Pharmanomics: How Big Pharma Destroys Global Health

Pharmanomics

Pharmanomics

How Big Pharma

Destroys Global Health

Nick Dearden

First published by Verso 2023

© Nick Dearden 2023

All rights reserved

The moral rights of the author have been asserted

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Verso

UK: 6 Meard Street, London W1F 0EG

US: 388 Atlantic Avenue, Brooklyn, NY 11217

versobooks.com

Verso is the imprint of New Left Books

ISBN-13: 978-1-80429-145-0

ISBN-13: 978-1-80429-146-7 (UK EBK)

ISBN-13: 978-1-80429-147-4 (US EBK)

British Library Cataloguing in Publication Data

A catalogue record for this book is available from the British Library

Library of Congress Cataloging-in-Publication Data

Names: Dearden, Nick, author.

Title: Pharmanomics : how big pharma threatens global health / Nick Dearden.

Description: London ; New York : Verso, 2023. | Includes bibliographical references and index.

Identifiers: LCCN 2023013755 (print) | LCCN 2023013756 (ebook) | ISBN 9781804291450 (hardback) | ISBN 9781804291474 (ebk)

Subjects: LCSH: Pharmaceutical industry – Moral and ethical aspects.

Classification: LCC HD9665.5 .D396 2023 (print) | LCC HD9665.5 (ebook) | DDC 338.4/76151 – dc23/eng/20230512

LC record available at https://lccn.loc.gov/2023013755

LC ebook record available at https://lccn.loc.gov/2023013756

Typeset in Fournier by Hewer Text UK Ltd, Edinburgh

Printed and bound by CPI Group (UK) Ltd, Croydon CR0 4YY

Contents

Introduction: Bad Apples

1. A History of Scandal

2. A Hedge Fund with a Pharmaceutical Firm Attached

3. It Was Greed, My Friends

4. The Pandemic Begins

5. Recolonising the Global Economy

6. The Hospital That Became a Trading Floor

7. A New Hope

8. Reach for the Moon

Notes

Index

Introduction: Bad Apples

Nearly eighteen months into the Covid-19 pandemic, Albert Bourla, the chief of one of the world’s biggest pharmaceutical corporations, Pfizer, sat down with a journalist in an upmarket Greek restaurant in New York.¹ Bourla had, by anyone’s estimation, enjoyed a successful year. And in August 2020, over a $324 lunch for two, he talked to the Financial Times about the global health crisis that had made his company a household name.

Bourla now sat on the most lucrative medicine in the history of the pharmaceutical industry, expected to bring in $36 billion for its producers in a single year. Pfizer was also working on another blockbuster – an antiviral treatment for Covid-19 – which would, if it came off, net billions more dollars a year for the corporation. All in all, Bourla told the journalist, his company had become ‘the most efficient machine’ possible for converting raw materials into vaccine doses.

But sales were not the only important consideration during the pandemic. Just before Covid-19 struck in winter 2020, the sector, known as ‘Big Pharma’ by its critics, was regarded as the least trusted industry in the US, while Pfizer itself was seen as the least trustworthy of the well-known Big Pharma firms.² The pandemic was an opportunity not simply to profit, but to improve the industry’s tarnished reputation.

What’s more, it seemed to be working. In New York, as Bourla tucked into a $32 Greek salad, he was interrupted by the restaurant’s head of marketing, who gushed: ‘It is due to you that we can be open.’ There were stories of revellers toasting Pfizer in Tel Aviv and cocktails named after his company’s vaccine in London. The president of the United States referred to Bourla as a ‘good friend’, while prime ministers and presidents from across the world begged for a little time with the great man.³

The pandemic, Bourla said, had given pharmaceutical companies like the one he ran a ‘stage’ on which to prove their detractors wrong.⁴ As Bourla had told the media a month earlier, ‘I’m satisfied that the company is doing financially very well, but even more satisfied when I go into a restaurant and get a standing ovation because everybody feels that we saved the world.’⁵ But he warned, as if to show his humility, ‘We should never take it for granted. It can change very quickly.’⁶

