The bill gates problem, p.6
The Bill Gates Problem, page 6
Building a team means knowing its members inside and out, understanding their strengths and their weaknesses. So, the foundation will look under the hood at each company it funds, scrutinizing its technology, examining its batch records, looking at its chemistry manufacturing controls, and collecting detailed information about its commercial ambitions and capacity. The entire value of a company is wrapped up in this proprietary information—one source described it as the “crown jewels”—and the Gates Foundation will insist upon seeing it. “We had to disclose our step-by-step process. We had to give a ton of information,” one former grantee told me. “And they said, ‘We will not provide additional funding unless you provide this information.’” Another source told me that the foundation insisted on seeing extensive confidential information about their company’s pharmaceutical development during the negotiation of a charitable grant. The foundation never came through with the money.
Buried on the Gates Foundation’s website is a survey instrument that asks its vaccine development partners for detailed business information. “Any data received from a manufacturer or obtained during conversations with a manufacturer is treated as HIGHLY CONFIDENTIAL,” the document notes. “No information provided by any one manufacturer will ever be shared with any other manufacturer or organization without explicit consent.”
In the pages ahead, grantees are asked an exhaustive list of questions—the dose size of vaccines, batch equipment size, the company’s estimated maximal capacity, the volume and price of the vaccine in each market where it will be sold, details of all expenses (research, labor, facilities, consumables, overhead), along with the registration costs and licensing fees. The questionnaire also probes for granular details about the company’s other financing arrangements, like with which banks it has outstanding loans and for what amounts. “If any questions arise, please contact Robyn Iqbal,” the document notes. According to LinkedIn, Iqbal later left the Gates Foundation to lead the “Competitive Intelligence team for global vaccine markets” at GSK. She did not respond to my press inquiry.
Is it appropriate for the Gates Foundation, as a nonprofit charity, to trade so freely in corporate intel and proprietary information? And what rules are in place to prevent the vast body of valuable confidential information the Gates Foundation collects from leaking to its close partners in Big Pharma, especially as Gates staff appear to revolve freely between the foundation and Big Pharma? Amit Srivastava, as another example, after playing a prominent role in pneumonia vaccine development at the Gates Foundation, including holding one of Gates’s board seats at Affinivax, left the foundation to work for the world’s leading seller of pneumonia vaccines, Pfizer. Can Srivastava really unsee the confidential business information he had access to from Pfizer’s competitors while working at Gates?
Srivastava dismisses these concerns as “intellectually lazy.” He said that in his career—which included positions at Gates and then Pfizer and then Orbital Therapeutics—confidentiality agreements were “standard practice,” obviating worries about corporate intel being shared. (He would not provide copies of these confidentiality agreements.) He denied the characterization that the foundation was hoovering up trade secrets from partners. “There is no recipe, there is no information that, in aggregate, you could just take, like a file, and take it to a different company and say, ‘Can you make this for me?’”
Srivastava did acknowledge, however, that the Gates Foundation regularly generates pushback from partners related to its collection of confidential business information, describing these discussions as normal business negotiations between an investor (in this case, the Gates Foundation) and a company. Sometimes, he said, issues arise when foundation staff take on a “self-reverential” posture, thinking “they’re doing god’s work and that they can run roughshod over grantees. I’ve seen this happen, and this can trigger some legitimate annoyances from grantees.… There is an art to asking for that information.”
In his own previous work for the foundation on pneumonia vaccines, Srivastava describes a let-all-flowers-bloom strategy. The foundation invested in two kinds of companies: those that could bring a traditional vaccine to market and those working on disruptive new technologies. “At the end of the day, the foundation did not want to end up without a product … so we would often invest in two players for the same kind of thing—and that would also trigger a lot of emotion and a lot of discomfort” among grantees, he added. “The foundation wants to ensure that if we invest in something, then the population [of poor people] gets the product in the best case, or some kind of benefit. And so, part of gathering that information—about the health of the organization, the nature of technology—informs” the foundation’s due diligence to make sure the work it funds goes to a charitable end.
