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As the death toll from the novel coronavirus climbs toward 90,000, a new national survey shows that a majority of Americans believe that the U.S. government should regulate the profits drug companies can make from drugs that treat or prevent Covid-19.

Although the pharmaceutical industry’s pricing practices have come under increasing scrutiny in the past few years, Covid-19 seems to be galvanizing public opinion in a way that should make any drug company executive or investor who is imagining fat profits for its Covid-19 therapies of vaccines think again.

My company, Phalanx Investment Partners, sponsored a survey of more than 1,000 U.S. adults that was conducted between April 20 and April 26. The results don’t bode well for the pharmaceutical industry: 78% said the U.S. government should regulate the price of Covid-19 treatments, and 53% said that drug companies shouldn’t make profits at all from Covid-19 therapies. Just 18% said that drug companies should be allowed to set the price of the therapies they develop.


Findings like these should show drug company executives that unless they make substantial deposits into the Bank of Goodwill, the industry runs an increased risk that Congress, already frustrated with price increases for drugs like insulin, may face pressure to find harsher remedies for potentially high prices.

Johnson & Johnson may have recognized this sentiment when it announced in April that it would make any Covid-19 vaccine that it developed available to the public on a not-for-profit basis for emergency pandemic use. Gilead Sciences similarly made headlines when it announced it will offer its current supply of remdesivir for free, and recently announced it is in talks with other drug makers to manufacture the drug for non-U.S. markets.


Activists and public watchdogs have made clear where they stand. Public Citizen, for example, has called on Gilead Sciences to open up its intellectual property on remdesivir, a potential treatment for Covid-19, to other manufacturers.

I expect other companies with potential treatments will follow suit. But when investors begin clamoring for returns on their investments, how will industry players balance competing interests?

Having profitable drug companies that are rewarded for innovation has helped drive research leading to important new treatments for common diseases such as cancer and heart disease and rarer ones like Duchenne muscular dystrophy and inherited retinal disease. Lowering the incentives for innovation may result in lower investment in research and development and, as a result, a less agile industry that produces fewer new cures and treatments.

Pandemic drugs have long been a special category, as demonstrated in 2001 when the George W. Bush administration convinced Bayer to lower its price for the antibiotic ciprofloxacin in the midst of the anthrax scare. The government has also negotiated prices for smallpox and other supplies and drugs for pandemics without leading to price controls for a wider array of drugs.

Giving up Covid-19 profits might be a small price to pay if it helps the drug industry continue to have vocal allies who defend its freedom from U.S. price controls and to reap profits from a patent system that allows monopolies for drugs whose discovery is often based in part on taxpayer-funded research.

If the drug industry hasn’t already taken note of what the Minnesota Senate recently did, it should. It passed a prescription drug price transparency bill with an overwhelming bipartisan vote of 63-2. Other states have similar legislation pending.

Americans continue to embrace capitalism, but it is increasingly a caring capitalism that demands transparency and recognizes multiple participants and recipients.

The biopharmaceutical industry would be wise to see the important difference between maximizing and optimizing profits, and realize it is facing a moment when it can continue to restore faith that an agile, innovative, and caring industry can be a partner in public health without being forced to do so.

David Maris is the managing partner of Phalanx Investment Partners, an investment and advisory firm that specializes in health care investing for social good. He was previously a pharmaceutical equity research analyst for leading investment banks.

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