And change it did. Within a few months of Bourla’s FT interview, concern about the role of corporations like Pfizer in perpetuating the now deep levels of global vaccine inequality was becoming increasingly mainstream. While rich countries had vaccinated most of their populations, many countries in Africa, Asia and Latin America had barely been able to start their vaccine programmes. By November 2021, the number of booster shots being administered in rich nations outstripped the total number of vaccines administered in low-income countries by nearly two-to-one.⁷

All Western companies involved in vaccine production had failed to some extent. But particular anger was reserved for the producers of new generation mRNA vaccines. These vaccines were proving particularly effective at preventing the hospitalisation and death of Covid-19 patients. But mRNA vaccines were produced by just three companies – Pfizer and its German partner BioNTech, and another US-based corporation called Moderna.

Pfizer, in particular, stood accused of sending a measly 1 per cent of the vaccines it had delivered to COVAX, the international body set up to try to ensure all countries got a reasonable amount of the vaccines on offer.⁸ What’s more, these companies had sold their vaccines almost entirely to the richest countries in the world, and they were making eye-watering amounts of money on those sales – an estimated $1,000 per second from just two vaccines, with profit rates that would make the most cutthroat of financiers salivate.⁹ So lucrative was Covid-19 that, within just over a year of the pandemic being declared, Big Pharma’s vaccines had created nine new billionaires.¹⁰

It started to dawn on policymakers that a small handful of for-profit corporations with no public accountability could decide how many vaccines could be made in a given year, who got to buy them, and at what cost. They got to dictate, in other words, who lived and who died in the most serious public health emergency in living memory.

A barrage of allegations surfaced. Pfizer was accused of denigrating the vaccines of one of its competitors, with a potentially disastrous impact on vaccine hesitancy.¹¹ The company was accused of blatant profiteering, trying to charge the United States $200 for a vaccine course that cost, at the very most, $13 to produce.¹² It was accused of bullying governments, forcing them to change their national laws to protect Pfizer’s profits, or even mortgaging national assets to cover any compensation claims against the firm.¹³ Perhaps most serious of all, they were accused of stringing lower-income countries along, holding out the possibility of vaccine sales that they had no intention of delivering, simply to improve their bargaining position with richer countries.¹⁴

Suddenly a wide range of experts and insiders, not people used to badmouthing Big Pharma, started to speak out. One academic told the media that this represented ‘really an extreme form of rapacious capitalism’.¹⁵ A documentary maker trying his hardest to take a balanced approach on the positives and negatives of the company was forced to conclude that the most generous thing any of the people he’d talked to had found to say about Pfizer was ‘they’re a bunch of shitbags. They’re not the only ones, but they’re cleverer than the rest.’¹⁶

To add insult to injury, these vaccines had not, for the most part, been invented by the corporations now in charge of producing them. ‘It’s not even their vaccine’, one former US government official complained, adding that the fact it had become the ‘Pfizer’ vaccine was ‘the biggest marketing coup in the history of American pharmaceuticals’.¹⁷

In the pharmaceutical world, scandals – and there are plenty, as we will see in the coming pages – are often put down to a bad apple in a barrel of otherwise pretty good fruit. And for every negative story that emerges in the world of medicines, we, the public, are told: Sure, there are always a few who take advantage, but don’t throw the baby out with the bath water – without Big Pharma, there would be no medicines.

But what the Covid-19 pandemic showed clearly is that, while the pharmaceutical world is certainly diverse, with a wide range of companies exhibiting more or less extreme behaviours, the problem is not individual greed. It goes much deeper than that, lying at the very heart of how these firms are structured. Once you start to pull at this thread, you discover that Pfizer, while certainly at the more unpleasant end of the Big Pharma spectrum, cannot simply be dismissed as a ‘one-off’. Rather, the rules and incentives by which Big Pharma operates have created a deeply dysfunctional industry, which in turn prolonged the pandemic and ensured that the way the world has dealt with Covid-19 has entrenched global inequality, possibly for a generation.

