Big Pharma’s Finest Hour?
IN FOCUS, 11 Jan 2021
The roll-out of COVID vaccines gives much-needed hope. But without fundamental reform of the drug industry, inequality and mistrust will cost lives both nationally and globally.
9 Jan 2021 – If there’s one thing keeping us going through this dark and difficult January, it is surely this: the end is in sight, a vaccine is here. While many of us in Britain are in a state of deep despair at the incompetence of our government, the speed and ingenuity of those who have researched and developed the vaccines is something to applaud.For many of the corporations researching these vaccines, the virus has created an opportunity which cannot only be measured in soaring share price or anticipated profits. Rather, they are looking to the virus to rejuvenate the public image of this most unloved of business sectors. Many commentators have looked at the work of these companies in 2020 and concluded that, whatever the problems with ‘Big Pharma’, they have ‘delivered the goods’.
So, do we have a win-win? A vaccine which can, soon, allow us to return to a degree of normality, and a business sector that has reconciled the need for a financial return with ‘doing the right thing’ by humanity?
Sadly, this is to miss important elements of the story which, when taken together show that the current pharmaceutical model is deeply flawed, and driven by the need to deliver sky-high returns to shareholders, not a more healthy population.
While we here in Britain might be able to look forward to widespread vaccination this year, many other countries which face situations at least as bad as ours have no such hope. The reason for this can be found in the highly financialised Big Pharma industry, which lives off decades-long monopolies and a business model which treats the development of new and useful medicines as an after-thought at best.
If we don’t counter the Big Pharma model now, coronavirus will continue to spread in many parts of the world, exacerbating global inequality and potentially allowing the disease to further mutate in ways that will threaten our own health in the future too.
A vaccine for those who can afford it
Rich nations, representing just 14% of the world’s population, have bought up 53% of all the most promising COVID-19 vaccines so far. Nearly 70 lower income countries will only be able to vaccinate one in ten people next year, on current projections, whilst western countries will have many times the vaccines they require for their whole population. Of the two leading vaccines to date, Pfizer pre-sold over 82% of the doses it can produce by the end of next year to rich countries, while for Moderna the figure was 78%.
This isn’t justified, as some suggest, by the fact that the rich have more vulnerable people. In fact, research suggests that by hoarding the vaccine, rich countries will massively increase global death rates. While we might be able to avert 61% of deaths from coronavirus if vaccines were distributed fairly across the globe, the number falls to 31% of lives saved if rich countries take most of the early vaccines. That’s a lot of lives.
In fact, we are all at more risk when rich countries hoard vaccines, because allowing the disease to continue unchecked across parts of the world increases the risk of further mutated, potentially drug resistant strains returning to haunt us in the future.
The iniquity gets worse. Bear in mind that the vaccines we have developed have been made with vast sums of public money. In some cases, like Moderna’s vaccine, it was made pretty much entirely with public money. Yet the intellectual property has effectively been privatised. While some companies, like Astra Zeneca, have pledged to limit prices, many have not. Moderna’s vaccine looks set to be the most pricey on the market – with massive profits set to be generated by sales to the very governments which paid for the medicine in the first place.
And the global patent system creates an artificial scarcity around medicines, too. The technical know-how that goes into them is secret, making learning from each other’s research more difficult, and preventing countries from simply producing these vaccines themselves.
This is why India and South Africa are demanding these global rules are suspended at the World Trade Organisation, allowing coronavirus products to be made without fear of legal action. Rich countries including Britain are blocking this proposal, saying patents are no obstacle to producing the medicines we need. But given these countries have bought up most of the medicines that can be produced, this justification looks like rank hypocrisy to poorer countries who have virtually no vaccines heading their way anytime soon.
Far from showing that the current system works, coronavirus has given us plenty more examples of how broken the current system is – and how much better a world we could have if health needs directed our medical research priorities.
While some vaccine scepticism is surely driven pushed by conspiracy theorists online, it seems likely that a portion also relates to the fact that medicines are driven by big businesses that many ordinary people deeply distrust. Contrast this with how people from all walks of life feel about the NHS.
Coronavirus should convince us to push for change. It’s long overdue.
