by Jon Hellevig for The Saker Blog
You may have wondered why the EpiPen costs $600 while the ingredients in the simple injection device cost less than $1. It is due to the oligarchical control of every layer of the healthcare industry. This post is excerpted from The Saker post linked here and is based on a paper by the Awara Accounting (source)
Almost everyone here on PP is aware of the mechanism of Regulatory Capture (where an industry gets “its people” assigned to the government agency that regulates that same industry).
We are also familiar with the situation where a single investment corporation owns two competitors. The result is that true competition ceases.
And we are familiar with laws that limit competition, such as the Bush era law that prohibits Medicare from seeking competitive pricing (something done in every other western nation).
So here is a new one: Horizontal Shareholding which masks the concentration of power (oligarchic control) from the casual observer.
Horizontal shareholding is a way that a single clan of oligarchic investors conceal their consolidated control. For example, Vanguard and BlackRock are the two leading investors in almost every layer of the healthcare system (hospitals, insurance companies, pharmaceutical corporations, pharmacy benefits managers, retail pharmacies, physician groups, etc).
But Vanguard’s major investor is BlackRock.
And BlackRock’s major investor is Vanguard.
Another of the top 5 investors in sick care is State Street. State Street is owned by BlackRock and Vanguard.
Another of the top 5 investors is Bank of America. But Bank of America’s major owners are BlackRock, Vanguard and State Street.
Who are the biggest owners of BlackRock? Well that would be Vanguard and PNC Financials (which is owned by Vanguard and BlackRock).
An example from Pharmaceutical manufacturing:
Northern Trust is closely associated with the Big Three investors having Vanguard as its biggest shareholder, BlackRock as second, Wellington, fourth, and State Street as fifth. Wellington, in turn, is an investment vehicle which seems to be closely related to Vanguard. Bank of America is basically also a conduit of the Big Three investors, having BlackRock, Vanguard, and State Street as second, third, and fourth largest owners….
The same horizontal shareholding is seen with the health insurance companies.
For example. my own outrageously expensive insurance company is Anthem. It is owned by BlackRock, Vanguard, T. Rowe Price (whose principle investors are BlackRock and Vanguard) and State Street (whose principle investors are Vanguard and BlackRock).
What about drug wholesalers?
The end result is that today a close-knit oligarchy controls all major corporations and most of the US economy. Nowhere is this ownership concentration and its pernicious effects so visible as in the pharma and healthcare industries.