Profiteering in the Era of COVID-19

Julian Vigo

Several months ago, Médecins Sans Frontières (MSF) called to end medical profiteering during the recent coronavirus pandemic where the development of drugs, tests, and vaccines will be integral to our getting through this difficult moment in our collective history. While MSF is foreseeing a future inevitability, it is also highlighting what is already happening as many businesses are price-gouging essential products during this crisis.

In the UK the Competition and Markets Authority (CMA) has recently established a coronavirus task force to crack down on companies that cash in during the outbreak. In fact, the CMA has already contacted traders and online platforms about the inordinate pricing of certain products. In the Philippines, 59 people have been arrested for profiteering and hoarding and in Australia, the government has enacted measures to respond to COVID-19 profiteering with up to five years in jail.

In a moment when freelancers are finding themselves without any clients and most governments are forgetting to consider their economic needs in packages meant to salvage national economies, many are still making money during this pandemic. The kinds of companies thriving are of course those which produce personal protective equipment (PPE) like face masks and gloves as well as the larger corporate structures around these industries. But there are also many businesses thriving at this moment which are not the usual suspects.

Meanwhile, during lockdown many people have sought out ways of staying economically viable while also in search for mental health support. For instance, online therapies to help deal with the stress of 24/7 with partner, kids and/or unbearable flatmates have sent many turning to natural remedies such as cannabis oil, exercise and even sourdough baking. Meanwhile others looked to shore up the damage caused by lockdowns and were conducting online investments in the micro-finance sector boomed in India and where companies providing investment news like LearnBonds started to explode by people suffering the effects of longterm cabin fever. Even New Zealand’s far briefer lockdown fueled cryptocurrency investments. Around the planet as consumers were shifting to online shopping as the safety default and so too were many businesses moving more and more of their sales online. Invariably we will see many studies in the near future that discuss how capitalism was changed by COVID-19.

Among the many fraudsters out to make a quick buck selling masks to healthcare workers at extortionate prices, there have been a few more ethical companies that found themselves surprisingly in need during lockdown. Video conferencing platform Zoom has found itself in high demand internationally as it is has been used by businesses whose workers have had to conference call from their kitchens. Even pet supplier, Chewy, and lesson-to-meal kit company, Blue Apron, were surprised by the upsurge in sales during this crisis. Similarly, there are other business like the bulk packaging manufacturing sector which have not been negatively affected by the COVID-19 pandemic.

While many companies are trading ethically, not all are playing fairly. In the past few months, the CMA has found listings on Amazon that have overpriced items such as thermometers sold at almost eight times their normal price and a £3 bottle of disinfectant being sold for £29.99 on eBay. In Florida, one seller was offering fifteen N95 face masks on Amazon for $3,799. Approximately three dozen US states have now enacted anti-gouging laws to protect against these practices during the pandemic, but this raises ethical questions as to why price gouging is ever OK, global pandemic or not.

Many readers might recall that Martin Shkreli, CEO of Turing Pharmaceuticals, became a household name in 2015 for having changed the price of a life-saving drug, Daraprim, which treats toxoplasmosis, a parasite infection, from $13.50 to $750 a tablet. This drug is primarily needed to save the lives of babies and adults suffering from AIDS. But Turing Pharmaceuticals is hardly unique to the world of price gouging. This is part and parcel of capitalism.

Gerald Posner, author of Pharma: Greed, Lies, and the Poisoning of America, recently commented that “Pharmaceutical companies view COVID-19 as a once-in-a-lifetime business opportunity,” adding “the worse the pandemic gets, the higher their eventual profit.” In the USA, the Campaign for Sustainable Rx Pricing (CSRxP) has been “promoting bipartisan, market-based solutions to lower drug prices in America” after research which demonstrates the millions of dollars that the pharmaceutical industry has invested into lobbying, advertising and public relations with the goal of convincing the public that the industry is behaving ethically.

While private industry is fond of claiming that they invested private money into the development, testing, and trials of their drugs, this is often not the case. For instance, during the severe acute respiratory syndrome (SARS) outbreak in 2002-2003, the United States spent $700 million of taxpayer money on coronavirus research.

Likewise, another possible drug to treat coronavirus, remdesivir, was developed with the help of taxpayer-funded research. Yet if remdesivir turns out to be the solution to COVID-19, then another battle begins since Gilead Sciences, infamous for its price gouging of HIV drug Truvada and Sovaldi, owns the exclusive rights of production to remdesivir. In March, Gilead Sciences was the focus of a public outcry over its monopoly of remdesivir.

In February, 46 members of Congress signed a letter to US president, Donald Trump, asking that COVID-19 vaccines and treatments developed with the support of taxpayer money must be produced without giving an exclusive license to private manufacturers. Think of this as open-access medicine if you will. Meanwhile, the US Health Secretary, Alex Azar, recently stated that he could not guarantee that eventual coronavirus treatments or vaccines would be affordable even though taxpayer money played a large role in their development.

Additionally, the U.S. Department of Justice has added a reporting mechanism on its website in addition to the creation of the COVID-19 Hoarding and Price Gouging Task Force in order to avoid individuals and companies hoarding designated items. This came on the heels of the DOJ having confiscated more than a half a million pieces of medical gear from hoarders who were planning to resell these items at exorbitant prices. The equipment seized included 192,000 N95 face masks, 598,000 medical grade gloves and 130,000 surgical masks. Moreover, the hoarding does not affect only the supplies used to combat the spread of COVID-19 but has been found to prey on the vulnerability of women and girls in Nigeria as now feminine hygiene products have also suffered price gouging according to Plan International.

Now is the time to affirm positive community connections and support those in need of assistance during the global pandemic which will affect each and every one of us in different ways. We are in this together, but it is our choice as to how we engage in this together.