The Innovation Story: Profits, Prices, and Legitimacy in the Pharmaceutical Market
One important way that organizations gain legitimacy is through storytelling (Lounsbury and Glynn 2001), where organizations narrate goals in ways that align with cultural and symbolic systems of meaning to gain social approval. However, while this body of scholarship illustrates how organizations use stories to gain legitimacy, it lacks a specific theoretical account of how these stories may lose their legitimating power. This paper addresses this theoretical gap by examining how rhetorical legitimacy changes with the moral value of the industry. Specifically, I advance a theoretical framework of de-legitimacy that shows the stickiness of resonant stories and shows that de-legitimation is tied not to the loss of the stories’ prevalence, but rather to the erosion of the faith in the content of the stories. My analysis demonstrates that legitimizing stories for morally contentious commodities, like prescription drugs, require morally balanced narratives.
I base my argument on a qualitative content analysis of 83 Congressional hearings transcripts on prescription drug pricing from 1959-2019. I investigate two related questions: (1) How are pharmaceutical companies’ stories about prices legitimated or rejected by Congressional members over time? (2) How are prescription drug prices justified and profits moralized in the face of uneasy public sentiment about the commodification of health and illness? My argument is informed by theories in economic sociology about valuation and moralized markets. As such, my analysis foregrounds how cultural beliefs about profits and medicine factor into valuation processes, above and beyond factors such as economic calculations and organizational context.
My analysis shows that, during the 1950s and 1960s, pharmaceutical companies presented an argument about innovation that balances profits with promises of future innovation. This moralizing narrative, which I call the innovation story, is premised on the idea that successful pharmaceutical companies will fuel the invention of novel treatments that will benefit American patients. I find that narratives connecting high profits to future innovation are particularly compelling to Congressional members because they help resolve the moral tensions stemming from the commodification of prescription medication. However, during the second half of the 20th Century, Congressional members struggled to justify their support for the pharmaceutical industry as its profits began to skyrocket in the early 2000s and Americans were overwhelmed by the costs of essential medications, like new cancer therapies and PrEP to protect against exposure to HIV/AIDS. To compensate for this imbalance, Congressional members drew on other moral justifications to help prop-up the innovation story and account for an affordability crisis for American patients. These included ensuring the highest standard of safety, protecting the nation from socialism, and the need to uphold American exceptionalism in the pursuit of medical knowledge. Ultimately, most recent evidence suggests that both conservative and liberal Congressional members abandoned the innovation story and leverage it against pharmaceutical companies.
Altogether, my findings demonstrate the theoretical purchase of investigating moral legitimacy as a balancing act. I interrogate the power and limits of storytelling in the construction of legitimacy. Organizations need more than material resources to survive; they also need social approval from their audiences. Legitimacy is fundamentally a dynamic collective process where organizations must match their practices to the values, norms, and beliefs of their social context (Johnson, Dowd, and Ridgeway 2008). Whereas extensive scholarship has demonstrated the importance of storytelling for organizations in gaining legitimacy, I use the case of the pharmaceutical industry to demonstrate the role that these same stories play in the loss of legitimacy. Ultimately, my analysis demonstrates the stickiness of resonant narratives and demonstrates how the process of de-legitimation is tied not to the loss of the stories’ prevalence, but the erosion of faith in the content of the stories.
Johnson, Cathryn, Timothy J. Dowd, and Cecilia L. Ridgeway. 2006. “Legitimacy as a Social Process.” Annual Review of Sociology 32(1):53–78.
Lounsbury, Michael and Mary Ann Glynn. 2001. “Cultural Entrepreneurship: Stories, Legitimacy, and the Acquisition of Resources.” Strategic Management Journal 22(67):545–64
My goal in this paper is more ontological than epistemological. I am curious not just whether we can use the same analytical tools to explain the classification of wine and the classification of illnesses, but whether these classifications are actually related to each other. Do states that enumerate people through census categories in a certain way do the same when calculating national economic figures? Do doctors’ typologies of their patients tell us something about the diagnostic categories they will apply to the diseases inside them? I suggest that the answer is yes: that societies can, in part, be classified by the classes of classifications they apply and how they do so. I advance this claim through a theory of “national repertoires of classification.”
