I recently heard a bunch of Doctors and Nurses where I work complaining about "obscene profits" of the oil industry.  Before long, the topic turned to something they all knew (a little) more about: pharmaceuticals.

It was repeatedly assumed that these big evil companies were taking advantage of the poor by not selling their life saving products at cheaper rates. They professed that the companies should act more altruistically and be more compassionate.

And here I thought Docs were supposed to be smart...

To ask if medical technology companies perform their research and development for profit or medical science is a leading question. It presumes that medical companies should forego the prospect of a profit and altruistically spend billions of dollars to make the world a better place.

Of course it is for a profit, because otherwise they have no positive income stream to continue developing and creating new technologies. If they were merely performing research for medical science's sake, then before long they would be bankrupt from misplaced dollars and lack of investment capital. The question is really a leading question that implicates medical technology companies as "evil corporations," the common bad guy these days.

Will drug companies spend millions of dollars to research new drugs if they can't sell them afterwards? Will technological companies develop more accurate scanning and medical technology if no one will pay to use it? Would pharmaceutical companies spend billions on research if there were no prospect of profit?

No.

Its called the profit motive. And before discounting it, remember that if you have a job, you understand and follow the profit motive every time you work, and every time you spend a dollar.

But to seek to make a profit doesn't make the company evil. In fact, one could say that it is the most service they can render. The only way to turn a profit is to provide a service or technology that people value enough to pay for. If they can provide this service, they have not only made a profit, but they have helped others at the same time.

Consider some of the more modern scanning technologies. A recent product has been developed to allow direct visualization of veins beneath the skin. It makes for more successful IV insertions in small infants. It costs about $25,000. Is the company being evil to charge that much? What if it was your child's life the IV would save? Wouldn't it be worth it then? There are those who say that the company is exploiting others to charge such a high rate, but if there were no profit motive, the product wouldn't have been developed in the first place. No investors would have given the millions required to produce it, and no lives would have been saved.

The same can be said of Xray machines, CT scanners, MRI, PET scans, etc. Anytime a company can find something that may be profitable, they will do their best to develop it to perfection. And unless it can actually help save lives, the health care industry won't pay for it. Profit is a direct consequence of useful technology.

The way service in the free market works can be used by analogy. Imagine a market with no money, but where everyone gets what they need based on their service to others. If you serve your neighbor, you are entitled to food, clothing, entertainment, etc... Naturally, you would want to serve as many of your fellowmen as possible. Consider dollar bills as "service notes." If you go to the store, you will ask the grocer for some food. The grocer will ask if you have served anyone. You say yes. He asks for proof. You show him the service notes you got after helping your neighbor cut his lawn. The grocer then gives you the food and takes your service notes for providing you with food. He will then give them to another person, say, the plumber who provides service by coming to his house and fixing his running toilet. The plumber now has the notes and so on and so on...

That is how the free market operates. Each person acting in his own interest will be compelled to help others along the way by providing a product or service that the other person considers more important than the money they hold.

As with individuals, so with large companies. They develop technology for profit, yes. But in doing so they inevitably help their fellow man and promote the advance of science.

Think about that next time you take a prescription or have a procedure done. It just may save your life...