Crash Course on Rentier and Monopoly Capitalism:

#3 Rentierism and Big Pharma — with Nick Dearden

In this episode we do a deep dive into the realm of Big Pharma. As with Big Tech, this industry epitomises large-scale rentier income extraction by corporations. Despite the industry's assertions that the costs associated with drug research and development justify high prices, the stark reality of profit margins unveils a different narrative.

We will further ask Nick: 

  • How did pharmaceutical companies transform over the past decades, and what implications does this have for the accessibility of medicines?

  • What characterizes the business model of Big Pharma, and why should this be a matter of concern for us all?

  • What is a pathway toward change in the pharmaceutical landscape? Which stakeholders should play a role, and what specific changes are imperative for progress?

Nick Dearden
Global Justice Now

For over 20 years Nick Dearden has been a campaigner against corporate globalisation and for global economic justice. He is also the director of the British NGO Global Justice Now. Last October, he published his latest book on the pharmaceutical industry: Pharmanomics. How Big Pharma Destroys Global Health. 



00:02:43 Rodrigo Fernandez: So this is the third episode on the series on monopoly capitalism and rentier capitalism. Today we will be talking about Big Pharma, Big Pharma next to big tech. These are two sectors that really show how monopoly power and monopoly capitalism today is working out for some and not for the many. (...)

00:04:00 So we're very happy to have with us Nick Dearden. He's an activist, a campaigner for over 20 years, working on issues on corporate globalization. He is the director of the british NGO Global justice now. And last October, yeah, this book came out at Verso called The pharmaceutical industry, pharmanomics, how Big Pharma destroys global health. And so, as we were discussing before, yeah, Nick has been working on a campaign on big pharma for some years. So maybe it would also be good to dig into that a little bit. But before we go there, I would like to go straight to the book and to the content. So there's many issues you describe in this book, but if we would like to get more familiar with what pharmonomics is about, I thought a good entry point would be to discuss what you label as financialization. And so in your book, you emphasize that there are three parts to corporate financialization that are relevant for the pharmaceutical sector. So the first one is maximizing shareholder value or maximizing payouts to shareholders. The second involves growing debt and cash holdings by these firms, and the third revolves around intangible assets. So my question basically is, could you guide us through these different components and tell us what this business model, this financialized business model looks like?

The financialised Business Model

00:06:00 Nick Dearden (ND) Thanks very much, Rodrigo. (…) Ffinancialization underlies the growth of monopoly power in the neoliberal economy over the last 40 years. And I should say that those metrics you pick out, really, I'm indebted to you and other experts like you for those metrics, because financialization has been a kind of buzword, buz term for several years now, but it's really hard to get at the heart of what it means and how you can measure it. And so I thought it was great that you and experts like you kind of gave us these three measures as a way of showing whether an economy was financialized. And I used it to look at the pharmaceutical industry.

So, yeah, I mean, shareholder value, for me, this is utterly critical as to how we've developed over the last 40 years an economy which is almost obsessed with short term profit maximization at the expense of everything else. The mechanism for doing that is so clearly about creating a series of incentives, often through CEO directly, saying CEO pay is dependent upon shareholder return. Or indeed, CEO pay largely is made up of shares, and therefore it affects the CEO as well. But shareholder value, absolutely critical.

And the idea that the primary duty of a private corporation is returning as much as they possibly can to their shareholders, not reinvesting in their business, not investing in their staff or their factories or whatever else it is, but returning money to shareholders. And in the case of the pharmaceutical industry, you can see it very, very clearly. So between 2000 and 2018, and this may be a figure you originally quoted, Rodrigo, the 27 biggest pharmaceutical corporations in the world saw a 400% increase in the money that they return to shareholders every year, taking it from around 30 billion in 2000 to around $146,000,000,000 a year by 2018. So, absolutely huge amount. And when I looked at individual pharmaceutical corporations, you find every year, almost without fail, the amount that those corporations return to their shareholders well exceeds research and development budgets in many years, even exceeds the amount that they bring in in profit, even exceeds their net income, which seems incredibly counterintuitive to people. I mean, how can this be? That they're paying their shareholders out more than they're actually making in profit in a year?

Debt and Cash Holdings

(00:08:59) And that brings you to the second metric, which is debt and cash holdings, which kind of holds up this whole system. So that the neoliberal economy is based upon, upon debt, upon increasing amounts of so called investment, but by which you're essentially taking debt on, that allows you to grow your operations ever bigger, it allows you to develop monopoly positions, merchants and acquisitions, all this kind of stuff. But at the end of the day, it comes with a cost. And the cost is you are beholden to the people who've lent you this money. And the people who've lent you this money, have lent you this money, often not entirely, but often not because they care deeply about the development of medicines, but because they think you can give them a better return than anybody else in the marketplace.

So you are competing against every other economic entity to return as much as you possibly can to these investors and shareholders. So that's the second bit of the equation.

Intellectual property

(00:09:47) And then intellectual property, which I know we'll come on to, and intangible assets, these are things like patents, like copyrights, like trademarks, which have become so important to the balance sheets of all manner of corporations.

