The Newsletter

by Karry M and Chris Noble 

It’s 2019. We’re living in the age of peak medical innovation yet people are dying of curable diseases because of profit mongering and the unquenchable greed of capitalists and the resulting medical industrial complex.

Graduate students committed to the quest for medical innovation, often inspired by family members and loved ones living with conditions they know in their heart can be cured, underpaid and overworked and often found scavenging the department’s free lunch seminars, are suddenly pulled into a talk with the technology transfer office because, Eureka! They’ve made a discovery! The National Institutes of Health (NIH) funded laboratory they’ve committed years of their lives to have finally struck gold: balanced bioactivity and low toxicity of the possible drug they have been investigating. What else could a biomedical researcher ask for? But suddenly there are new faces in the lab using foreign jargon like “non-exclusive licenses” and “intellectual property”; all of the forms that seemed like standard boilerplate from Human Resources office are flashed on the table. It turns out that the innovation, and, in fact, all of the innovations developed in the university’s labs, have always been predestined to be private property of the university. In an instant, the life-saving cure that was destined to change the world for the better and save countless loved ones, and which inspired many to conduct biomedical research in the first place, and has had dedicated to its discovery innumerable dedicated young adult years, becomes another commodity to be sold to the highest bidder. Rather than being made as accessible as clean air or the water we need to live, this medical innovation will undergo an economic analysis to determine “what the market will bear” aka what consumers are capable of paying that hits the economic sweet spot of just enough catastrophic health expenditures to stay profitable.

But pharmaceutical companies need to keep their prices high in order to finance the highly costly research and development of new life-saving therapies, right?? Wrong!

A recent study from the non-profit biomedical research organization, Drugs for Neglected Disease Initiative (DNDi), has shown that a drug can be developed from lab bench to manufacturing floor for a little as $200 million. This is orders of magnitude cheaper than the industry fueled propaganda conducted by the Tufts Center for the Study of Drug Development (CSDD), that most recently presented a figure of $2.8 billion. The difference between these two rational, evidence based calculations is the intention of the report. The CSDD study intended to show at the very maximum what the research and development of a new blockbuster medicine would cost by not including the amount of research financing that is subsidized by publicly funded NIH grants or other alternative finance mechanisms such government subsidies, tax credits, and the financial benefits of publishing and using open access journals. The CSDD study also included the costs associated with redundant trials from trial failure and the high per-patient clinical trial cost assumptions which were never economically justified in the study’s methodology. The intention of this study was to inflate the cost of research and development to its highest, most economically inefficient value so any rebuttal to the subsequent high priced medical innovation will be mute. This begs the question of the intentions of modern medical innovation: is it to cure diseases and save lives or is the research industry simply for the purpose of more research? Why would a company ever be incentivised to actually find a cure in this economic system? One Goldman Sachs analyst recently even mused, “is curing patients a sustainable business model?”.

In addition to the expensive research and development process, drug companies have been spending more and more on marketing for the past 20 years, increasing to over $20 billion in 2016, according to a recent study in the Journal of the American Medical Association. As of 2013, all but one of the top 10 drug companies actually spent more on marketing than they did on research and development. They also make more in profit than they do on research and development, according to Marcia Angell, former editor-in-chief of the New England Journal of Medicine and author of The Truth About the Drug Companies: How They Deceive Us and What to Do About It (2004). Much of the marketing done by these companies is to providers who assist with clinical trials of their drugs, and then prescribe them once they are approved. Influential doctors are often given expensive special treatment by these companies in the form of speaking deals, board appointments or patent or royalty arrangements. Companies spend huge amounts on “educational” events that meet doctors’ continuing education requirements and also promote specific drugs.

Additionally, much of the research and development that is done by these companies is used to develop “me-too” drugs, or drugs that have nearly identical counterparts already on the market, because they are projected to bring a high return on investment. Consequently, research and development of necessary drugs such as antibiotics and vaccines for neglected diseases is too often ignored. Effective regulation of research and financial relationships with healthcare providers could save billions by preventing wasteful spending on marketing, and focusing on necessary drugs instead of redundant me-too products. The goal of pharmaceutical research and development regulations should be to foster a system that prioritises high quality research for needed innovations rather than high quantity investments with little actual impact on patients’ lives.  

In a time when people are dying because their financial limitations don’t allow them to have access to necessary medicines, we need to start finding ways to ensure that drug development doesn’t come with an enormous price tag for patients. How can we begin changing the system so that pharmaceuticals are treated as a public good? Is it best to start with regulations at the state or federal government level, or to create alternative institutions to take down the pharmaceutical industry from the grassroots? Is it even possible to make such a drastic transformation?

