Gilead and the hedge fund managers

Activists Target Hedge Fund Managers Cashing In on Predatory Drug Pricing Schemes from Gilead Sciences

Vocal New York, May 5, 2015

On the eve of Gilead Science’s annual shareholder meeting, activists criticized the pharmaceutical giant’s decision to price its Hepatitis C Virus (HCV) cure out of reach for millions of sick people by targeting three major hedge fund investors in the company. The groups released a new report charging Julian Robertson of Tiger Management, Steve Cohen of Point72 Asset Management, and other hedge fund managers of profiting from extortionate drug prices on the backs of 3.5 million Americans and 175 million people worldwide who are living with the virus.

Gilead charges as much as $1,125 per pill and $94,500 for a course of its lifesaving treatments, forcing health care systems to limit access, robbing patients of a decent quality of life, and forcing many into serious health problems and complications.

Hedge fund managers are laughing all the way to the bank. A pack of hedge fund managers bet big on Gilead price-gouging schemes in 2014, increasing the number of shares they held by a factor of 12. The bet turned out well for the hedge fund managers – Gilead’s stock rose 84%. But things haven’t worked so well for HCV patients who still can’t get access to Gilead’s overpriced drugs.

“The hedge fund industry directly supports Gilead’s decision to put astronomical profits over people’s lives,” said Fred Wright of the grassroots political group VOCAL New York. “Hedge fund managers, including those we’re protesting today, have unapologetically attacked any effort to control drug costs for the good of the public. They’re parasites feeding off of people’s desperation.”

“While Gilead reports, once again, exorbitant profits from their HCV cures, the majority of the people with chronic HCV infection cannot afford them and are not being cured,” said Luis Santiago of ACT UP New York.  “Millions of people will see their HCV disease progress, with horrendous yet avoidable health results. Gilead’s profiteering is letting people get sicker, knowing there is a cure. Gilead must substantially lower these outrageous prices so the rationing is lifted and we can cure everyone with HCV.”


Hedgepapers No. 13 - Hepatitis C and Hedge Fund Profiteers

Hedge Clippers, May 4, 2015

A pack of hedge fund managers bet big on Gilead price-gouging schemes in 2014:

Julian Robertson of Tiger Management: “I love Gilead right now. I think it’s fabulous…They’re going to get inundated with cash from the profits on the Hepatitis C drug”

Steve Cohen, Chairman and CEO of Point72 Asset Management, whose firm’s schemes to game drug trials resulted in extensive insider trading investigations and almost landed him in prison

Cliff Asness of AQR Capital Management, who has published extensive rants against Obamacare, and who sits on the board of the Manhattan Institute, which opposes Medicare drug price negotiations

Robert Mercer of Renaissance Technologies, a major backer of key players in the fight against Obamacare, including the Heartland Institute and presidential candidate Ted Cruz

Joel Greenblatt of Gotham Asset Management and Glenn Dubin of Highbridge Capital, also significantly increased their stakes in Gilead Sciences over the course of 2014

These six hedge fund managers increased their shares of Gilead by twelve times during this period. The stock price rose 84% over this period, and the value of their collective holdings in Gilead went from $45 million to $844 million.

That’s a lot of interest in curing Hepatitis C victims – or rather, in squeezing them for profit.


Pharmaceutical firms contribute to wealth inequity

Quote of the Day, April 27, 2015

Pharmaceutical firms are buying the rights to the products of other firms, often buying the firms themselves, paying very high prices for these rights. …an even more egregious example is the action of Gilead Sciences in buying up the rights to the newer, more effective Hepatitis C drugs, again paying outrageous prices for those rights. They are recovering this capital cost by charging $1,000 or more for each pill sold, when a course of treatment may be 84 pills.

A massive amount of capital is paid out, requiring the purchasing firm to charge much higher prices for those drugs to recover the funds paid to acquire the drug rights. Who receives the capital paid out? The wealthiest tier - the tier that holds by far the largest percentage of shares in public and private corporations.



By Don McCanne, MD

Last week in a Quote of the Day it was described how pharmaceutical firms such as Gilead were paying outrageous amounts for drug rights and then passing these extra costs onto patients through much, much higher drug prices, while tacking on exorbitant profits.

Today’s report shows where much of these profits are going: to the hedge funds! The pharmaceutical industry has become a tool of Wall Street in extracting funds from patients and passing them on up to the very wealthiest, including the fund managers themselves - compounding our problem with wealth inequity.

This screams out for government intervention. With this and all of the other abuses, how could we not support moving control of health care financing to our own public program - a single payer improved Medicare for all?

(For those who plead that hedge funds serve not only the wealthiest individual investors, but they also serve institutional investors such as university foundations and union retirement funds, then you should ask yourself if it is proper for these institutions to expand their assets with tainted money. An important role of government should be to ensure that their money is clean.)