Dean Baker: Patent Monopolies and the Abundance Agenda

 Patents and the Abundance Agenda

20 hours ago

I haven’t read Ezra Klein and Derek Thompson’s new book, Abundance, but everyone I know seems to be talking about it. Therefore, I thought I would throw in my two cents, not on the book for obvious reasons, but on what a serious Abundance Agenda (AA) should look like. Specifically, I want to talk about patents and how reform of the rules on intellectual property really needs to be at the center of a serious AA.

The key point that most people in policy debates seem determined to ignore is that there is a huge amount of money at stake with patent monopolies and their cousin, copyrights. My calculations indicate that these monopolies raise the cost of the protected items by more than $1 trillion a year. This comes to around $7,500 per household.

In the case of prescriptions drugs alone these protections likely increase the costs by more than $500 billion a year. Imagine we lived in a world where nearly all drugs were cheap. Drugs are rarely expensive to manufacture or distribute. Without patent monopolies, drugs would be selling as cheap generics, costing $10 or $20 a prescription, and often less. No one would have to set up GoFundMe pages to cover the cost of a lifesaving drug.

Patent monopolies also hugely raise the cost of medical equipment like MRIs or kidney dialysis machines. If this equipment sold in a free market, we would likely be paying around a third or less than what we do today. Low-cost drugs and medical equipment would go far toward making medical care affordable.

We do need to pay for the research underlying these innovations, but this can be done through other mechanisms, most obviously direct public funding, as we used to do the tune of $50 billion a year through the National Institutes of Health and government agencies. We can also make this research more efficient by requiring that it be open source. (I discuss funding mechanisms in chapter 5 of Rigged [it’s free].)

In a world where patent and copyright monopolies played a much smaller role, a wide range of items, from smart phones and computers to software, movies, and video games would be far cheaper than is currently the case. This would seem to fit in well with a real AA.

The Political Appeal of Reforming Intellectual Property

But beyond just making things cheap, reforming intellectual property is also likely to have some serious political appeal if any politician ever took it up. First, the effort would be acknowledgement that bad things didn’t just happen to less-educated workers, the losers in the economy over the last half-century. Politicians and their accomplices in the policy world did bad things to them.

Specifically, they repeatedly changed the rules on intellectual property to make patent and copyright monopolies longer and stronger. These rules changes, both in domestic law and international trade agreements, were not just the natural working of the market. They were deliberate policy that had the effect of shifting income from less-educated workers to those with college and advanced degrees.

Putting intellectual property reform on the table is acknowledgement that policy did in fact screw tens of millions of less-educated workers to the benefit of more educated workers. Just to take one important example, before the Bayh-Dole Act passed in 1980, which made it far easier for private corporations to get patents on publicly funding research, just 0.4 percent of GDP was spent of prescription drugs. Furthermore, there was no upward trend in this spending, it had been roughly the same for the prior two decades. Spending on drugs rose rapidly in the next two decades. It is now more than 2.2 percent of GDP, a difference of $540 billion a year.    

If we restructured patent and copyright rules to make them shorter and weaker, it would redistribute a massive amount of income from the richest 10 percent of the population, and especially the richest 1 percent, to everyone else. This would be a great act of redistribution that involved less government, not more.

This change would also help with the biggest grievance raised by Klein and Thompson, restrictive zoning. While we badly do need zoning reform, it is worth noting that excessive land and housing demand from the rich and super-rich decreases the supply for everyone else.

To take one particularly egregious example, Bill Gates owns 10.5 acres of prime land for his mansion just outside of Seattle. This could easily be a location for one hundred single-family houses or several hundred multi-family units. And that’s just from one copyright enriched billionaire.

Taking a slightly different angle, the stock of second homes is roughly 6.5 million. Suppose that reformed patent and copyright rules, along with other redistributive measures, cut this figure in half. That would leave another 3.3 million units, 2.3 percent of the housing stock, to be occupied by people as first homes. If we increased current production by 20 percent, a big lift, it would take us more than 10 years to add this much additional housing. In this sense, a bit of redistribution can go far towards creating abundance.

