2. A History of Pharmaceuticals: A Case for Treatment

“‘If there was a company that was selling an Aston Martin at the price of a bicycle, and we buy that company and we ask to charge Toyota prices, I don’t think that that should be a crime.’

Martin Shkreli, CEO of Turing Pharmaceuticals, defending a decision to raise the price of a

62-year-old drug to fight parasitic infection from $13.50 a tablet to $750, 2017

Valeant’s approach found imitators, however. Martin Shkreli adopted an even more extreme strategy of price gouging at Turing Pharmaceuticals, increasing the cost of Daraprim, on the market since 1953, from $13.50 to $750. In 2007 generic drugs producer Mylan acquired the rights of the long-established EpiPen® – used to provide urgent relief to people with severe allergies – and over the next ten years gradually raised the price sixfold. The company paid almost a billion dollars to settle – ‘without admission of liability’ – claims that it had violated antitrust laws and defrauded Medicaid.

Leslie Hannah, an eminent business historian, has shown how the ‘rationalisation’ of industry, which was favoured by the British Government (represented by the Bank of England), set the stage for the new ‘corporate economy’ which would characterise Britain for decades. The 1920s saw the creation by merger of ICI (chemicals), the Distillers Company (Scotch whisky) and Unilever (soap and margarine). A similar wave of mergers in Germany established IG Farben and Vereinigte Stahlwerke as the dominant chemical and steel producers respectively. (Both these companies were dissolved by the victorious Allies in 1945.)

Beijing wanted especially for manufacturers to maintain operation. While the rest of the world was having trouble producing stuff— masks and cotton swabs, electronics for remote work— and while foreign consumers had stimulus money to spend, Chinese factories were positioned to meet the world’s demand.

For a while, that scheme worked. China’s trade surplus hit a record high in 2021, and then again in 2022, approaching almost a trillion dollars. In spite of the tariffs that Donald Trump imposed on gigantic categories of Chinese-made goods, the United States and China experienced record trade in 2022.

In the modern world, many manufactured products can be refashioned for military purposes. The smartphones we carry around have sensors that would have been military grade a decade ago. The consumer drone is also dual use, which is why Ukrainians and Russians have tried to buy China’s DJI drones for the battlefield. That’s why industrial capacity should be understood, increasingly, as military capacity. All the drones, smartphones, and batteries that are overwhelmingly produced in China give it an advantage that the United States does not necessarily have.