Ghost-managing the social determinants of value

While Thorstein Veblen’s works are fascinating and full of great insights to understand the evolution corporate capitalism, his works remain a bit dated and difficult to use as a coherent analytical framework. The rest of this chapter aims at developing analytical categories to better understand the capacity for dominant corporations to shape the social determinants of value according to their interests. If it becomes clear that existing social structures and differential advantages are being capitalized by corporations, the analysis of how corporations transform these social structures according to their interests does require a more detailed framework.

This section builds in part on the works of Miller and Harkins (2010) and identifies seven categories of capture as a comprehensive framework to analyze the political economy of influence in any industrial sector: (1) scientific capture, (2) professional capture, (3) technological capture, (4) regulatory capture, (5) market capture, (6) media capture, and (7) civil society capture. The word “capture” is used to describe the attempts to capture these elements by different strategies and should not be understood in terms of a complete capture of these elements. The categories suggested aims at better understanding this ghost political economy of influence that is constitutive of the contemporary dynamics of capital accumulation. The following sections introduce these categories one by one and provide an outlook on how they apply to the pharmaceutical sector. [1]

possible to convince prescribers about the products’ benefits and about the low risks associated to the product. Ghostwriting has become a usual strategy for scientific capture in the medical literature (Lacasse and Leo, 2010; US Senate Committee on Finance, 2010). The extent of ghostwriting at play goes beyond the basic issue of plagiarism. The notion of “ghost management” was developed to show the extent of the use of ghostwriting and refers to a whole system of management behind closed doors used to influence scientific results in favor of corporate interests (Sismondo, 2007; Sismondo and Doucet, 2010; Gagnon, 2012; Sismondo, 2018).

The first strategy is to inflate the number of favorable scientific publications. Many studies found in medical journals are written by ghostwriters or medical writing agencies paid for by drug companies. These publications form part of carefully thought out publication plans that are essential to the success of promotional campaigns and the market launch of a new drug. For example, internal documents from Pfizer revealed that, between 1998 and 2000, the company directly initiated the writing of at least 85 scientific articles on the antidepressant drug sertraline (Zoloft). During this period, the entire scientific literature on this active substance consisted of only 211 articles (Sismondo, 2007). In this way, Pfizer produced a raft of articles showing the drug in a positive light, lessening the impact of more critical studies. It is estimated that around 40% of medical journal articles mentioning patented molecules are ghostwritten and part of such publication plans (Sismondo,

2018: p. 101).

The second strategy is to restrain the disclosure of unfavourable results. Pharmaceutical companies consider private-sector clinical research produces private, confidential results as part of their intellectual property. They assume the right not to publish certain results, in the name of trade secrecy. And they are not compelled by political and health authorities to make public the data obtained in clinical trials. Drug companies can therefore select what data they want to see published (Goldacre, 2013).

A third strategy is to intimidate and neutralize independent researchers who produce studies that show the product in an unfavourable light. For example, in Merck’s internal e-mails, which came out during lawsuits over the harm caused by its drug rofecoxib (Vioxx), revealed that the company had drawn up a hit list of “rogue” researchers who had criticized Vioxx. Managers recommended that the researchers on the hit list had to be “discredited” and “neutralized”. “Seek them out and destroy them where they lived” reads one of the e-mails. This intimidation was the result of the work of an entire team that systematically monitored everything that was said about the product (Rout, 2009).

It is important to understand that in a sector like pharmaceuticals, these strategies are no exception: a company that would refrain from these strategies in the name of ethics would simply lose their market shares (Gagnon, 2013). If profits are affected by the scientific literature about the risks of the product, it is more than likely that dominant corporations in the sector will deploy strategies to capture science in order to build their intangible assets. For example, similar ghost-management strategies to capture science were used by tobacco companies to downplay the risks of dependence and cancer for their products while touting the benefits and self-confidence associated with smoking cigarettes (Proctor, 2012). Similar strategies were used by sugar manufacturers and sugary food companies in order to downplay the role of sugar in heart disease and shift the focus on saturated fat (Kearns et al, 2017). In the case of medical devices, manufacturers systematically concealed adverse effects associated to their products while promoting their products with false claims (Lenzer, 2018). Declassified Monsanto documents from litigation reveal Monsanto-sponsored ghostwriting of articles published in toxicology journals and the lay media, interference in the peer review process, behind-the-scenes influence on retraction and the creation of a so-called academic website as a front for the defense of Monsanto products (Gillam, 2017; McHenry, 2018; Thacker, 2019). Internal documents also showed step by step strategies used by Monsanto to discredit investigative journalists criticizing their products (Foucart and Horel, 2019; Gillam", 2019).