Government regulation

Before 1980, research that was performed by universities, nonprofits and small businesses that were funded by the federal government resulted in the inventions being owned by the government, which would only grant non-exclusive licenses. This caused a delay in bringing products initially discovered through federally funded research to market, because there was no incentive to be the first company to take the financial risk of performing the necessary clinical trials without the guaranteed reward in the form of exclusive rights to the profits. In 1980, the Bayh-Dole Act allowed drugs and other inventions that are funded by federal research to be patented by the universities, nonprofits, and small businesses that perform the initial research, who then license exclusively to companies in order to avoid the previous stalling. For a while, the profit motive this introduced resulted in a dramatic increase in the number of new drug applications to the FDA. March-in rights were added as a safeguard in the Bayh-Dole Act stating that if there is a barrier in bringing a product to market, the federal government can step in and assert its rights to remove the barrier. The government literally has the right to “march in” and license the product to a third party if it has not been brought to market in a reasonable time period or on reasonable terms, if the owner has not made efforts to ensure “practical application” of the product or when needs of the public relating to safety and health are not being met. It’s important to note that these rights have never been used, but have been threatened once before during the anthrax scare of the early 2000’s when the government was seeking to stockpile ciprofloxacin from Bayer Pharmaceuticals, but was unwilling to pay their high prices. In response, Bayer reduced its price by 50% immediately. Despite the fact that unreasonable prices are an obvious barrier to public access, these rights have never been utilized. The stance of the NIH seems to be that if the product is publicly available, they cannot exercise march-in rights. Health justice advocates know that march-in rights are a potential way to put pressure on big pharma, and they are asking the NIH to reconsider its stance.

State governments have introduced their own initiatives to lower drug prices. For example, Maryland has recently introduced the use of a prescription drug affordability board. In April, they were the first state to pass legislation to appoint a committee to study prescription drug pricing and after a year of such study they will make recommendations to the state’s Legislative Policy Committee on how to go about reducing the payment required to purchase them. The bill was originally written to apply to all Maryland residents’ health insurance plans, but it was scaled down to apply only to state and county government employees. They are expected to face pushback from pharmaceutical companies and pharmacy benefit managers, but the legislations’ backers hope to return with a more universal bill in 2024. Massachusetts and Maine are learning from the forward progress made by Maryland and elsewhere with the support of National Academy for State Health Policy (NASHP), and are adapting their initiatives to pursue even stronger legislative strategies. All interested parties can join the MA Prescription Drug Affordability Coalition to join in on these initiatives here in Massachusetts.  

Generic drugs are generally 80% cheaper than their brand name versions, but even generic manufacturing is not immune to price gouging. Drug company executives from 20 companies are currently facing charges from 44 states that they colluded to increase prices of over 100 generic drugs through anti-competitive agreements. According to court documents, the prices of some of the drugs listed in the case were increased over 1000% in a timespan of less than two years. Legislation has been proposed to prevent such price hikes for generics. Senator Elizabeth Warren wrote a bill to nationalize the manufacturing of generic drugs or contract them to be manufactured by a third party, ensuring that they are offered at a fair price. This addresses the problem of generic monopolies, which have driven up the price of generic drugs and restricted their supply. Senators Bernie Sanders and Ro Khanna also wrote legislation addressing the same problem, titled the Prescription Drug Price Relief Act, and it is actually pretty simple in its mechanics: if the US price for a medication is higher than in other developed countries, the drugmaker’s monopoly would be ended and generic competitors could enter the market to sell alternative versions of the drug at a lower price.

True universal single-payer healthcare would effectively solve the problem of high drug prices. The federal government would be the only purchaser of medications for all of its citizens, allowing it to have massive bargaining power with pharmaceutical companies. Even when prescription drug purchases are not themselves nationalized, as is the case in Canada, the federal government generally has oversight of pricing plans. Currently Scotland, Wales and Northern Ireland provide universal drug coverage with no copays, coinsurance or deductibles, while keeping costs significantly lower than the U.S. and Canada. Representative Doggett in Texas has proposed a bill titled, Medicare Negotiation and Competitive Licensing Act, that would give Medicare the authority to issue compulsory licenses to generic manufacturers when fair prices are negotiated with pharmaceutical companies. This initiative has over 125 cosponsors in the house and is an initiative to stay aware of. If Medicare For All becomes a reality, this initiative will set the stage for an effective, efficient, and most importantly, affordable single payer health care system.

