The wave of mega mergers in the global pharmaceutical industry is driving prices for new “wonder drugs” financed with public funding, a study by the UK’s Cambridge University Department of Sociology asserts. Despite putting up the money, the public is the loser, the researchers contend. The successful development of a breakthrough drug, they say, makes the company producing it more attractive as an acquisition target, and the bidding wars compound the price. All of this makes shareholders richer.

What’s more, the study says, the high prices lead to a rationing effect, as many public health services only treat the sickest patients with the new drug. When treatment is withheld, infectious diseases spread faster. Cambridge cites several examples of how the process works. After a protracted M&A battle, in which the company walked away with the prize, it says Gilead Sciences more than doubled the price of its treatment for hepatitis C over initial estimates, calculating “how much health systems could bear.”

The company, the researchers say, charged public health services in the US up to $68,000 per patient for a three-month course and the National Health Service in England nearly £35,000 then channeled the profits into a share buyback rather than financing additional research.

This is an industry-wide phenomenon, Cambridge notes, adding that large pharmaceutical companies increasingly rely on input from public institutes, universities and venture capital-supported start-ups for their innovations, acquiring the most promising compounds rather than doing the research themselves.

The study’s lead and senior authors, Victor Roy and Lawrence King, also cite the example of Sofobuvir, a compound now owned by Gilead, designed to treat hepatitis C. The drug was developed by a start-up, Pharmasset, which eventually also raised private funding. When Pharmasset’s Phase 2 trial showed more promising than Gilead’s own, Gilead acquired the product for $11 billion in a 2013 bidding war, then priced it at $48,000. By the first quarter of 2016, the $35 billion intake paid for the development costs nearly 40 times, the research alleges. The bulk of the proceeds were funneled into a share buyback.

As another example of how high drug prices are boosting pharmaceutical companies’ share price, the Cambridge team said Merck of the US spent $8.4 billion in 2014 to acquire a drug developer specialized in staph infections. It subsequently closed the acquired company’s early-stage development facility and scant weeks later announced a fresh share buyback.

In an article for the British Medical Journal, the researchers explore new business models they believe could remedy the situation. These include giving health systems greater bargaining power to negotiate deals for breakthrough treatments and limiting share buybacks. Another proposal focuses on a mix of grants and major milestone prices to “push and pull” promising therapies into wider application while uncoupling drug prices from development costs.