Big Pharma Reaps Massive Profits by Ripping Off Public Research and Weaponizing Patents

Nick Dearden

From HIV/AIDS to COVID-19, the pharmaceutical industry has made obscene profits by exploiting public research and denying lifesaving medication to poor countries. Building a fairer system of medicine production means breaking Big Pharma’s power.

A researcher works in the clinical-stage biopharmaceutical company Xencors new laboratory in Pasadena on Wednesday, April 26, 2023. (Sarah Reingewirtz / MediaNews Group / Los Angeles Daily News via Getty Images)

Interview by
Cal Turner
Sara Van Horn

The past few years have been a roller coaster for Big Pharma’s public image. In the 2010s, revelations about Purdue Pharma’s culpability in the opioid epidemic brought scrutiny to medication manufacturers. But in 2021, the names Pfizer, Moderna, and Johnson & Johnson became synonymous with lifesaving vaccines almost overnight. The COVID-19 pandemic catapulted these companies to household-name status and gave them the veneer of being forces for social good.

In his new book, Pharmonomics: How Big Pharma Destroys Global Health, investigative journalist Nick Dearden explores how the pharmaceutical industry wields monopolies and patents to make mountainous profits at the expense of global access to crucial medicines. Pharmanomics demonstrates how, from the HIV/AIDS epidemic to COVID-19, Big Pharma has parasitized public health systems in the Global North and systematically denied vital medications to countries in the Global South. Cal Turner and Sara Van Horn spoke with Dearden for Jacobin about how Big Pharma has manipulated global health crises for profit, how the innovative capacities of public health and medical research are undermined by industry interests, and what a fairer, safer system of medicine production might look like.

Sara Van Horn

Who is Big Pharma? What does it do, and why is it so powerful?

Nick Dearden

The term refers to the biggest pharmaceutical companies — the likes of Pfizer, Johnson & Johnson, Moderna, AstraZeneca, GSK — but it also implies a common way of operating, based on the monopolies these corporations enjoy, and the way they produce and market drugs.

Particularly in the United States, these companies have an extremely bad reputation, for very good reason. These are corporations we rely on to provide lifesaving medicines, but they are absolutely addicted to sky-high profits. If the purpose of this industry is to make medicines, to keep us healthy, and to eradicate disease from the world, then it’s completely dysfunctional. If its purpose is to behave as a cash machine for superrich investors, then it’s working extremely effectively.

Cal Turner

Can you give us a brief history of Big Pharma, especially its reinvention in the early 1990s? How did these companies become the industry titans we know now?

Nick Dearden

Many of these companies emerged in the late nineteenth century and consolidated after World War II. The opioid crisis is an example of the way pharmaceutical companies behaved for much of the twentieth century: they invented drugs, then they squeezed as much profit as they could from those drugs by selling them in highly inappropriate ways. The result in that case was that three hundred thousand people in the United States alone died of overdoses.

But in the 1990s, another — also very harmful — model for how Big Pharma could function emerged. Like a lot of companies at the time, pharmaceutical companies realized that it wasn’t the stuff they produced that was creating the most value. They realized they owned something intangible: not research, not staff, not factories, but intellectual property, such as copyright and patents. Patents have given companies a complete monopoly for at least twenty years — and often much longer — on the drugs they produced.

In realizing this, pharmaceutical companies began to rethink and restructure what they did. Rather than prioritizing long-term investment in research and development, they focused on protecting their intellectual property. The pharmaceutical industry gutted research and development of new drugs. They got rid of all of many parts of that process that they could contract out or buy from others. What they were left with were drug monopolies and that really changed how they behaved.

Today, by and large, the pharmaceutical industry does little to research and develop drugs. They buy up other companies that have done that research, often with huge amounts of taxpayer funding. As a consequence, if you are a company that profits primarily from intellectual property, what’s important to you is not doctors and medical researchers but lobbyists and lawyers, because they are the people who are going to extend and deepen your patents.

You have no interest in medicines that would treat diseases primarily suffered by poor people in poor countries; you have no interest in dealing with pathogens that could cause the next pandemic, because in all likelihood, a pandemic won’t be caused by that specific pathogen. They have very little interest in curing disease, because their ultimate blockbuster is lifelong treatment for chronic disease — that’s where enormous amounts of their time and energy are spent.

Martin Shkreli is a great example of what’s happened to the industry. He realized there was effectively a monopoly on an antiparasitic treatment particularly needed by people with HIV, so he bought the drug and then he jacked up the price by 5,000 percent overnight. Later, when he was asked if he had any regrets, he replied, “I regret not raising the price further.”

