Patents before profits. That soundbite snagged my ears and turned my full attention to the CNN business report. I recognized the voice and the face-Ray Gilmartin, chairman of Merck. Calmly and reasonably, he explained how extraordinary circumstances in the developing world demand that his company uncouple the normally fused objectives of high profitability and unwavering patent protection.

Barely before the ink dried on our March issue, with its critique of industry pricing in the editorial "Surrounded" and elsewhere, Merck offered to provide its HIV medicines to developing nations at cost. It held forth only one, though problematic, proviso: countries must set up a "mechanism" for preventing parallel import of the Merck brands. As long as Merck can protect its intellectual property, it will sell the products there at zero profit.

Its action forced other companies to respond. Bristol-Myers Squibb and Boehringer Ingelheim soon declared their own at-cost programs. GlaxoSmithkline will almost certainly follow suit. How far the reaction will spread before our April press time is anybody’s guess. And plenty of guessers abound.

On one hand, hardened industry critics will see no good in the action; they will insist that pharma companies always do only the minimum required to cover their own behinds. On the other hand, industry boosters may believe Merck is giving the store away and that, in the end, industry patents and profits will suffer. Some even envision companies closing shop and leaving the business entirely if those innovation motivators fall prey to the "access activists," who probably won’t be happy until all medicines are universally free.

Still adding to the irritation around industry pricing is the public relations disaster of the Capetown 40-a collection of large pharma companies suing the South African government to prevent the import of "pirated" HIV products. You can argue the legal merits of this case until the cows come home, but it won’t change the smell in the air. Whatever paltry gain the Capetown 40 win from this folly, it will never equal the value they lost by damaging the industry’s image around the world.

Pharmaceutical executives naturally wax defensive when confronted with such opposition. But only cold business sense will clarify their predicament. Most people would probably never question the industry’s right to patents if they believed companies treated those patents as sacred trusts. Once people come to perceive companies as malign exploiters of intellectual property, their questions will never end. Damaging the industry’s image thus harms the basis of the business itself.

Gilmartin’s words had a liberated quality. Yes, they could represent a dangerous swerve from past industry practices-even open a Pandora’s Box of price depression and patent intrusion. Yet the industry is now surrounded by its pricing critics, and Merck’s action may open the only way out of the critical circle.

Still, as companies adjust their pricing for developing nations, they will inevitably have to temper their profits in the developed world. Moreover, they will have to exercise greater care and flexibility in how they defend their patents across all borders.