As Coronavirus Cases Mount, So Do Concerns About Price-Gouging and Corporate Profiteering

As the number of global COVID-19 cases soared past 254,000 and the death toll topped 10,000 on Friday, concerns persisted--particularly in the United States--about healthcare costs related to the ongoing outbreak, limited testing and protective medical supplies, and how corporations may try to cash in on the public health crisis.

The Intercept's Naomi Klein, author of the 2007 book The Shock Doctrine: The Rise of Disaster Capitalism, warned earlier this week in a video about "coronavirus capitalism" that the U.S. and other governments are "exploiting" the COVID-19 pandemic "to push for no-strings-attached corporate bailouts and regulatory rollbacks."

Klein took to Twitter Friday to highlight a New York Times report about how--although President Donald Trump on Wednesday signed legislation that orders free testing for COVID-19--even people with health insurance could face high medical bills, which experts worry will deterring people from seeking treatment.

"The problem is we have reams and reams of evidence that if people know they face hundreds or thousands of dollars in bills, they'll hesitate, they'll wait and see," Sabrina Corlette, a research professor at Georgetown University, told the Times.

The newspaper detailed some ways in which people could walk away with bills after being tested for COVID-19:

It's possible, especially if you go somewhere that isn't in your health plan's network or undergo an array of unrelated tests. "There are still questions about the battery of testing people may receive and out-of-network testing," said Cheryl Fish-Parcham, the director of access initiatives at Families USA, a consumer advocacy group.

You could also face sizable out-of-pocket costs if you have something that looks like coronavirus, like the garden-variety flu, but isn't. While New Mexico is requiring insurers to cover the testing for flu and pneumonia, so far it's an exception.

The Kaiser Family Foundation (KFF) last week estimated the potential costs of coronavirus treatment for people in the United States with employer health plans. The KFF researchers found that based on 2018 data, the average cost--including both what was covered by insurance and patients' out-of-pocket contributions--of a hospital admission for pneumonia with major complications and at least one other medical condition was $20,292. They noted that "costs vary greatly across the country," ranging from $11,533 to $24,178. The average cost for patients with less serious complications was $13,767; for those with no complications it was $9,763.

"The typical deductible in employer sponsored plans is $1,396," the KFF researchers wrote. They found that out-of-pocket costs averaged $1,464 for admissions without complications and was "similar, though a bit lower for people with major complications," because people with other conditions may have earlier costs that contributed toward meeting their deductible. They concluded that "people with employer coverage who are admitted for COVID-19 treatment could face out-of-pocket costs exceeding $1,300," but "there are several reasons to believe out-of-pocket costs could be even higher during this outbreak than this analysis indicates."

The KFF researchers estimated that 18% of patients who had pneumonia with major complications or other conditions and were admitted to an in-network hospital still faced out-of-network charges, or "surprise" bills.

"This coronavirus pandemic exposes the incredible weakness and dysfunctionality of our current healthcare system."
--Sen. Bernie Sanders Although some private insurance companies have decided to waive or suspend co-pays or deductibles for medically necessary treatment related to COVID-19, the KFF researchers wrote that "the challenge of addressing these concerns over costs in the United States is exacerbated by a fragmented health insurance system and decentralized regulation process."

Democratic presidential candidate Sen. Bernie Sanders (I-Vt.) has repeatedly argued in recent days that "this coronavirus pandemic exposes the incredible weakness and dysfunctionality of our current healthcare system" and demonstrates the necessity of establishing a Medicare for All system that guarantees healthcare as a human right nationwide--a charge that has been echoed by other single-payer advocates.

The pandemic has also exposed the risks of limited federal regulation of companies that produce essential drugs and medical equipment. The Interceptreported Thursday that "in recent weeks, investment bankers have pressed healthcare companies on the front lines of fighting the novel coronavirus, including drug firms developing experimental treatments and medical supply firms, to consider ways that they can profit from the crisis."

"Gilead Sciences, the company producing remdesivir, the most promising drug to treat COVID-19 symptoms, is one such firm facing investor press," according to The Intercept. Although remdesivir was developed in partnership with the University of Alabama through a National Institutes of Health grant, the antiviral--which started as a treatment for dengue, West Nile virus, Zika, MERS, and SARS--is patented by the pharmaceutical company.

As The Intercept revealed:

During an investor conference earlier this month, Phil Nadeau, managing director at investment bank Cowen & Co., quizzed Gilead Science executives over whether the firm had planned for a "commercial strategy for remdesivir" or could "create a business out of remdesivir."

Johanna Mercier, executive vice president of Gilead, noted that the company is currently donating products and "manufacturing at risk and increasing our capacity" to do its best to find a solution to the pandemic. The company at the moment is focused, she said, primarily on "patient access" and "government access" for remdesivir.

"Commercial opportunity," Mercier added, "might come if this becomes a seasonal disease or stockpiling comes into play, but that's much later down the line."

The report also detailed examples of Steven Valiquette, a managing director at Barclays Investment Bank, asking representatives from healthcare distributors of N95 masks, ventilators, pharmaceuticals, surgical gowns, and other equipment about potential price increases in response to higher demand due to the pandemic.

Owens & Minor chief executive Edward Pesicka reportedly pushed back against Valiquette's questioning, saying that during this crisis, "we are not going to go out and leverage this and try to 'jam up' customers and raise prices to have short-term benefit."

Robert Weissman, president of public interest watchdog Public Citizen, told The Intercept that "notwithstanding the pressure they may feel from the markets, corporate CEOs have large amounts of discretion and in this case, they should be very mindful of price-gouging, they're going to be facing a lot more than reputational hits."

"There will be a backlash that will both prevent their profiteering, but also may push to more structural limitations on their monopolies and authority moving forward," added Weissman. He pointed to remdesivir when discussing how the government could work to prevent price-gouging, explaining that "the Gilead product is patent-protected and monopoly-protected, but the government has a big claim over that product because of the investment it's made."

"Even for products that have no connection to government funding, the government has the ability to force licensing for generic competition for its own acquisition and purchases."
--Robert Weissman, Public Citizen

"The government has special authority to have generic competition for products it helped fund and prevent nonexclusive licensing for products it helped fund," Weissman said. "Even for products that have no connection to government funding, the government has the ability to force licensing for generic competition for its own acquisition and purchases."

However, if the initial COVID-19 legislation Congress passed in early March is any indication, more public pressure is needed to push federal lawmakers to take action. As Politico reported, "Industry lobbyists successfully blocked attempts... to include language in the $8.3 billion emergency coronavirus spending bill that would have threatened intellectual property rights for any vaccines and treatments the government decides are priced unfairly."

Lawmakers from both major parties have unsuccessfully tried to advance legislation in recent months that would crack down on rising drug costs. Rep. Jan Schakowsky (D-Ill.), who has fought to ensure that coronavirus treatments developed with federal funding are affordable and accessible, told Politico that "the idea that drug companies should have free reign to set prices during an international pandemic is immoral and dangerous."

As for medical equipment that is in short supply, Trump on Wednesday invoked the Defense Production Act, a Korean War-era law that empowers the federal government to instruct private industry to produce essentials in a time of crisis. Although Trump initially said he would only use that power for "a worst case scenario in the future," the Associated Pressreported Friday that he caved to pressure and moved to use the law to mandate the production of much needed medical supplies.