Gainesville, Florida (Special to Informed Comment) – The 14 largest publicly-traded pharmaceutical companies spent $747 billion on stock buybacks and dividends from 2012 through 2021 — substantially more than the $660 billion they spent on research and development. So argue economists William Lazonick, professor emeritus of economics at University of Massachusetts, and Öner Tulum, a researcher at Brown University, in a new paper.
Recently Big Pharma bluntly and unashamedly announced price hikes in the United States on more than 350 drugs while continuing to brazenly insist that large price hikes are necessary for innovation. The Lazonick/Tulum research shows that the business model of America’s largest pharmaceutical companies involves far more spending on enriching shareholders and executives than on research and development.
Big business, Big Insurance and Big Pharma industries dominate our government with public health taking a back seat to the need for large private profit. Many government leaders from both political parties share the same ‘profits over public health’ ideology, even though the Covid-19 pandemic clearly showed how our economic system failed to serve our citizens by allowing these groups to privatize, sabotage, fragment and cripple our health, public health and other social services.
No greater disconnect exists between the public good and private interests than in the U.S. system of monopoly, for-profit Big Pharma.
Over forty years of profiteering by Big Pharma and oligarch control of our economy left the public totally exposed and ill-prepared to face the public health crisis of COVID-19. Because Big Pharma rarely invests in prevention, it has very little motivation to invest in preparedness for a public health crisis. Drugs for prevention do not contribute to share-holder value and profit. Instead, cures are designed once a public health crisis strikes.
The sicker we are the more profit they earn.