I could go on with other growth enhancing measures that also reverse upward redistribution (free trade in doctors’ services and a modest sales tax on financial transactions to reduce waste in the sector are two favorites), but I’ll save those for another day, perhaps after I’ve read the book. But no one should be confused, patent and copyright monopolies are a big deal in the economy and redistribute an enormous amount of income upward. We should be talking about them when we talk about an abundance agenda.   

A Review of Joe Stiglitz' Road to Freedom

 

The Road to Freedom: Economics and the Good Society by Joseph E. Stiglitz. New York: W.W. Norton & Company, 2024. 384 pp. $29.99 hardcover 978-1-324-07437-3

by Patrick Kabanda--- the author of The Creative Wealth of Nations, with a Foreword by Amartya Sen.

 

In recent years, a number of books have been written about the startling state of affairs in the United States. These include The Economists’ Hour by Binyamin Appelbaum, Thinking like an Economist by Elizabeth Popp Berman, Rich, Free, and Miserable by John Brueggemann, Poverty, by America by Matthew Desmond, The Man Who Broke Capitalism by David Gelles, Winner-Take-All Politics by Jacob S. Hacker and Paul Pierson, The Hidden History of the American Dream by Thom Hartmann, Losing Our Way by Bob Herbert, Wealth Supremacy by Marjorie Kelly, This Land Is Our Land by Suketu Mehta, The Wolves of K Street by Brody Mullins and Luke Mullins, Supercapitalism by Robert B. Reich, What Are We Doing Here? by Marilynne Robinson, The Curse of Bigness by Tim Wu, and so on. Among that list, Joseph Stiglitz, whose other books include People, Power, and Profits and The Price of Inequality, adds another title, which, building on his earlier work, covers issues ranging from trade to pharmaceuticals, Big Tech, and much more: The Road to Freedom: Economics and the Good Society. 

Stiglitz’s first objective in the book is to explicate the meaning of freedom from the outlook of twenty-first century economics in a coherent and straightforward manner. This, he tells us, is in line with what John Stuart Mill did in his classic book On Liberty published in 1859. The world has surely changed since Mill penned his title, and so has our comprehension of economic and social affairs. Our contemporary challenges therefore require a rethinking of such basic concepts as freedom, as Mill himself recognized. Since one person’s freedom can often mean another’s unfreedom, Stiglitz’s ultimate objective is “to understand what kind of an economic, political, and social system is most likely to enhance the freedoms of most citizens.” To make his case, Stiglitz, who’s careful not to lose ‘sight of the forest for the trees’, divides the book in three parts. 

The first part considers freedom and coercion via a traditional economist’s view where it’s assumed that people’s beliefs and desires are “unchanging in time and unaffected by others”, in constant tempo like the ticking of a metronome. The second part, which incorporates insights from modern behavioral economics, is a counterpoint to the first. It recognizes that beliefs and behaviors aren’t set in stone. They can be shaped, as Stiglitz emphasizes. This part also takes up social coercion’s constraining effect. The third part harmonizes the ideas developed in the first two parts to not only facilitate our understanding of the elements that make for a good society, but to also consider the kinds of government and global architecture most likely to get us there in a harmonious way.

If the book were a piece of music, one could hear a few leitmotifs mirroring each other. These include freedom, values, trade-offs, externalities, the ‘veil of ignorance’, neoliberalism, Friedrich Hayek, and Milton Friedman. Hayek and Friedman characterized themselves as apostles of freedom. But the word freedom, as Stiglitz points out, has been hijacked by some on the Right to justify their beliefs, which are too often against the very core of what a good society is all about.

Take, for instance, gun violence. The way things stand, it’s as if guns deserve more freedom than people — allegedly because it’s people who kill people and not guns. Hence any intervention, which tries to regulate guns, is against the freedom to carry guns. Yet if we can also say that cars don’t kill people, it’s the people who do, the United States passed seat belt legislation, which has saved thousands of lives. But while many of the issues around gun rights are seen in a particular reading of the Second Amendment, there are also dark economic forces at play here.

