Why Should Drug Corporations Like Merck and Eli Lilly Even Exist?

How do Big Pharma executives have the nerve to show their faces in public, much less threaten to sue the government that has enriched them with the treasure—and the lives—of the American public? Government-funded discoveries have given drug companies like Merck and Eli Lilly much, if not most, of their patented technology. The government’s lax attitude toward drug company predation and criminality has made them even richer.

A recent staff report from the Senate Health, Education, Labor, and Pensions (HELP) Committee and its chairman, Sen. Bernie Sanders, found that “the average price of new treatments over the past 20 years that NIH scientists helped invent is $111,000 – more than ten times the price that led the NIH to first introduce a reasonable pricing clause in 1989.”

And yet, at the first sign that the government might ask for something in return, these corporations bite the hand that feeds them. Unfortunately, it’s the public who bleeds.

Merck’s crass lawsuit and Lilly’s bombastic threat are only the latest reminders that these corporations prey on the lives and wealth of people in the U.S. and all around the world.

How rich is Merck? Its net income was $19 billion last year, an increase of 40 percent over the previous year. Its CEO received $18,469,835 in total compensation. On average, Merck’s senior executives received more than $10 million each in 2022. More than half of that was awarded in the form of shares, giving each of Merck’s leaders a multi-million-dollar incentive to maximize profits regardless of the human cost.

And yet, these senior executives don’t seem embarrassed. In fact, the global pharmaceutical corporation is suing the United States government to prevent it from negotiating prices on a handful of drugs as permitted under the Inflation Reduction Act (IRA) passed last year.

And, as this article was being prepared for publication, the head of Eli Lilly & Co. exhibited a similarly pathological detachment from human need. CEO David Ricks threatened to withhold medicine from seniors and disabled people on Medicare unless his demands were met. Adopting the mock empathy of an arm-twisting gangster, Ricks said that refusing drugs to these patients would be “really sad for people who rely on government benefits, but it’s a consequence that market actors will pursue [to] restrict their exposure to the law ...”

Nice little prescription ya got here, pal. Be a shame if somethin’ happened to it.

(Irony note: Ricks, who was paid $21.1 million last year, demanded the repeal of the IRA’s drug provisions at an investment conference hosted by global bank-cum-crime syndicate J. P. Morgan.)

That isn’t ‘business as usual.’ It’s a hostage crisis. And it raises a different question, one Ricks would undoubtedly prefer we not ask: if “market actors” can’t provide the public with the medicines they need, why should we entrust private actors with our medicines?

I recently interviewed Merith Basey, Executive Director of Patients for Affordable Drugs (video below), an organization that does excellent work on drug policy. Basey remarked that the IRA is “a first step in fighting back against the power of pharmaceutical corporations.” You could say that’s a “glass half full” (or “syringe half full”) response, but she’s right that the law could affect the drug pricing crisis. In fact, the Inflation Reduction Act’s drug pricing provisions are among its few features that would actually reduce inflation. They were watered down significantly from Democrats’ original proposals, however, which in turn were much weaker than what is done in similar nations. As Basey correctly observed, the US is the only developed country that does not have a comprehensive system for regulating overall drug prices.

Merith Basey: Merck Pharma Bros Fight for Greedwww.youtube.com

The IRA’s compromises were due in part to the $16.4 million and $15 million spent by Merck respectively on lobbying as the Act was drafted, as well as on the millions of dollars in campaign contributions Merck and Lilly executives routinely lavish on both parties. And it didn’t hurt that 50 out of 57 lobbyists prowling the halls of Congress in 2021 for Merck were ex-government officials themselves; few things are more persuasive than a friendly face offering ready cash.

Still, the government did something. The law’s drug pricing provisions allow Medicare to negotiate prices for only ten drugs to start, but the government will be able to choose the costliest among them and more can be added in subsequent years. (There’s no guarantee it will use this power effectively, however, which is why Sanders says he will not approve any more government healthcare nominees until the administration releases its plan.)

