questions by patients. They have to either take it or leave it, relying on nothing more than trust.
Last week, Open ran a story on how radiologists are so extremely monitored by the government when it comes to screening of babies in the womb for their gender that even inadvertent mistakes are punished like a crime. Following that yardstick for the entire medical profession might be too much, but there is a healthy mean where oversight evokes enough fear to bring greed under control. If a profession has given up on its self-respect, then it is time for others also to stop looking at them like gods.