Big Pharma, big money
The pharmaceutical industry is one of the most profitable in the world. Many of the individual corporations that constitute ‘Big Pharma’ enjoy annual revenues well in excess of the majority of countries on the planet. Johnson & Johnson is more wealthy than even rich countries like New Zealand and Hungary. Pfizer’s revenues are bigger than oil-rich Kuwait or Malaysia.
In a recent report from Global Justice Now, the organisation I lead, we looked at the track record of seven corporations hoping to produce vaccines. Six of these giants – excluding Moderna for now, as it currently has no products on the market – made a mind-blowing combined revenue of $266 billion last year, with profits of $46 billion. Consider these figures in comparison with the US’s unprecedented programme of public spending on vaccine development, Operation Warp Speed, which currently stands at around £12 billion – most of which has been handed over to the same rich corporations detailed in our report.
How have these corporations become so wealthy? The monopoly system, embedded in the World Trade Organisation’s TRIPS agreement (The Agreement on Trade-Related Aspects of Intellectual Property Rights), gives the investors of new medicines a 20 year monopoly, during which they can charge pretty much whatever people will pay for their medicines.
But it has failed to incentivise long-term and difficult research – the supposed justification of this system. Rather, the industry continues to rely on massive injections of public money to research necessary drugs, whilst resulting intellectual property is effectively privatised and the monopoly handed to Big Pharma.
Big Pharma then gets on with its real job – making massive profits. That could be through share buybacks and dividend payments to keep stock price high – something which has exceeded research and development budgets in recent years. It could be making meaningless tweaks to current drugs in order to renew patents. It could be lobbying for even greater monopoly privileges in trade deals. It could be buying up small companies doing actual innovative research, so they can sit on their patents. And where research does take place, it is focussed on chronic conditions suffered by patients with money, leaving us without effective cures to diseases suffered by people who can’t afford to buy medicines, and without vitally-needed acute medicines, like new antibiotics, too.
This system is by now hard wired into the thinking of Big Pharma.
Take one small example from Pfizer – amongst the top 30 most profitable corporations in the world last year, with $52 billion in revenue and $16 billion in profits. Back in 2013, Pfizer and its UK distributor Flynn hiked the price of an important anti-epilepsy drug which 48,000 UK patients relied upon, from £2.83 to £67.50 per 100mg pack, before reducing to £54 from May 2014. As a whole, UK wholesalers and pharmacies faced price hikes of 2,300% – 2,600%.
Or another example – Pfizer’s testing of experimental new drugs during a meningitis outbreak in Nigeria, which dogged the corporation for 20 years and was reportedly the inspiration for John Le Carre’s novel The Constant Gardener. Pfizer tested a new drug during a serious meningitis outbreak. But an employee claimed Pfizer’s trial “violated ethical rules”, and in the years that followed, several lawsuits were initiated, in Nigeria and the US, with claims that the parents hadn’t given meaningful consent because they hadn’t realised their children were part of an experimental trial. Ultimately, Pfizer agreed to out of court settlements of $75million with the state of Kano as well as payments of $175,000 to four sets of affected parents. It denies any wrong-doing.
Or take GlaxoSmithKline (GSK) which was, less than 10 years ago, handed a $3 billion fine after it admitted to giving kickbacks to doctors in the US and encouraging the prescription of unsuitable antidepressants to children. Doctors and their spouses were flown to five-star resorts, given $750, and access to snorkelling, golf and deep-sea fishing. The corporation also published an article in a medical journal which misled about the safety of a drug in children, and then used the piece to try to drum up business.
Or Gilead, which has faced extensive criticism for the pricing of its Hepatitis C drug (and possible COVID-19 treatment) Sovaldi, introduced to the US market at $84,000 for a 12 week course. A US Senate committee investigation concluded: “it was always Gilead’s plan to max out revenue, and that accessibility and affordability were pretty much an afterthought.”
Gilead’s next Hepatitis C drug, Harvoni, was priced at $94,500. Following release of these drugs, Gilead’s corporate profits increased fivefold to $21.7 billion with Hep-C drugs generating nearly $62 billion of sales since 2013. Professor Jeffrey Sachs reckons that Gilead may have spent around $300m on research and development (R&D) for the drug, a figure that would be recouped in just a few weeks of US sales of the drug.
