- The Guardian
- Issue #2069
Photo: Anna Shvets – pexels.com (CC0).
The big pharmaceutical monopolies’ profit-driven model of making medicines is bad for our health. While in theory these companies exist to make the medicines we need, most are more interested in making money for their shareholders than finding cures for the most deadly diseases.
Because they are set up to prioritise shareholder interests, Big Pharma companies prioritise making drugs that will secure high profits, rather than those that will create the most health benefit. This system fuels irrational results, with some studies finding that more than half of approved medicines in recent years offered no therapeutic advance.
A system driven by profits also ignores many deadly diseases, especially those most prevalent in the Global South, where Big Pharma companies see less opportunity for profit. Diseases like tuberculosis kill millions, yet receive very little attention from Big Pharma companies.
Moreover, there is little within the current system to guarantee that medicines are affordable for the patients who need them. Patent monopolies effectively allow companies to charge the price the market will bear. As one former drug company manager put it: “If Grandma is on the table, no one will blink at the price.”
Big Pharma’s profiteering model proved especially catastrophic during the COVID-19 pandemic, with pharma companies refusing to share vaccine patents and recipes with manufacturers in the Global South, even as billions of people were left without access to vaccines.
This disastrous episode is just one example in a long history of Big Pharma putting profit before people’s lives: from the failure to invest in treatments for Ebola, to Martin Shkreli’s hiking the price of a life-saving drug by 5000 per cent, to the millions of South Africans needlessly deprived of HIV/AIDS medication.
Following decades of Big Pharma failure, the disastrous inequality of the pandemic must mark a turning point for the way we produce medicines. Never again can Big Pharma be allowed to put profit before people’s lives.
MONEY-MAKING MODEL
Pharmaceutical companies are increasingly focused on maximising short-term financial returns to shareholders rather than making investments to benefit people’s health. Big Pharma companies make higher profit margins than even the energy and finance sectors, yet most new medicines don’t add any therapeutic benefit.
A key pillar of the Big Pharma model is intellectual property, which allows companies to retain exclusive ownership over ‘inventions of the mind.’ Patents allow pharma companies to prohibit the manufacture, use or sale of an invention without the patent holder’s permission, for a minimum 20-year period. This market exclusivity is supposed to incentivise innovation to benefit the public. In reality, patents provide excessive financial rewards to patent holders, as the monopoly created by the patent allows high prices to be set.
Studies have shown that Big Pharma’s estimates for the cost of producing new drugs are wildly overestimated, even when adjusted for the risks taken in bringing an untested product to market.
While some argue that high prices are justified as long as pharma companies provide the drugs we need, Big Pharma companies are actually very bad at producing new, life-saving drugs. Over 50 per cent of the new medicines that reach the market are “copycat drugs,” meaning they do not bring any added therapeutic advance for patients. This is a deeply irrational use of vast sums of money, not to mention some of the brightest minds in science.
Big Pharma also increasingly buys up the work of public researchers and smaller biotech companies rather than doing its own research and development. In this way, pharma companies build up huge concentrations of market power, which in turn allows them to raise prices sky-high.
Even after the COVID-19 pandemic, the profit-driven pharma industry is failing to invest in vaccines or treatments for some of the most dangerous pathogens. In fact, 10 of the 16 pathogens most likely to cause the next pandemic have completely empty research pipelines. Wary of low profit margins, the industry is also failing to produce new antibiotics, even as concern over drug-resistant bacteria grows.
In a further demonstration of the wrong priorities, many Big Pharma companies spend less money on research and development than they do on shareholder dividends and stock buybacks.
PANDEMIC PROFITEERING
When the world was hit by a pandemic in 2020, there were hopes that the urgency and scale of the crisis would prompt a more collective approach to the development of COVID-19 vaccines and treatments. However, Big Pharma companies quickly asserted themselves and were allowed to retain monopoly rights over the production of vaccines and treatments.
Big Pharma companies soon entered into contracts with the world’s richest countries, leaving most people in low- and middle-income countries without access to vaccines. Countries in the Global South, led by South Africa and India, called for intellectual property rights on COVID-19 vaccines, treatments and tests to be suspended, to allow manufacturers around the world to produce vaccines and end dependency on a few unaccountable corporate giants.
Yet, even as the deadly results of vaccine inequality became clear, wealthy countries including the UK and European Union blocked such moves, while pharma companies refused to share their patents and vaccine recipes with manufacturers in the Global South. The World Health Organisation reported that 1.3 million fewer people would have died if COVID-19 vaccines had been distributed equitably in 2021.
The profiteering of these companies is even more scandalous when you consider that every major vaccine was rooted in billions of pounds of public funding. The Oxford-AstraZeneca vaccine was 97 per cent publicly funded, and the Moderna vaccine 100 per cent publicly funded, yet both of these ended up in the hands of private corporations.
The case of Moderna, whose vaccine was dependent on mRNA technology developed over decades – and at the cost of billions of dollars – by public scientists in the US, was particularly egregious, with the company making profit margins of over 70 per cent. Meanwhile, the Pfizer-BioNTech vaccine, which also depended on mRNA technology, was supported by nearly half a billion euros of German public funding.
