[Ip-health] New York Times (RETRO REPORT) - Lives and Profits in the Balance: The High Stakes of Medical Patents

Thiru Balasubramaniam thiru at keionline.org
Mon Dec 12 20:42:14 PST 2016



Lives and Profits in the Balance: The High Stakes of Medical Patents

Retro Report


Decades after Dr. Jonas Salk opposed patenting the polio vaccine, the
pharmaceutical industry has changed. What does that mean for the
development of innovative drugs and for people whose lives depend on them?

By RETRO REPORT on Publish DateDecember 11, 2016.

“The West Wing,” Aaron Sorkin’s television series about a fictional White
House, had a knack for crisply summarizing complex real-life issues. In an
episode from 2000, pharmaceutical executives and leaders of an AIDS-plagued
African country are summoned to the White House. The purpose is to see if
reluctant businessmen can be persuaded to sell the Africans desperately
needed drugs at a modest price.

“The pills cost ’em 4 cents a unit,” a presidential aide grouses about the

“You know that’s not true,” a colleague says. “The second pill cost ’em 4
cents. The first pill cost ’em $400 million.”

The other man replies, “They also enjoy unprecedented tax breaks, foreign
tax credits, research and experimentation exemptions, and expensing of
research expenditures.” He might have added that many prescription drugs —
antidepressants, arthritis medications, anticancer pills and more — result
from research largely financed by taxpayers, not by private companies that
reap the profits.

Tensions inherent to drug pricing — that 4-cent second pill versus the $400
million first one — underpin this final installment in the current series
of Retro Report videos, which examine major news stories of the past and
their lasting consequences. To highlight how the ground has shifted in the
pharmaceutical world, the video recalls Dr. Jonas Salk, the creator of the
first successful vaccine against polio in the 1950s. Dr. Salk’s conquest of
this crippling and often deadly disease made him revered even beyond his
death in 1995. One poll at the close of the 20th century showed that he was
deemed, far and away, the greatest person in medicine over the last
thousand years, ahead of Louis Pasteur, Marie Curie and Alexander Fleming.

In a 1955 interview with Edward R. Murrow, Dr. Salk was asked who owned the
patent for his vaccine.

“Well, the people, I would say,” he said. “There is no patent.” After a
pause, he added with a laugh, “Could you patent the sun?” That attitude was
common among men and women of science. The physicist Enrico Fermi said
scientists possessed “no proprietary rights” to their creations.

Times change. While the sun remains off limits, patents have become the
norm in the drug industry. By the 1980s, even Dr. Salk could not resist
them; he obtained patents for a potential AIDS vaccine. Such protections
are now the lifeblood of drug companies, a reality raised with Retro Report
by Lori M. Reilly of the Pharmaceutical Research and Manufacturers of
America, an industry group. “Without patents,” she said, “companies
wouldn’t have the incentive to bring a medicine to market.”

But at what cost to consumers? That question is at the heart of public
policy decisions that can mean life or death for millions. On average,
vital medicines cost appreciably more in the United States than in other
developed nations. Annual spending on prescription drugs in this country
averages nearly $1,000 a person — a total exceeding $300 billion, or about
10 percent of an overall health care bill of $3 trillion.

Some drug makers have belatedly concluded that their prices are indeed
uncomfortably high, and they pledge to limit future increases. During the
presidential campaign, their industry was criticized by the candidates of
both major parties, and in an interview with Time magazine published last
week, President-elect Donald J. Trump said, “I don’t like what’s happened
with drug prices.” But how tough with manufacturers Mr. Trump intends to
get is far from clear.

Price tags on some medications have been eye-popping. Gilead Sciences
charged $1,000 a pill for Solvadi, a drug for hepatitis C. Eli Lilly priced
a lung cancer drug, Portrazza, at about $11,430 a month. Pfizer’s list
price for Ibrance, a medication for advanced breast cancer, was $9,850 a

Then there is Gleevec, which figures prominently in the video. It is a
lifesaver for people with chronic myeloid leukemia, a relatively uncommon
blood cancer that afflicts an estimated 5,000 Americans every year.
Produced by the Swiss company Novartis, Gleevec has been called a miracle
drug, and with reason. Unlike many other forms of chemotherapy, it directly
attacks the cancer instead of poisoning every cell in the body. It thus
gets the job done with few, if any, side effects. But a Gleevec regimen can
run to more than $100,000 a year, and it is an expense for life.