While Srivastava again and again described the foundation’s activities as “not unusual” and totally uncontroversial, the truth is that the foundation’s far-reaching engagement in the commercial marketplace is unusual. The Gates Foundation is a nonprofit, tax-privileged charity that is acting like a private equity investor, venture capital fund, or a pharmaceutical company. It has positioned itself to see the confidential business information of competing companies, and it even asks charitable partners to sign “global access agreements” that give the foundation licensing claims to their technology (explored in more detail later in the book). And the foundation, of course, is run by Bill Gates, one of the world’s most storied monopolists who stands widely accused of anti-competitive behavior.
This reputation has followed Gates from Microsoft to his philanthropic work. In perhaps the most famous public allegation, a leaked memo from the director of the World Health Organization’s malaria program, Arata Kochi, complained in 2007 that the foundation had used its wealth to take over malaria research, which had become “locked up in a ‘cartel.’” The foundation’s monopolistic control over the research agenda then positioned it to influence WHO recommendations and priorities, which, Kochi warned, “could have implicitly dangerous consequences on the policy-making process in world health.” And if anyone dared to challenge Gates’s agenda, Kochi noted, the foundation and the army of surrogates it funds would mount “intense and aggressive opposition.” The Gates Foundation later became the second-largest funder of the WHO, expanding its financial influence even farther.
While a number of stories like this have emerged over the years, with little apparent impact on the foundation, they have overwhelmingly examined the foundation’s monopolistic power over research and policy. Sources I spoke to in private industry say that the Gates Foundation brings the same “cartel” mentality to its work in pharmaceutical development. The foundation’s presumption of expertise and authority, its muscular use of money, and its seemingly unregulated ability to operate in commercial spaces, these sources say, have allowed it to exercise wholly inappropriate marketplace power. As one company describes it, “They’re clearly ranking their horses—who is faster?”
And because it can take an ownership stake in every horse in the race—many different competing companies working on the same disease—the foundation also has some ability to influence the outcome of the race: who wins and who loses. The allegation isn’t that Bill Gates is trying to hurt companies out of some pathological sadism but, rather, that he is unwittingly maiming his charitable partners out of pathological narcissism, that the foundation’s father-knows-best ethos, a clear holdover from Gates’s days at Microsoft, compels it to act in an anti-competitive manner. One company that formerly worked with the foundation brought up the fable of “The Scorpion and the Frog.” As the story goes, the scorpion needs to cross the river, but it doesn’t know how to swim. So, it asks the frog to carry it across. The frog reluctantly agrees. Halfway across the river, the scorpion stings the frog. As the two struggle in the water and begin to drown, the frog asks the scorpion why it would do such a thing. “Because it is my nature,” the scorpion replies.
During my reporting for this book, I reached out to dozens of pharmaceutical developers and start-ups that have worked with the Gates Foundation. Most didn’t respond, and most of the ones that did, did so anonymously. As one source told me, “I don’t want to be highlighted in your book as someone who is sour on Gates.… He can come in and buy all of our stock and have me fired. You have to be careful.” While pharmaceutical developers generally agree that the foundation’s money is of great importance to the development of new drugs and vaccines for poor people, four small developers, each working on different diseases, offered consistent accounts of the foundation abusing its financial power. Two of them agreed to show me documentation supporting their claims.
Two developers said the foundation got involved in personnel issues, wanting to vet new hires to senior executive positions. “Gates was trying to tell me who I could and couldn’t hire … in my own organization,” one source told me.
Three developers described the foundation as playing an inappropriate matchmaker role either to advance or to obstruct business partnerships. One developer said the foundation had counseled one of its corporate partners against working with them. Another said the foundation had wanted to push them into a business relationship against their wishes. “To me, it was very obvious,” the source told me. Gates’s plan was, “How can we take this tech and give it to another company? How do we get you vetted so we can get you bought by another company?” This allegation seems to chime with the example we examined earlier, in which the foundation pressured the University of Oxford to partner with Big Pharma on its Covid-19 vaccine. It also appears in line with the foundation’s clearly articulated belief that only the largest companies have the wherewithal to successfully market new products.