And I mean, looking at Naomi Klein's work, no logo, in which she describes this enormous change taking place in global capitalism, from where corporations began to realize that what was the really profitable bit, what really added value to what they were doing, was not the stuff they were actually making. It was not the McDonald's hamburgers or the Levi's jeans. It was the trademark. It was the name. It was the brand. Because actually, what they were producing was no different to what anyone else was producing. What was important was the market power that was given to them by these intangible assets.

And for the pharmaceutical industry, it wasn't so much the brand, but it was another form of intangible asset; patents. And the pharmaceutical industry recognized in the 90s that what was really important to it was not its factories or even its research per se, was not its staff, was its patents. And they set about creating a framework in which they could squeeze as much as possible out of their patents, regardless of the cost to the rest of society, regardless, in some senses, of the cost to their own business model, which I think we'll come on to talk about. But certainly today, these patents, these intangible assets, are absolutely at the heart of big pharma profits, at the heart of the big pharma balance sheets. And that has, as we'll come on to talk about, really profound implications for how this business model works. But in short, this is an industry which, as a result of being hyper financialized, I would say this has happened to all sorts of businesses and industrial sectors throughout our society. But I would say big pharma really was in the vanguard of this move. And it's no surprise that a former hedge fund manager like Martin Shkerli, who became this kind of farmer bro, in an interview, said, he was asked, why did you start a pharmaceutical company? And he said, well, I came from hedge funds, and I realized that hedge funds couldn't make me as much money as pharmaceutical companies can.

Intellectual property business model

00: 12: 05: Sara Murawski: So about this intellectual property business model, could you elaborate a bit more on that also? How does it indeed imply consequences for society? What are we experiencing that respect, and why is it so problematic, you think?

ND: Well, patents and intellectual property in general is very interesting, isn't it? Because we've been told for the last 40 years, everything's about free markets and perfect competition and so on. And of course, we know, we've discovered throughout your crash course series, that's not really the case at all. But patents, it's really obviously not the case. What patents do is they give individual corporations complete monopolies over the production of certain medicines. And the logic behind that is, well, it's very costly to produce a medicine. If you simply allow somebody else to begin producing it on day one, you're never going to be able to recoup the money that you've made from that investment, and therefore you will disincentivize the creation of new medicines.

But actually, what we found is, as patents have become stronger and stronger, tighter and tighter, more and more stringent over the last 40 years, and that's one of the big developments that's happened in the neoliberal period, that patents have become more and more enforceable, more widespread, deeper, more extensive. Actually, it hasn't bolstered innovation at all. And I think what I try and do is trace why that's the case. And essentially why it's the case is the pharmaceutical industry has become addicted to making absolutely sky high profits through this financialization process. And it's recognized that patents are the number one aspect of its business model that allows them to do that.

And so if you're really interested in maximizing the amount of money you're making out of your patents, then what you need to be thinking about is not, am I employing really great researchers and medical experts? It's, am I employing really great lawyers and lobbyists? Because it's the lawyers and lobbyists that are going to enforce your patent rights and ensure that your patents are even more enforceable and even stronger in the future. And so that's what the pharmaceutical industry has spent the last 40 years doing. And it's actually degraded its research and development capacity. It's degraded its productive capacity in order to put as much as it possibly can into maxing out patents.

And the consequences of that are really quite stark. So most of us think, and this is a story that's been woven by the big pharma industry for many years now to ward off regulation and so on. Well, okay, we might have problems with the way the pharmaceutical industry makes its money. We might not think they're very nice. We may think they're pretty greedy and their medicines are expensive, but at least we have medicines, because you imagine a world without medicines. And that's very frightening. It's frightening to me. And so they've kind of told us this story, well, you have to put up with all of this, because at the end of the day, we make your medicines. But actually, the more they've told that story and the more they've become dependent on financial markets and on intellectual property, the less they've made our medicines. And what I discovered is these aren't really medical research institutions anymore. And that's a product of this reliance on patents. It's a product of this reliance on financial market. They actually behave more like hedge funds.

Business models

00 :15 : 38 (RF) Now, if I just can come in briefly just to summarize how I understand also your book and other research is that large pharmaceutical firms used to do research, bring out new drugs and so on. And now, increasingly, they buy up intellectual property from other firms. So it's through mergers and acquisitions, taking on debt, and then growing through mergers and acquisitions. And so they are appropriating intellectual property, often created by public money, public institutions. And they are the ones with their connections and their market power that are able to convert it into money, so they can monetize it through their specific connections they have. What would be a long term consequence of this? Because what we're seeing is that the ones who used to fill the pipelines of research and development and new drugs used to be these large pharmaceutical firms. But now, yeah, that is drying up. They're buying up these princes all around them that have promising new drugs. Where are the new drugs coming from? And is there a need for new drugs?

ND: So new drugs are coming primarily from research that's funded by the public purse. Now, the research may be done by university departments, so it may be done, in one sense, by the public sector directly, or it may be done by small biotech companies. But wherever it's done, the only chance, really, of that research seeing the light of day is they get bought up by Pfizer. And the problem with that is a), we're getting a very bad return for public investment, right? Because at the end of the day, these drugs are not cheap at all, and they're putting an enormous strain on our health systems. So we're paying twice for these drugs.

