Resolution on Nationalizing the Pharmaceutical Industry

The following resolution was adopted by the Federal Convention of Socialist Action in June 2021

Like all capitalist-owned corporations, the priority of pharmaceutical companies starts and stops with shareholder profits. Rip the mask off of Pfizer, Scooby Doo-style, and you find the same motivation that exists just under the surface of Exxon-mobil, Monsanto, Amazon, and Halliburton. The capitalists that own Pfizer, Moderna, Johnson & Johnson, and AstraZeneca do not provide a service. No, they hold essential services hostage while they shake down the working class. If the COVID-19 pandemic has a silver-lining, it is that workers may realize the need for democratic control over essential industries. This includes big pharma. Socialist Action and other revolutionary groups call for the immediate nationalization and democratization of the pharmaceutical industry. Put our collective scientific knowledge to work for humanity, not for shareholder greed!

Some may argue that the successful design and testing of multiple Covid-19 vaccine formulations in under one year by scientists employed by private biotech companies proves the virtue of capitalist control. According to the old saying, without competition and a profit motive, no technological advance can be made. This is bunk. From insulin to penicillin to the polio vaccine, remarkable advances only require human need and control over the means of production. The fact that many vaccines and antibiotics emerged from non-profit academic institutions reveals an innate desire of people to improve life, absent the profit motive.

Indeed, a publicly-owned pharmaceutical once operated in Canada. The University of Toronto used to operate the Connaught labs and manufactured vaccines and insulin for the public good. In the case of insulin, scientists sold the patent to U of T for $1 so that the life-saving medicine would be affordable for all diabetics. Further, the Connaught labs contributed greatly to the creation of a polio vaccine. But Brian Mulroney and the Progressive Conservatives sold the Connaught labs to Sanofi in the 1980s. Infectious disease expert Dr. Earl Brown recently blamed the privatization on “a poor business model…of not making so much profit.” This is just silly and highlights the reactionary nature of academia. Would we complain that our hospitals do not make enough profit (maybe we shouldn’t give Justin Trudeau any ideas)? The Connaught labs existed to manufacture and distribute essential medicines, not to make a few shareholders wealthy. But privatization yielded a windfall for the government that in turn cut taxes for the capitalist class.

Today, despite the federal government providing one billion dollars in medical research funding every year, our universities have no choice but to license any innovation to private pharmaceutical companies, who profit immensely and act as gatekeepers of what ought to be collective human knowledge. To begin to rectify this grave injustice, we must expropriate the pharmaceutical profiteers beginning with Sanofi!

Instead of a centralized and rationally-planned pharmaceutical system that draws on our collective scientific knowledge, we face a privatized system that subordinates the intellectual contributions of academics to the profit motive. Such a bleak landscape emerges from an economy based on private ownership of capital! Not only do the capitalist profiteers own the physical infrastructure, such as the factories and laboratories, they also own ideas in the form of patents.

The formulations of countless essential medicines and vaccines remain hidden from the view of the public and scientists alike. Despite every single ‘private’ innovation and discovery building upon previous ‘public’ discoveries, the capitalist system allows individuals to de facto own ideas and exploit them for profit.

Indeed, the very existence of patents for drugs in Canada results in pharmaceutical companies making decisions to maximize control in order to maximize profits rather than innovating and bring new drugs to market.

Pharmaceutical companies in Canada spend roughly an equal amount on marketing their drugs (sales representatives, taking out ads in journals, etc) as they do on research and development.[i] Among Canadian pharmaceutical companies, the percentage of sales reinvested into research dwindled from 11.7% in 1995 to only 4.0% in 2018 (see table 14). While roughly half of all drugs fail during late-stage clinical development, almost a quarter fail due to “commercial” reasons.[ii] Adding injury to insult, companies publish the clinical trial results for fewer than 10% of these commercially non-viable drugs.[ii] At the commanding heights of pharmaceutical research and production, the commercial interests of a few wealthy capitalists matters beyond all else.

Other perverse corporate strategies become prevalent in a system that allows for patents. Because owning a patent means being able to set whatever price you want, pharma companies put most of their resources into tweaking existing drugs so they can extend their patents. We call this evergreening.[iii] A delightful term for an evil process. Of the sixty-one drugs patented in Canada in 2018, only one qualified as a breakthrough while the Patented Medicine Prices Review Board deemed fifty-six new drugs to be of little to no improvement (see figure 1).

Another strategy to maintain control involves buying up startups for the sole purpose of preventing future competition. Researchers from the London Business School estimate that between five and seven percent of startup acquisitions meet the definition of a “killer acquisition.”[iv]

Of course, the privatization of the pharmaceutical industry is not contained to Canada but instead found in all capitalist nations. The cooperation of these nations in the form of free-trade agreements and bureaucratic establishments like the World Trade Organization ensures that all nations are held hostage by pharmaceutical profiteers.