Finally, Pfizer and GSK produced a vitally important pneumonia vaccine. While campaigners at Médecins Sans Frontières won some price reductions, they say the reductions are not nearly enough, leaving the vaccine costing “roughly US$9 for each child… in the poorest countries, and as much as $80 per child for middle-income countries”. Campaigners at the humanitarian medical organisation claim: “Pfizer and GSK have earned over $50 billion in sales of the pneumococcal vaccine in the past ten years, with Pfizer winning the lion’s share of these revenues. Today, 55 million children around the world still do not have access to the pneumonia vaccine, largely due to high prices.”
There are many more cases of price hikes, preventing competition, safety concerns, tax dodging, and more, highlighted in our report. And sadly, we can see these problems already at play in the development of coronavirus vaccines and treatments.
In early November 2020, Pfizer made headline news around the world when it announced its vaccine candidate was more than 90% effective.But Pfizer has so far made no promise to limit profits, and pre-sold over 1 billion doses to rich governments.
It gets worse. Pfizer has been outspoken in its desire to maintain patents, and derided attempts to create a patent-free mechanism to pool coronavirus research, with its chief executive Albert Bourla commenting last May that: “At this point in time, I think it’s nonsense, and… it’s also dangerous”. Pfizer’s vaccine is predicted to make $13 billion in 2021.
Moderna’s vaccine is estimated to cost between $64 and $74 per person (two doses) even under it’s cheaper ‘pandemic pricing’. This is despite the fact that $2.5 billion of public money directly contributed to this vaccine. Campaign group Public Citizen claims that in effect this means “taxpayers are paying for 100% of Moderna’s COVID-19 vaccine development. All of it”. The USA has subsequently bought or reserved up to 500 million doses, thought likely to make the company $8 billion.
Moderna’s corporate executives have been criticised for selling huge amount of stock when shares soared after the company announced early positive – though not very detailed – results in May 2020, when stock price rose rapidly. Hours after releasing, two Moderna executives sold off nearly $30 million in automated sale shares while days later, Moderna’s leading shareholder sold 1 million shares, earning $69.5 million. Former Securities and Exchange Commission officials said the events were “highly problematic” and worthy of investigation.
The promising vaccine being developed by Oxford University was to be produced on a non-exclusive, royalty-free basis. The director of Oxford’s Jenner Institute told the media, “I personally don’t believe that in a time of pandemic there should be exclusive licenses.” However, on entering a deal with AstraZeneca, the situation changed. The deal is exclusive and while the company maintains it will not profit, it has failed to release details of its contract and how it calculates research costs.
Imagine a different world
No-one wants to dim what hope we do currently have – with vaccines already being rolled out and within touching distance for many of us. So let’s look at it a different way.
Imagine if the drive of the pharmaceutical corporations for ever greater levels of profit was removed from the equation. Imagine if we could replace cut-throat competition and secrecy with collaboration and openness. Imagine if our research was driven solely by the desire to rid the world of disease and suffering, starting with the most serious and deadly conditions. When combined with our technological know-how, the dedication of our brilliant researchers and the trust which such a model could inspire in the population at large, imagine what we could achieve.
Coronavirus gives us the opportunity to reset the way we produce medicines. To suspend global patent rules, as countries like South Africa and India are demanding, or at least override them bilaterally, or even to adopt an open source agreement on medical research towards coronavirus medicines. These are big ideas, which could potentially transform the way we produce and share medicines way beyond the pandemic. Many of these ideas received political backing from the last Labour leadership, as part of the party’s new approach to medical research, including public research institution free of patents.
In Britain, we keep fighting for a fully public healthcare system which has always generated overwhelming public support and trust since the NHS was founded. But if we take it for granted that our hospital and clinics should be publicly controlled, why not the medicines that are administered there? If our healthcare is too important to be left to the market, than that must include the research and development of medicines which can keep us well.
Nick Dearden is director of Global Justice Now.
Tags: Big Pharma, COVID-19, Capitalism, Catastrophe Capitalism, Coronavirus, Disaster Capitalism, Mafia, Predatory Capitalism, Vaccines
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