Another developer I interviewed alleged that the foundation thought one of its leading product candidates would be better served with a different developer, telling me the foundation sought to “acquire assets by any means.” Two developers told me that the foundation’s strong-arming and interference had effectively “killed” their products. Both these companies told me they had considered suing the foundation to recover damages, but had ultimately decided against it because of the time and expense it would have required. “I also recognized that the Gates Foundation had billions of dollars, and they could just stall forever,” one source told me. “We need a class action suit, that’s what we need.”
These kinds of allegations present the worry that the Gates Foundation is preventing better, cheaper products from reaching the marketplace and that lifesaving drugs, diagnostics, and vaccines may be held up by the foundation’s meddling, micromanaging, and malign influence. The foundation believes that its in-house expertise and its ability to scrutinize the technology of many competing technologies give it the unique ability to know what products will work and what won’t. And it believes that its charitable mission justifies its extreme interventions in the marketplace because these efforts will bring new lifesaving pharmaceuticals to the global poor.
“To have the level of arrogance to believe that you actually know more than anyone else about everything,” one source told me. “[Bill Gates] might know a lot more than someone about something, but he’s not going to know more than everyone about everything. They have that level of arrogance [at the foundation].”
“They certainly think they have the best—the crème de la crème,” another source noted.
What’s beyond dispute is that the Gates Foundation has organized its charitable relationships in a way that gives it a great many levers to help or hurt the developers it funds, using sticks and carrots to compel a company’s technology down the foundation’s favored development path. It can give your company funding or stop funding you. It can decide to fund your competitor. It can make your project dependent on its money and then change the terms and conditions of the relationship in midstream.
If you get on the wrong side of the Gates Foundation—say, your company won’t agree to a business partnership it wants—the foundation can make it very difficult for your company to court other funders. Two developers told me that the foundation had bad-mouthed their company to other investors, greatly damaging their ability to secure financing. When the Gates Foundation talks and says that is has lost confidence in a company’s technology, other investors generally listen.
One developer told me that another lever the foundation can pull to prod an unwilling partner is to place unreasonable demands on research and development activities, effectively delaying, or sabotaging, commercial progress. “They’re deciding on the end points of trials, how, technically speaking, you’re going to evaluate if a [drug, vaccine, or diagnostic] works or not. If you pick end points in a certain way, you can tank a whole product at great expense,” another source noted. “With a little coercion, you could make it fifteen years instead of ten years. How do you slow it down? [The foundation can tell you] ‘You should do another study.’
“These are people who have a lot of opinions and no expertise, and suddenly Gates is deciding how these products are developed. It’s strange for a charity.”
The nuclear option the foundation has at its disposal is suing, or threatening to sue, companies. And, on this point, we have a rich public record of documentary evidence to tell the tale. PnuVax, a small vaccine company in Canada, was, for a time, one of the foundation’s biggest private-sector partners, if not also Gates’s best hope for bringing a new pneumonia vaccine to market. Beginning in 2014, the foundation pledged close to forty million dollars in three different grants to the company. At some point, the relationship went sideways, and the foundation brought down the hammer. When Gates sued PnuVax, the legal complaint became public information—and it revealed a great deal. Filed by K&L Gates, the law firm bearing the name of Bill Gates’s late father, the complaint includes a copy of the foundation’s grant agreement with PnuVax. (These are usually hidden from public view.) The agreement shows a data table with the prices at which PnuVax was to sell its pneumonia vaccine—between forty-eight cents and one dollar per dose (depending on the volume). While Pfizer and GSK were taking many times that price via Gavi, the Gates Foundation had found, and invested tens of millions of dollars in, a company that it thought could make shots for a fraction of the price. The agreement showed that the foundation had insisted on creating a scientific advisory committee “to provide regular input and make recommendations” to the company—and the foundation declared its intention to play a role on this committee. Members of the committee, the agreement noted, could even attend the all-important meetings PnuVax held with the government regulators who would decide whether or not to green-light a new pharmaceutical product.