Just look at Pfizer’s rivals. There’s Moderna, the new kid on the block, whose Covid-19 vaccine was developed entirely with public funds but whose CEO, Stéphane Bancel, became a billionaire after privatising that knowledge.¹⁸ Not content with the billions of dollars Moderna made selling vaccines – almost entirely to rich nations – he refused to transfer the know-how behind the Spikevax vaccine to the World Health Organisation, preventing the production of many more doses, thereby prolonging the pandemic and costing countless lives.¹⁹

Then there’s US corporate giant Johnson & Johnson, which produces a huge range of healthcare products, as well as a Covid vaccine. The corporation licensed doses of this vaccine to be made through a South African company, but then insisted that those doses were exported out of South Africa, just as that country was entering a major Covid-19 outbreak, and sent instead to the already highly vaccinated rich world.²⁰

And it isn’t only vaccines. US corporation Gilead discovered that one of its already existing antiviral drugs could be useful in the treatment of Covid-19. It then tried to obtain a special ‘orphan status’, which could bring the company additional monopoly privileges over the medicine, allowing the company to further boost the profits it could make.²¹ ‘Orphan status’ is a category used for rare diseases, and was designed to help incentivise drug research into conditions that affect very few patients. The idea that a pandemic could constitute such a rare disease was so ludicrous that even Gilead ultimately rescinded its claim.

These are not simply examples of poor behaviour by individual chief executives. The problem, at its heart, is that Big Pharma companies behave more like hedge funds than medical research firms.

There has been a trend in recent books to look back to a golden age of the pharmaceutical industry, when chief executives were more likely to be scientists, and when researching medicines for the public good, even if it generated tiny profits, was seen as the right thing to do by these companies.²² This case is somewhat over-blown. Back in the early 1960s, Harold Wilson, who would go on to be British prime minister, spent years in parliament bemoaning the eye-watering profits of ‘an industry which has grown fat at the expense of the public purse’.²³

In the United States, anti-monopoly crusader Senator Estes Kefauver held a series of groundbreaking hearings, in which he hauled Big Pharma executives in front of his committee and berated them for profiteering by marking up drugs by thousands of per cent. Kefauver suggested the pharmaceutical industry was making twice the profit margin the average US manufacturer enjoyed at the time. He would go on to launch a full-scale assault on the patent system that underlay these profits, only to be halted by the power of the industry and its friends in Congress.

So, in reality, there was never a social contract between Big Pharma and the public it supposedly served. But it is true that the global economy that arose from the late 1970s onwards, and which incorporated a financial logic at its very heart, turbo-charged the worst elements of the pharmaceutical industry, transforming it almost beyond recognition.

Perhaps no one represents this new industry more honestly than the ultimate bad boy of the pharmaceutical sector, Martin Shkreli. Shkreli is something of a pantomime character because, far from trying to avoid negative publicity, he seems to embrace it with glee. The rap-loving businessman was not born to wealth. When Donald Trump called him a ‘spoiled brat’, Shkreli countered, ‘My parents were immigrants and janitors. [Trump] inherited wealth! Fuck him.’²⁴

Shkreli was a hedge fund manager, but started up a pharmaceutical company when, by his own admission, he realised there was not enough money to be made in hedge funds. His strategy for making money from his pharmaceutical company was simple: buy up expired drug patents for important medicines, control the supply of those medicines, and hike the price.

In 2015, Shkreli became infamous when his company, Turing Pharmaceuticals, acquired a simple-to-make but lifesaving anti-parasitic medicine, used particularly by Aids patients and pregnant women. He then jacked the price up by 5,000 per cent. True to form, when Shkreli was asked at the end of 2015, and after being labelled ‘the most hated man in America’, about any regrets he might have, he replied that he should have raised the price higher. In the highly divisive world of US politics, Shkreli managed to unite Hillary Clinton, Bernie Sanders and Donald Trump in their opposition to him.²⁵

Of course, Big Pharma moved to distance itself from Shkreli. He was just another bad apple, they said, but you cannot judge the whole industry by his standards. ‘I think it’s really important for our industry to make it clear that he is not us. We are a research-based pharmaceutical industry,’ one Big Pharma CEO told the press.²⁶