The gun lobby aggressively lobbies politicians to make sure that guns are left alone. In turn, people who treasure guns for whatever reasons spend on them. This is so much so that a friend who has volunteered as a business adviser once told me that just after Barack Obama got elected president in 2008, the sales of automatic weapons near his Northeastern town skyrocketed. For some right-wing media outlets were telling their viewers that hordes of armed bad people would attack the elderly and steal their property, yet Obama would block gun sales. Consequently, even grandmas were purchasing automatic weapons and thousands of rounds of ammunition to defend their homes. Meanwhile, tragedies like the Sandy Hook Elementary School shooting, which took precious young lives, persist as gun killings crop up here and there on American soil.

Early in the book, Stiglitz, a Nobel economist who has advised presidents, served as World Bank chief economist, and teaches at Columbia, argues that trade-offs are at the center of economics. The field thus has much to contribute to the discourse about freedom. He is nevertheless also quick to note that, though economists can add to the dialog on freedom, the economy and society, there’s plenty the field doesn’t capture. Hence the need for an economic and political system that, besides efficiency, equity and sustainability, also delivers on moral values. Surely, if the trade-off for gun reform would be reduced gun violence, then one would think that saving lives would be paramount to gun rights. Moreover, as Stiglitz cites Isaiah Berlin, “Freedom for the wolves has often meant death to the sheep.” You needn’t memorize Bach’s “Sheep May Safely Graze” to appreciate that the sheep also deserve freedom to live, and to even safely graze on unpolluted pastures.

But, as Stiglitz cogently writes, the way Hayek and Friedman tied freedom to unfettered capitalism ex cathedra has contributed to the rising inequality and rampant environmental degradation. For they believed that free markets were kind of sacred gifts that were handed down from heaven. Anyone who questioned them was disobeying a sacred commandment. Indeed, in this new ‘economic religion’ as Stiglitz puts it, “markets are always efficient and the government always inefficient and oppressive.” And as a fundamentalist religion, you dare question what it preaches — as I’m sure Stiglitz himself has already experienced. Believers of this religion, moreover, have ready-made answers to spill out if things don’t go their way. “If markets were unstable (as evidenced in the 2008 financial crisis), the problem was the government — central banks had unleashed too much money. If a country that liberalized didn’t grow in the way the religion said it should, the answer was it hadn’t liberalized enough.” If monopolies such as those enveloping the media were growing, let it be, because government intervention will kill innovation. 

More than 50 years ago, in his New York Times essay titled “The Social Responsibility of Business Is to Increase Its Profits”, Friedman said: business people who talked about ‘social conscience’ and ‘social’ ends, and not ‘merely’ profits — that is, those who were concerned with “providing employment, eliminating discrimination, avoiding pollution and whatever else may be the catchwords of the contemporary crop of reformers” — were doing nothing but “preaching pure and unadulterated socialism. Businessmen who talk this way, are unwitting puppets of the intellectual forces that have been undermining the basis of a free society these past decades.”

Progressive thinkers have been called all sorts of names. Moreover, even skeptical citizens and their representatives aren’t spared either. When they “oppose received economic wisdom,” as Caitlin Zaloom writes in her essay Too Close for Comfort, “they can count on being dismissed as ignorant, irrational, or silly.” But that doesn’t take away the fact that a free society is beyond free market fundamentalism. It’s also about our deeply shared values, values that support our collective well-being. In economics nomenclature there are trade-offs here. But whose freedoms are we privileging? In considering what’s best for society, Stiglitz turns to John Rawls’s ‘veil of ignorance,’ a framework where people imagine that they are ignorant of their personal circumstances so that they can more fairly envision a fair society. This framework, as Stiglitz reminds us, is akin to Adam Smith’s ‘impartial Spectator’. And though many who espouse neoliberalism’s free and unfettered markets seem to only connect Adam Smith with the ‘invisible hand’ — as if that’s the only thing Smith ever said, and discount his thinking as a moral philosopher — both Rawls and Smith suggest that “when assessing what makes a good society” one should separate themselves from self-interest.

