[Plura-list] Capitalists hate capitalism

[Cory Doctorow]

Read today's issue online at: https://pluralistic.net/2023/06/09/commissar-merck/

Today's links

* Capitalists hate capitalism: Merck's version of "market pricing" is "whatever we ask for."

* Hey look at this: Delights to delectate.

* This day in history: 2003, 2008, 2013, 2018, 2022

* Colophon: Recent publications, upcoming/recent appearances, current writing projects, current reading

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🐹 Capitalists hate capitalism

As the Marxist agitator Adam Smith once said, "People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices."

Smith understood that capitalists hate capitalism. They don't want to compete with one another, because that would interfere with their ability to raise the prices their customers pay and reduce the wages they pay their workers. Thus Peter Thiel's anticapitalist rallying cry, "competition is for losers," or Warren Buffett's extreme horniness for businesses with "wide, sustainable moats."

These anti-capitalist capitalists *love* big government. They love no-bid military contracts, they love ACA subsidies for health insurance companies, they love Farm Bill cash for Cargill and Monsanto. What they don't love is *markets*.

Case in point: pharma giant Merck. The Inflation Reduction Act (IRA) includes a provision that allows Medicare to (finally) start (weakly) negotiating the prices it pays for (a tiny handful of) drugs. If you're scratching your head and wondering if you understood that correctly, let me assure you, you did: the US government is currently *prohibited* from negotiating drug prices when it bargains with pharma companies.

In other words: Medicare simply pays a pharma companies - whose products build on billions in publicly funded basic research, whose taxes are reduced by billions in research credits, whose patents are backstopped by billions in enforcement - whatever it demands.

To do otherwise, you see, would be socialism. Markets are "efficient" because they "discover prices" through bidding and selling. In the case of publicly purchased drugs, the price that Uncle Sucker "discovers" is inevitably "a titanic sum" or possibly "add a couple more zeroes, wouldya?"

Enter the IRA. Starting in 2026, Medicare will be permitted to negotiate the price of ten (10) drugs. The negotiations will use the prices of other drugs from the dysfunctional, monopolized market as a starting point and go up from there. The negotiations go on for three years, and there are multiple stages where pharma companies can hit pause with court challenges:

https://prospect.org/health/2023-05-11-regulators-bungling-drug-price-reform/

The system will *not* consider the prices that Medicaid or the VA (which *are* allowed to bargain on prices) pay. Nor will it consider the prices that other governments pay - the US is alone in the wealthy world in offering the anticapitalist price-taking posture when dickering with the pharma companies.

But this isn't enough for Merck. They are suing the Biden administration over the IRA's drug pricing plan, arguing that it is an unconstitutional taking under the Fifth Amendment:

https://www.cnbc.com/2023/06/06/merck-sues-biden-administration-over-medicare-drug-price-negotiations.html

Merck is represented by Big Law firm Jones Day, who made their bones by representing the RJ Reynolds from smokers with lung-cancer, arguing that the smoking/cancer link wasn't scientifically sound. That's not the only fanciful argument they put before a judge: Jones Day also represented Trump in his attempts to overturn the 2020 election (they also hired Trump's counsel Don McGahn as he exited the White House's revolving door).

As Ryan Cooper writes for *The American Prospect*, Merck's argument is that the "fair market" value of its drugs can only be discovered if its single largest customer - Medicare - simply pays whatever Merck demands of it:

https://prospect.org/health/2023-06-08-merck-negotiating-drug-prices-unconstitutional/

They explicitly denounce the idea that a powerful buyer should use its market power to extract price concessions from sellers like Merck: "leveraging all federal insurance benefits (amounting to over half of the prescription drug market) to coerce companies to abandon their First and Fifth Amendment rights is a quintessential unconstitutional condition."

Rebutting this argument, Health Secretary Xavier Becerra said, "negotiating for the best price is as American as apple pie. Since when is competition in this American system a bad thing? Why should we be the patsies around the world and pay the highest prices for medicines?"

The irony here is that Merck itself is a *very* powerful buyer. Whether negotiating commercial leases, raw materials or wages, Merck is ruthless in extracting the lowest prices it can from its suppliers. The company attained its massive scale the old fashioned way: buying it. By drawing on its nearly limitless access to the capital markets, Merck bought out dozens of its competitors:

https://mergr.com/merck-acquisitions

Anticapitalist investors funded these acquisitions in the expectation that Merck would be able to use its market dominance to pay suppliers less, charge customers more, and use some of the resulting windfall to corrupt and bully its regulators so that it could buy still more companies, charge still higher prices, and impose crushingly low prices on still more suppliers.