Yet, for all these denunciations, Shkreli’s behaviour really was not so abnormal in the modern pharmaceutical industry, except in one respect: Shkreli did not hide what he was doing behind a wall of public relations. As he himself told a healthcare summit, ‘My shareholders expect me to make the most profit. That’s the ugly, dirty truth … no one wants to say it. No one’s proud of it. But this is a capitalist society, capitalist system and capitalist rules. My investors expect me to maximize profits. Not to minimize them or go half or go 70 per cent but to go to 100 per cent of the profit curve.’²⁷ One of Shkreli’s former employees added that, while pharmaceutical companies might like to pretend they are in a different category, ‘they don’t have any higher moral ground to comment on what we do!’²⁸

As I will show, many of Shkreli’s activities are indeed pretty mainstream in an industry renowned for price gouging, for buying up the intellectual property of other people, for acquiring or shutting down competitors, for playing the financial markets, for making insignificant changes to existing drugs and pretending they have made something new and important, and for lobbying for an even more favourable regulatory environment.

Far from being a necessary evil, which in spite of profit-hungry behaviour at least keeps us healthy, Big Pharma today is in fact one of the most financialised industries in our heavily financialised global economy. Big Pharma has little interest in keeping us healthy, and often an interest in the very opposite. It acts as a parasite on public research and public health systems; a super-efficient vehicle for channelling public resources into the pockets of the already superwealthy.

Indeed, Big Pharma has almost forgotten how to make useful medicines. What often surprises people most about the industry is that the big corporations we associate with production of medicines do so little research into the medicines we need. These are not, by and large, companies that develop vital drugs and then make obscene profits off the back of the drugs they create. Rather, the drug creation is done by others, often bankrolled by the public sector.

In this Big Pharma is not alone – though, perhaps because medicines are so important to all of us, they make the aversion we feel that much more acute. But the way in which medicines are made says something much more profound about our economy as a whole, giving us a glimpse of a deeply broken system. Wherever we look, our economy has been hollowed out, with corporations more interested in the diktats of the financial markets than in focusing on what they were set up to do. The results cannot be overstated. Under the rubric of ‘letting the market decide’ what gets made, we have built a system of monopoly capitalism, with inequality so extreme and the power of big business so great that it threatens to overwhelm what remains of our democratic rights.

Along the way, this model has fuelled extraordinary levels of inequality in medical access at a global level, as well as putting unbearable burdens on public health services in the Global North.

Meanwhile, for public health advocates across the Global South, the real scandal of the pandemic is that anyone might ever think putting Big Pharma in charge of a global vaccination effort could produce anything other than obscene inequality. For those who lived through the HIV/Aids epidemic in Southern Africa, the lesson should have been clear: do not trust Big Pharma when it comes to a major public health emergency.

In the early 1990s, while Big Pharma was in the middle of reinventing itself into the beast we know so well today, many at the top of the industry saw that their biggest asset was not their research expertise or their manufacturing know-how. It was, instead, their intellectual property – the patents and trade secrets that gave them monopolies, allowing them to control supply, production and prices over a wide range of medicines. Regardless of whether the underlying medicines were ultimately produced or not, the intellectual property was an incredibly profitable commodity in its own right, open to being moved around to hide profits or avoid regulation, or bought and sold on financial markets.

The key to cementing this power was making this intellectual property sacrosanct. Throughout the 1980s and ’90s, Big Pharma worked to increase these monopoly powers. The industry lobbied and funded US politicians, supported new laws, integrated itself into European decision-making, and repeatedly fought court battles to set new legal precedents, all giving the industry ever more rights to extend their patents and keep their data secret. But perhaps their greatest achievement was a new trade deal, the Agreement on Trade-Related Aspects of Intellectual Property Rights – known as TRIPS. Described by journalist Alexander Zaitchik as ‘a brute and profoundly undemocratic expression of concentrated corporate power’, TRIPS extended US-style patent protection to the entire world.²⁹ Whereas before, countries across the Global South could produce medicines far more freely, TRIPS enforced monopoly protection everywhere. And while there were exemptions built into the agreement, as South Africa was soon to discover, those exemptions were particularly hard to apply in practice.

