- In the aftermath of the coronavirus pandemic, several companies and individuals have gained financially.
- Some of these profits have been characterized by secrecy, overpricing, cronyism, inefficiency, and unfairness.
- There is something morally wrong with excessive gains made while millions of people are suffering.
- Ahmed Sule is a London based financial analyst, writer, and social critic.
- This is an opinion column. The thoughts expressed are those of the author.
- See more stories on Insider's business page.
It has been over a year since the World Health Organization declared the coronavirus pandemic a public health emergency of international concern. The pandemic has left in its wake fear, death, and economic ruin to millions of people worldwide. However, for Big Pharma, Big Tech, outsourced corporates, management consultants, military outfits, politicians and their cronies, and a select number of scientists, life has been good. These individuals and organizations benefiting from the pandemic constitute what I call the COVID-industrial complex (CIC).
The COVID-industrial complex is a transnational multi-billion dollar public-private partnership. It is a well-oiled machine, hence why it is only appropriate to add it to the select list of industrial complexes where "Businesses become entwined in social or political systems or institutions, creating or bolstering a profit economy from these systems."
Under this industrial complex, the government, which sits at the top of the food chain, uses its financial power to create an enabling environment that rewards other participants in the CIC. Some may justify the existence of the COVID-industrial complex because overspending and waste are permissible if it results in saved lives.
Others may argue that capitalism rewards those who produce things that are rare and valuable. While there is nothing wrong with making a profit, there is something morally wrong when the excessive gain is made on the back of people's misery, primarily when characterized by secrecy, overpricing, cronyism, inefficiency, and unfairness.
Several COVID contracts have been awarded without a proper competitive tendering process. An investigation by USA Today on 15 of the states most impacted by the pandemic revealed over 1,600 COVID contracts with no competitive bids.Some of the contracts even went to vendors engaged in tax fraud.
According to the National Audit Office, between March 2020 and July 2020, the British government awarded £10.5 billion (roughly $14.4 billion) in COVID contracts without a competitive tender process. NPR identified 250 companies that got COVID deals worth more than $1 million without going through a fully competitive bidding process. These companies included a company that imported vodka.
In some instances, funds for COVID emergencies have been utilized for other uses, as in the case of the Pentagon, which diverted some of the $1 billion funds meant to build up the country's supplies of medical equipment. Instead, the fund was channelled to defense contractors and used to produce jet engines, body armor, and uniforms.
In 2020, the British government introduced the NHS Test and Trace scheme to help track and prevent the spread of COVID-19. The government earmarked £22 billion (roughly $30 billion) to the system for the 2020 financial year, which was more than the combined police and fire service budget. Despite the astronomical budget, the project was characterized by data breaches, unqualified staff, and inefficiencies. In July 2020, over 100 public health experts, academics, journalists, and trade union leaders wrote to the British Health Secretary asking for details of the contract awarded to the private sector to run the track and trace program. The authors noted that 90% of the funding was unaccounted for.
Cronyism has been a key feature of the COVID-industrial complex. According to Public Citizens, a non-profit consumer advocacy organization that champions the public interest in the halls of power, 27 clients of Donald Trump-connected lobbyists received federal COVID aid, totalling more than $10.5 billion.
In Britain, the current chancellor, Rishi Sunak, is a co-founder of Theleme Partners, a hedge fund with a $500 million investment in Moderna. As of November 2020, the UK Government had secured 7 million doses of the Moderna vaccine. Sunak has refused to disclose whether he will profit from the vaccine. In Germany, two members of the Christian Democratic Union resigned over allegations of profiting from brokering deals to procure face masks.
Governments around the world have purchased vaccines from Big Pharma for their citizens. According to the Financial Times, at least 476 million doses of coronavirus vaccines have been administered worldwide as of March. Pfizer, which jointly produces the Pfizer-BioNTech COVID-19 vaccine, expects $15 billion in 2021 sales based on current deals. Barclays forecasts sales of $19.6 billion in 2021, $12.2 billion in 2022, and $11.4 billion in 2023 for Moderna, assuming regular vaccinations. Over the past year, Moderna's share price has risen by 372%.
As people socially distance globally, they have come to rely on technology to go about their daily lives. Governments have also engaged the services of tech giants. A consortium of Big Tech firms such as Microsoft, Oracle, and Salesforce has teamed up to develop a digital vaccine passport.
'It's a crisis though'
Some may argue that Big Pharma and Big Tech deserve to make excessive profits from the pandemic because they are working towards ending the crisis. But this argument cannot withstand analysis. Big Pharma and Big Tech have benefited significantly from taxpayers' government-funded research. The US government has spent $10 billion to support the development of potential drugs and vaccines to fight coronavirus. Also, Big Pharma has benefited historically from tax breaks that increase its cash flow - an intellectual property regime that enables it to overcharge patients and a legal framework that gives it the upper hand in prescription drugs price negotiations.
Furthermore, concerning the production of the COVID vaccine, the risk-reward principle has been turned on its head. The UK and US governments have given Pfizer indemnity, protecting it from legal action should people die or have a severe vaccine reaction. According to CNBC, "If you experience severe side effects after getting a Covid vaccine, lawyers tell CNBC there is basically no one to blame in a US court of law." As a consequence of these legal protections, the government has provided an asymmetric environment whereby Big Pharma privatizes the gains from the vaccine rollout. At the same time, the risks are socialized by the public.
Even though the COVID-industrial complex appears to be headquartered in the global north, it has branches in the global south. The Kenyan government ordered an investigation into 15 government officials and business people who misappropriated $7.8 million designated to purchase PPE for hospitals throughout Kenya. In Nigeria, during the "End Sars" protest against police brutality last fall, protesters overran several government-owned warehouses where relief materials funded by a private-sector coalition against the coronavirus were hoarded instead of distributed to people suffering from the economic impact of the virus. Recently, protesters in Paraguay have accused the government of colluding with private contractors to acquire COVID medical supplies that were ineffective.
On January 17, 1961, President Dwight D. Eisenhower delivered his final address to America. During the speech, he introduced the concept of the military-industrial complex. He cautioned on the influence of the military-industrial complex, the power of money and state capture by a scientific-technological elite. Sixty years after the speech, his words ring true in our present age where the COVID-industrial complex continues to make gains from people's pain. To paraphrase President Eisenhower, we must guard against the acquisition of unwarranted wealth, whether sought or unsought, by the COVID-industrial complex.