The IRA's drug-bargaining provisions are extraordinarily weak. When they were first mooted in 2021, I talked about how Democrats were caving on muscular drug price controls that would benefit every American (except a handful of pharma shareholders):

https://pluralistic.net/2021/11/18/bipartisan-consensus/#corruption

They did so despite wild, bipartisan support for imposing price discipline on Big Pharma, and ending the 300% premium Americans pay for their drugs relative to their cousins abroad. 95% of Democrats support strong price controls; so do 82% of independents - and *71% of Republicans*:

https://www.rwjf.org/en/library/research/2021/11/healthcare-affordability--majority-of-adults-support-significant-changes-to-the-health-system.html

No one believes Big Pharma's scare stories about how this would kill R&D: 93% of Americans reject this idea, including 90% of Republicans. They're right - nearly all US basic pharma R&D is directly funded by the federal government, with pharma companies privatizing the gains:

https://khn.org/news/article/public-opinion-prescription-drug-prices-democratic-plan/

Despite the fact that really whipping the shit out of Big Pharma would be both popular and good for America, the Dems' final version of pharma bargaining is a barely-there nothingburger where ten drugs will become slightly cheaper, *after* the next federal election. This is called "political realism" and it's a fantasy.

The idea that limiting drug controls to the faintest, most modest measures would make them easier to attain was obvious nonsense from the start, and Merck's anticapitalist lawsuit proves it. Merck will settle for nothing less than total central planning - by Merck. For Merck, the role of the federal government is to wave through a stream of mergers culminating in Merck's ownership of every major drug; patent extensions for these drugs to carry them into the 25th century and beyond, and unlimited sums paid for these drugs on Medicare.

Given all that, there would have been no downside to the Dems passing an IRA that subjected the drug companies the same modest, commensense, market-based discipline we see in Canada, or the UK, or France, or Germany, or Switzerland.

But that's not the IRA we got. Instead of defending a big, visionary program in court, the Biden admin is facing down Jones Day and Merck to defend the most yawn-inducing, incrementalist half-measure. What a wasted opportunity.


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🐹 Hey look at this

* Some blogging myths https://jvns.ca/blog/2023/06/05/some-blogging-myths/ (h/t Kottke)

* OpenAI Sued for Libel After ChatGPT Allegedly Hallucinates Man Into Embezzlement Lawsuit https://gizmodo.com/chatgpt-openai-libel-suit-hallucinate-mark-walters-ai-1850512647

* Eli Lilly Unveils Insulin That Doesn’t Work On Poor People https://www.theonion.com/eli-lilly-unveils-insulin-that-doesn-t-work-on-poor-peo-18505059011

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🐹 This day in history

#20yrsago Biopiracy: a new colonialism https://web.archive.org/web/20030625011109/http://www.alternet.org/story.html?StoryID=16057

#20yrsago Ed Felten explains why “black box” DRM tech is bad for society https://www.onlisareinsradar.com/archives/001359.php

#20yrsago Encrypted AIM https://web.archive.org/web/20030801072150/http://enterprise.aim.com/products/aim/personalcerts/

#15yrsago Virgin Media UK working with record industry to spy on and threaten downloaders https://www.independent.co.uk/tech/virgin-warns-illegal-downloaders-stop-or-face-prosecution-842086.html

#15yrsago Broadcasters fight hard against public use of blank spectrum https://arstechnica.com/uncategorized/2008/06/if-white-spaces-fail-we-dont-have-that-many-chances-left/

#15yrsago Kucinich begins impeachment process for GW Bush https://web.archive.org/web/20080610145134/https://www.rawstory.com/news/2008/Kucinich_presents_Bush_impeachment_articles_0609.html

#15yrsago My new graphic novel for sale and as a free, remixable, shareable download https://archive.org/details/CoryDoctorowsFuturisticTalesOfTheHereAndNow/Cory_Doctorows_Futuristic_Tales_of_the_Here_and_Now_CBR/

#10yrsago NSA whistleblower goes public https://www.youtube.com/watch?v=5yB3n9fu-rM

#10yrsago New NSA leak: BOUNDLESSINFORMANT documents the extent of NSA spying around the world https://www.theguardian.com/world/2013/jun/08/nsa-boundless-informant-global-datamining

#10yrsago What Prism slide-presentation means by “direct access” to Internet giants’ servers https://www.techdirt.com/2013/06/08/more-details-prism-revealed-twitter-deserves-kudos-refusing-to-give/

#10yrsago Beastles are back: double-album of Beastie Boys/Beatles mashups imminent https://web.archive.org/web/20130613055246/http://listen.radioclash.com/2013/06/sunday-9th-is-beastles-day-exclusive-mixes-from-djbc-ian-fondue/