But also the drugs that get taken forward are only getting taken forward because there's a belief that they can keep the profits at astronomically high levels of these companies. And that means you're only interested in certain types of drugs. You're interested in drugs which can ease chronic conditions for people who live in rich countries or people who are rich and live in the global south, who can afford to pay a lot of money on an ongoing basis for a drug; cancer medicines, for which the sky is the limit in terms of what people will pay.

But beyond that, there's very little interest in particular for my concern as an organization interested in access to medicines around the world. There's no interest at all in diseases that are suffered by poorer people in poorer countries. Right. You can't make any kind of profit off them, so they're not very interesting. But even here in the west, I mean, before COVID there was almost no interest in vaccines. Not because vaccines can't make a profit. They can make a profit, but it's a reasonable profit, it's not an astronomical profit. So vaccines weren't very interested.

Antibiotics. There's very little interest in developing new or alternative antibiotics, which is one of the reasons we are facing an absolute, what has been called an antibiotic apocalypse, where by 2050, you're looking at tens of millions of people who'll be dying every year of previously preventable diseases, because any new antibiotic or an alternative antibiotic that you bring online today, you're only going to use very, very sparingly. Pharmaceutical companies can't make a lot of money for that while they remain under patent.

So the diseases that are causing pandemics, the diseases that are causing mass death among people who aren't rich, but also diseases that may cause mass death for us, too, are not really interesting to the pharmaceutical industry. And actually, what they spend most of their time doing is not even producing these blockbusters. It's making tiny tweaks to drugs they already own so that they can apply for new monopolies on it. And the worst I came across in the book, which is an extreme example, but was a company had put a powder pill into a plastic capsule and applied for a new patent on it. You could pull the capsule apart and the powder pill fell out. Right? I mean, you're talking about the lowest possible change they can make to a medicine and also be granted a new patent on it. And that's one of the reasons why, in research study after research study, they found, of the mediciners that come onto the market every year, a tiny fraction of them are genuine breakthroughs, and only a minority of them are even a minor benefit on what was already on the market, because that's what's driving those are the incentives in the industry. It's not about making medicines that we need to create healthier societies or to fight the diseases that are most problematic.

Winners of the pandemic

00: 20: 32 (SM) Yeah, maybe let's zoom in a little bit on something that we all experienced recently, the pandemic, which was, I think, also very blatantly an example of public investments, expenditures and private gains. Right? So there we witnessed how the pharmaceutical sector, and mainly, like the big four greatly benefited from the pandemic, both financially, so huge profits, but also in terms of reputation. Right? They were all of a sudden, like the great heroes of the pandemic. Whereas, as you also rightly state, they had hardly invested in vaccines to fight epidemics like these in the preceding years. And most actually, of the COVID vaccines, or Covid like vaccines, were developed so swiftly because of the huge amount of public money that was spent on former research. Right? Yeah, maybe also more from a campaigner perspective. So how did this narrative shift? Because I think a lot of people are quite concerned about the power of big pharma, and they know this is going on. A lot of people know how the IP issue works. But still, with the pandemic, all of a sudden, it was like, oh, amazing. And they did it so fast, and they're the new heroes, right? So how did this happen? And did governments learn anything from this situation? Do you see any change in their policy regarding how they relate to big pharma? But also, championing big pharma as the big winners of the pandemic, I think, has also very bad consequences for how people perceive big pharma very much.

ND: Well, they did some great pr, didn't they? And, I mean, they were honest about it. In an interview with Albert Bourla, the head of Phizer, in the middle of the pandemic, he said, this is not just about profits. It's also about how we create a better image for ourselves. Because at the time, Pfizer had been rated, like, the least popular company in the least popular sector in the United States. So they really went to town in terms of trying to convince the public that we've created these life saving, pandemic ending drugs in record time. We've got them to record number of people's arms, and that's why you need us at the end of the day.

And the truth, and this was one of the reasons I wrote the book, really, was because that's not what happened at all. I mean, back in 2018, the World Health Organization was absolutely desperate for big pharma companies to begin investing in pathogens that could cause an epidemic. Hardly any of them were doing anything. Coronavirus. Nothing at all. Even though that had caused epidemics in other parts of the world. That was all public research or publicly paid for research. And then the amount of public money on the table went stratospheric. When the pandemic actually broke out, the US operation warp speed alone put $17 billion on the table, essentially just handed over to these companies so that they could begin taking the research that had already been done by the public sector and turning it into vaccines. You could get into people's mean. This wasn't just like campaigners like me complaining about this. I mean, there's a great quote from an FT article in the book from a member of the American administration who was negotiating with Pfizer to try to buy Pfizer vaccines at a reasonable price. Pfizer were trying to charge $100 a shot for their vaccine. And this guy, you can kind of see him tearing his hair out and he's like, but it isn't even Pfizer's vaccine. The fact we call it Pfizer's vaccine is one of the biggest marketing coups in the history of this sector.

