As the flu pandemic is killing and sickening scores of Americans, Big Pharma companies’ profits are soaring.
This year’s vicious H3N2 strain has sickened record-breaking numbers of people, outpacing the devastation caused by the 2009 flu epidemic as of last week.
Just days ago, a young mother died of complications from the illness after telling her husband she would forego the $116 medication because it was too expensive.
As more Americans get sick, the economy stands to lose more than $10 billion, but nearly $2 billion may be trickling into the pockets of vaccine and medication makers and distributors, pharmacies and health care providers.
We break down who is making the most off the horrific flu.
The flu is costing Americans their lives and the country billions in productivity, but Big Pharma is raking in profits on cheap-to-make flu drugs and vaccines
Vaccine-makers are made millions in the last few months
There are five companies that make flu shots recommended by the Centers for Disease Control and Prevention this year: Sequirus, GlaxoSmithKline, Sanofi Pasteur and Protein Sciences.
For a private sector customer, a flu shot costs between $15.64 and $21.12 per dose, according to the Centers for Disease Control and Prevention (CDC).
The largest out of those five companies, Sanofi Pasteur and GlaxoSmithKline made some very serious bucks on their vaccines in 2017, especially in the fourth financial quarter of the year, as the flu was really ramping up in the US.
According to its latest earnings report, Sanofi’s flu vaccine revenues were up by 21 percent, netting the drug-maker about $617 million, on the back of ‘strong US pandemic flu purchases.’
GlaxoSmithKline (GSK) saw an 18 percent increase in its vaccine sales over the course of the year, but the business grew by 76 percent in the last quarter of the year.
GSK made $136 million of its $675 million annual sales in the fourth quarter of 2017 alone.
The company credited the ‘benefit of later phasing of shipments in the US’ for its particularly successful year.
‘Everyone, financially, is benefiting from this,’ said Dr Gerard Anderson, a public health professor at Johns Hopkins’s Bloomberg School of Public Health.
‘It’s the American way.’
Pharmacies mark up already-over-priced medicines
Stock prices for CVS spiked in January 2018 as stores faced vaccine shortages
This has been a banner year for pharmacy companies like international retailer CVS.
CVS boasted a 5.3 percent increase in its net revenue in the fourth quarter of 2017, netting a cool $48.4 billion.
In an earnings call, the company’s chief financial officer David Denton called the 2017-2018 flu season ‘exceptionally strong,’ hailing it as ‘a major factor in this improved outlook.’
Later in the call, he somewhat more soberly said: ‘Clearly the flu season’s impact [was] fairly significant as you look across the country and will affect Q1 [of 2018] positively, but we expect Q2 to be in the normal zip code’ of earnings.
Though CVS’s competitor, Walgreens, ate some costs during its merger with Rite Aid, the company still reported a 5.3 increase in its sales.
Pharmacies also mark up the prices of the drugs they stock, Dr Anderson notes.
The flu is like free money for Big Pharma
Though the CDC recommends three different drugs to treat this year’s strain of the flu, the most popular and widely-used one is Tamiflu.
During the flu season, ‘really, the maker of Tamiflu, that’s the major beneficiary’ financially speaking, Dr Anderson says.
‘These drugs cost very little to manufacture and people are being charged 100 times what it costs to make the drugs and often these are drugs that are no longer on patent, so it’s pure profit,’ he adds.
Without insurance, Tamiflu’s price starts at $112.20.
Since the CDC started collecting data for this season, in October 2017, at least 124,316 people have tested positive for some form of the flu in public laboratories.
Tamiflu costs very little to make, but is marked up to a starting price of $112.20
It is unclear how many of those were prescribed Tamiflu, or oseltamivir, as it is known generically.
For the sake of estimation, however, if all of them got the cheapest form, that would amount to nearly $14 million in sales (though not all of that money would make it to Tamiflu’s maker, Genentech, a subsidiary of Roche Pharmaceuticals).
Genentech does not release its financial data, but Bob Purcell director of corporate relations for the company told Daily Mail Online that ‘demand for oseltamivir is at the highest levels we have seen in years.’
Dr Anderson says that all that money could be used for improvements for next year’s flu season, but he is skeptical that that will be the case.
‘The hope is that they use the profits to develop new and better vaccines for the flu, because the current one is not very effective.
‘That’s the hope, but the reality is that they are probably going to have very good financial years,’ he says of pharmaceutical companies.