Big Pharma's origin: how the Chicago School and private equity shifted medicine's focus from health to wealth

Between 2010 and 2016, the FDA approved 210 new medicines and every single one was produced at public expense, part of a $1T US government investment project in medical research. Despite this massive public subsidy, the pharma industry has only grown more concentrated and rapacious, raising prices and diverting the profits to their execs and investors, who now pocket 99% of industry profits: the industry made $500B in profits between 2006 and 2015, and during that time, the US government pumped $33b/year into pharma research.

The history of Big Pharma's big business is beautifully told in a long piece by Alexander Zaitchik in the New Republic. Zaitchik describes how the NIH changed its policies in 1968, ending the rule that forced publicly subsidized researchers to assign their patents to the federal government and allowing them instead to flog them on the open market. This created a new kind of academic research program, focused on using public money to develop patented products that would be exclusively assigned to pharma companies who'd be guaranteed monopolies over life-saving medicines.

That's when the Chicago School -- the origin node of neoliberalism and the worship of markets as self-correcting, self-optimizing systems that cannot and should not be regulated -- got involved, seeding a network of think-tanks and journal articles that decried competition as "wasteful duplication" and celebrated monopolies for their efficiency.

These articles created the fiction of mass private-sector investment in pharma, downplaying the taxpayer's role in subsidizing the industry and lionizing the few pennies that escaped the grasp of execs and shareholders. Read the rest