But I think there was also an awareness, and there was a particular awareness, of course, among the many, many countries in the global south who were getting none of these vaccines, particularly the mrna vaccines. I mean, there was nothing on the table for them. And that was essentially because Pfizer and Moderna sold everything to the richest countries in the world. They said, we'll get to everyone else at some point in the pandemic. Of course, they never did, because a year into the pandemic, then rich countries needed to buy boosters, third doses, fourth doses, and they never got to those countries.

But that was a wake up call, and I think it was a wake up call, particularly for the richer developing countries. So countries like South Africa, like Brazil, that aren't used to being right at the back of the queue and suddenly found themselves in exactly the same position as the poorest countries in the world, just can't get hold of anything. And that was a huge wake up call. And those countries have been told for years now. Well, don't worry, you don't need to have all of your own research and development. You don't need to have your own manufacturing facilities you can rely on the market, can import stuff, right? We don't need to do everything ourselves. Well, they couldn't. When the shit hit the fan, they couldn't. And they also couldn't rely on any form of charity. I mean, there was almost no donations. I mean, apart from the United States, the only country that gave any substantial donations at all, no one else really gave anything meaningful. So they woke up to it.

I also think it was a bit of a wake up call for the United States government too. And I think that's one of the reasons that Biden fairly early in the pandemic, came out and said he supported a waiver of intellectual property. Because, you see, the thing is not just that we weren't selling this stuff or that we weren't donating this stuff to other countries, it was that we wouldn't give them the know how to produce it themselves. And that was the thing that I think people really couldn't get to grips to the idea that actually there's loads of factories that can make this, loads of laboratories that can make this, but won't. Pfizer and Moderna will not share the recipes or the know how, because the intellectual property and the control of that intellectual property is hardwired into these corporations, which, of course, means we couldn't vaccinate hundreds of thousands, millions.

Think of how many deaths could have been saved if we'd actually shared that know how. And I think even at the level of the US administration, which has always been one of the most pro big pharma countries in the world, there was a recognition. Well, hang on a minute, we paid for this and you're claiming we didn't pay for it and you're not taking any instruction on what we can do with the research that we paid for. That, I think, rankled with senior administration officials, particularly when it became clear that if you had had a vaccine and you were living in the global south, ods were in the middle of the pandemic, you would have had a chinese vaccine. And if you think about what that means for geopolitics in the world, that was deeply worrying for the US.

00:27: 12 (RF) But the EU was equally adamant in protecting IP rights.

ND: The EU was worse. Yeah, the EU was worse. I mean, the worst countries in the world were Britain and Germany and Switzerland and Norway not very good either. They were the worst.

But would you say this episode that, well, clearly showed the defects of the IP regime and how unfair it is and how it clearly doesn't work for the majority of the planet? Didn't we already see this with the HIV crisis? But that wasn't a sufficient wake up call somehow?

The HIV crisis actually happened at the very beginning of the current intellectual property regime. So I should explain, intellectual property is not something that I think most people think of as a trade issue. Right. It's not about me selling you goods and you selling me goods, but actually, because when the WTO was founded in the mid 1990s, effectively, trade rules became way more than we used to think about as trade free trade issues, and they came to incorporate so much of the rules that underlie the global economy. And the industries like Pharma argued very hard; the WTO needs to oversee and enforce intellectual property rules and do that everywhere in the world. Everywhere in the world needs to have the same level of intellectual property as the United States. Now, that was crazy at the time.

I mean,it's hard to explain how big a change that was, because until the late 70s, many european countries didn't put intellectual property on medicines. It was just not the done thing. It was not considered. I mean, my own country did it fairly early after the second world war. But even so, in the 60s, when governments couldn't get antibiotics at a price they could afford, they overrode those patents and bought them from Italy, which didn't have intellectual property on medicines. Right. So the idea in the mid 90s that most developing countries should put intellectual property provisions onto medicines was quite crazy. But it happened. They got it through the WTO, and this was a big thing. Sorry.

Global system

RF: And just to be clear, it only becomes powerful as a global legal infrastructure if it applies to all countries, if there's no way out of it. Because if just a few countries have bilaterally agreed to do this, you can go through another country. But if the global trade system is organized for all in such a way, you can never go around it.

ND (00: 29: 46) That's right, it is. And one of the particularly problematic things they tried to do was to stop countries importing. This didn't all come in one go. In fact, for the lowest income countries in the world, they're still not bound by these rules. But that's a problem in itself, because many low income countries can't really will struggle to make some stuff, although not all of it. Bangladesh has a good pharmaceutical industry, but what they would say to the next level of countries up is you can't import that stuff. So you have to abide by western intellectual property standards. If you're Brazil, Colombia, South Africa. And South Africa was the real problem, because South Africa in the early two thousands, of course, HIV was horrific, the way that it was tearing through society, and it was a death sentence for people, despite the fact that by that point, we had drugs here in the west that you could take that would indefinitely extend your life and prevent you passing HIV on to your unborn child. So we had that in the west.

