[Ip-health] Building a NASA for Prescription Drugs--The New Republic

Fran Quigley fwquigley at gmail.com
Thu May 10 05:09:56 PDT 2018



This short mass media article cites the work of Dean Baker and others. The argument is that the U.S. government can significantly reduce drug prices by emulating other agencies that are far more stingy than NIH in handing over patent rights to private industry. And it quotes Jamie on the point that the government already funds all stages of development, including clinical trials, for some drugs. 


I realize not everyone likes the “NASA for Drug Development” shorthand. But my experience is that the label helps non-experts envision a different approach from our current dysfunctional system. 



Where the system runs into trouble is in the middle of the process, when the government hands over the most glittering prize in the modern-day economy: the multi-decade patents that give private companies a monopoly on life-essential products. Through a mechanism established by the Bayh Dole Act of 1980, private companies are allowed to claim patents on promising compounds discovered with government funding—and that means exclusive rights to manufacture and sell the resulting drug for a period of twenty years and often longer. 

This isn’t just an outdated model; it’s also deeply inefficient. Companies can price medicines at hundreds of times what it costs to make them (it’s how a hepatitis C medicine could cost $1,000 for each pill that is manufactured for a few dollars ). With the government providing a guaranteed market for the drugs, companies like Gilead and Pfizer have had years where their reported profit margins exceeded a staggering 40 percent. All of the big pharma companies average between 15 and 20 percent profit each year. Most Fortune 500 companies are happy to claim half of that. There is “absolutely no reason why the taxpayer should be forced to subsidize a private monopoly and have to pay twice: first for the research and development and then through monopoly prices,” Senator Russell Long insisted when Bayh Dole was passed in 1980. 



There is a better approach, both for spurring important research and keeping medicines costs low. Economists like Dean Baker of the Center for Economic Policy and Research and Amitabh Chandra of the Harvard Kennedy School have given thought to what this new system would look like. 

Chandra envisions a “NASA for drug development” where private companies are contracted to do federal work, but the government does not hand over monopoly patent rights. Eli Lilly and Pfizer would be contracted to conduct clinical trials, or even manufacture and distribute medicine, in the same way that Lockheed Martin and Northrup Grumman are contracted to design and build supersonic aircraft or space vehicles. Baker describes a similar approach modeled on the U.S. defense industry. The Department of Defense spends $300 billion  each year on government contracts with private companies like Raytheon and Boeing, which make a healthy profit building high-tech missiles and aircraft—but they are not routinely handed massive windfall-producing patent monopolies.

As longtime affordable medicines advocate James Love of Knowledge Ecology International points out, such ideas for drug development aren’t proposing anything the government doesn’t already do.  The NIH, the Biomedical Advanced Research and Development Authority, and the National Cancer Institute already fund the full research process for  some medicines developed in the United States today. “Government funding for every stage of drug development is done every day now, in a consequential but limited way,” Love says. And, even after Bayh Dole was passed, governments have continued to fund the early, riskiest stages of drug development for cancer, HIV, and mental health drugs, as well as some vaccines. The DoD and NASA models would simply expand on what the government already does.



If the United States were to move towards a NASA system, the federal government would have to find up to $75 billion in their budgets to replace private industry R&D. But that’s not an insurmountable obstacle. There should be plenty of money available. Baker and other economists calculate that a NASA for drug development, which would eliminate patents and the price markups for prescription drugs that come with them, would save Americans hundreds of billions of dollars every year thanks to drugs being generic-level cheap from day one. The savings to government program spending alone is more than enough to replace every penny of the $75 billion that the private U.S. pharma industry claims it spends on R&D—and replace it with research that is more widely shared and targeted more at public health than at quarterly profits. In this alternate universe, scientists and labs could switch their focus away from developing yet another iteration of an erectile dysfunction drug towards tackling challenges like tuberculosis.  



Fran Quigley

PFAM: People of Faith for Access to Medicines,  <http://www.pfamrx.org/> www.pfamrx.org, (317) 750-4891

Also:  <http://mckinneylaw.iu.edu/faculty-staff/profile.cfm?Id=440> Clinical Professor, Health & Human Rights Clinic, Indiana University McKinney School of Law 

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