Drug pricing also poses a longer-term threat to corporations like Merck: that the public will see how effective these negotiations are and want them extended to all medications and patients. That may explain the unmitigated gall of Merck’s executives, whose lawsuit argues that negotiating with the government – the largest purchaser of prescription medications in the country – is “tantamount to extortion.”

Extortion! Merck’s executives and board—a group that includes veterans from the weapons industry, venture capital, and a tax-dodging consulting company—think it’s unfair to negotiate prices with the American people. Meanwhile, the company’s recklessness has caused tens of thousands of deaths—deaths that could plausibly be deemed “involuntary manslaughter” (i.e., causing death while acting “in a unlawful manner”) in a fairer legal system.

In case you have any residual sense of goodwill toward Merck, let me help you with that:

• Merck sold its painkiller Vioxx for five years after initial trials raised the possibility that it caused heart attacks. It did. By the time Merck pulled Vioxx from the market it had caused an estimated 88,000 heart attacks among Americans. 38,000 of them died.
• Merck reportedly made a “hit list” of doctors who disliked Vioxx, which included words like “neutralize” and “discredit”; an internal email said of such physicians, “We may need to seek them out and destroy them where they live ...”
• Merck concealed reports of sexual dysfunction and other risks from its anti-baldness drug Propecia, including a “long trail of suicide reports.”
• Merck was forced to pay $2.3 billion to settle tax fraud charges.
• Merck paid $650 million to settle for violating the False Claims Act by overbilling Medicaid.
• Merck paid $1.5 million to settle charges of violating federal environmental laws in its Pennsylvania manufacturing facilities. Its additional environmental violations include the use of methylene chloride and proven animal carcinogens as a solvent in some drugs.
• Merck paid $688 million to settle claims that it concealed the poor clinical trial outcomes for Vytorin, an anti-cholesterol drug.

These are not the nicest or most law-abiding people.

Merck, like most predatory corporations, tries to present itself as socially responsible, but its business model continues to hurt the people it claims to care about. “Merck for Mothers” is a program whose stated goal is “to help create a world where no woman has to die while giving life.” What about the mothers who died after taking Vioxx?

Merck publicly withdrew funding from the Boy Scouts in response to the scouts’ anti-gay ban. What about the gay people can’t afford Isentress, a Merck anti-HIV medication that often costs more than $2,000 per month? And what about all the vulnerable people who take Januvia, the Merck diabetes drug that retails for a monthly average cost of $547? As Basey noted, Januvia is taken by about one million Medicare recipients and Medicare Part D has already spent $17 billion on it, even though it is fifteen years old.

Nope, says Merck, we still won’t negotiate.

Sadly, Merck and Lilly aren’t outliers in their industry; they are the norm.

Merck’s executives aren’t the only ones profiting from its malfeasance. So are some Senate and House members. They shouldn’t; nobody should. It's blood money. It’s profit without honor.

Merck’s executives should remember their company’s own history. Originally the subsidiary of a German company, Merck’s US assets were nationalized during World War I under the Trading with the Enemy Act. It may be time to revise our definition of an “enemy.” By endangering our lives and wealth, these corporations are endangering our national security.

Sadly, Merck and Lilly aren’t outliers in their industry; they are the norm. Merck’s crass lawsuit and Lilly’s bombastic threat are only the latest reminders that these corporations prey on the lives and wealth of people in the U.S. and all around the world. Drug price negotiation is a great idea, but there comes a point when talking to people like these is tantamount to negotiating with terrorists.

If these corporations can’t meet the public’s health needs—and the evidence suggests they can’t—the government should eliminate these antisocial middlemen and produce the public’s medicines itself.

(The Zero Hour and Social Security Works, along with many other policy and advocacy organizations, signed an open letter calling on the government to overhaul our broken drugs-for-profit system.)