By the early 2000s, HIV/Aids was having a catastrophic effect across Southern Africa, with as many as 4.5 million – or one in nine people – living with HIV in South Africa, and 1,700 people being infected every day.³⁰ By this date, there were life-saving drugs on the market that could suppress the virus, halting the development of Aids and preventing the spread of HIV. The problem was that the patents on these drugs were held by pharmaceutical corporations that, as in the case of Covid, were able to set the price and decide who could produce the medicines.

In practice, that meant HIV medicines were priced at $10,000 per patient per year, rendering the drugs unaffordable both for South Africa’s health service and for most individuals in the country.³¹ But the situation was not insurmountable; fortunately, the medicines did not cost anything like that much to make. By producing the medicines in the Global South, it was estimated South Africa could cut the cost by 90 per cent. Fortunately, at the same time, the government had introduced legislation which would have given them the power to override patents and import generic versions of desperately needed medicines from elsewhere.

Big Pharma saw things differently. Accusing South Africa of ‘piracy’, thirty-nine firms, including some of the biggest corporations in the world, sued the South African government.³² Together with senior figures from the United States and European governments, they pulled out all the stops to prevent South Africa introducing the legislation. The corporations were ultimately forced to back down. The case was also a disaster for the industry’s image, sparking a movement that lives on to this day, and has been a critical part of the battle for equitable Covid-19 drugs.

But the battle was important precisely because it went to the heart of how the industry now made money – not from developing important new medicines, but from the monopoly power that patents, or intellectual property, conferred on them. We will see how this power laid the ground for the sort of pharmaceutical system that exists today: one where fortunes can be made without ever setting foot in a scientific laboratory, and where far more money can be made by playing the financial markets and exploiting access to desperately needed public knowledge than by inventing an important new medicine.

The consequences of such a system are bad for almost all of us. We have seen how they make a pandemic harder to end. And we will see how they are also making new health emergencies – like antibiotic resistance – unsolvable.

In fact, the problems of this intellectual property regime go well beyond medicines. This system of monopoly power has not only helped restructure our wider economy away from invention or production and towards financial markets. It has also fundamentally reshaped the relationship between richer and poorer countries, formerly the colonisers and the colonised. The latter have been rendered dependent on having to rent – or do without – the vital technologies that are necessary for building a modern society. Unless they can control and utilise these technologies, dispending with the rules of the financialised global economy, they will remain subservient to the power of the richest corporations in the richest countries on earth.

This book is not intended to push readers into despair – far from it. The chapters that follow will lay out the problem of the pharmaceutical system in detail; but they will also point the way to a very different sort of medical research and development. Such a model will be essential if we are to deal with the public health emergencies that lie ahead. But such a model is also closer now, precisely because of the failures of Big Pharma to deal with Covid-19, than it was ten years ago. That is because the movements that have arisen against the injustices of vaccine inequality, among ordinary people but also between governments around the world, are not only growing in power; they are starting to sow the seeds of that new system here and now.

This change is currently on a small scale. It will need to be nurtured and supported. But it is there, and it holds out the promise of more transformative change not only to the way medicines are produced and distributed, but to the economy as a whole. Such change will be vital, too, if we want to halt climate change, build a better food system, and create a more democratic society. Because the current way we are doing things is driving us towards the abyss at breakneck speed.

The purpose of this book is to open more minds to the possibility of that change. After all, all of the arguments made against reform are the same arguments that could have been made against the creation of the National Health Service in Britain after the end of the Second World War. But if, here in Britain at least, we take it for granted that our hospitals and clinics should be publicly controlled, why not the medicines that are administered by them? If our healthcare is too important to be left to the market, then that must include the research and development of medicines that keep us well.