But you were talking about, it was $10,000 a patient for a course. I mean, that was completely unaffordable. Nobody could afford that in South Africa. So what the South African government did was say, okay, maybe we need a bit of wriggle room on these intellectual property laws. Let's give ourselves the right to import where we can't make this stuff ourselves, but we can get it much cheaper from overseas. Let's do that. And they knew that in India by that time, you could make these HIV pills for a dollar a pill. So they said, we can import this and we can treat people. And as soon as they did that, 39 pharmaceutical corporations slapped a lawsuit on them, accused them of piracy for stealing their intellectual property, and they took the ANC government to court. Now, they backed down eventually in the face of enormous public opposition, as you can imagine. But it sent a chilling effect, I think, through the rest of the world because people were like, well, that's a bit dangerous. We don't want that to happen. So the bullying, and that bullying, by the way, was helped by the US government and by the European Commission as well. That bullying sent a real chilling effect down the spine of countries around the world. And it's one reason, I think, that countries have been extremely reticent to create their own pharmaceutical industries.

IP Protection and right to health

00: 32: 11 RF: Maybe this would be a good moment, Sara, for you to come in with some questions on IP protection.

SM: I've been working on trade and investment forever and unfortunately it's a very underestimated topic. Maybe we should do a crash course on it one day because there's so much enshrined in trade and investment treaties. I'm wondering about what you're saying about the US being concerned now. There might be some cracks in the system because a lot of vaccines in the global south came from China, right? But that's more, of course a geopolitical argument rather than anything that has to do with morality, solidarity or what have you not. But I noticed that there were a lot of campaigns also, and still ongoing during the pandemic, to waive the trips thing. And I think not all of them were successful. But can you point to some successes and ongoing campaigns and where do you see the next wins? Because indeed there's a whole geopolitical role about a lot of things in the world. Critical raw materials, but also IP. But of course, in the end, the goal should be that everyone has access to medicines, right? Because we all have a right to health, how to ensure that? And what kind of legal steps can we envision in the next years to change the regime, actually, for example, indeed, when it comes to trade and investment rules, but also the possibility of suing countries if they just want to fulfill basic human rights.

ND: Absolutely. So, look, the main thing we were campaigning for in the pandemic was a waiver of intellectual property on Covid vaccines and medicines and diagnostics for the length of the pandemic. So it was fairly reasonable and limited.

A waiver would be that the intellectual property provisions at the WTO don't apply. So if a government decides we can make this, and we want to make it, they can get on with it, and they don't have to worry about being sued or lengthy negotiations with the patent holder. Now, that never got passed, there was a very watered down version of it that got passed extremely late, but it wasn't what we were demanding. And I think there were lessons in there for campaigning on these kind of global trade rules.

But I don't think that means it was a failure, because what I think it did, what I think the campaign did, was to give a kind of umbrella of resistance to all sorts of governments and social movements around the world who thought, we really need to do things differently. And there's something really interesting about the pandemic, which is actually, by the end of the pandemic, how many countries have made their own vaccine? There was quite a few, actually, that have made effective vaccines from Cuba to Vietnam to Thailand to South Africa. That's new, that's really new.

And South Africa went one step further. South Africa said, we need to know how this mrna thing works, because it's not just about COVID. MRNA is potentially a revolutionary vaccine platform that could be used to inoculate against HIV, against malaria, against tb, against certain types of cancer. This cannot just be the property of a small handful of companies. They asked Pfizer and Moderna to help. Actually, Pfizer and Moderna, surprisingly did not help, but they just said, with backing from the World Health Organization, we're going to do this anyway. And they cracked it.

They worked out how they could make one. They weren't able to bring it online before the pandemic ended, but they're now working on a tb vaccine, I think, at the mrna hub in Cape Town.

But then they also said, we're going to do something really radical here. This is not something we own. We will share the know how with all governments and producers that we think can produce this thing safely. And there are twelve governments they've already shared this information with. They've come over and learned how to do it. Including Brazil, including Argentina, including India. So this is big stuff. This is research and development potential, which has been stymied, I would argue, by intellectual property provisions at the WTO for years and years and years, which is just kind of starting to happen. I mean, they're just kind of behaving like it doesn't exist. And I think that's really exciting.

And I think the wake up call to governments, even if they're not doing research and development, the wake up call to governments around manufacturing was also huge. So there are all sorts of experiments with factories being opened in many countries. In Egypt, I mean, China helped Egypt open some factories to produce its vaccine and said, we'll transfer the knowledge to you. So that's really exciting. But I do think there is something that goes beyond solidarity, which is also changing in the United States, which also helps make this possible, which is the United States. For domestic reasons, the pharma industry is hating the United States because they've been able to charge whatever they want for their medicines for the longest period.

And of course, within the last few years, this awful opioid scandal, people who haven't seen painkiller, it's a hard watch, but it's well worth understanding just how deep this has gone into the american psyche. And I think that has taken hold through the Bernie Sanders campaign, into the Biden administration. Big pharma has kind of become enemy number one, and they are not interested in protecting the rights of this industry anymore.

I'm not saying they're going to radically transform the industry at a global level. But the United States traditionally has been one of the leading defenders of intellectual property and the pharmaceutical industry at a global level. And it is not at this moment in time playing that role. And that gives space for us as campaigners to push around the world governments to take that leap into creating their own research and development and their own industry and running those industries in radically different ways to the way that we see it being run at a global level.

What about the EU?