Shkreli went on to make some really interesting comments that I find very applicable to the industry today: “I am not expected to give my shareholders a decent return but to maximize their return.” He also said, “I don’t do anything that the rest of the pharmaceutical industry doesn’t do.” He’s right. He’s extreme, but not unusual, and he does it without the sanctimonious words that you get from many pharmaceutical executives.

Cal Turner

How has the pandemic affected the pharmaceutical business?

Nick Dearden

It’s been very contradictory. At the beginning of the pandemic, the pharmaceutical industry was totally unable to deal with what was happening because it had shown zero interest in pandemics. The World Health Organization [WHO] had been raising concerns for years, because other strains of coronavirus had already caused health epidemics in other parts of the world, but pharmaceutical companies had done basically nothing.

Big Pharma is generally not interested in vaccines, because vaccines are meant to inoculate you for life or for a long period of time. Stopping somebody from getting ill is what we want as a society, but it’s not a good way of making money. The number of companies producing vaccines had gone down from twenty-six in 1955, to eighteen in 1980, to four in 2020 pre-pandemic.

What saved us during the pandemic was the public money that had been put into researching pathogens like coronaviruses. But we then let the pharmaceutical industry privatize that knowledge and build a monopoly on it. In fact, we gave them tens of billions of dollars to do this.

The fact that we call it “Pfizer’s vaccine” is surely the biggest marketing coup in the history of American pharmaceuticals. Those aren’t my words, but a phrase used by a former US government official understandably peeved that Pfizer was trying to charge his administration $100 a shot for this vaccine.

Its vaccine was actually developed by a smaller company called BioNTech with public funding. The Moderna vaccine was to some degree developed by Moderna, but almost entirely with public money. AstraZeneca’s vaccine has very little to do with AstraZeneca. Johnson & Johnson’s vaccine was similarly built on many, many years of public research. All of these companies that we’ve now come to associate with the vaccines put very little of their own money into research and development.

Of course, governments faced a genuine problem. It’s true that during this recent period of financialization, pharmaceutical corporations have reduced their investment in production, but most of them can still produce pills, and some can still produce vaccines. But despite the constriction of manufacturing and capacity from Big Pharma, we haven’t developed anything else, so we’re still dependent on them.

During the pandemic, we could have done deals with generic factories, but governments panicked and turned to these companies, which allowed Big Pharma to claim credit for ending the pandemic. It was a phenomenal boon for Pfizer and Moderna and their image in the West.

But those companies only sold to the richest countries in the world. Additionally, because they wanted to keep the monopolies on the mRNA technology that underlay those vaccines, pharmaceutical companies wouldn’t share how to make vaccines with countries across the world. We could have ended the pandemic much sooner, and certainly more fairly, if we just shared that technology with everybody who was able to use it safely around the world, and that was prevented by these companies. That story is well known in the Global South.

Sara Van Horn

Can you expand on how Big Pharma’s practices affect access to medicine in the Global South?

Nick Dearden

The pharmaceutical industry is not interested in making medicines for diseases suffered primarily by poor people in poor countries, like malaria and tuberculosis. In terms of diseases that affect both rich and poor countries, if cutting-edge medicines are stretching very rich countries with national health systems, it’s simply impossible to afford them in most other countries.

Let me give you an example of the first problem. There’s some interesting work into a new malaria vaccine, but lots of the initial research was done by the US Army. They handed the research to the British company GSK.

It turns out that GSK never really had much interest in finding a malaria vaccine, because it wouldn’t make huge profits. However, one of the key ingredients in that malaria vaccine is extremely useful in producing a vaccine for shingles, which is also suffered by people in rich countries, and GSK put all their time and effort into researching the shingles vaccine.

But as with COVID, it wouldn’t share its information on that key ingredient with anybody else, as that would damage their monopoly on the shingles vaccine. So GSK is sitting on information that could be vital in dealing with what is still one of the world’s worst killers.

We shouldn’t be surprised. When HIV was spreading through southern Africa in the ’90s, we already had drugs that could have prevented transmission from mothers to babies and massively extended lives. Yet nobody in southern Africa could afford those drugs. When the government of South Africa passed a piece of legislation that would have allowed it to import cheaper generics of those drugs, thirty-nine pharmaceutical corporations took them to court and accused the government of piracy — of stealing their “intellectual property.”

There’s currently a huge monkeypox outbreak going on in the Democratic Republic of the Congo. Five hundred people died last year, and twelve thousand people have been affected, but there has not been a single vaccine in the DRC. As soon as monkeypox came to the West last year, there was a rush for vaccines. Now the Global North has forgotten about it.

In my book, I quote writer Robin Henig, who argues that what constitutes an epidemic in the eyes of the medical establishment is one white person dying of a disease. There’s so much racism in the way we think about access to medicines.

Sara Van Horn

What is the political landscape that allows Big Pharma to monopolize lifesaving information and to act with such impunity? I’m thinking about the fact that Big Pharma has roughly two lobbyists for every member of Congress.

