When I was growing up, the left regularly criticized Big Pharma and its influence on American politics. As recently as 2015, progressive stalwart Elizabeth Warren had “Big Pharma in her sights.” The right, meanwhile, was slow to criticize pharmaceutical companies. That dynamic was even evident in lobbying, with about 55 percent of Big Pharma’s political contributions going to Republican candidates from 1989 to 2020. Yet today, that dynamic has been completely reversed.
In 2020, Big Pharma gave over 60 percent of its political contributions to Democrats. Party leaders promptly backed COVID-19 vaccine mandates across federal and state agencies, helping pharmaceutical companies net hundreds of millions of dollars in profit during the pandemic.
The question is, how and why did America’s political parties realign themselves around one of the nation’s most influential industries? To find the answer, you have to follow the money.
Open Secrets, a tax-exempt, charitable organization that tracks financial influence on U.S. elections and public policy, reports that contributions “soared following passage of the Affordable Care Act (aka ‘Obamacare’) in 2010.” In 2009, in the run-up to Obamacare’s passage, pharmaceutical companies spent a then-record $275 million on lobbying. (In 2023, that number had ballooned to $384 million.)
Why were pharmaceutical companies investing so much money into lobbying for Obamacare? After all, that money might have been spent developing new drugs or marketing medicine to the public. What did pharmaceutical companies stand to gain from influencing federal legislation?
As it turns out, Obamacare was a huge opportunity for Big Pharma. In essence, Obamacare forced millions of Americans to buy health insurance from private corporations. The bill was so good for business that drug companies agreed to pay $90 billion to fund the expansion of insurance coverage—after all, insured patients are paying customers.
It also expanded federal drug coverage for the poor so that the federal government now pays for the prescription medications of the 90 million Americans now on Medicaid—almost double the number covered before Obamacare’s passage. With taxpayers footing the bill, Big Pharma has raked in the cash.
The nation’s most valuable pharmaceutical company when Obamacare passed, Johnson & Johnson, was worth about $175 billion in 2010. Today, the most valuable pharmaceutical company is Eli Lilly, and it is worth nearly $800 billion. That is more than a 4.5-fold increase in just 14 years.
Clearly, Big Pharma’s investment in Obamacare paid off. By forcing Americans to buy insurance, the law increased demand for medical products. Now, more than half of Americans regularly take a prescription medication, and the typical number of medications hovers at four. And that, too, can be traced back to the incentives baked into Obamacare.
Obamacare loaded healthcare professionals and insurers with about 200 million hours of paperwork each year. Included in that paperwork is reporting on merit-based incentive (MIP) criteria, which are supposed to reflect the quality of care. However, MIPs define care quality in terms of medication. The more patients are prescribed long-term medication, the better.
In addition to creating perverse incentives for doctors and drugmakers, Obamacare also built price increases into American healthcare. It did so by mandating that health insurance companies cannot earn more than a 15 percent profit. While that might sound good, it means that in order for insurers to make more money, their prices have to rise. The higher their prices, the larger their 15 percent share will be. It’s no wonder that inflation in healthcare cost inflation has outpaced inflation in the CPI by 35 percent.
Insurance companies have grown significantly as a result of this provision. The largest insurer, UnitedHealth Group, had a market capitalization of just under $40 billion when Obamacare passed. It is now worth just under $550 billion. That’s nearly 14 times higher!
Obamacare clearly was a huge gift to Big Pharma and the nation’s biggest insurers. It’s no surprise that in its wake, these powerful interests have aligned themselves with the progressives who passed it—and that progressives led the COVID-19 vaccine mandate effort on behalf of their donors.
Ironically, critics of corporate influence over American politics now have a home in the Republican Party they once deplored. Perhaps the most significant manifestation of this shift is Robert F. Kennedy Jr.’s recent endorsement of President Trump. This may be the beginning of a broader political realignment.
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