It is true that, during a major pandemic, we developed – thanks to massive public investment in a short period of time – incredible medicines to deal with the emergency. Sadly, those medicines were ultimately doled out on the basis of power and wealth. Now imagine what might have been achieved 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 that such a model could inspire in the population at large, there is no telling how much more could be achieved.

Huge thanks are due to Kieran Burch, Emma Dowling, James O’Nions, Christa Hook, Max Lawson, Martin Drewry, David Legge, and Mohga Kamal-Yanni, as well as all the campaigners who worked on People’s Vaccine here and around the world, who have provided so much of the information, analysis and inspiration for this book.

1

A History of Scandal

Legendary American artist Nan Goldin made her name documenting the queer subculture of which she was a part in 1980s New York. Her photographs offer a shockingly honest portrayal of life outside the mainstream; she refused to gloss over the sex, violence and drug use that were a routine part of the life of her and her friends. But the real low of Goldin’s life, the experience that prompted her to become a nearly full-time activist, came nearly thirty years later, in the form of a prescription painkiller called OxyContin.¹

In a 2018 article in Art Forum, Goldin revealed how an OxyContin prescription she had be given for tendonitis in her left wrist sent her overnight into a dark spiral of addiction.² She described the black market in ‘Oxy’ when she returned to New York City, the gateway that Oxy provided into other drugs, the overdose and the pain of withdrawal: ‘I survived the opioid crisis. I narrowly escaped. I went from the darkness and ran full speed into The World. I was isolated, but I realized I wasn’t alone. When I got out of treatment I became absorbed in reports of addicts dropping dead from my drug, OxyContin.’³ Goldin went on to describe finding out that she was not alone. In fact, OxyContin had become an epidemic in the United States by 2017, one which had already killed hundreds of thousands. By 2017, of the ninety-one people dying every day from drug overdoses in the United States, 60 per cent involved opioids like Oxy.⁴

But Goldin learned something else too. As an artist, she knew the name Sackler very well. The Sackler family were a major source of philanthropic funds for art galleries and museums across the world. But what she now realised was that their money came from the very drug that nearly killed her:

I learned that the Sackler family, whose name I knew from museums and galleries, were responsible for the epidemic. This family formulated, marketed, and distributed OxyContin … The Sackler family and their private company, Purdue Pharma, built their empire with the lives of hundreds of thousands … They have washed their blood money through the halls of museums and universities around the world.

As part of a new activist group called Prescription Addiction Intervention Now, or PAIN, she set out to expose them.

The Sackler family has been in pharmaceuticals since the 1950s, when Arthur Sackler and his two brothers bought a small company called Purdue.⁵ But Arthur Sackler’s real talent was in selling drugs, and he is credited with inventing modern forms of pharmaceutical marketing in the United States. In particular, he was expert at marketing to doctors directly, understanding the role that doctors played not only in the prescription process, but as symbols of trust in society.

Sackler helped Pfizer – before then mostly a chemical company – to become a profitable drug company with a particularly successful marketing campaign on antibiotics.⁶ But his real triumph came in marketing a new drug, Valium, in a way that turned it into a blockbuster for pharma giant Roche in the 1960s and ’70s.

Reflections of Arthur Sackler’s approach to marketing can be seen all over the modern pharmaceutical industry. First, and perhaps most far-reaching, was the suggestion that virtually everyone should be taking really strong medicines on a regular basis. People with perfectly standard levels of anxiety were encouraged to take Valium, even though no testing had been done into its addictiveness. One piece of marketing encouraged Valium for people with no psychiatric symptoms at all: ‘For this kind of patient – with no demonstrable pathology – consider the usefulness of Valium.’⁷

As Patrick Radden Keefe, author of Empire of Pain: The Secret History of the Sackler Dynasty, puts it, Arthur Sackler has a ‘Don Draper–style intuition for the alchemy of marketing’.⁸ He recognised that doctors were perceived to be paragons of truth, whose words were rarely questioned by patients. If you could get to the doctor, the patient would surely follow. Keefe’s work details the techniques used, from adverts masquerading as weighty scientific opinion in medical journals, through giving payments to regulators to support their products in, for instance,