Martin Shkreli, former CEO of Turing Pharmaceuticals LLC, departs after
appearing before a House Oversight and Government Reform hearing on
“Developments in the Prescription Drug Market Oversight” on Capitol Hill in
Washington February 4, 2016. Shkreli invoked his Fifth Amendment right
against self-incrimination and declined to answer questions on Thursday
from U.S. lawmakers interested in why the company raised the price of a
lifesaving medicine by 5,000 percent. CreditJoshua Roberts/Reuters

Staggering prices lead some health professionals to conclude that profit
making has at times turned into profiteering, at the expense of people who
could not be more vulnerable.

Pharmaceutical companies, however, respond that in certain cases, a high
price for that 4-cent drug is essential if the first $400 million pill is
ever to be produced. Clinical trials are expensive, and failure is routine.
Many drugs never make it to market.

Also, the companies say, many patients pay nowhere near the full price
because of discounts and insurance benefits. Then, too, patents are not
forever. Often, a manufacturer has maybe eight to 10 years to turn a profit
before its patent expires and the drug may be produced in generic form at a
significantly lower price. And profits, the industry adds, are what pay for
the costly experimentation that may yield the next miracle.

Does all that money truly go to research and development? Not according to
studies that show that the industry spends more on advertising and other
marketing mechanisms — twice as much in some instances — than on laboratory
work. Kantar Media, a consulting firm that tracks the industry’s spending,
put the total devoted to marketing last year at $5.4 billion.

The emphasis on sales would not surprise anyone who watches the evening
news. On the major broadcast networks, viewers are typically 60 and older.
Accordingly, advertising amounts to a litany of age-related indignities.
Kantar Media’s list of the most-advertised prescription drugs is led by
Humira, to treat rheumatoid arthritis; Lyrica, for nerve pain; Eliquis, an
anti-clotting medication; Cialis, for erectile dysfunction; and Xeljanz,
also for rheumatoid arthritis.

A year ago, the American Medical Association urged a ban on these sorts of
direct pitches to consumers, but congressional action seems unlikely. Even
so, the government’s stake in the drug industry is considerable. A good
deal of basic research is financed by American taxpayers, through
institutions like the National Institutes of Health.

Under the Bayh-Dole Act of 1980, named for Senators Birch Bayh and Bob
Dole, private companies are authorized to obtain patents for a variety of
products developed with public money, pharmaceuticals among them. The
assumption is that these firms are better positioned than the government to
bring innovations to market.

But officialdom has a right under the law to withdraw patents from
companies that put drugs out of reach because of high prices. It has yet to
intervene despite petitions calling on it to do so. The pharmaceutical
lobby, a dependable source of campaign contributions, is not readily defied
in Washington. Politicians have resisted appeals to let Americans buy drugs
lawfully in other countries and to allow Medicare, the nation’s biggest
drug purchaser, to negotiate lower prices with pharmaceutical companies.
That Americans want cheaper medicines seems incontestable. In a September
poll by the Kaiser Family Foundation, 77 percent of those surveyed
described prescription drug costs as “unreasonable.”

The industry’s reputation is hardly enhanced when someone like Martin
Shkreli comes along. The founder of Turing Pharmaceuticals, the smirking
Mr. Shkreli seized upon a generic drug for treating a parasitic infection
and summarily raised its price to $750 a pill from $13.50. The industry’s
image suffered another blow when Mylan sharply raised, to $600, the list
price for EpiPen, which is vital to treat severe allergy attacks.

Mr. Shkreli, who faces criminal charges on a separate matter, defended his
actions at a health forum last year. “It’s a business,” he said. “We’re
supposed to make as much money as possible.” But not everyone regards
lifesaving drugs as just another product ripe for exploitation.

In 2013, some 120 doctors and researchers from around the world, all
specialists in chronic myeloid leukemia, banded together to denounce the
high prices being demanded for drugs like Gleevec. Leading them was Dr.
Hagop M. Kantarjian of the MD Anderson Cancer Center in Houston. With
prices at “unsustainable” levels, Dr. Kantarjian said, “pharmaceutical
companies have lost their moral sense.”

The video with this article is part of a documentary series presented by
The New York Times. The video project was started with a grant from
Christopher Buck. Retro Report has a staff of 13 journalists and 10
contributors led by Kyra Darnton. It is a nonprofit video news organization
that aims to provide a thoughtful counterweight to today’s 24/7 news cycle.
Previous episodes are at nytimes.com/retroreport. To suggest ideas for
future reports, email retroreport at nytimes.com.

For breaking news and in-depth reporting, follow @NYTNational on Twitte

More information about the Ip-health mailing list