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The Corruptions of Pharma as a Service


In the last few years, business models known as “X-as-a-Service” flourished. Most major companies turned their previous one-time products into subscription-based ones, improving, they said, customer retention. 

Investors loved the reliable cash flows, and every industry got on the hype train. Everyone from the ever-ephemeral corporate speak in earnings calls and quarterly reports to hedge funds and investment bank analysts started talking about “BaaS” (Banking as a service), “SaaS” (Software as a service), “GaaS” (Gaming as a service), or “DaaS” (Data as a service). 

During the many ransomware attacks earlier this year, experts monitoring that dark market even started to describe the opaque mechanisms behind organizing ransomware attacks as Ransomware-as-a-service, RaaS. Forbes and others have branded this new business doctrine the “As a Service”-revolution (XaaS). 

Let’s launch another mildly distasteful acronym: PaaS – Pharma as a Service. 

The structure of pharmaceutical products in the U.S. and many other Western countries relies on the precautionary principle: before a drug is approved and launched on the market, it must go through several rounds of testing. The drug has to be safe, at least relative to the condition it is intended to ameliorate, and effective at doing that. 

The ones that mostly make waves outside that industry are “Stage III” trials – usually large, usually double-blind, randomized control trials of some new medicine. Before the FDA approves it for use, pharma companies must show that the drug “provide[s] benefits that outweigh its known and potential risks for the intended population.

The process is slow, costly, lengthy, bureaucratic, and with high risk for the submitting pharmaceutical company. If the drug fails, or gets delayed, that’s millions and millions down the drain for your average pharma company. This means that it’s almost only pharmaceutical players with deep pockets that can afford to simultaneously fund and support enough trials to reap some of those juicy rewards of future drug patents. 

Willing participants can’t always get access to what seems to be a functioning drug, sometimes not even when their circumstances are so dire that the risks are warranted. The process most certainly means that successfully developing a drug is in the billions of dollars.

What if they could speed up the process and convince the wider public that everyone needs this new product? In a single shot – pun intended – massively expand the market for their novel product. What if, even better, it seems that everyone also needs supplements of this drug every six months or so?

Just to be clear, I’m not arguing fault here – or some conspiratorial set- up. I have no reason to believe that there were darker forces at play in the last year or pretend that we have some sort of smoking gun (“Big Pharma orchestrated the pandemic!”). Such stories are very rarely right, and shocking if even a little bit true.  

But think about the numbers for a minute. And consider whether this is a Bootleggers-and-Baptists situation going on. 

During the pandemic, the pharmaceutical giant Pfizer quadrupled its revenues from vaccines, and is now looking at $33.5 billion in 2021 from Covid vaccine sales alone (for comparison, a normal pre-pandemic year Pfizer averaged around $50bn in revenue, across all its products). The Covid vaccines indeed look like a juicy boost. 

Rebecca Robbins and Peter Goodman report for the New York Times that the U.S. paid Pfizer around $20 per dose delivered, with Israel even worse with $30 per dose. Pfizer expects to deliver about 2 billion doses this year, at somewhere between $10-$15 in revenue per dose (as it shares revenue with BioNTech) for a neat $20 or $30 billion of revenue – a 40-60% boost to pre-pandemic revenue. 

Naturally, many of these payments are politically induced in order to encourage manufacturers to rapidly scale production; Big Pharma can’t expect to receive that sort of hefty payoff forever. But if we convince enough people to take booster shots, say, every six months – or better yet, have governments mandate them in search of some laudable goal, Bootleggers and Baptists style – the vaccine producer still gets access to an entirely new market, massive and with beautifully recurring revenues. Pharma as a Service. Every six months, another brand new and shiny pharma needle goes into a few billion arms. Ka-Ching.

In all fairness, they won’t be able to reap the financial benefits that governments around the world have thrown at them every year going forward. For argument’s sake, let’s stipulate a slightly lower rate as a more believable long-term market rate, say $5 per dose.

Like with all subscription services, some people will opt out; others are too weak, too old, or too young (though, with vaccines for kids we’re solving that problem!); and others yet will refuse to submit. So perhaps the equilibrium service evens out at a billion doses a year, for $5 billion of revenue annually. Not revolutionary for a company that sells pharma products for $50bn a year – but not chicken-change either (especially as at least Pfizer’s profit margins on Covid vaccines look very attractive). 

What’s most disturbing, of course, is that the very media outlets least likely to approve of pharmaceutical companies making billions – The New York Times, The Guardian, MSNBC etc – are the ones loudest shouting for vaccine mandates. On the other hand, they run articles denouncing the many billions that pharma companies are making from Covid vaccines (here, here, or here). 

Which, one might ask, is it going to be?

All they had to do for the chips to fall where they did was to convince enough people and politicians that this was a terrible disease, that no other protection works, and that recurring booster shots are the only “scientific” way out.

 Of the many odd events in the last 20 months is that the CDC still refuses to offer practical advice that seems to work well – go outside, get exercise, ensure you’re not Vitamin-D deficient. To quote Bret Weinstein, a pariah of the corporate press, why are we not picking the low-hanging fruit before we go after excessively complicated and poorly working medical interventions like rushed and experimental vaccines?

Why should we unquestioningly believe a government that has routinely, incessantly, and carelessly hid information, issued faulty claims, and at every step of the way prevented truthful and accurate information from reaching the public?

Plenty of other medications seem to have a protective effect against Covid-19 and many of its consequences. The laughable “horse dewormer” debacle over Ivermectin is a good example. A recent study in The Lancet shows that Fluvoxamine, another cheap and readily available drug, seems to work well against Covid. What do these treatments have in common? They’re cheap, off-label, widely accessible – and don’t massively boost the revenue of Big Pharma. 

None of this is proof of foul play, but it sure feels like the circumstantial evidence is piling up. I’m not saying we have a smoking gun. I’m not saying there were dark rooms with despicable people smoking cigars and dreaming about billions of new pharma dollars. But given the corruption in American politics, in its bureaucracy, and most importantly in its media and academic establishments, is it inconceivable to suggest that maybe Big Pharma wanted its share of the as-a-Service-revolution?

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  • Joakim Book

    Joakim Book is a writer and researcher with a deep interest in money and financial history. He holds degrees in economics and financial history from the University of Glasgow and University of Oxford

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