Physicians for a National Health Program (PNHP) has drafted a plan for pharmaceutical regulation in a national healthcare program in order to ensure an efficient process of drug research and development. They suggest creating a formulary of necessary drugs, and eliminating funding for unnecessary “me-too” drugs that serve an identical purpose to drugs already on the market. The government may then negotiate prices with drug companies, and in cases in which negotiations over prices of patented drugs fail, PNHP recommends that the government offer up rights to develop generic versions, or create new versions themselves. Publicly funded drugs created by public entities should remain patent-free, suggests PNHP. The FDA should be completely free of financial conflicts of interest. These initiatives would eliminate the billions of dollars that pharmaceutical companies spend on marketing their products to providers (free samples, anyone?) who serve double duty as regulators of the drug industry. Consumer advertising could also be scaled down significantly, in order to save companies money that they could pass along to their customers.

Open source medicine and nongovernmental regulation

In the past few decades, various other innovative methods to create necessary drugs at a lower cost without involving the government have begun to spring up. International nonprofit institutions and so-called “biohackers” are using creative tools to solve the problem of inadequate access to necessary pharmaceuticals in the U.S. and abroad.

One of these is DNDi, a patient-centered non-profit research and development collective working to meet the needs of those with diseases not addressed by the for-profit pharmaceutical companies, especially potentially deadly diseases common in the Global South, such as malaria, trypanosoma, and pediatric HIV infections. Because these are diseases endemic to economically disadvantaged areas, companies do not have a financial incentive to move potential treatment candidates through the costly development pipeline. Companies often discover drug candidates for these diseases, as their importance is well understood but development is usually stuck at the publication phase. DNDi works to develop treatments and vaccines for these illnesses, using open source drug discovery and partnering with pharmaceutical companies (which often lend out their molecular and compound libraries), research institutions, national disease control programs, and universities. They create or enhance clinical trial centers, train clinical trial personnel, and support the use of appropriate technology in areas where the diseases are endemic. They aim to delink the cost of research and development from the cost of the product, and promote financial transparency. They actively work to ensure that the drugs they develop have the widest possible access with the goal of pharmaceuticals as a public good/commons, mostly publicly funded. Intellectual property laws are seen as secondary to equitable access to treatment by vulnerable populations in this model. Intellectual property rights to the drugs that are developed are often waived, and they can then be given out for free or at a deep discount.

Doctors Without Borders/Medicins Sans Frontieres (MSF) works with DNDi, and has its own Access Campaign which aims to lower the price of drugs, stimulate development of generics, and act as a corporate watchdog for pharmaceutical companies. The Access Campaign speaks out for the needs of neglected populations to advocate for research into neglected diseases and bring back into production necessary drugs that are no longer produced due to lack of profit.

The price of insulin has skyrocketed in the past 20 years due to the limited number of patents available. The Open Insulin Project is creating recipes for “homebrewers” to create their own insulin and sidestep patent laws. The FDA currently doesn’t regulate such instructions if they do not make explicit health claims. The project was started at Counter Culture Labs in Oakland in 2015 by a group of self-proclaimed biohackers, some of who use insulin personally, and has been taken up by DIY bio labs around the world. Similarly, OpenAPS has made DIY Artificial Pancreas System technology available to the public at no cost, so that anyone with a compatible glucose monitor and insulin pump can make their own closed-loop system.

The Medicines Patent Pool initiative (MPP), has allowed pooling of patents in order to increase access to high-quality generic HIV medication for over 10 years. In 2008, most low income countries in areas such as sub-saharan Africa, only had access to first-generation HIV medications, which had dangerous long-term side effects, and to which patients could develop resistance. Because of these patent pools, newer and safer treatments have become more affordable in these areas. Now MPP has begun to expand into other necessary medicines for diseases like tuberculosis and hepatitis.

Methods such as open sourcing, flexible intellectual property laws, shared access to compound libraries, development of non-financial incentives, and international cooperation are all recommended by the World Health Organization to promote drug discovery to benefit developing countries. A collection of these alternative financing mechanisms can be found on the website http://altreroute.com/ developed by the student lead advocacy organization, Universities Allied for Essential Medicines (UAEM). These methods, if used correctly, could also be used to decommodify the U.S. pharmaceutical industry and create a human centered incentive system that truly puts people before profits.

Karry M is a member of Boston DSA Healthcare Working Group. Chris Noble is a member of Right Care Alliance, a grassroots coalition of clinicians, patients and community members working to hold the healthcare institutions accountable and put patients over profits.