BIG PHARMA DIKTAT
Globally, it is estimated that the public pays for two-thirds of all upfront drug R&D costs and even medicines discovered by drug companies are often built on a large body of scientific work done in the public sector. In spite of this, there is no guarantee that these medicines will be accessible to patients in the UK or worldwide. Instead of making the industry more democratically accountable, the UK government has consistently bowed to Big Pharma’s demands.
For example, abiraterone, a prostate cancer drug, was developed with heavy financing from the UK’s largely publicly funded Institute of Cancer Research, but the country’s National Health Service (NHS) has often had to ration access to it because of its excessive cost. In this case and many others, taxpayers are in effect paying twice by buying back medicines they have already paid to discover.
Meanwhile, although the UK’s universities continue to fund huge amounts of research into medical advances, very little of this stays in the public sector and few conditions are put in place to stop pharma companies from charging exorbitant prices, both in the UK and internationally.
In 2023, pharma companies started calling for the NHS to pay even higher prices for drugs, demanding a huge tax cut to undermine an existing pricing scheme. Their proposals would cost the NHS an extra $2 billion a year, piling further pressure onto a health system that is already buckling under the pressure of underfunding and privatisation.
THE GLOBAL SOUTH
Vaccine monopolies proved deadly for people in low- and middle-income countries during the pandemic, but this was far from the first time that Big Pharma has failed people living in the Global South. At the peak of the HIV/AIDS epidemic, and amid annual global deaths of over 2 million, Big Pharma companies charged a crippling £9,000 [AUD$17,697] per person for key treatments, even though generic companies showed that a 97 per cent reduction in price could still be profitable.
When Nelson Mandela’s South Africa passed a law that would allow it to import generic medicines, the pharma industry responded with fury, with 39 companies issuing a lawsuit to prevent the action. The companies eventually withdrew, but only after huge resistance from grassroots movements both in South Africa and internationally.
As well as setting scandalous prices and putting essential medicines out of reach of millions of sick people, the profit-driven pharma model has a terrible record of investing in diseases that affect people mostly in lower-income countries. Between 1945 and 1965, when tuberculosis was still a significant problem in rich countries, eight different anti-TB drugs were discovered. However, once TB was no longer a significant problem in the Global North, the development of these vital drugs stalled, with no new anti-TB drugs developed between 1965 and 2012. Meanwhile, just 4 per cent of newly approved products are for neglected diseases that affect middle- and low-income countries.
When countries like Brazil and South Africa resisted integration into the global intellectual property rules, known as TRIPS, they were pursued by the US with threats of trade sanctions. Rigid intellectual property rules, in combination with the immense power of pharma corporations, have limited development of pharma industries in the Global South, leaving many countries dependent on outdated and neo-colonial models of charity, rather than building strong domestic industries that protect local sovereignty.
ALTERNATIVES
Alternative models, which put medical advances ahead of shareholder greed, are emerging but they need support.
SHARING THE SCIENCE
One shining example is the team of scientists in South Africa who saw the catastrophic effects of vaccine inequality during the pandemic and took matters into their own hands. Teaming up with the World Health Organisation to make a version of Moderna’s vaccine, they initially appealed to the American company to transfer technology to its vaccines hub. When Moderna refused, the South African scientists pushed ahead with their mission anyway, successfully reverse-engineering a version of the vaccine.
Now, instead of hoarding it, the hub has already started freely sharing the science with 15 other countries. Not only could this make a major dent in the power of pharma monopolies, but it could also secure greater control for countries in the Global South. Perhaps most significantly, the hub plans to deploy the mRNA technology to battle not just COVID-19 but also diseases like malaria, HIV, cancer and TB.
STATE-LED INNOVATION
Cuba offers a strong example of how state-led innovation can lead the way. Despite being a small nation under heavy embargo, it has developed two successful, homegrown COVID-19 vaccines. Moreover, it also pledged to support countries in the region, first by exporting vaccines, and then transferring production technology to other countries that need it.
ALTERNATIVES TO PATENTS
US senator Bernie Sanders has proposed an interesting alternative to the patent system which would involve setting aside 0.55 per cent of US gross domestic product (GDP) (about $100 billion) as prize money for drug development. The prize would be paid to successful companies instead of giving them lengthy patents for creating new drugs, and health priorities, both national and international, would be decided democratically.
Conditions
Given that the public is paying for so much of the most important pharmaceutical innovation, governments could do far more to apply conditions on that funding. By doing this, they could ensure cheaper access to drugs, give the public a share of the revenues produced by taxpayer-funded research, and make the medical science available for others to improve on. A more collaborative and open approach to knowledge sharing would likely encourage more medical innovation, especially when compared with the strangling effect of patents and the litigious monopolies that hold onto them.
Our demands
- Break Big Pharma’s patent monopolies and support better ways of rewarding innovation.
- Share vaccine and treatment technology with lower-income countries, so all countries can make the medicines they need.
- Attach public-interest conditions to publicly funded research to hold pharma companies accountable.
- Invest to make the medicines the world needs, not the ones that make the most profit.
- Build up publicly controlled medicines research and manufacturing, to ensure the right to health for all.
- First published by Global Justice Now