00: 38: 39 SM: And what about the EU? Because you said the main problematic countries are based here, like UK, Germany, some Nordics. Do you see any change here happening?

ND: There is change, but it's very hypocritical. So there is change happening in terms of how it affects us at the EU. The UK, I would say, is not massively interested, although even in the UK, I mean, we've just been renegotiating the price that the National Health service pays big pharmaceutical companies for their products. And even there, the UK government was pushing back on what big pharma wanted. But at the EU, there's lots and lots of talk. There's been lots of talk in the parliament, european parliament, there's been lots of talk in the commission about how we deal with the fact, a) of another pandemic and b) of the fact there are now big medicine shortages around Europe. So something about this system is not working. And also a recognition that even if we get some big breakthrough in coming years, our health systems, frankly, even our very well funded health systems, are not likely to be able to afford very many of the medicines that come from that.

So it's a kind of a recognition, even at a very high level, that something needs to change here. So there's been discussion, in France, they've been talking about public manufacturing, more public elements to the industry. They've been talking about how they override patents, compulsory licensing, it's called. I mean, this is always a right of countries, but it's a right that the EU has not tended to use and certainly not encourage other people to use.

So they're now saying, well, actually, no, we need to consider this. This may be necessary. And I think this is all part of the change in discourse around global economics, away from the idea of ever longer supply chains, ever more free markets. Let the market do its work and everything good will come to you. That's changing. And there is a recognition of the need for state intervention, for state planning. Now, what that looks like is still up in the air and there's a huge debate to be had around it, but there is a recognition of that. The problem with the EU at the moment, I think, is that it is still, and the UK and even the US, it is still blocking the demands of southern countries at the WTO for a relaxation of intellectual property rules.

Spaces of Hope?

00: 41: 00 RF: Like always. Well, comparable to the UK. The Netherlands is walking the neoliberal path, and in the Netherlands, the facilities, I think that they were erected in the 1950s to mass produce vaccines, they were just privatized. So it's a weird time to be doing that. But, yeah, maybe we could turn to what could be regarded as spaces of hope. In your book, you discuss a report that I believe your organization also co authored, or you campaigned for, that was written together with Mazzucato and was titled The People's Prescription. Could you perhaps give us more details? What is this program about? How can you use that to transform things for the better?


ND: So Marianne Mazzucato, as you know, is very keen on this idea that she wants to dispel this myth that innovation and creativity comes from the private sector. Her argument is, basically, it doesn't. It comes from large amounts of public sector money and strong objectives, or missions, as she calls them, which the public sector sets. And so she thinks pharmaceuticals are an amazing example of quite how bad the private sector is when it comes to innovation and creativity. The most risky parts of almost all drugs that are invented is done by the public sector. So her argument is, and particularly, and I think this is really going with the grain of the times, economic thinking of the times at the moment. Her argument is, if we want cutting edge drugs of tomorrow, we've got to set some missions to create those drugs. We've got to put the money behind it, but we've also got to put a regulatory system in place that means that any resulting intellectual property cannot simply be privatized, and we allow a bunch of investors to essentially max out what they can make on it. There needs to be a completely different way of doing this. And so we wrote this report for what that could look like, a government coming to power. What kind of a framework could they set to do this? And sure, it might cost them more in terms of the public money they need to put in the first place, but at the end of the day, they wouldn't be paying twice for things, because they would then be able to put conditions upon any drugs that came out of that research so that it wasn't simply possible for someone to walk away with the intellectual property and charge whatever the market will bear for the next 20 years for it. So it's an appealing case, I think, for decision makers. I would also argue, and there's some of it in there, there needs to be public options, like you were just talking. I mean, our government did the same with vaccine manufacturing. It privatized the vaccine manufacturing facility that we'd finally got ready by the end of the pandemic to privatize it. It's now sitting mothballed. A private investor has taken it over. They're not really interested in making vaccines. It seems they're interested in seeing what they can get on the market by selling it or taking it apart. I don't know what they're doing with it, but anyway, it's not doing anything.

Monopoly Power

00: 44: 33 RF: Doesn't this also go a bit to the heart of the problem of monopoly power, that there's many problems involved with monopoly power. Prices, productivity declines. But, yeah, it contradicts with democracy and the democratic decision making. And it leads to state capture eventually, large corporations setting their own rules. So isn't this the terrain where the problem lies, that these are such a big corporations that they basically set their own rules? And, yeah, it is very hard in that structure to change anything.

ND: It is hard. I'm not saying it's easy, but that's why I do think we need the public option in there.  Look, what we found with COVID was all these companies, like I said at the beginning, had kind of degraded their productive capacity because there wasn't enough money made in factories just pumping this stuff out, and yet we put nothing else in place to replace them. Decision makers still kind of believed their own rhetoric that the market would provide, even though we could see they were scaling back their productive capacity and their research and development and whatever. Research and development we did put money in to mean that there was still stuff in the pipeline, but when it came to manufacturing, we did very, very little.

And so what that meant was we were dependent on them. They had us over a barrel, essentially, when the pandemic started.