2 Professional capture

Beyond scientific capture, it is important to understand that many companies deploy additional strategies to capture the technical experts of a specific sector, like engineers or healthcare professionals. It is important to differentiate this strategy from scientific capture since it has sometimes very little to do with science, and more to do with promotional campaigns. “Key opinion leaders” and promotional campaigns geared toward professionals have the capacity to shape expert opinion and influence professionals on controversial issues. In the United States, while the pharmaceutical industry spent $24 billion in research and development in 2004, it spent $58 billion in promotional campaigns (Gagnon and Lexchin, 2008), of which $54 billion was spent targeting healthcare professionals including $43 billion spent specifically targeting physicians. It represents average promotional spending of $61,000 per physician annually to influence their prescribing habits. In addition to standard promotion, the CMS Open Payment Data shows that, in the United States, drug manufacturers paid $9.35 billion to 627,000 physicians (directly or through an institutional affiliation) which represents a yearly average of $15,000 per physician.

The investment in professional capture in the pharmaceutical sector is financially greater than what is being invested in research and development. In other words, the main activity of drug companies is not to produce drugs, but to produce and control narratives shaping medical knowledge in a way that favor its interests. The production of the social determinants of value (medical knowledge and social demand for drugs) is much more important here than producing value (therapeutic benefits of the drugs for the population). Professional capture thus seems central to developing intangible assets in specific industrial sectors.

3 Technological capture

The notion of technological capture is important when considering that the dominant corporations in many sectors are the driving engines of technological change in the context of important technological path-dependency. Core companies often compete for establishing the technological standards in their sector or for developing patent portfolios to increase their bargaining capacity against competitors. According to Alfred Chandler (2005), dominant companies in any industrial sectors have developed an integrated set of capabilities essential to commercialize new products in volume for national or world markets. These integrated capabilities become their learning base to develop their control over networks of production and distribution and to market new products. As such, they become core companies that set the technological direction in which the whole industry evolves. The concentrated power of technical, often proprietary, and functional knowledge embedded in the core companies integrated learning bases is such “that a relatively small number of enterprises define the evolving paths of learning in which the products of new technical knowledge are commercialized for widespread public consumption” (Chandler, 2005: p. 9).

This creates a dynamic where barriers to entry prevent start-ups from creating effective integrated capabilities that would be essential to compete in the industry. These dynamics are evident in the pharmaceutical sector, in which most start-up companies cannot even consider competing with core companies. For example, more than 80% of the drugs sold by Pfizer and Johnson and Johnson were discovered and developed by third parties (Jung et al, 2019). In fact, the development of new molecules is often financed through public basic research. Once a molecule is considered promising, it is often transferred to a start-up company that will start developing the molecule into a medication (often benefiting from generous tax credits) only to be acquired by a larger company.

Furthermore, because patents make technical knowledge proprietary, developing technical capacity often takes the form of “kicking away the ladder” for smaller companies who would like to enter a market. In fact, the race for patents has become a race for strategic patenting, a strategy consisting of patenting as many elements as possible in their broadest scope, in order to provide patent holders greater potential rights over future innovations. Such patent portfolios allow for the construction of “patent thickets”, or “patent gridlocks” (Heller, 2008), which are barriers to entry based on the threat of patent litigations against any new competitors. This multiplication of low-quality patents is often harmful to innovation (Gold et al, 2010). As such, patents are used in business sectors more as barriers to entry and restraint on competition instead of incentives to innovate.

4 Regulatory capture

Regulatory capture can be defined as “the result or process by which regulation, in law or application, is consistently or repeatedly directed away from the public interest and toward the interests of the regulated industry, by the intent or action of the industry itself” (Carpenter and Moss, 2014: p. 13). Influencing laws and regulations are key objectives for many companies. An obvious way in which corporations invests in influencing policymakers is through lobbying on their own account or via heavyweight trade associations. According to the Center for Responsive Politics based on data from the Senate Office of Public Records, the number of lobbyists at the Federal level in the United States (Congress and federal agencies) was 11,652 in 2018 and total declared spending on lobbying was $3.45 billion. The pharmaceutical sector ranked as the top lobbying industry in 2018 with declared spending of $282 million, followed by the insurance sector ($158 million) and electronics ($147 million).

In addition to direct lobbying, revolving doors (Public Citizen, 2005) and ubiquitous conflicts of interests in Government and academy should also be considered as important means of regulatory capture. For example, a growing literature accounts on how private interests manage to shape public law, especially in the case of international trade agreements (Drahos and Braith- waite, 2002; Sell, 2003; Brunelle, 2007; Gleeson et al, 2019). According to Open Secret Database, in 2018, the pharmaceutical sector counted 1,021 revolving door lobbyists (industry lobbyists who previously worked with government). It is the industry with the most revolving door lobbyists, followed by electronics (828) and general manufacturing and distribution (677). Regulatory capture is certainly a central feature in the accumulation of intangible assets for dominant corporations, especially in the pharmaceutical sector.

5 Market capture

The category of market capture refers to any capacity for corporations to develop market power or restrain market competition. The building of monopolistic capacity through cartel agreements, mergers and acquisitions, cooperation agreements or through specific forms of corporate structures (trusts, holdings, and conglomerates) are the main elements that could be included under that category.

While cartels remain officially illegal according to competition policies in most industrialized countries and should not be considered central within the structure of corporate capitalism, two cartels emerged among pharmaceutical products in the 1990s: one in lysine (an essential amino acid) and the other in vitamins (Connor, 2008).

