“A Scandal’: Contracts Show Trump Giving Big Pharma Free Rein to Price Gouge Taxpayer-Funded Coronavirus Drugs

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Yves here. You could see the plan to let drug companies feed at the coronavirus trough a mile away with the hyping and now US stockpiling of remdesivir. More is sure to come.

BTW, Common Dreams has a mini-fundraiser on. If you are feeling a bit flush, please consider donating.

By Jake Johnson, staff writer, Common Dreams. Originally published at Common Dreams

Government contracts obtained by consumer advocacy group Knowledge Ecology International show that the Trump administration is giving pharmaceutical companies a green light to charge exorbitant prices for potential coronavirus treatments developed with taxpayer money by refusing to exercise federal authority to constrain costs.

Through the Freedom of Information Act, Knowledge Ecology International (KEI) last week got hold of a number of heavily redacted agreements between the Trump administration and major pharmaceutical companies like Johnson & Johnson, Regeneron, and Genentech.

Five of the seven documents reviewed by KEI are classified as “other transaction agreements,” which allow federal agencies to loosen regulations designed to protect the public in order to help companies streamline the product development process.

In the case of four contracts for potential Covid-19 treatments or vaccines with Johnson & Johnson, Genentech, Regeneron, and Roche issued by the Biomedical Advanced Research and Development Authority (BARDA) and the Pentagon, the Trump administration omitted a standard conditionrequiring that products developed with taxpayer money be made available to the public “on reasonable terms.”

“This means that the government has limited its ability to intervene if the pharmaceutical companies (which are party to the agreements and are receiving hundreds of millions of dollars to conduct the research) charge unreasonable prices for the resulting Covid-19 vaccines or treatments,” KEI noted in a press release.

KEI also found that federal contracts with Genentech and Regeneron for coronavirus treatments contain passages restricting the government’s ability to “have generic manufacturers make and distribute through pharmacies and other commercial outlets an effective diagnostic test, drug, or vaccine for Covid-19.”

The details of the contracts come just days after the Trump administration faced backlash from consumer groups for refusing to require Gilead to charge a reasonable price for its Covid-19 treatment remdesivir. On Monday, as Common Dreams reported, Gilead announced it will charge U.S. hospitals around $3,120 per privately insured patient for a treatment course of remdesivir, which was developed with the help of at least $70.5 million in taxpayer funding.

“Allowing Gilead to set the terms during a pandemic represents a colossal failure of leadership by the Trump administration,” Peter Maybarduk, director of Public Citizen’s Access to Medicines Program, said in a statement Monday. “The U.S. government has authority and a responsibility to steward the technology it helped develop.”

As the Washington Post reported Wednesday, “[Johnson & Johnson] has a $456 million contract with BARDA to develop a coronavirus vaccine and a $152 million contract to conduct screening of drug compounds that could be Covid-19 treatments.”

“Regeneron has contracts worth up to $130 million to develop two therapies for the disease,” the Postnoted. “Roche’s Genentech subsidiary has contracts worth $47 million to develop a pair of therapies.”

James Love, the director of KEI, told the Post that “the amount of money the government is throwing at companies is unprecedented.”

“Normally when you write bigger checks,” Love said, “you should have more leverage, not less leverage.”

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    1. EoH

      The assumption that the lobbying reach of the pharmaceutical industry somehow grasps Capitol Hill but misses the White House is charming.

      As was said below, this particular form of grift, including the deletion of standard contract terms intended to promote the public interest, emerges from the executive branch. Mr. Trump has said many times, and meant it, that he is the Executive Branch.

    2. Billy

      It would be easy for the Biden campaign to take advantage of this by posting all the bills and laws he has promoted, and for which he voted to counter such things.
      His stand on Medicare For All for example.

    3. noonespecial

      Bi-partisan grifters all ’round, yes.

      However, as an NYC-based sports journo would say, let’s go to the video tape:

      “Drug prices are coming down, first time in 51 years because of my administration, but we can get them down way lower working with the Democrats,” Trump said in a May 22 (2019) address in the Rose Garden.

      Where’s that leadership today? No, I don’t naively expect the Ds in Congress to put up much of a fight, but let’s call a spade a spade. If you say it, mean it.

  1. Sound of the Suburbs

    Adam Smith was an expert on the small state, unregulated capitalism he observed in the world around him.
    Perhaps he can help.
    “The interest of the dealers, however, in any particular branch of trade or manufactures, is always in some respects different from, and even opposite to, that of the public. To widen the market and to narrow the competition, is always the interest of the dealers. To widen the market may frequently be agreeable enough to the interest of the public; but to narrow the competition must always be against it, and can serve only to enable the dealers, by raising their profits above what they naturally would be, to levy, for their own benefit, an absurd tax upon the rest of their fellow-citizens.”
    I see.
    Reducing competition maximises profit.
    Let’s do more mergers and acquisitions to get rid of the competition.

    Good old 18th century price gouging.
    This is what small, state unregulated capitalism was like.

    Economics the timeline.
    Classical economics – observations and deductions from the world of small state, unregulated capitalism around them
    Neoclassical economics – Where did that come from?
    Keynesian economics – observations, deductions and fixes for the problems of neoclassical economics
    Neoclassical economics – Why is that back again?

    We thought small state, unregulated capitalism was something that it wasn’t as our ideas came from neoclassical economics, which has little connection with classical economics.
    On bringing it back again, we had lost everything that had been learned in the 1930s and 1940s, by which time it had already demonstrated its flaws.
    They developed the parallel universe of neoliberalism from neoclassical economics.