For example, the renegotiated North America Free Trade Agreement (NAFTA 2.0) actually enhances intellectual property protections such that Canada is required to lengthen the exclusivity period for brand-name medications. What is the result? A delay in generic medications coming to market and an increase in prescription drug prices.

And to no one’s surprise, at least not to Socialist Action members, corporate greed remains the priority even as the Covid-19 pandemic rages.  

Within days of Pfizer announcing the successful results of its vaccine clinical trial, the wealthiest nations in the world outbid poor countries such that 85% of the most destitute people in the world have no access. And as May 2021 came to a close, just ten countries accounted for 75% of Covid-19 vaccines given. As Canada, America, and European countries celebrate a vaccination rate of over 50%, countries like India and Vietnam face devastating waves of Covid-19 driven by new variants and single-digit vaccination rates. With how things are going, researchers at Duke predict that those living in impoverished countries will not be vaccinated until 2024. Meanwhile, nearly half of Israeli citizens have been vaccinated so far. The key to success? A combination of outbidding other nations and denying vaccines to essential healthcare workers besieged in Gaza and the West Bank.

But Ottawa is not content to simply outbid poorer nations. Led by South Africa and India, one-hundred low- and middle-income countries challenged an international agreement that protects the patents on essential medicines. If the World Trade Organization permits countries to manufacture their own generic Covid-19 vaccine, billions more people could be vaccinated. But Justin Trudeau and Canada refuse to commit to waiving such intellectual property rights. Not only is Canada’s prioritization of private profits fundamentally colonial in nature, it is incredibly short-sited from an epidemiological perspective. Viruses do not respect national borders. 70% of Canadians can be vaccinated but a pandemic will rage globally if billions of people from the poorest countries remain vulnerable.

If the international pharma cartel prioritizes evergreening and marketing and killing innovation, then we must ask an important follow-up question: what does pharma neglect? If you want an easy way to answer that question, just begin naming the most essential medicines discovered over the past century.

Since the 1950s, the number of pharmaceutical companies producing vaccines plummeted, leading to less innovation and a shortage of essential vaccines.[v] And don’t forget the rampant vaccine denialism. Hard to fault someone from espousing a healthy scepticism of the vulturous pharmaceutical industry.

Then there are the neglected tropical diseases and rare diseases. Diseases restricted to the so-called global south, like Chagas disease, comprise the former, and the latter designates diseases affecting fewer than one in two-thousand or so people. In both cases, the market does not appeal to investors, so human needs remain unfulfilled.

And despite the growing threat of mass antimicrobial resistance, only four of the top fifty pharmaceutical companies, by sales, operate an active antimicrobial drug discovery pipeline. Why? It is not profitable. Short courses of antibiotics for acute infections, or the development of vaccines for unpredictable pandemics, or new drugs for diseases that kill poor people are not as profitable as lifetime treatments for chronic diseases like diabetes or heart disease. This is not a conspiracy; these companies are very open about it.

So what strategy do neo-liberal governments employ to combat these serious threats to human health? Financial incentivization. Basically a lib way to describe throwing money at companies in hopes that they invest it in something useful. Examples include “Making Markets for Vaccines: A Practical Plan,” a report by the Global Health Policy Research Network and the Center for Global Development , which proposed the “AdvancedMarkets commitment”, where “donors would make a legally binding commitment to pay for a new vaccine if and when one is developed.” In their view, this strategy works because;

“Some people want to see medicines available at the lowest possible price, so that everyone who needs them can afford to use them. Some want industry to make a sufficient return on medicines to enable and encourage them to go on developing important new products. Many people have some sympathy with both points of view. The AdvancedMarkets commitment would resolve this trade-off both by ensuring that poor people get access to a vaccine they need, and by providing a return to the developer to encourage further innovation.”

Neo-liberalism! Things only happen as a side effect of making money!

Despite some well-intentioned people, pharma exerts its might when confronted with any attempt to put people first. The Coalition for Epidemic Preparedness Innovations (CEPI), founded in 2017, raised a billion in capital to incentivize private research into vaccines to fight potential epidemics “where market incentives fail.” [vi] Any serious stipulations burdened on awardees disappeared following a round of consultation with potential pharmaceutical partners. No longer would CEPI set the price of a potential vaccine so that poor countries could afford them. No longer would pharma companies be required to disclose all data pertaining to funded projects. Instead, the rich simply get richer off the public’s dime by selling vaccines back to us at a 100% markup.

And this is also happening during the current pandemic of COVID-19. In April, Oxford announced that it would donate the rights of its potential COVID-19 vaccine to any manufacturer. The promise stood until the Bill & Melinda Gates Foundation conversed with them. Instead, Oxford licensed the vaccine to AstraZeneca in an exclusive deal with no price control. Same deal with the Moderna vaccine. First, the American government funded the project almost entirely to the tune of one billion dollars. Second, scientists working at the National Institutes of Health played a big part in designing the vaccine. And last, the same American government signed a contract to purchase 100 million doses for another billion-and-a-half. Public innovation and private profit on both sides of the pond.

