Many COVID-19 heroes put their lives at risk or died caring for others. We all owe health care providers, scientists, public health professionals and other frontline workers a huge debt of gratitude. But the health care industries did just fine. Four of the 10 companies that profited most during the pandemic are in health care.
Drug companies and their executives are the biggest COVID winners. Pharma executives were able to run the federal government’s $22 billion COVID vaccine program, Operation Warp Speed, because they were exempted from the usual conflict-of-interest requirements. According to Nina Burleigh’s “Virus: Vaccinations, the CDC, and the Hijacking of America’s Response to the Pandemic” excerpted in Forbes, “Executives at Moderna and Pfizer cashed in on the vaccine, selling shares timed precisely to clinical trial press releases.”
Pfizer’s pre-tax profits from its vaccine are estimated at $990 million. Unlike other companies, Pfizer didn’t take federal funds to develop or manufacture the vaccine but it did get federal contracts for vaccine doses worth billions of tax dollars. And Pfizer’s partner in developing the vaccine, BioNTech, received $445 million from the German government. Pfizer also received billions in private donor funds to develop and test the vaccine.
Pfizer is not the only drug company that profited. In return for massive Operation Warp Speed subsidies, Johnson & Johnson and AstraZeneca promised not to profit on their COVID vaccines during the pandemic. However, there was no requirement that they share what they‘ve learned about vaccines at taxpayers’ expense to benefit the public in the next pandemic. Both companies have enjoyed large profits during the pandemic, largely from pharmaceuticals. Johnson & Johnson’s net earnings were $6.2 billion in the first quarter of this year, $400 million more than the first quarter of last year. AstraZeneca’s operating profits in the first quarter of this year were $1.9 billion, about double last year. Moderna posted that company’s first quarterly profit of $1.2 billion early this year driven by its vaccine.
Concerns early in the pandemic that insurers would be hit hard were misplaced. Insurers made a lot of money in 2020 because early in the pandemic, providers cancelled elective procedures and consumers delayed getting routine care. For the first time in history, U.S. health care spending dropped in 2020. Because the Affordable Care Act caps insurers’ administration and profits, it’s estimated that they will have to return $2.14 billion of those profits to consumers and payers. It’s expected that insurers will continue to benefit from COVID into this year because of federal policy changes in response to COVID and the effects of the recession including higher enrollment in the exchanges and higher premium subsidies that apply to more people.
While we won’t know until the audits come in this fall, there are early indicators that Connecticut hospitals and their large health systems were also spared financially last year. Connecticut hospitals received over $1 billion in state and federal COVID relief funds. Unlike nursing homes and other health care sectors, Connecticut hospital employment has returned almost to pre-pandemic levels. U.S. hospital spending has more than rebounded at $60 billion higher this March than two years ago. COVID testing became a very profitable service for many hospitals.
Large health systems, most led by hospitals, are growing bigger using COVID relief funds to buy more physician practices. While this shift began in Connecticut before the pandemic, COVID has accelerated the trend. Studies find that this consolidation only raises prices and spending without improving the quality of care. This COVID consequence could have lasting effects accelerating rising Connecticut’s health care costs long into the future.
COVID has been a terrible burden on frontline workers, providers and the economy, but it has been a boon for health care industries.
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