The documents offer a variety of indications that PnuVax was positioned for success. The company’s CEO, in a previous role, had been “directly responsible for the launch and approval of Prevnar 7,” the vaccine that launched Pfizer’s pneumonia vaccine empire. PnuVax also had its own manufacturing facility, and it had already developed its pneumonia vaccine. In short, it didn’t appear to be asking the foundation to fund early-stage research but, rather, was trying to get its vaccine across the finish line.
So why would Gates torpedo this deal? According to the complaint, from early 2019, the foundation accused PnuVax of “misused grant funds” and “unauthorized pre-grant expenditures.” If you read through the eighty-five-page complaint (and accompanying exhibits), it becomes clear that PnuVax wasn’t buying Ferraris with the foundation’s money. Rather, Gates accused the company, among other allegations, of using a small portion of its grant money to make lease payments on its vaccine manufacturing facility. As the National Post reported before the lawsuit, PnuVax had fallen behind on its lease payments to the Canadian government, and the small start-up company decided to prioritize expenditures on developing its pneumonia vaccine. Gates alleged that the company had used foundation monies to pay off the lease and that this was a misuse of grant funds.
The question is, why would the foundation go nuclear over such a seemingly picayune transgression? If PnuVax had the kind of potential the foundation clearly believed it did—Gates had offered it three consecutive grants totaling almost forty million dollars—why go to the mat over such a minor issue? At the end of the day, wasn’t PnuVax using Gates’s money for expenses related to its vaccine development business?
The foundation’s legal complaint made sweeping demands, asking for a money judgment to address PnuVax’s alleged breach of contract and that the company pay for the foundation’s attorney fees. Gates also asked the court to issue a judgment declaring that PnuVax had “failed to comply with the terms and conditions of the Grant Agreement.”
The case ended eleven weeks later with a voluntary dismissal.
Global News reported that “the lawsuit by the Bill & Melinda Gates Foundation against PnuVax was voluntarily dismissed in May 2019 with no costs payable by either party.” Maclean’s wrote that the foundation’s “inoffensive allegation was never proven.” But, by that point, the damage had been done. A previous news cycle, led by an odd “exclusive” in the British tabloid the Daily Mail, had dragged the company’s name through the mud.
Being sued by the most celebrated humanitarian organization in the world and branded as an untrustworthy actor, even if such claims are never substantiated, can have a long-term impact. Industry sources told me it can make a company radioactive to other investors. The Globe and Mail reported that, during the Covid-19 pandemic, PnuVax was extremely well positioned “to produce millions of doses of Covid-19 vaccine by the end of 2020,” but that it had been enigmatically passed over by the Canadian government’s funding program. PnuVax, notably, also never brought its pneumonia vaccine to market.
Just for perspective, it’s worth reiterating the broader context. At the same time that the Gates Foundation was partnering with and then suing PnuVax, the foundation was partnering with many of PnuVax’s competitors, like Affinivax. And the foundation has a board seat on Gavi, which was handing out billions of dollars to Pfizer and GSK for their pneumonia vaccines. (The Gates Foundation, itself, has also given more than $200 million—in charitable donations—to Pfizer and GSK for a variety of projects.) It’s an extraordinary level of influence, at every level of the market—influence that looks and feels a great deal more like Microsoft than Mother Teresa. It clearly suggests that the same incorrigible lust for control that animated Bill Gates’s leadership in software also energizes his work on pharmaceuticals at the Gates Foundation. And this shouldn’t surprise us. As one industry source told me, quoting Maya Angelou, “When someone shows you who they are, believe them the first time.”