Not only are pharmaceutical companies bleeding us dry (profit margins above 50%!), they simultaneously bully the Canadian people for more subsidies and less taxation. By owning the means of production, their leverage cannot be underestimated. Much like the ultimatum given by Novartis when India’s Supreme Court put a stop to their evergreening, Pfizer makes thinly-veiled threats about outsourcing jobs if Ottawa doesn’t liberalize our economy further.

So make no mistake in equating the existence of COVID-19 vaccines that emerged from the private sector with the usefulness or justification of for-profit medicine. Because working-class scientists designed and tested the successful vaccines, and we don’t even know their names. The capitalists who raked in all the profit merely let them have access to means of production. Not because a vaccine would help humanity, but because the market was big enough. So big, in fact, that Covid-19 profiteering minted nine new billionaires!

If the bottom-line is profit, capitalist interests will only coincidentally align with working-class interests.

What is the position of the NDP, the only mass labour party in either Canada or the US? After decades of grassroots struggle within the NDP, led by the NDP Socialist Caucus and others, the NDP finally began campaigning for universal pharmacare in 2019. That is a welcome change and a sign of growing class struggle, but it is not enough! A single-payer pharmacare system would undoubtedly alleviate some of the systemic inequality in accessing medications but the Canadian government would remain stuck negotiating with for-profit pharmaceutical companies. Worse, pharmaceutical companies would continue to control and exploit intellectual property and unilaterally decide on research programs, which we know do not address the biggest health crises that society faces.

There is an alternative! We need to fight for a well-funded, publicly-controlled, and centralized pharmaceutical pipeline. Rather than a system built on corporate greed, we can instead research and manufacture the drugs that people truly need!

With scientists in control, accountable to the public, society could focus efforts on improving lives. Only with a truly democratic research and manufacturing program would we research new antibiotics and new vaccines, and also ensure that everyone has access to clean water, healthy food, adequate time to sleep, safe working conditions, affordable housing, and free education. The best solutions are often the cheapest and least profitable – and thus invisible to neo-liberal eyes.

Reformism fails humanity. History shows that any gains won by the working class will be erased during subsequent waves of austerity. You can win single-payer health care only for the United Conservative Party of Alberta to reintroduce private health care after two recessions in a decade. The capitalists will retreat if pressured, but return persistently.

Now is the time for the working class to seize the means of pharmaceutical production. Only our interests reside with the masses. We are the masses. We sacrifice for our broader community. We organize to make food for our neighbours. We put in long hours to treat our sick and dying. We sing with our neighbours and bang pots and pans. They cut ‘hero pay’ from grocery store workers during a pandemic. They let our elders die preventable COVID-19 deaths. They ticket us for being homeless and kick us out of our parks.

Socialist Action demands the following;

That the government immediately expropriate all domestic pharmaceutical companies, beginning with Sanofi. Bring back the Connaught Labs!

That Canada no longer honour drug patents, and instead produce generic medications at cost for all who need them.

That research and development of new drugs be brought under democratic control of doctors, pharmacists, scientists, patients and their advocates.

That federal investment into drug discovery and manufacturing be increased.

Decriminalize all drugs. Ensure access to safe-injection sites. Access to free abortion and contraception.

Provide universal and accessible medical care, dental care, mental health care, vision care, and pharmaceuticals for all living in Canada, including preventative and rehabilitation services. Affordable housing, clean water, and food for all. Guarantee Indigenous people access to clean water, food, decent housing, and specialized centres for treating the ongoing effects of colonial violence.

[i] Lexchin, J. (2018). Pharmaceutical company spending on research and development and promotion in Canada, 2013-2016: a cohort analysis. Journal of pharmaceutical policy and practice, 11(1), 1-6.

[ii] Hwang, T. J., Carpenter, D., Lauffenburger, J. C., Wang, B., Franklin, J. M., & Kesselheim, A. S. (2016). Failure of investigational drugs in late-stage clinical development and publication of trial results. JAMA internal medicine, 176(12), 1826-1833.

[iii] Collier, R. (2013). Drug patents: the evergreening problem.

[iv] Cunningham, C., Ederer, F., & Ma, S. (2018). Killer acquisitions.

[v] Offit, P. A. (2005). Why are pharmaceutical companies gradually abandoning vaccines?. Health Affairs, 24(3), 622-630.

[vi] Huneycutt, B., Lurie, N., Rotenberg, S., Wilder, R., & Hatchett, R. (2020). Finding equipoise: CEPI revises its equitable access policy. Vaccine, 38(9), 2144-2148.