Other strategies, like mergers and acquisitions or cooperation agreements are central to market capture. With more than $2.5 trillion in deals announced worldwide, 2018 was set to become a record year for the value of corporate mergers and acquisitions (Grocer, 2018) while 2019 was expected to be a record year for mergers and acquisitions in the pharmaceutical sector (Grocer, 2019). Mergers and acquisitions are a typical case of goodwill creation that does not increase production capacity. For example, in the case of pharmaceuticals, mergers and acquisitions are often used to slash spending in research and development since many in Wall Street see pharma research as value-destroying and as a target for cuts (Economist, 2014). In a nutshell, the destruction of the capacity to create real therapeutic benefits for a population is often considered as an excellent w'ay to build the intangible assets for the shareholders.

Collaboration agreements between companies are becoming very important, especially in knowledge-based sectors. In the pharmaceutical sector, it was found that among the 16 largest pharmaceutical companies worldwide at least 82 collaboration agreements existed in 2008, which means that each dominant firm had on average more than ten cooperation agreements with other dominant firms (Gagnon, 2009). The sector is organized less like a competitive market and more like a network of cooperation. Market competition in the pharmaceutical sector becomes an elusive concept when compared to the reality of organized systematic cooperation. While there is not necessarily an official cartel agreement, we find ourselves confronted with the multiplication of quasi-cartel agreements, w'hich results in the same consequence - increased monopolistic capacities as a form of intangible assets.

6 Media capture

Media can play an important role in creating intangible assets. It can play a direct role in lobbying and policymaking as it provides a capacity to connect with public opinion and elite opinion, and it can help to target and destroy industry critics (Miller and Harkins, 2010). Literature on media institutions and processes accounts for the different mechanisms by w'hich media are influence and captured by corporate interests. Such mechanisms include advertising, public relations, influence of media ownership, and attacks on critics (McChesney, 2008).

Total pharmaceutical media advertising expenditures in the United States (excluding social media) amounted to $6.5 billion in 2018 (Snyder Bulik, 2019), which represents more than 4% of the $152 billion spent in advertising for all sectors (Mandese, 2019). Experts in corporate public relations (PR) are also becoming more and more active in shaping the news concerning corporate interests. It is estimated that for every working journalist in the United States, there are now' 4.6 PR people, up from 3.2 a decade ago (Edgecliff-Johnson, 2014).

An often-neglected dimension of media capture is the use and role of media in securing regulatory capture through the sophisticated use of seemingly independent organizations as echo chambers for corporate messages or through direct attempts to take over the means of communication (Miller and Dinan, 2009). Many think tanks presenting themselves as independent nonprofit organizations act as simple lobbying organizations for their corporate funders. The line is also getting blurred between journalism and lobbying, especially in the era of internet and social media. Confessore (2003) calls “journo-lobbying” the massive lobbying disguised as journalism: “The new game is to dominate the entire intellectual environment in which officials make policy decisions, which means funding everything from think tanks to issue ads to phony grassroots pressure groups.”

7 Civil society capture

Civil society refers here to charities, nongovernmental organizations, trade unions, social movements and other groups associated with civil society. The technique of creating front groups (sometimes called astroturf organizations) has a long history in the era of corporate capitalism (Miller and Dinan, 2008). In addition, many grassroots organizations in civil society can be captured or influenced by corporate groups, especially when they rely on corporate grants to fund their activities.

In the pharmaceutical sector, patient groups play a key role to get a drug approved and reimbursed by insurers at very high prices. Most patient groups, however, are not created by drug companies, but they often rely on corporate donations to fund their activity. Not surprisingly, they often end up defending the interests of drug companies (get drugs approved and reimbursed at high prices) in spite of claims that their funding does not influence their discourse (Batt, 2017). While drug companies might fund specific groups to support specific products, drug companies can also band together to fund specific groups to support specific regulation in favor of their sectors, just like when they hired marketing firms to create nonprofit groups to push for higher drug prices in the name of patients (Elgin, 2019).

According to their websites disclosing their funding to US-based patient organizations in 2017, GlaxoSmithKline distributed $29.4 million to these organizations, Novartis spent $20.4 million, Roche disclosed spending $25.5 million and Genentech paid S58 million in grants and donations to patient groups and independent medical education initiatives. If the funding pattern of GSK, Novartis, Roche, and Genentech is representative of other companies and considering that these companies represented jointly 14.3% of the total $952.5 billion global prescription drug markets (Pharmaceutical Technology, 2019), we can estimate that drug companies spent almost a billion ($932 millions) in grants to patient groups and education in the United States in 2017. In many ways, patient organizations have become a central part of the communication strategies used by Big Pharma (McCoy, 2018).

  • [1] Scientific capture Attempts to capture science by corporate interests are increasingly documented (Matheson, 2008; Mirowski, 2011; Gotzsche, 2013; Fabbri et al,2018; Lenzer, 2018; Sismondo, 2018; Howick, 2019). The social authority ofscientific discourses makes science an excellent target to shape the socialdeterminants of value. The pharmaceutical sector effectively demonstrates the need to capturescience in different ways. A new drug can gain financial success only if it is
 
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