Once more Big Pharma faces some bitter criticism.
A report, entitled Killer Profits: How Big Pharma Takeovers Destroy Innovation and Harm Patients, notes that "in just 10 years, the number of large, international pharmaceutical companies decreased six-fold, from 60 to only 10."
"Instead of spending on innovation, Big Pharma is hoarding its money for salaries and dividends," the report says, "all while swallowing smaller companies, thus making the marketplace far less competitive." In 2018, 12 of the biggest pharmaceutical companies spent more money on stock buybacks than on research and development
While pharmaceutical executives often attempt to portray such consolidation as a means to increase operational efficiency, the report states that:
"digging a level deeper 'exposes a troubling industry-wide trend of billions of dollars of corporate resources going toward acquiring other pharmaceutical corporations with patent-protected blockbuster drugs instead of putting those resources toward' discovery of new drugs."
Merger and acquisition (M&A) deals are often executed to "boost stock prices," to "stop competitors," and to "acquire an innovative blockbuster drug with an enormous prospective revenue stream." The report calls M&As "just the tip of the iceberg of pharmaceutical companies' anti-competitive, profit-driven behaviors".
"Pharmaceutical companies often claim that lowering the prices of prescription drugs in the United States would devastate innovation. Yet, as prices have skyrocketed over the last few decades, these same companies' investment in research and development have failed to match this same pace. Instead, they've dedicated more and more of their funds to enrich shareholders or to purchase other companies to eliminate competition."
Instead of producing lifesaving drugs for diseases with few or no cures, large pharmaceutical companies often focus on small, incremental changes to existing drugs in order to kill off generic threats to their government-granted monopoly patents.
Big pharmaceutical companies are not responsible for most major breakthroughs in new drugs. Rather, innovation is driven in small firms, which are often spun off of taxpayer-funded academic research. These small labs are then purchased by giant firms after they've assumed the risk needed to develop a blockbuster drug.
The present pandemic is a case at point - a worldwide crisis, that requires a worldwide solution. This is a classic case where there are enormous benefits from collective action and few downsides. This is not a case, like seizing oil or other natural resources, where if the United States gets more, everyone else gets less and vice-versa. Sharing knowledge about vaccines, treatments, and best practices for prevention is costless and the whole world benefits if the pandemic can be contained as quickly as possible. The logical path would have been to open-source all research on treatments and vaccines, both so that progress could be made as quickly as possible, and also intellectual property rights would not be an obstacle to large-scale production throughout the world. This way, the information would be quickly shared so that researchers and public health experts everywhere could benefit. This sort of global cooperation is obviously not on Big Pharma's or capitalism's agenda. Open-source research and international cooperation could call into question the merits of patent monopoly financing of prescription drug research. As a result of capitalism's failures, millions of preventable infections and tens of thousands of avoidable deaths.