If you read one book this year about the economics of health, Pharmanomics by Nick Dearden should be it. The Director of Global Justice unpicks the way Big Pharma does business and rips us all off. This may not be unique in a capitalist society, but in the health sector, it costs countless lives.
The COVID pandemic started to open the eyes of governments to this particularly rapacious form of capitalism. As Nick puts it, ‘They got to dictate who lived and who died in the most serious public health emergency in living memory.’ They prolonged the pandemic and entrenched global inequality for a generation with a vaccine that was invented mainly using public money. Corporations like Pfizer, Johnson & Johnson and Moderna – used taxpayer support to get the vaccines that bear their names ready. Then, they privatised the know-how behind these vital medicines and refused to share it with the many countries that could have joined the global manufacturing effort. Even AstraZeneca, whose Oxford vaccine was almost entirely funded by the public purse, turned what should have been a 'People's Vaccine' with an open license into an exclusive license, which prioritised rich countries. A practice they had undertaken before when they closed down early research into tuberculosis and malaria in favour of drugs for diseases affecting richer countries.
This book shows, page after page, how Big Pharma has been doing this for years. The patent system that underpins their profits delivers returns that manufacturing companies can only dream about. In the 1990s, Big Pharma discovered that their most significant asset wasn't research and development but intellectual property. So they lobbied in the USA and fought court battles to extend their patents and keep their data secret. This culminated in a trade deal known as TRIPS that enforced monopoly protection everywhere - described by one journalist as ‘a brute and profoundly undemocratic expression of concentrated corporate power.’ It is now a core part of the World Trade Organisation rules.
Examples include OxyContin, the drug behind the opioid addiction epidemic that has probably killed more than 300,000 people. You can watch how they encouraged overprescribing in the Netflix miniseries Painkiller. The drug generated $35bn for the company Purdue. They are now using the same discredited tactics to market opioids in China and other countries.
We are often told that these profits are essential to develop new drugs. However, Big Pharma does very little research into new medicines. They spend between five and eleven times more on advertising than on research. The drug is created by smaller companies, often funded by the public sector, and then bought out by a big drug company for the patents. They close down competitors and make small changes to drugs to extend patents. They are also one of the most financialised industries in our heavily financialised economy – stashing cash in tax havens to buy up companies and enrich shareholders. Medicine costs are entirely unrelated to research costs; they are hard-wired into the financialisation of the industry. As a Congressional investigator put it, 'The big Pharma fairy tale is one of ground-breaking R&D that justifies astronomical prices, but the pharma reality is that you spend most of your company's money for yourself and your shareholders.'
When you read the techniques that these companies use, it could drive you to despair. However, that is not the author's intent. He wants to open our minds to the possibility of change. We created the NHS, so why not the medicines they administer? 'If our healthcare is too important to be left to the market, then that must include the research and development of the medicines that keep us well.' It would save the NHS billions in the inflated costs that drain NHS funds. The purchasing power of the NHS has resulted in some small progress in regulating costs compared to the USA. Needless to say, the drug companies are a big part of the lobby trying to privatise UK healthcare.
Governments need to stop being embarrassed about their role in the economy. There is a long list of technologies invented in the public sector whose ownership is transferred to the private sector and then rented back to us at enormous cost. We also need to reform the patent system to be shorter and more narrowly drawn. The pandemic and the profiteering of Big Pharma should be a wake-up call for governments in the Global North as much as it has been for the Global South. We should pressure governments to change.
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