Clearly, the present economic system, which has ruthlessly preached self-interest, isn’t working. Indeed, though “we live in a world of unprecedented opulence,” as Amartya Sen observed in Development as Freedom, “we also live in a world with remarkable deprivation, destitution and oppression.” This is why Stiglitz suggests substituting the current model with ‘progressive capitalism’, or a rejuvenated social democracy, a system that works for the wellbeing of all people and the planet. He believes that this is the system most likely to help us create a better economy and society. For “progressive capitalism entails not only an array of institutions but also an important role for collective action.” 

The expansion of freedom for all via “well-designed regulation and public investments, financed by taxes” is a key role of collective action. And so is balancing “expansions of the freedoms of some against the reductions in the freedom of others.” Free market fanatics often claim that checks and balances are impediments to economic growth. But Stiglitz reminds us of what Mahbub ul Haq observed in the human development framework: that the economy is there to serve the people, and not the other way around. Indeed, if universal human flourishing is the ultimate objective of a good society, access to such things as basic health care shouldn’t be a headache in the United States. But it is, and that’s why progressive capitalism would seek to address such issues. 

This is especially important because the rising economic inequality, at the expense of things like meaningful universal healthcare, isn’t freedom even for the affluent. It’s unfortunate, for instance, that when a gunman killed the CEO of UnitedHealthcare, some celebrated the shooter as a folk hero. For they saw this episode as a payback for the ‘delay and deny’ tactics that have become associated with the health insurance industry in the name of free enterprise. But even before beginning to consider how the shooter got his gun, it’s clear that economic concentration in the hands of the very few isn’t Eden. And that’s why Stiglitz’s book should not only be read widely but also acted upon. For it adds to the repertoire that’s calling for collective action to build the road to true universal freedom, to orchestrate a truly good society.

 

 

Dean Baker: Donald Trump Declares April 2 “Tax Day”

 Donald Trump Declares April 2 “Tax Day”

Donald Trump seems pretty clear that he will go through with his huge tax hikes (tariffs) on April 2. We don’t know for sure what his cute tax package will be, but if it’s anything like what he’s promised: 25 percent taxes on imports from Mexico and Canada, 20 percent taxes on imports from China, and 25 percent taxes on imported aluminum, steel, and copper, and possibly perhaps some surprise taxes on imports from the European Union and Japan, we are talking $200 billion to $400 billion a year.

That sum would be between $1,500 and $3,000 per household. If we take these amounts over a decade, as is often done in tax discussions, we’re talking about between $1.5 trillion and $3.0 trillion in higher taxes that Donald Trump wants to hit us with in two weeks.

Depending on what he exactly we get from our reality TV show star president, this is likely to be the biggest tax increase in history. And unlike tax hikes put in place in the last three decades by Presidents Clinton and Obama, which primarily hit the top one percent, Trump’s tax hikes will primarily hit ordinary workers.

The reason is simple enough for even Donald Trump to understand. Import taxes are a tax on consumption and especially consumption of goods.

Trump and his billionaire friends don’t spend all their income. By contrast, a normal worker earning $60,000 a year likely spends pretty much their entire income. Furthermore, moderate and middle-income workers are likely to devote a larger share of their spending to buying things as opposed to services. They are more likely to spend money on items like food and clothes. By contrast higher income people spend more money on services like restaurants, gym memberships, and vacations.

This means that April 2, which Trump is apparently now hyping as “Liberation Day,” will probably be the biggest tax hit ordinary working people have ever seen. The Republican Party has now come full circle from being staunchly anti-tax to being a party celebrating big tax hikes.

Trump does throw out some mush-brained rationale about how his taxes will rebuild the United States industrial base. But no one who is not on his payroll tax takes his claims at all seriously. Our industry is now thoroughly integrated with our trading partners, especially neighboring Canada and Mexico. Trump’s taxes are more likely to just raise costs and hurt industry rather than help it. Trump can already claim 600 workers laid off in Minnesota mines.   

And none of the arithmetic comes close to adding up. Even if we managed to close our trade deficit, which is currently 3.0 percent of GDP, entirely with increased manufacturing output, it would increase the share of the workforce employed in manufacturing from 8.0 percent to 9.0 percent. That is not exactly going to transform the labor market.