We can't let that happen again and again. I'm actually looking at the United States owhere I think there's something quite positive happening. Insulin. I mean, the problem with insulin is partly intellectual property, but it's a bit more complicated than that. But anyway, there are huge monopolies on insulin, despite the fact it's been around for more than 100 years, which means that most Americans who need insulin, struggle to afford it and have to ration, at great cost to their health and possibly even their lives. California has now said, to hell with this. We just need to produce this stuff at cost. And they've put 100 billion on the table and they've said, we're going to get a nonprofit to manufacture this stuff. I think it should have been completely public. But anyway, they've gone with a nonprofit company which is manufacturing this stuff.

Seven other states in the US have now said they're going to do the same. This is the heart of free market capitalism, where they're essentially saying, we're going to have at cost production of medicines, paid for by the public, available for anyone who needs it. I think that represents an enormous change, and I think it's something we've all got to learn from and there's some real hope there and some stuff I think, to look into in terms of campaigning for a better system.

antitrust legislation

00: 47: 12 SM: Before we go to the audience, we also have a question from Jenny from our team, and she's asking whether there's a role for antitrust legislation at the moment. So we're also going to discuss these things in the next episode. But would it make sense, you think, to break companies up? Is that feasible, let's say, in the next, well, five years? I guess the EU needs to decide upon that, right?

ND: It absolutely is, and I think there is some appetite for it. Again, you see a bit more appetite in the US for this, where, of course, the focus everywhere is on tech and the size and power of the tech companies. But Pharma too, there have been recent mergers and acquisition that have been halted or are under investigation in the United States. And that's really important. I mean, these companies have been getting more and more and more powerful and bigger and bigger and bigger since the second World War. Really. It was after the second World War that they managed to bring together lots of different bits of the production chain. So that right from research and development through to selling the pills, you had one company sitting on that. And of course, in the age of neoliberalism, those mergers and acquisitions just got greater and greater and greater. And again, of course, that means that the power these corporations hold over society isn't just about the fact that they have monopoly rights to produce a specific medicine. It is the fact that there are not very many of these companies left anymore. I mean, they are bigger and bigger, huger and huger companies. And so when they make a decision about actually it's not profitable to be in vaccines anymore, that's a huge problem because you don't have anybody else who's saying, well, don't worry about it, we can make those. We are dependent on it. So I absolutely think antitrust law is a really important part of this equation.

Against Big Pharma and the far right

00: 49: 03: RF: Maybe we can go to a question by a participant, named Kade, I don't know exactly if it's an organization or a person, but the question reads, how do we campaign effectively to resist big pharma without any wins being co opted by the far right?

SM: And maybe you can take into account european elections coming up.

RF: Yeah, and German elections and many others

SM: And the US and many others, it’s election disaster year.

ND: It's a really good question. And I don't know if part of that question also refers to some of the conspiracy theories around medicines, vaccines and so on.

RF: Yes it does, he or she answers.

ND: So that was a huge problem, right? We were campaigning on this through the pandemic, and I remember going on kind of an online protest, and we had a real protest, and I remember being cheered on by some people who were vaccine skeptics. And then they kind of realized what we were calling for, and they were like, oh, no, they're pro vaccine there. We don't like them. It got very confusing.

And I think for many people, we're talking about why the pharmaceutical industry structurally works in this way. And of course, anybody who is inclined towards conspiracy theories can use that to make up a story about how this company is run by, I don't know, lizards or paedophiles or whatever who are trying to poison us. One of my arguments around all of this, actually, is the whole structure of the industry does not help at all in terms of our ability to convince people that many of these vaccines are a good thing. The structure creates conspiracies almost. It certainly creates a lot of suspicion, and I think quite rightly so.

Actually, one of the, for me, part of this campaign is precisely about saying this is science, technology, and medical innovation, which is too important to be left to enormous monopolies to profiteer off and to profit from. You said, Rodrigo, earlier, that so much of this is actually about democracy when it comes down to it. And I think that's exactly right in this country. And I guess it's worked in a similar way throughout other european countries, too. After the second world war, there was a huge movement and a big argument around whether you live or die when you're ill, whether you get treated and how you get treated should not be dependent on the money in your pocket. It should not be dependent on how wealthy or poor you are. And we created the national health system, and most people in Britain still believe the National Health Service is probably the pinnacle of what a civilized government has ever done in this country. And despite all attempts to privatize it, they've not quite been able to take it off us. I think those kind of arguments where you bring down...

… So what I say now is taken for granted, that nurses and doctors and whatever, they don't work for us personally, depending on how much you pay them, the treatment you get is what you need. Why is it that we accept that, but we seem to think it's okay that the medicines that are administered in those hospitals are created in the most cutthroat, capitalist way you can possibly imagine? It doesn't make sense. So how can you make a kind of democratic argument, and I think that's beginning to happen from what I've seen in the EU as well. So I know there's a conference coming up in a couple of months time around public pharmaceuticals in the EU where known experts, academics, health practitioners, I mean, the things being run by some doctors, I think are saying we need to make medicines democratically in the public interest. And for me, that is okay. It is clearly a stronger argument where there's a case of a medicine you can't get hold of because of this particular intellectual property over here. But I think there are stronger long term arguments that we can make that say the medicine system that we need and that we want and that we can create is part and parcel of building a democratic culture.