#10yrsago PRISM and Canada: what are the north-of-the-border implications of American spooks gone wild? https://web.archive.org/web/20130611192144/http://www.michaelgeist.ca/content/view/6869/125/

#10yrsago PRISM and denials, what’s going on? https://www.engadget.com/2013-06-07-new-york-time-report-may-fill-the-gap-between-prism-leaks-and-co.html

#10yrsago Another Top Secret leak: Obama’s cyber-war hit-list https://www.theguardian.com/world/2013/jun/07/obama-china-targets-cyber-overseas

#5yrsago The BBC warns that new EU copyright rule will break the internet https://www.bbc.com/news/technology-44412025

#5yrsago Anti-piracy group’s study reveals that pirates are mostly people who couldn’t afford, find, or use a commercial version https://torrentfreak.com/pirates-are-valuable-customers-not-the-enemy-180606/

#1yrago Powered wheelchairs and Right to Repair https://pluralistic.net/2022/06/08/chair-ish/#r2r

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🐹 Colophon

Currently writing:

* A Little Brother short story about DIY insulin PLANNING

* Picks and Shovels, a Martin Hench noir thriller about the heroic era of the PC. FIRST DRAFT COMPLETE, WAITING FOR EDITORIAL REVIEW

* The Bezzle, a Martin Hench noir thriller novel about the prison-tech industry. FIRST DRAFT COMPLETE, WAITING FOR EDITORIAL REVIEW

* Vigilant, Little Brother short story about remote invigilation. ON SUBMISSION

* Moral Hazard, a short story for MIT Tech Review's 12 Tomorrows. FIRST DRAFT COMPLETE, ACCEPTED FOR PUBLICATION

* Spill, a Little Brother short story about pipeline protests. ON SUBMISSION

Latest podcast: The Swivel-Eyed Loons Have a Point https://craphound.com/news/2023/05/14/the-swivel-eyed-loons-have-a-point/



Recent appearances:

* How To Save News Media From Our Tech Overlords (Canadaland)
https://www.canadaland.com/podcast/888-how-to-save-news-media-from-our-tech-overlords/

*  Most AI is not artificial or intelligent (with James Bridle)
https://www.youtube.com/watch?v=VPvHjvZz7l0

* This Machine Kills
https://soundcloud.com/thismachinekillspod/257-red-team-blues-ft-cory-doctorow

Latest books:

* "Red Team Blues": "A grabby, compulsive thriller that will leave you knowing more about how the world works than you did before." Tor Books http://redteamblues.com. Signed copies at Dark Delicacies (US): and Forbidden Planet (UK): https://forbiddenplanet.com/385004-red-team-blues-signed-edition-hardcover/.

* "Chokepoint Capitalism: How to Beat Big Tech, Tame Big Content, and Get Artists Paid, with Rebecca Giblin", on how to unrig the markets for creative labor, Beacon Press/Scribe 2022 https://chokepointcapitalism.com

* "Attack Surface": The third Little Brother novel, a standalone technothriller for adults. The *Washington Post* called it "a political cyberthriller, vigorous, bold and savvy about the limits of revolution and resistance." Order signed, personalized copies from Dark Delicacies https://www.darkdel.com/store/p1840/Available_Now%3A_Attack_Surface.html

* "How to Destroy Surveillance Capitalism": an anti-monopoly pamphlet analyzing the true harms of surveillance capitalism and proposing a solution. https://onezero.medium.com/how-to-destroy-surveillance-capitalism-8135e6744d59 (print edition: https://bookshop.org/books/how-to-destroy-surveillance-capitalism/9781736205907) (signed copies: https://www.darkdel.com/store/p2024/Available_Now%3A__How_to_Destroy_Surveillance_Capitalism.html)

* "Little Brother/Homeland": A reissue omnibus edition with a new introduction by Edward Snowden: https://us.macmillan.com/books/9781250774583; personalized/signed copies here: https://www.darkdel.com/store/p1750/July%3A__Little_Brother_%26_Homeland.html

* "Poesy the Monster Slayer" a picture book about monsters, bedtime, gender, and kicking ass. Order here: https://us.macmillan.com/books/9781626723627. Get a personalized, signed copy here: https://www.darkdel.com/store/p2682/Corey_Doctorow%3A_Poesy_the_Monster_Slayer_HB.html#/.

Upcoming books:

* The Internet Con: A nonfiction book about interoperability and Big Tech, Verso, September 2023

* The Lost Cause: a post-Green New Deal eco-topian novel about truth and reconciliation with white nationalist militias, Tor Books, November 2023

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