But it gets worse. Back in 1980, manufacturing jobs were good jobs. On average they paid higher wages and were more likely to offer health care insurance than other jobs in the private sector. This is no longer the case. The manufacturing wage premium has largely, if not completely, disappeared.

The reason is that the sector is no longer heavily unionized. In 1980 almost a third of manufacturing jobs were unionized compared to just 15 percent in the rest of the private sector. At present, only 8.0 percent of manufacturing jobs are unionized, which is barely better than the 6.0 percent figure for the rest of the private sector.

And the prospect that any new manufacturing jobs will be unionized is not very high. Co-president Elon Musk is extremely anti-union. He is even pushing a lawsuit arguing that the National Labor Relations Board, the agency that enforces labor law, is unconstitutional.

So, in Trump’s dreams, we increase the share of the workforce employed in manufacturing by 1.0 percentage point, and those jobs pay no more than the jobs in health care or retail that they replace. And this gain comes at the expense of trillions of dollars in higher taxes paid by ordinary working people.

That story might be a MAGA dream, but to any normal person it’s a nightmare. Happy Tax Day!

Fwd: The Real Reason Walgreens Collapsed

via Matt Stoller's Blog

It's not that Walgreens didn't modernize or couldn't compete with Amazon. The 124 year old company is being squeezed to death by monopolistic pharmacy benefit managers.

