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Too Big to Feed

Mega-mergers are sparking unprecedented consolidation across food systems, and new data technologies represent a powerful new driver. For decades, firms in the agri-food sector have pursued mergers and acquisitions and other forms of consolidation as part of their growth strategies. However, the recent spate of mega-mergers takes this logic to a new scale. Since 2015, the “biggest year ever for mergers and acquisitions”, a number of high-profile deals have come onto the table in a range of agri-food sectors – often with a view to linking different nodes in the chain. These include the $130 billion merger between US agro-chemical giants,

Dow and DuPont, Bayer’s $66 billion buyout of Monsanto, ChemChina’s acquisition of Syngenta for $43 billion and its planned merger with Sinochem in 2018. These deals alone will place as much as 70% of the agrochemical industry in the hands of only three merged companies. A new report Too Big to Feed Exploring the impacts of mega-mergers, consolidation and concentration of power in the agri-food sector from the International Panel of Experts on Sustainable Food Systems analyzes this issue.

Will the mHealth Business Shrink or Exacerbate Health Inequalities?

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An article in the November American Journal of Public Health analyzes the social networks of the  major stakeholders in mobile health app development and describes their financial relationships to each other and to global corporations in technology, pharmaceuticals and entertainment, prime investors in the rapidly expanding mHealth business.  The authors conclude that public health researchers need to “extend their scrutiny and advocacy beyond the health messages contained within apps to understanding commercial influences on health and, when necessary, challenging them.”  In an accompanying editorial, CHW’s Nicholas Freudenberg notes that in their effort to maintain profitability in a crowded marketplace, corporations selling the 259,000 mHealth apps now on the U.S.  market   may make misleading claims, cover up defects or market unscrupulously, thus harming rather than helping users. Those mHealth apps that are effective and safe risk widening inequalities in health by being more accessible to the users who can afford them.

The Rise and Fall of the Opioid Industry’s Drug Czar

A  Washington Post 60 minutes investigative expose revealed that  Trump’s nominee to head the Drug Enforcement Agency, Tom  Marino, a Republican from Pennsylvania  had led a successful effort in the House of Representatives to strip the DEA of its most potent weapon against large drug companies suspected of spilling prescription narcotics onto the nation’s streets. The revelation forced Marino to withdraw and Trump to start again in pursuing his long-promised campaign against opioid misuse.  The story suggests two lessons. First, corporate influence in Congress is so strong that even in an opioid epidemic, the drug industry can persuade Congress to deregulate to protect its profits.  Second, the power of investigative journalism continues to be an important check on abuses of authority.   

The 100 Largest Governments and Corporations by Revenue in 2016

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In 2014, 64 of the largest economies in the world were corporations and 36 were governments.  Two years later, in 2016, 69 were corporations and 31 governments.  The source for estimated revenues for governments was The CIA World Factbook and for corporations The Global Fortune 500 List, which reported 2016 annual revenues.

Between 2014 and 2016, total revenues for the 100 largest economies fell by 9%, from $29.9 trillion to $27.2 trillion. In that same period, the ratio of government to corporate revenues of the economies on the top 100 list fell from 1.9 in 2014 to 1.7 in 2016.  In both years, governments on the list spent almost twice as much as corporations. This suggests that among the world’s largest economies, governments continue to play a crucial role in spending. What they do and don’t spend their revenues on has a crucial impact on health.

In 2016, the top 5 corporations accounted for about 16% of the revenues reported by businesses on the list.  For governments, the five largest accounted for 59% of government spending, a mark of the continuing spending power of the governments of the world’s largest economies: United States, China, Japan, Germany and France.  In 2016, the five largest governments outspent the five largest corporations by a ratio of almost six to one. Among the world’s largest economies, Big Government is still much bigger the Big Corporations.

Between 2014 and 2016, government revenues fell for a striking 26 of the 31(84%) governments that were on the list both times. For the 52 corporations on the list in both years, revenues fell for 32(62%), a lower percentage of revenue losers than among governments.  Declines in oil prices contributed to falling revenues for both countries and corporations that lost revenue between 2014 and 2016.

Annual revenues are of course only one indicator of the size of a government or corporation but it is one metric that enables comparison of the two.   Understanding the changing dynamics between governments and corporations is a critical priority for public health researchers seeking to take on the social determinants of health.

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Eliminating tax deductibility of advertising for corporations: An old idea whose time has come?