A renewed classification of societies based on their classification systems returns to an older strand of sociological thinking that reaches back to Durkheim and Mauss (1967:7), who wrote in 1903 that in a given society “the classification of things reproduces [the] classification of men.” I take as my direct starting point Fourcade’s (2016) more recent claim that there are three main “principles” of classification: cardinal (quantitative counts), nominal (discontinuous groupings), and ordinal (continuous rankings). I disaggregate these broad principles into different features of a classificatory “repertoire”: who is legitimately able to classify, how they are expected to do it, what kind of categories they use, and why classification is socially useful. It is not just horizontal linkages between them that make it such that “although it is possible to pull out a single classification scheme…in reality none of them stands alone” (Bowker and Star 1999:38). There are also meta-level principles that underpin seemingly unrelated classification systems.
While we can see all three principles of classification in operation through societies and across historical periods, certain repertoires predominate in certain places and times. I suggest that there is a distinctive repertoire of classification at work in categorizing people, things, and ideas in France and the United States. I start with the what of classification, using the classification of wine. In the U.S., these goods are evaluated based on an point scale and in France on incommensurable “terroirs,” or unique combinations of land, practices, and history (Zhao 2005). This suggests the predominance of ordinal categories in the former and nominal ones in the latter. The classification of the idea of “nature” shows differences when it comes to the how of classification. Here, Americans have quickly embraced tools of economic commensuration and calculation, while the French have resisted formalized mechanisms of quantification that allow for ordinal comparison (Fourcade 2011).
I then show this repertoire as it operates in a completely different domain: the classification of people, in this case, people with mental illness. French clinicians have embraced a rigid set of nominal typologies that divides between “real malades [mentally ill]” and everyone else, emphasizing autonomous professional judgments in discerning between them (also visible in evaluations of intelligence – see Carson (2007)). The who of classification in the U.S. places much less emphasis on expertise, with clinicians accepting both peoples’ self-categorization and the results of ordinal scales and measures in locating people along a continuum of mental health (see, also, Porter 1996). The why also diverges. French policymakers and professionals fearing that classification is productive, and that mis-identifying people as mentally ill might actually make them so. For Americans, classification is a purely descriptive antecedent to intervention. The American approach makes sense when seen as part of a repertoire focused on bringing as many elements as possible into a single, inclusive ordinal scale—not so different from new credit scoring schemes (see Fourcade and Healy (2013)).
Where do these different repertories come from? I argue that they result from distinctive resolutions of the tension between capitalism and liberal democracy. If capitalism rests on an essentially cardinal logic of accumulation, the French have sought to wall off certain kinds of difference into incommensurable nominal groupings, while Americans have sought to create a fluid movement up and down an ordinal scale of merit and success. These approaches to human difference then spill into other domains precisely because a “repertoire” of classification in one domain represents a transposable and cognitively parsimonious way of addressing challenges in other, less central social domains. The exceptions to the patterns I describe, like the U.S.’s rigid racial caste system or France’s system of concour exams which produces ordinal rankings, are also the glaring exceptions to these resolutions themselves.
My hope is that this approach can help cultural sociologists out of a current impasse in comparative studies. As Bonikowski (2017:148) notes, while critiques of “national cultures”—the idea that societies differ in terms of a stable set of norms and values—“have been persuasive, their unintended consequence has been the abandonment of country-level comparisons.” The notion of a classificatory “repertoire” suggests—consistent with Bourdieu’s (1990) notion of habitus—that people in a given society have a distinctive “toolkit” for classifying and comprehending new problems (Lamont and Moody 2000), one which is flexible yet surprisingly coherent in how it is used to make order out of a disorderly world.