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	Forwarded this email? Subscribe here f The Real Reason Walgreens Collapsed It's not that Walgreens didn't modernize or couldn't compete with Amazon. The 124 year old company is being squeezed to death by monopolistic pharmacy benefit managers. Matt Stoller Mar 14   READ IN APP   I enjoy Scott Galloway's popular podcast Prof G Markets, and I was listening to him and co-host Ed Elson discuss why the private equity giant Sycamore Partners - which specializes in squeezing blood out of failing retailers - is buying Walgreens for $10 billion. Walgreens is America's second-largest drug store chain, and has been a public company for more than 100 years. "Going private," particularly to a fund like Sycamore, is an admission of failure. The trends for Walgreens aren't good - it has closed a thousand stores since 2018, and plans to shut 1,200 more this year. And if you look at the gross operating income of the U.S. retail segment, it is collapsing. I put these charts together based on data in Walgreen's annual reports. What's going on? Well that's simple. Margins are falling apart. Galloway and Elson went back and forth on why Walgreens is flailing. The company hasn't modernized in the age of Amazon. It has too many stores. Bad management. A dumb acquisition of VillageMD in 2021. Etc. And these would seem like reasonable causes, since lots of other retailers are dying in the face of low price competition. But the real reason Walgreens, and the pharmacy business in general, is dying, is because of a failure to enforce antitrust laws against unfair business methods and illegal mergers. Elson touched on it when he mentioned lower reimbursement rates, but I don't think people appreciate the full scope of what happened to Walgreens, and to the full pharmacy business in general. This is not a case of bad management, it's a case of desperate management. Let's start by noting that on first blush, Walgreens should be fine. It's a historic company, and a historically powerful one. In 1901, pharmacist Charles Walgreen created the first Walgreens store, and he was an aggressive and entrepreneurial founder. He did some of his own drug manufacturing, and quickly expanded Walgreens to 100 stores within 25 years. The chain invented the malted milkshake in 1922, and that decade it took advantage of prohibition by selling "medicinal" alcohol. It was also a powerful chain store, not as dominant as A&P, but part of the set of firms that decade who fostered a powerful political backlash from local businesses. And its scale remained pretty much to the present day. As late as 2015, Walgreens was worth $100 billion, an investor darling and an icon of Wall Street and America. And it's not like Amazon has come into the drug store space and taken Walgreen's margin. Yes, there is some competition, but pharmacies are regulated businesses and the consumer doesn't choose a pharmacy based on price. A doctor prescribes a drug, the consumer goes to the most convenient pharmacy and pays the copay that his or her insurance mandates. It doesn't matter what pharmacy you choose, it just matters that it's in your insurance company's network. After you've hit your deductible, the consumer price is the same wherever you go. Moreover, even today, the other financial numbers from Walgreens aren't bad. Sales aren't going gangbusters, but the number is basically increasing, and so are the number of 30-day prescriptions, even though they've cut the number of stores every year since 2017. Its expenses, aside from a temporary a spike having to do with an unusual opioid settlement, are manageable. Here are some charts I made from their annual reports making these points. You'd think Walgreens would be doing fine. But it's not. So what's the explanation? It's not that the cost of physical pharmaceuticals is higher. Walgreens has market power, and they own part of Cencora, which is one of the major distributors. The problem is unique to the business of pharmacies, which is that its pricing is almost totally out of its control. Normal retailers set pricing by buying wholesale, adding a mark-up, and then selling for the wholesale price plus the markup. And Walgreens does that in a bunch of lines of business, like when you go into the store and get candy or stationary. But in its main line of business - pharmaceuticals - Walgreens doesn't set prices. Insurance companies do. And there's the rub. In the U.S., a consumer will go into a drug store, in this case Walgreens, after their doctor prescribes medication, and then the consumer will make a copayment. A Walgreens pharmacist then dispenses it. After doing so, Walgreens gets a set reimbursement from that consumer's insurance company for that medication. How much does it get? Well, those insurance company's contract with what's called pharmacy benefit managers (PBM) to manage negotiations with pharmacies. A PBM sets up a network for insurance companies, manages drug prices, and handles all the payment logistics between patients and pharmacies. PBMs negotiate with pharmacies, and set up a pricing agreement on which drugs are covered and how much those pharmacies get reimbursed in return for allowing those pharmacies to serve its customers. Theoretically, both sides have some leverage in this negotiation. If a pharmacy chooses not to accept the prices and terms offered by those PBMs, then consumers who have an insurance company that uses that PBM just won't go there. PBMs also have an incentive to give reasonable terms, or at least used to, because it's valuable to have more pharmacies in your network. After all, an insurance company that doesn't let its customers shop at popular drug stores doesn't have as compelling a product. Pricing wasn't a big problem for Walgreens when there were lots of PBMs, because it had the ability to say no if the deal was unreasonable, and still maintain a flow of customers. But in the early 2010s, there were a bunch of mergers in the PBM space. Two companies, Express Scripts and Medco Health Solutions, combined in 2012, forming the biggest PBM. Today, there are really only three PBMs - Express Scripts, Caremark and OptumRx - serving 80% of customers. And if there are three gatekeepers for customers, you really have no choice but to sign on the dotted line, no matter the terms. No business, not even one as large as Walgreens, can afford to lose 20-30% of its revenue, which is what happens if you refuse to do business with one of the big PBMs. Here's what happened to Walgreens when it got into a fight with Express Scripts in 2012, just after the Medco-Express Scripts merger, which one industry analyst called it an "apocalypse" for the drug chain. Walgreens eventually came