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As the debate on the Republican plan for tax reform that promises big reductions in taxes for the wealthy and corporations heats up, public health professionals may have the opportunity to expand the national discussion on taxes and health.  One way that Congress could balance the cuts in taxes for the well-off is to reduce the tax deductions that corporations now use.  Since the federal tax code was created in 1913, businesses have been able to immediately deduct their full advertising costs. But over the years, proposals to limit the deduction have been floated as a way to raise revenue. In May, The Hill reported that industry groups and more than 100 lawmakers want to prevent tax reform legislation from curbing the deduction for businesses’ advertising expenses. Opponents of dropping this deduction include both Democrats and Republicans and Senate Minority leader Chuck Shumer.  “If you make advertising more expensive, there will be less information available to the public,” Jim Davidson, executive director of the Advertising Coalition told The Hill.

For more than 35 years, however, public health advocates and researchers have examined the public health consequences of Internal Revenue Service rules that allow corporations to deduct advertising expenses from their income for tax purposes. The conclusions of that research suggest that advertising by the tobacco, pharmaceutical, ultraprocessed food, alcohol, firearms, automobile and other industries does much more than provide information to the public. It encourages and promotes use of products that are associated with major causes of premature death and preventable illness in the United States.  And after getting a tax deduction for this health damaging marketing, corporations then send another bill to their consumers and the public: for the costs of health care and lost productivity generated by the illnesses their aggressively promoted products induce.

Corporations and Health Watch readers who want to become familiar with the evidence on the health impact of the tax deductibility of advertising costs can consult the following sources:

  1. In 1981, James Mosher and Lawrence Wallack urged the Bureau of Alcohol, Tobacco and Firearms to reconsider the tax deductibility of the billion a year the industry then spent on advertising, given the costs this advertising imposed on the nation.
  2. In 1992, the American Public Health Association passed a resolution urging Congress to eliminate the tax deductibility of expenses for promoting and advertising of alcohol and tobacco products.
  3. According to a 2008 study in the Journal of Law and Economics, eliminating the deductibility of costs associated with unhealthy food marketing could reduce rates of obesity by five to seven percent, which would mean 700,000 to 1 million fewer obese children.
  4. By revoking the tax deductions for Direct to Consumer Advertising, argued a 2012 report in the Santa Clara Law Review, Congress could minimize the harms associated with that practice by using a “sin tax” to force pharmaceutical companies to consider more fully the consequences of such marketing.
  5. In the 1990s, the automobile industry spent 9 billion tax deductible dollars advertising sports utility vehicles, their most profitable product but also one associated with higher rates of accidents, fatalities and pollution.  Once again, tax payers were asked first to subsidize the promotion of these vehicles, the pay again for the higher costs these vehicles incurred.

By introducing this evidence into the current public debate on taxes, public health advocates can set the stage for revisiting an end to the tax deductibility of advertising products that contribute substantially to our nation’s most serious public health problems.

Nicholas Freudenberg

How Big Business Got Brazil Hooked on Junk Food

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Nestlé candies from Brazil.  Credit.

A New York Times examination of corporate records, epidemiological studies and government reports — as well as interviews with scores of nutritionists and health experts around the world — reveals a sea change in the way food is produced, distributed and advertised across much of the globe. The shift is contributing to a new epidemic of diabetes and heart disease, chronic illnesses that are fed by soaring rates of obesity in places that struggled with hunger and malnutrition just a generation ago.  “What we have is a war between two food systems, a traditional diet of real food once produced by the farmers around you and the producers of ultra-processed food designed to be over-consumed and which in some cases are addictive,” said Carlos A. Monteiro, a professor of nutrition and public health at the University of São Paulo.  “It’s a war,” he said, “but one food system has disproportionately more power than the other.”  Watch a Times video of the story.

The shift in framing of food and beverage product reformulation in the United States from 1980 to 2015

Food and beverage product reformulation is a public health nutrition policy of recent prominence; it is a so-called ‘win-win’ policy, as unlike other nutrition policies, it has the potential to also benefit the food and beverage industry. This study investigates how and why reformulation became a public health initiative by conducting a framing analysis on 278 US newspaper articles from 1980 to 2015. Three primary frames of reformulation were identified: business, health, and political. The political frame of reformulation grew in importance after 2001, to describe reformulations occurring in response to public health policy initiatives aimed at obesity and noncommunicable diseases. The increasing use of a political frame suggests that voluntary reformulation followed a growing threat of policy change and litigation facing the industry, a finding that provides important context to debates about voluntary reformulation initiatives.

Scott C, Nixon L. The shift in framing of food and beverage product reformulation in the United States from 1980 to 2015. Critical Public Health. 2017 Jun 7:1-3.