Nick Dearden

Yes, some of it is about lobbying — the industry buys off politicians who could vote against their interests. But I don’t think that’s the only component, or even the most important component.

Globalization has forced states to compete for investment. All countries want a scientific and technological development base within their countries, and so pharmaceutical companies can simply threaten to jump ship and move to another country. There are also very strong relationships with Big Pharma — “partnerships,” as they call them — built within academic institutions, which these institutions see as very important to why students want to attend their schools.

On many different levels, Big Pharma has society in a headlock. And we’re foolish enough to continue handing them the publicly created research and development that gave them that headlock in the first place.

Cal Turner

You describe in your book how Big Pharma acts as a parasite on public research and public health systems. Can you explain the relationship between the pharmaceutical industry and public health care?

Nick Dearden

We as taxpayers put an enormous amount of money into the research and development of new medicines and drugs. We then hand this research over with very few conditions on how it should be used. And we end up paying for that research again through very high drug prices, either as individuals through our insurance or through our public health systems.

It’s putting a phenomenal and unsustainable strain on both individuals who don’t have a national health system and on public health systems like the UK’s National Health Service [NHS]. In the last decade, the NHS has spent about £13 billion on just ten super-expensive drugs. These prices put incredible pressure on a service that is already unbelievably overburdened.

Sara Van Horn

You talk in the book about decolonizing medicine. What does that mean?

Nick Dearden

The first step is to look at health care as not simply about the production of medicines. Medicines are very important, but they’re not the only element of what makes us healthy by a long shot.

The biggest determinants of health are sanitation, access to clean water, decent housing, and employment. Focusing on vaccine production might be helpful, but it’s not going to radically change people’s experience of health in the same way that raising living standards in Europe and the United States did in the early twentieth century. Part of decolonization is focusing on the social conditions beyond the science and technology of medicine production.

But to the extent that medicine production is important, countries in the Global South need to be able to focus on the diseases and treatments that matter to their people. They need to do more of that research themselves or in partnership with each other wherever possible.

There’s already a lot of medicine production in India, some in Brazil, and a bit in South Africa, but it wasn’t enough to deal with COVID-19. Production itself needs to be scaled up, and some of that production is going to have to be public or heavily publicly supported. I would like to see production done in a way that overcomes the intellectual property monopolies that we’re seeing with Big Pharma.

I think it’s possible. In 2021, the WHO, in partnership with the South African government, launched the mRNA hub, a research center devoted to mRNA technology — partly to end the pandemic, and partly because mRNA technology could be very useful in dealing with a host of other diseases. The pharmaceutical companies wouldn’t give up their intellectual property, so researchers at the mRNA hub cracked it themselves and promised to share it with countries that can safely produce the new vaccines they are researching, including a tuberculosis mRNA vaccine. So far, they’ve shared it with fifteen different countries patent-free. That’s a radically different and far more sensible way of making medicines.

We’re supposed to be living in a knowledge economy, yet we privatize and monopolize knowledge, allowing corporations to sit on and profiteer off it for decades. I’m hopeful that two things come together: a decolonization project that sees the Global South build some desperately needed self-sufficiency and which also provides a model for the Global North of a pharmaceutical industry that operates in a completely different way.

Cal Turner

What would an ideal pharmaceutical system look like, in terms of manufacturing, funding, mission, and ownership?

Nick Dearden

The first thing is that it has to be far more regionally distributed than it currently is. The idea that the whole world can depend on a handful of countries to produce all their medicines, through the mechanism of the market, is nonsense. Countries now realize they need to be doing more research themselves, regardless of what help they might get from the West. I’m hoping that entails way more cooperation between governments, particularly governments in the Global South.

The second thing is that we already put vast sums of money into researching and developing potential new medicines. What we’ve got to do now is push our governments to ensure that they stop handing that research over to pharmaceutical companies without conditions. Big Pharma should not have their hands anywhere near the medicines that we rely on as a society.

The final thing is that we’ve got to tackle this big question of the knowledge economy and intellectual property. That means immediately stopping any trade deal that has an intellectual property chapter. There’s been some great thinking from people like Dean Baker, Joseph Stiglitz, Arjun Jayadev, and a UK group called Common Wealth about a public intellectual property system that is able to license that knowledge and charge differently for it depending on whether you’re a nonprofit, a small company, or a big company.

You could then use the leverage you have over that knowledge to begin restructuring the whole economy in the public interest. Remember this all goes way beyond medicines. Do we want gigantic corporations monopolizing new climate technologies or our food system? Wresting control of society from big business is vital for dealing with climate change, or even for living in a democratic society. We won’t get there unless we can stop them enclosing and hoarding our common knowledge.