back with its tail between its legs and signed a deal with Express Scripts. At that moment, it became clear that PBMs had all the power, and drug stores had none. It got worse. In 2015, the third biggest PBM OptumRx bought the fourth largest PBM Catamaran. There were many other mergers, and this graphic is nifty, notably CVS Caremark buying Aetna in 2018. Yes, CVS, a major Walgreens competitor, is setting its revenue, which is insane. (That's why CVS's drug stores entered a host of markets while its pharmacy rivals flailed.) Some may know about PBMs as middlemen who hike the price of drugs to consumers, sometimes taking 50% or more in rebates from drug makers. The Federal Trade Commission noted one example of a PBM marking up drug prices by as much as 7,736%. Other rebating practices are at the heart of the FTC lawsuit on insulin, and should be barred by closing the exemption in the Anti-Kickback statute. But PBMs also impose costs on the other side of the market, to the pharmacies. In 2015, the big three, with their market power, began lowering reimbursement rates on pharmacies and charging a host of new fees. And that includes doing it even to the second biggest drug store chain in America, Walgreens, which was politically powerful and worth $100 billion at the time. Walgreens flagged it was happening at the time to Wall Street. Here's the company's annual report from that year. We experienced lower reimbursement rates in fiscal 2015 as compared to the same period in the prior year. They also noted that consolidation was now a business risk. Many organizations in the healthcare industry, including PBM companies and health insurance companies, have consolidated in recent years to create larger healthcare enterprises with greater bargaining power, which has resulted in greater pricing pressures. For example, in July 2015, OptumRx, UnitedHealth Group's pharmacy care services business, completed its combination with Catamaran Corporation, with the combined businesses expected to fulfill over one billion prescriptions in 2015 and be the third largest PBM company in the United States…. If this consolidation trend continues, it could give the resulting enterprises even greater bargaining power, which may lead to further pressure on the prices for our products and services. Well then, there we go, Walgreens warned in 2015 that monopoly power could choke out its business. And it did. The lower reimbursement rate sentence returned in the 2016 Annual Report, with an additional phrase. We experienced lower reimbursement rates in fiscal 2016 as compared to the same period in the prior year… We expect this trend to continue. Yes, in 2016, Walgreens realized they didn't have leverage, thus "we expect this trend to continue." Walgreens also kept the consolidation warning in there, as it did every year thereafter. And every single annual report since has had the same set of sentences. 2017 The Company experienced lower reimbursement rates in fiscal 2017 as compared to the same period in the prior year. The Company expects these pressures to continue. 2018 The Company experienced lower reimbursement rates in fiscal 2018 as compared to the same period in the prior year. The Company expects these pressures to continue. 2019 The Company experienced lower reimbursement rates in fiscal 2019 as compared to the same period in the prior year. The Company expects these pressures to continue. 2020 The Company experienced lower reimbursement rates in fiscal 2020 as compared to the same period in the prior year. The Company expects these pressures to continue. 2021 The Company experienced lower reimbursement rates in fiscal 2021 as compared to the same period in the prior year. The Company expects these pressures to continue. 2022 The Company experienced lower reimbursement rates in fiscal 2022 as compared to the same period in the prior year. The Company expects these pressures to continue. 2023 The Company experienced lower reimbursement rates in fiscal 2023 as compared to the same period in the prior year. The Company expects these pressures to continue. 2024 The Company experienced lower reimbursement rates in fiscal 2024 as compared to the same period in the prior year. The Company expects these pressures to continue. Every single year, Walgreens told investors it was getting worse reimbursement rates, and it expected that trend to continue. Every single year, it warned investors that consolidation in PBMs was hurting its business. But rather than trying to get policymakers to act against dominant PBMs, the management got desperate, trying to find ways to imitate CVS without being able to break into the PBM layer. It went global with the acquisition of Boots Alliance, opened a specialty pharmacy, tried to get into clinical care, and bought VillageMD. The corporation even hired its current CEO, Tim Wentworth, from his position leading Express Scripts, which is the PBM that destroyed Walgreens in the first place. But none of it worked, because none of it addressed the unlawful squeezing of its revenue. One of the big differences between Walgreens and, say, Toys "R" Us, another chain that felt the sting of Amazon, is that Walgreens is not just a company, it's a regulated medical provider. Its pharmacists are licensed, it handles controlled substances, and its employees are caregivers. That imposes significant limits and constraints, such as liability for wrongfully dispensing opioids, but it also gives it an embedded competitive advantage. There's a reason that it has lasted for 125 years, the local pharmacist is hard to get rid of. PBMs, however, are engaged in a sort of industry-specific arson. And we can see this dynamic by looking at independent pharmacies writ large, nearly one in three of whom have closed in the last ten years. Today, 46% of U.S. counties now have pharmacy deserts, meaning no pharmacies at all. Walgreens, in some ways, is better set up than most independent pharmacies, because it's big and has bargaining power in purchasing drugs. It also has a lower cost of capital. But it's dying regardless. Three days ago, my organization released a report showing that 326 pharmacies have closed since December of 2024. Why is that month significant? Well, that's the month Elon Musk tanked legislation to address some of the monopolistic squeezing that PBMs are putting on pharmacies and consumers. Musk later said he didn't know what a PBM is, but at the time, his beef was that the year-end legislation had too many pages in it. I guess we can thank Musk for the sale of Walgreens to private equity. Hopefully, Sycamore Partners realizes there's more money if PBM reform goes through, and tries to use their political leverage to make their investment work out.