The system has eaten itself

00: 53: 13: RF: Would you say that basically it has gone too far? This pharmaceutical system is not working? It wasn't working for a long time for the global south. But now, increasingly, as we are seeing the consequences for the global north, that we are seeing these spaces of hope emerging, of changes in the global north, but also in the global south. You were mentioning new production and trade facilities being set up by South Africa, Argentina and so on. So is it basically that the system went too far and this is creating these changes?

ND: Well, it's eaten itself. I mean, I think it's true of a lot of capitalism. Capitalism is eating itself,

RF: Cory Doctorow  would call it enshittification

ND: Right, exactly. I think there's a recognition of that amongst even some people who quite like the system. I read the Financial Times. I think it's really interesting paper to know what investors are thinking and so on. But there's an editorial line in the Financial Times for the last few years now, which is kind of like what I would call an enlightened capitalism, that actually yeah, it's gone too far. And if you simply allow these individual capitalists to do anything they want, the whole system is coming down. So for them, there is a reason for a government being able to take a step back and say, in the interests of the whole system, we need to regulate this in a different way. Now, we may not want that system at all. We may want a fundamentally different system, but clearly the fact that argument is happening gives us a space to begin arguing for that.

And I think with pharmaceuticals, you have some really surprising people. I mean, we've got somebody in the UK called Jim O'Neill. He used to work for Goldman Sachs. He was a big wig at Goldman Sachs. He coined the term bricks. (…) And he's in the British parliament and he was a conservative. I mean, he's not anymore. But he was a Conservative sitting in our house of Lords, and he was trying to get antibiotic research done in big pharma, and he put this incentive framework into place, and blah, blah, blah. Five years later, he comes back, what have you done? And he knows they've done nothing. And he says, I don't believe a word you people say. Frankly, I think part of this industry should just be nationalized. That's someone on the center right of the political spectrum. Simply recognizing this does not work for how we want society to be in 20, 30, 40 years time. So I think there are interesting alliances. I think there are interesting ways of convincing people that we need really quite big change here.

Around the WTO

00: 55: 44 (SM) And that also means that you can sort of operate around the WTO, or do we really need to tear down the WTO before we can actually make this happen?

ND: I think this is a great question, and I think it's something we as campaigners need to think more about. My experience of the people's vaccine campaign in the pandemic is that it is going to be very, very hard to get agreement at the WTO to rip up deals that were made in the mid to late 90s. It was great. We were trying to stop these deals happening in the first place. I think that's what those of us old enough who remember fighting against globalization when it was being constructed. We needed to stop some of this stuff happening. We did stop some of it happening. We didn't stop all of it happening by a very large margin. I don't think globalization is going to be untangled simply by going back to those forums and trying to pressure governments there to untangle them. There are too many vested interests, and I think it is going to be untangled by people simply doing things differently at a national level, first of all. But hopefully, as much as possible in the South Africa model, cooperating, and particularly, I think, southern countries cooperating because they have very little to lose in terms of cooperating around medical research, development, and manufacturing in the way South Africa is doing. I think that's going to be absolutely vital. So regional cooperation and South south cooperation, I think, is going to be an absolutely vital way to overcome the rule of the WTO and its agreements.

Too much profit

00: 57: 09 (SM) Yeah, well, there's one more question in the Q A, so maybe, Nick, if you can answer it within a minute, then we can still do it. The question is from Miguel Vandenbedem. What kind of reaction could one expect from pharmaceutical lawyers if a nonprofit organization would go to court to condemn a certain pharmaceutical company for taking too much profit on the medicine for a rare disease causing the loss of budget for national healthcare?

ND: Well, that's a great question. And there is a case at the moment in the Netherlands, I believe, which has been brought by a nonprofit over the drug homeera. It's an anti inflammatory, one of the most expensive drugs in the world. Like, just ludicrous amounts of money it costs, and most health systems have to ration it. And they are taking a case to say, you have profiteered of public insurance money. So we'll see what happens. And I think there are some guys in Belgium doing the same thing. We haven't tried it here, but I think it's a great idea.

SM: Well, let's hope there will be an outcome soon and a precedent for more cases to follow. So, yeah, on a positive note, and actually a lot of positive notes, I noticed, Nick, I mean, a lot of good examples of how change is actually happening on the ground (RF: because it is so bad. SM: Because it's so bad. Maybe Marx was right after all. Let's keep it so.).

But thanks a whole lot, Nick. Super interesting. Very clear. Recording of this session will be put online as well as a podcast version. Thank you all audience for participating in this third webinar of our crash course series on rentier and monopoly capitalism. We will have a fourth and final webinar in this series on February 29 at 16:00 CET with Angela Wigger on monopoly power and EU Competition Policy.

About this series:
Crash Course on Rentier and Monopoly Capitalism

For every product you buy on Amazon, 40% of the price goes directly to Amazon. Corporate titans dominate the market, leveraging their control over technology and resources to outpace smaller rivals and impact value chains, labor, and economies. Why compete, when you can own the market? Why produce when you can lay back and collect monopoly rents?