In this paper we set out to develop a sociological theorization of autonomy by asking how people interpret themselves and others as autonomous. To do so we draw on a cross-study comparison of two ethnographies with populations for whom autonomy is both central and problematic. One ethnography focuses on a post-acute care unit that works to recuperate elderly adults who are experiencing new forms of impairment after a hospitalization. The other is an ethnography of disabled young adults who are “learning” autonomy at an independent living program.
We find that in their everyday work, staff at both field sites evaluate their clients’ actions and practical capabilities against institutional benchmarks as well as interpretations of their clients’ imagined pasts and futures. Important differences emerge between the temporal projects of enhancing autonomy at the organizations we studied. At the independent living program, the question of who clients could be if afforded the opportunity to flourish loomed large and demanded that the future (the horizon of autonomy) be kept open. At the post-acute care unit, the yardstick of autonomy depended on who the clients were in the near and distant past. Making the elderly “independent” required clients and staff to construct a present social identity that was consistent with their imagined past autonomy.
By leveraging this contrast, we claim that people “do” autonomy by constantly measuring their momentary, present actions against their past and future selves. We thus tap into a growing body of literature that highlights the centrality of temporality for understanding how individuals act and interact. By drawing on shared knowledge of the past and common expectations for the future, actors construct a joint interpretation of the present which they use to inform their interactions (Bourdieu 1997; Patrick 2018; Tavory 2009; Tavory and Eliasoph 2013). We take up these sociological insights to theorize the interactional process of constructing autonomy as one in which dependence is defined as momentary, and thus appropriate, as long as it can be situated within a long-term project of becoming autonomous. In theorizing this process, we claim
that individuals are never fully (in)dependent. However, the elusive temporality of autonomy enables subjects to be seen as autonomous even when their isolated actions look like dependence.
Theorizing autonomy as a temporally situated phenomenon allows us to go beyond the philosophical debates about what autonomy is, in order to better understand how it motivates action. We contribute to feminist and critical analyses of the neoliberal project of cultivating autonomous subjects (Gong 2017; Haney 2010; Mason 2016; Wacquant 2009), by showing that to uphold the fiction of autonomy it is crucial to obscure moments of dependency as transitory. Placing our empirical cases in conversation, we are able to show that autonomy depends on situating dependency not only somewhere, in relation to people andt hings, but sometime, according to imagined pasts and future goals. This approach enables us to see more clearly how all of us engage in the constant business of “doing” autonomy, and to better understand the role of institutions (from schools to corporations) in producing autonomous selves.
Bourdieu, Pierre. 1997. Pascalian Meditations. Stanford, CA: Stanford University Press.
Gong, Neil. 2017. “‘That Proves You Mad, Because You Know It Not’: Impaired Insight and the Dilemma of Governing Psychiatric Patients as Legal Subjects.” Theory and Society 46(3):201–28.
Haney, Lynne. 2010. Offending Women: Power, Punishment, and the Regulation of Desire. University of California Press.
Mason, Katherine. 2016. “Responsible Bodies: Self-Care and State Power in the U.S. Women, Infants, and Children Program.” Social Politics: International Studies in Gender, State & Society 23(1):70–93.
Patrick, Mary. 2018. “Gift Exchange or Quid pro Quo? Temporality, Ambiguity, and Stigma in Interactions between Pedestrians and Service-Providing Panhandlers.” Theory and Society 47(4):487–509.
Tavory, Iddo. 2009. “The Structure of Flirtation: On the Construction of Interactional Ambiguity.” Studies in Symbolic Interaction 59–74.
Tavory, Iddo and Nina Eliasoph. 2013. “Coordinating Futures: Toward a Theory of Anticipation.” American Journal of Sociology 118(4):908–42.
Wacquant, Loïc. 2009. Punishing the Poor: The Neoliberal Government of Social Insecurity. Edited by J. Adams and G. Steinmetz. Duke University Press.