To understand how Wall Street and drug corporations collaborate to exploit a rigged system at the expense of the rest of us — even in a public health emergency — let’s look at the drug company Moderna. 

Moderna is moving quickly to test one of the most promising COVID-19 vaccines. But the company did not develop this vaccine on its own. Moderna’s vaccine candidate is supported by almost half a billion dollars in taxpayer funding from the U.S. Biomedical Advanced Research and Development Authority (BARDA), along with considerable additional support from the National Institutes of Health.

After BARDA announced a $483 million award to Moderna, the company’s stock price jumped by more than 20 percent. One month later, after a taxpayer-funded clinical trial showed positive results for its COVID-19 vaccine, Moderna’s stock prices reached an all-time high — up more than 300 percent over the start of the year. That run-up in the stock price might sound like a good thing, but it’s happening because Wall Street is doing what it always does — setting stock price based on anticipation that Moderna will charge high prices for this taxpayer-funded vaccine. 

Wall Street influence is even more clearly on display with Gilead Science’s COVID-19 drug, remdesivir. As in the case of Moderna’s vaccine candidate, remdesivir was developed with taxpayer support. It is the first drug to show benefit to COVID-19 patients, improving recovery time in patients by four days. Yet analysts have been quick to assign a price that would reap billions of dollars for the drugmaker. 

A recent headline from a prominent industry trade publication made clear Wall Street’s priority: “Analysts to Gilead CEO: What’s your plan to monetize remdesivir?” And although an independent study pegged the cost to produce a course of remdesivir treatment at only $10, an influential analyst made clear he expected a lot more than that. He said U.S. patients should pay a whopping $5,000 for a course of treatment — the highest price in the world — which would help generate almost $8 billion in annual revenue by 2022. And, based on that, he raised his target price for the stock by 10 percent.

This is how stock valuation drives high drug prices. Once a rich valuation is set, the forces are in motion: Consumers are destined not to pay a fair price, but rather an amount closer to the maximum price analysts have told pharma they should try to get away with.

This dynamic has played out with Gilead in the past. 

Gilead paid inflated stock prices for two companies — one with a hepatitis C drug and another with a cancer treatment. Then, Gilead set excessively high prices of $84,000 and $373,000 for the medicines, respectively — prices that would justify the high stock prices paid in the acquisition and yield profits far in excess of what the industry says it costs to develop new drugs. 

Inflated pricing at the behest of self-interested Wall Street analysts and investors with a singular focus on stock value and profit is just one way our drug pricing system is rigged. And unfortunately, there’s no free market mechanism to constrain their rapacious pricing because our laws grant monopolies to drugmakers who can then charge whatever they want for a medicine. We are already suffering under this system in the U.S. for the drugs we need every day; if we let the status quo stand for COVID-19 treatments, we will allow Wall Street and Big Pharma to profiteer on the pandemic. 

We’re at a crossroads. We can’t let Wall Street and drug corporations dictate prices of COVID-19 medicines. There is bipartisan legislation in Congress to ensure treatments and vaccines developed with taxpayer funding are priced reasonably — that they are affordable and available to everyone. Yes, investors would have to settle for only “fair” profits, not spectacular returns. But the public interest would be served. That’s the only bottom line that matters during this global pandemic.