How We’re Thinking about Big Pharma in this Moment

Becky Chao
May 7, 2020 · 4 min read

The coronavirus pandemic is exposing the power that pharmaceutical companies hold in a visceral way. Ongoing efforts to rein in the public health crisis are looking to Big Pharma to find a vaccine and a treatment as soon as possible. Without public alternatives, regulatory guardrails, or checks on potential abuses, Big Pharma will be free to continue dictating the terms for how patients access life-saving medicine during this critical time. The current moment emphasizes the need for Anti-Monopoly Fund investments to reverse the current trajectory of corporate dominance with little oversight, tackle the problems at their roots, and build a more equitable society than the one we had before the crisis — where public health is a top priority.

Big Pharma already has a long history of engaging in egregious practices that prioritize profits over people and public health. We’re seeing pharmaceutical companies trying to leverage the ongoing crisis to further entrench their power. For instance, Gilead, a major pharmaceutical manufacturer, previously sought “orphan drug” status for remdesivir, an experimental drug that’s being tested for COVID-19 treatment. With this status, Gilead would’ve been able to enjoy a seven-year monopoly on sales on top of federal tax credits. After immense public pressure, Gilead eventually rescinded its application — but the company still retains the ability to dictate the terms for access to this possible treatment. Its CEO recently announced that it plans to give away the first 1.5 million doses, though the company is still deliberating on the price it’ll charge for access in the long run.

People are living the firsthand experiences of how costly monopolies in the pharmaceutical sector really are. The pharmaceutical industry is notorious for dubious pricing and product development strategies that allow manufacturers to charge high prices and extract monopoly profits. Gilead has previously stirred controversy for setting exorbitantly high prices for its breakthrough hepatitis C treatment. After acquiring the initial treatment in a merger, it charged $94,500 for a 12-week course of a combination treatment — a price so high that many state Medicaid programs and prison systems were priced out. More broadly, Big Pharma has been known to pay off competitors to deter competition and game the patent system, among other anticompetitive conduct. Drugmakers regularly employ pay-for-delay tactics to incentivize would-be competitors from entering the market with low-cost alternatives. When a patent expires or nears expiration, companies engage in “product hopping” to wind down production of the old drug and coerce patients into switching to “new” formulations. These “new” formulations involve making superficial changes to the existing formula, which then enable them to turn around and secure new patents that extend their monopoly and the ability to charge high prices. These practices are particularly troublesome because public funds drive innovation and R&D in this sector.

These profits also come at the expense of patients for whom affordability is critical to ensuring that healthcare is accessible. We can rely on vigorous antitrust enforcement in part to protect us from these abuses of power — and indeed, the Federal Trade Commission has made it a priority to police pay-for-delay arrangements and more — and prevent further consolidation that increases Big Pharma’s market power. But antitrust enforcers do not always block mergers in this space, and just two days ago greenlit a merger between AbbVie and Allergan — two pharma giants with long histories of anticompetitive abuses. We also know that there are a variety of other policy tools like compulsory licensing — which the government can use to bypass patents and allow someone else to produce a patented drug — that could facilitate a more competitive market and more affordable access to life-saving drugs. That’s why building an anti-monopoly toolkit is so critical in this moment.

We’re seeing groups mobilize to ensure that vaccines and therapies are available and affordable. Public Citizen, for example, has called for moving away from monopoly-based drug development and exclusivities so that innovation benefits society’s COVID-19 health needs in a timely manner. The Hero Action Fund has launched a campaign to break up the pharmaceutical monopolies.

These issues have been pervasive in the pharmaceutical industry long before the pandemic hit. The scale of the COVID-19 public health crisis shines a light on the vulnerabilities of this monopolies-driven system. And we know that there are still more cracks to come — hospitals and healthcare systems are preparing for drug shortages as another outcome of dangerous consolidation.

A number of groups have been leading this fight, and we plan to support their leadership and work. But we also know that translating the root cause for why Americans can’t afford medicine that improves their health and saves lives continues to be a challenge. To help solve this problem, we plan to seek out new voices — artists, cultural leaders, patients — who can serve as translators and connect the dots on the problem and set of solutions.

These issues have taken on a renewed sense of urgency in light of the ongoing pandemic. The crisis and its economic fallout show us that our widespread dependence on concentrated economic power is no longer sustainable. We’re eager to dig in on an anti-monopoly approach to the pharmaceutical industry in the coming weeks, but we also recognize that the issues stemming from corporate concentration are not unique to Big Pharma. We’ll be sharing more details on our AMF investments and rapid response efforts soon, so stay tuned to see more on our plans to bolster the anti-monopoly fight across the entire economy.

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