Monday, January 9, 2023

Life Sciences Now Greed Infected

reported how the greed and leverage boys contribute to increased healthcare costs:

...buyout firms invest in the development of the drugs, typically when they are in so-called Phase 3 clinical trials, one step away from regulatory clearance. They negotiate with pharmaceutical companies the returns they will receive in advance.

In most cases, the drug makers start paying the money back to the private equity firms when the drug is being developed, either by issuing equity, tapping cash on hand or borrowing. They also share a slice of the newly developed drug's revenue with the private equity firms once it's approved.

Blackstone and The Carlyle Group, two politically connected private equity underwriters (PEU), were mentioned in the piece:

Blackstone established a major presence in the sector in 2018 after acquiring Clarus, an investment firm specializing in clinical trial deals with $2.6 billion in assets. The strategy was emulated last year by Carlyle Group Inc when it acquired Abingworth, a peer of Clarus with $2 billion in assets.

Carlyle is now preparing to raise a dedicated life sciences fund, using the Abingworth team, that could amass several billions of dollars, according to people familiar with the fundraising plans.

Washington Business Journal did a story on Carlyle's life sciences move. 

"We are big believers in what we've called the biopharma revolution and in the explosion of discovery and science," Steve Wise, Carlyle's global head of health, told Reuters.

Carlyle believes in making grand returns, frequently from Uncle Sam's wallet.  President Biden's cabinet is chock full of former PEUs.  Nearly every Medicare Chief became a PEU if they weren't one already.

Politicians Red and Blue love PEU and increasingly, more are one.  

The big question of course is how state and federal regulators, as well as elected officials in both political parties, did not see that the entire construct of crypto currency was at best a form of money laundering and at worse outright fraud. There was no segregation of accounts, no internal controls, none of the consumer protections that are already part of existing law and regulation. 

Just as they did not reign in crypto, elected officials choose the greed and leverage boys over citizens' needs for affordable healthcare.

Incredulous members of Congress held hearings about “regulating” crypto as though oversight could make fraud somehow acceptable.

The healthcare PEU moves are but a different kind of fleecing. 

...nearly one out of four Americans are unable to afford the medicine their doctors prescribe and too many seniors are splitting their lifesaving pills in half because they can’t afford them.

It's the kind that harms people.