    I am getting a sneaking suspicion that I am the only person that has actually read any of Adam Smith’s work.

    1. flora

      If Milton Friedman is right that something called the market is the real arbiter of correct price and a corporation’s only duty is to maximize its profit, then can price gouging even exist? /rhetorical question of course.

  2. Freethinker

    Get real, not a Trump hit piece.

    This is a targeted article. The reporting clearly identifies Executive branch agencies as the subject contracting authorities signing patient-dodgy agreements with pharmaceutical companies to develop and market coronovirus treatments with tax payer subsidies.

    Complaining that the reporter’s piece did not include a review of Congressional conduct towards the pharmaceutical industry does not substantiate your claims of bias or incompleteness.

  3. divadab

    My concern is why Fauci and the CDC are actively promoting remdesivir, for which effectiveness against covid is at best equivocal, and actively suppressing the quinine salt drugs which have been successful prophylactic and early stage treatments in Europe and North Africa?

    Combine this with the admitted lying about masks usage and my conclusion is the NIH and CDC are unreliable and corrupt and led by self-dealers and bribe-takers. Like much of the federal govt apparatus, systematically corrupted by looters.

    Really terrible and worse because it is not surprising, rather business as usual in the empire of conversion of public treasure into private wealth and privilege.

    1. Oh

      The village idiot Fauci is totally unfit for his job. He should keep his mouth shut. He gives mixed signals and only serves the Orangeungutan moron.

      People don’t show their outrage against his actions nor the actions of the Crooked Corrupt Congress.

    2. Rob

      I also struggle to understand why the early treatment with cheap, known drugs is not being promoted. There are doctors in Brazil who are urgently trying to get the word out about their successes with hydroxychloroquine, chloroquine and ivermectin (for prophylaxis).

      https://youtu.be/6hwQp7xT4GY (English subtitles)

      If what they are saying is true, they have had astounding success. trump confused the issue by recommending people simply take drugs without a doctor’s advice (“what have you got to lose?”) and now it is almost as hard to get anyone to pay attention to these early treatment drugs as it is to convince people that masks are effective after that message got mangled.

      A doctor in the YouTube video describes the collapse of a 310,000 member hospital system in Belem, Brazil. They had to close the hospital doors, were intubating people in chairs, and had people dying in their cars. They now have zero ICU beds going to covid after starting the early treatment protocol for 55,000 patients.

      Was it their protocol or was it some other coincidence? It’s certainly worth looking into (unless you are Gilead, I suppose).

      It doesn’t help that the Brazilian president is an irresponsible mask denier. We have to just ignore the science deniers, look at what works, and move forward instead of floundering while waiting for an elusive vaccine.

  4. EoH

    Trump and his cronies, notably Jared Kushner, are not failing to lead. They are leading exactly where they want to go. In exchange for the grift, they will have demanded it in return.

    Among the purposes of the “other contracts” provision and government involvement, generally, is to encourage R&D for and production of drugs where there is insufficient demand or profit – in the eyes of private capital – for a needed drug. That is stunningly not true here, particularly where government is also priming the pump with hundreds of millions of dollars. Limiting authorization to promote generic replacements – gouging at the best of times – would seem to extend the duration of price gouging for years.

    Rather than reform pharmaceutical and health care industry practices – and the rapacious so-called insurance industry that mediates their funding (after ensuring its own) – this administration is doubling down on it. Economic pillage is its rule of engagement, as it is of the party that makes it possible.

    1. flora

      Yep. I’d call this a public-private corruption on a huge scale. However, I think Milton Friedman would not. Restraining price gouging or any bad market practice by regulation was his idea of corruption. An up-side-down idea that now seems to be accepted by govt itself.

      Corruption is government intrusion into market efficiencies in the form of regulations.
      Milton Friedman

      1. tegnost

        Maybe I’m a little slow, but doesn’t/shouldn’t this government intrusion include patents?
        It would if the chicago school had one iota of integrity…
        I liked Sound of Suburbs comment…

  5. Arizona Slim

    Yet another reason why I think this country needs a truth and reconciliation commission.

    1. Alex Cox

      In addition to the one which deals with the Kennedy and King assassinations, and 9/11? Or a separate one?

  6. Craig Dempsey

    Remember the uproar when a cure was developed for Hepatitis C, but then, IIRC, something like $80,000 was charged for a course of treatment? Suppose a promising vaccine is found for COVID-19, and you can get the shot for the bargain-basement price of $100,000. I would guess that COVID-19 would roar along as almost no-one would get the shot. Trump would get more of his beloved chaos, but hopefully lose a few more votes. Meanwhile, the economy would continue to hemorrhage trillions of dollars as thousands continued to die. Am I missing something?

  7. shinola

    Pay up or die!

    Thin out the ranks of useless eaters.

    Makes perfect sense in a neoliberal/Social Darwinist sort of way.

  8. Mel

    There is a breed of MMT denier that goes fulminating about “There is no Free Lunch.”, and they miss the point completely. In truth, no matter how expensive the lunch is, a monetarily sovereign government can come up with the money to pay for it. To pay for any number, actually, no matter how expensive the lunch is.

    Unverified medical treatments for $6000 a pop? Sure. Just pile them over there.

    And if we somehow achieve useful, life-supporting policies, we can pay for those, too.

    1. flora

      This is an interesting article about MMT being the rising contender to de-throne free market capitalism, aka neoliberalism. If the writer is correct about MMT rise and direct challenge to neoliberalism, aka free market capitalism (as distinct from capitalism) this could be the reason MMT is so fiercely resisted by current govts populated by free market followers. my 2 cents.


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