Publicly traded companies, for better or worse, have legal obligations to their shareholders.

If a publicly traded pharmaceutical company could make more profit for their shareholders by selling a treatment for a disease, instead of releasing a cure they discovered, would they be legally obligated to not make the cure available to the public?

  • This is how cancer treatments operate. Commented Nov 30, 2020 at 0:50

2 Answers 2


Not as you phrase it. There's no legal obligation to act in a certain way, or to make money for them, even. For example the company could make a product with a cheaper supplier (thus getting a bigger profit) but prefer not to pursue it to support the local economy, be greener, or just that their current supplier is part of their own group, so they want money to go there (there are also other reasons that could be business-oriented, such as the reliability of the provider).

In fact, the shareholders themselves usually can't order the company to do something directly. They do that indirectly by changing the CEO if needed.

Now, what could happen is:

  • Company discovers (potential) cure for a disease

  • Someone does the math and considers its better to stick to their traditional and to forget about that discovery. Maybe not for disease cures, but there are plenty of stories where a big company had an early ace on a new technology and did not pursue it, to their failure.

  • The pharmaceutical does not tell anyone they have a cure for the disease. Moreover, since they stopped investigation on that product, they are not even sure if it'd be safe. So they could deny even having such cure, as they didn't perform all the testing that would be required.

  • The world continues to suffer the disease.

As a brighter point, though. They could probably patent the cure (so they are the only ones able to produce it) and sell it for an exorbitant amount, thus dwarfing that evil incentive.


would they be legally obligated to not make the cure available to the public?

Your question is somewhat unclear. Obligated by whom? Why would the company want to release the cure when treatment is more profitable?

Regardless, the company's bylaws would determine shareholders' role on business decision-making and/or their ability to influence it. If for some odd reason the company intends to release the cure and the bylaws entitle shareholders to prevent the company from doing so, then the company can be obligated not to make the cure available to the public.

Other than that, it would be against public policy for authorities or third parties (subject to contractual constraints with those parties) to prohibit the company from choosing what is best for the common good, such as releasing a validated cure in lieu of temporary and more expensive alternatives.

  • 2
    I think the OP believes there is a legal obligation to the shareholders to maximize profits and the management's hands are tied. Not true, in general, of course. Commented Oct 30, 2020 at 21:21
  • @GeorgeWhite This part of what you wrote is spot on: "I think the OP believes there is a legal obligation to the shareholders to maximize profits". It likely is worthy of another question (which I will have to think about how to best pose), as I appear to be largely mistaken. The other part, "the management's hands are tied", isn't what I was thinking, however. Often management is just as greedy as the shareholders. Commented Oct 31, 2020 at 21:05

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