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Sunday, January 29, 2023

Our New Aristocracy, continued

 Some weeks ago the podcaster Terrence McNally--a college classmate and longtime friend of mine--interviewed a freelancer, Alexander Zaitchik, about his book, Owning the Sun, about the power Big Pharma and where it came from.  I was moved to get the book from the library and I am glad that I did. In the podcast interview Zaitchik mentioned that he was once a history graduate student, and it shows. He quit academia, probably wisely, but this book is a serious, concise history of a fascinating topic--the history of intellectual property.  

After a quick journey through medieval English precedents--which, as every young American ought to learn, remain the foundation of our laws--Zaitchik quotes the Constitution, which gives the Congress the power "To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries."  With respect to inventions that provision raised some eyebrows at the time, and two noteworthy inventors, Benjamin Franklin and Thomas Jefferson, opposed it.  This was the era of the Enlightenment--the era that may now be dying--and they believed that knowledge was the key to progress and therefore must be disseminated as widely and cheaply as possible.  And the idea of patents for medicines was particularly controversial.  The imperial German pharmaceutical giant Bayer was among the first international corporations to try to patent their products, and the idea that medicine should be made generally available remained conventional wisdom in the US for a long time.  

The question of patents naturally became entwined in the first half of the twentieth century with the more general question of monopoly power.  Our antitrust laws date of course from 1890 and 1914, but it was the later New Deal era that unleashed the most sustained attack on monopoly power, including attempts to control the abuse of patents.  Ironically, other appointments of patents included laissez-fiare economists such as Friedrich Hayek, who saw them as infringements upon the free market.  By an astonishing coincidence, I have just been watching a 1959 interview of Ayn Rand by Mike Wallace, and she too opposes any monopoly on industrial processes.  And during the Second World War the question arose in its modern form, as federal money funded a great deal of research of all kinds, including medical.  Federal government scientists developed the processes that led to the mass production of penicillin, and licensed them freely to a variety of manufacturers--who, Zaitchik notes, used various strategies to profit from the new drug as much as they could.  Dr. Jonas Salk, notably, refused even to consider patenting his polio vaccine.  Soon, however, the major drug firms were developing and patenting new antibiotics of their own.  

Big pharma as we know it emerged during the 1950s, and I scratched my head to learn that it relied from the beginning on addictive substitutes such as barbiturates (sleeping pills), anti-anxiety pills like Milltown, Librium and Valium, and amphetamines, marketed (as  I learned in the late 1960s from a girlfriend) as diet pills. They had already been marketing drugs with huge markups justified by the cost of research, even though they were already spending much more on marketing than research.  The public was not going along with this new development wholeheartedly, and big pharma's prestige took another hit when the FDA physician Dr. Frances Kelsey--one of the great American heroes--singlehandedly saved tens of thousands of American children from deformity by refusing to approve the drug thalidomide, that was already wreaking havoc around Europe.  Another great and forgotten mid-century public servant, Senator Estes Kefauver--the chairman of the Senate's anti-monopoly subcommittee--was holding hearings and crafting legislation to rein in their power when he died suddenly of a ruptured aorta in the summer of 1963. 

A decade and half later, Big Pharma got what it wanted in the form of new legislation passed after the 1980 presidential election had delivered the Presidency and the Senate to the Republican Party.  The still-Democratic Senate passed the Bayh-Dole bill, named after an outgoing Democrat and the Senate Republican leader, which reversed a fundamental principle of patent law. Until then, patents for inventions developed with government funds--as most drugs were, and often still are--belonged, by default, to the government.  Now the government had to show a specific reason why they should not belong to the corporation that developed them.  The arguments in favor of this shift resemble neoliberal thinking in general:  that companies needed the profit incentive offered by a patent to develop new drugs, which in turn would create jobs.  One lonely holdout was the ancient Washington bureaucrat Admiral Hyman Rickover, a relic of another age who insisted that knowledge developed by the government must belong to the public. The recent election had proven that the country was heading in another direction.

Much of the rest is a long, complicated and depressing story of how big Pharma, with the full cooperation of the American government, has taken advantage of this change and written it into important international agreements. They have particularly tried to prevent manufacturers in other countries--especially global south (Third World) countries--from making new drugs cheaply.  This became an international scandal in the 1990s when the first effective anti-AIDS drugs were introduced and marketed at prices the global south could not afford, costing many thousands of lives. One reason for the creation of the World Trade Organization was to get international agreement on the US conception of corporate patent rights.  And the same story was replayed when COVID struck, and the American firms that developed vaccines refused to license them cheaply over the world. A key player in that process, it turns out, was Bill Gates, who made his gigantic fortune by patenting computer code--an innovation when he did it--and, Zaitchik shows, has used his position as a leading philanthropist to encourage a broad interpretation of corporate rights.  The whole globalization enterprise, including various international trade agreements, has served to enshrine corporate power and give it new safeguards against political power, including democratically elected political power.

To any impartial observer, the profit motive has obviously wreaked havoc in American and world health care.  Combined with near-universal health insurance, it encourages more treatment instead of less.  It encourages big Pharma to develop drugs for incurable conditions and addictive drugs, and it discourages them from working on new antibiotics which we now desperately need.  It is the reason why Americans spend so much more on health care than other countries.  Yet our health care system has proven marvelously self-sustaining against attacks.

Exactly why is indicated in another piece I read this week in The New Yorker, about the management of great wealth by Evan Osnos.  Based on interviews with a former fund manager for two of the heirs of the Getty family fortune who has now fallen out with her employers, it goes in great detail into how our superrich--the 1 percent and the .1 percent--have managed to shield more and more of their wealth and income from federal and state taxation.  The article disappointed me at times.  Osnos tries to explain some complex financial stratagems and sometimes fails to do so, and I couldn't help wondering why some editor didn't tell him,. "I can't understand this, Evan, and our readers won't be able to either." But the overall picture is clear.  The superrich have so much money that they can buy all the influence they need in politics, and the legal system is also increasingly sympathetic to their plight.  By changing tax laws they can increase their resources and buy more influence.  This is why, as studies have shown, majority opinion on key economic issues of the day has almost no impact on policy.  I put down the article disturbed by another aspect of the problem.  Our powerful institutions on Wall Street, in Silicon Valley, and in the corporate world more generally can, and do, buy up an enormous percentage of our smartest young people after they go through elite institutions.  Those people then deploy their brain power on behalf of our existing economic system, which the universities in turn depend upon to manage and increase their endowments.  It's not surprising that universities, corporations, and some billionaires have become so woke lately--it's a great way to show that they are on the side of the angels while they drain all the rest of us regardless of race, gender, or sexual orientation.  Little did I know when I described 16th-century European aristocratic society more than thirty years ago in Politics and War that I would live to see the rebuilding of a similar system in the 21st.

1 comment:

PJ Cats said...

Dear Prof. Em. Kaiser,

thanks for this. It explains a lot. I can't disagree with anything in it and share your sadness in what we are losing today of the great efforts of our forebears (is that correct english?). Predictions for the future are usually worthless. We know that excessive privilege is supposed to have led to the French Revolution, but I just can't see such an event happening today. The world is falling apart at an astonishing rate, it is frankly frightening. Fair taxation and less inequality is the obvious solution, but decades of neoliberal supremacy have made this virtually impossible. Who knows where we will be in one or two years. I don't, I'm just trying to carve out a niche to be in. Like living in the old German Democratic Republic, 'Die Nischengesellschaft'. What a way to live... thanks again, greetings from France.