[Ip-health] Insulin: a case study for why we need a public option in the pharmaceutical industry

Dana Brown dbrown at democracycollaborative.org
Tue Sep 10 08:49:37 PDT 2019

wanted to share a little piece we put out together with T1International:


Insulin: a case study for why we need a public option in the pharmaceutical

When Frederick Banting, Charles Best, and James Collip filed for a U.S.
patent on insulin in 1923 and sold it to the University of Toronto for $1
each, they did it because, as Best once said, “insulin belongs to the

They also believed that securing the patent was a form of publication, and
wrote to the university president, “When the details of the method of
preparation are published anyone would be free to prepare the extract, but
no one could secure a profitable monopoly.”

Sadly, they were mistaken.

Today, three companies — Eli Lilly, Novo Nordisk (NVO), and Sanofi (SNY)
Aventis — control virtually the entire global market for insulin. This
oligopoly, which may have colluded to fix insulin prices, charges
exorbitant amounts for a medicine that people with type 1 diabetes cannot
live without. Since the 1990s, they have raised the price of insulin more
than 1,200%.

In the past few years we’ve learned about the tragic and preventable deaths
of 20-somethings who simply couldn’t afford their insulin, even with
insurance. Diabetes-related complications like amputations are on the rise
again after decades of decline, and many people who depend on insulin to
survive are sacrificing their rent, their cars, and their dignity just to
get by.

It’s an unconscionable evolution for a drug developed almost a century ago
in a public lab, in the public interest. How did it come to this?

The private pharmaceutical industry has every incentive to game the patent
system, extract the highest prices it can, and delay the market entry of
competitor drugs as long as possible. With the largest lobby in Washington
and a well-oiled revolving door to its regulators — hello, Alex Azar! —
large pharmaceutical companies have deftly evaded attempts to rein in their
excesses. That’s how Eli Lilly, Novo Nordisk, and Sanofi Aventis have
managed to keep their stranglehold on insulins and charge ever-higher
prices for years.

In addition to having potentially catastrophic effects on the lives of
patients, profit-maximizing strategies responsible for these eye-watering
price tags also result in differential pricing practices with
discriminatory effects, unnecessary financial strain on the U.S. health
care system, and contribute to growing corporate power over our democracy.
But as one of us (D.B.) argues in a report released Tuesday, if we act now
to institute a public option for pharmaceuticals, we could ensure that this
terrible story is never repeated.

By public option we mean the creation or expansion of publicly owned
institutions to function across the entire pharmaceutical supply chain —
from research and development to manufacturing to wholesale and
distribution — in order to assure a safe, consistent, and accessibly priced
supply of essential medicines.

It is sorely needed because the private pharmaceutical industry is failing
us on a number of fronts. It operates on an extractive model that
contributes to inequality and increasingly produces drug shortages,
inefficiency, lagging innovation, misinformation and misuse of medications,
and, most famously, the world’s highest drug prices.

Related: Vertex’s next act: a billion-dollar bet on a cure for type 1
Essential medicines like insulin, antibiotics, anti-allergy medicines, and
more could and should be developed and sold by public institutions in the
public interest. A number of other countries, including Sweden, Brazil,
Thailand, and Cuba, have successful publicly owned pharmaceutical companies
spanning any and all links in the supply chain. It’s high time the U.S.
joins their ranks. Moreover, Americans across the political spectrum
already support public production of essential medicines.

The incentives for a pharmaceutical industry in the public sector would be
radically different than for a pharmaceutical industry in the private
sector. Free from the need to satisfy hungry shareholders with ever-higher
quarterly returns, public pharmaceutical companies could be designed to
ensure that public health needs are the priority.

In fact, the public already funds the majority of the basic research
leading to the development of new drugs in the U.S. through the National
Institutes of Health and other public entities. Directing those funds to
public institutions specifically designed to develop new essential
medicines based on society’s greatest needs would be more efficient and
effective at ensuring we get true innovation, and not a glut of “me-too”
drugs structurally similar to existing products.

A public pharmaceutical R&D institute could patent its inventions and keep
them in a public-interest patent pool in order to stimulate further
scientific advancement and safeguard those advances from profiteers,
thereby securing long-term affordable access to the medicines developed.
The private pharmaceutical sector would be welcome to compete with this
public sector on the development and production of essential medicines, or
it could choose to focus on lifestyle drugs.

Publicly owned manufacturers at the state, local, and regional levels could
make new medicines developed by a national R&D institute and also produce
low-cost generics. These manufacturers would then work with publicly owned
wholesale distributors to assure the medications are available at hospitals
and retail pharmacies nationwide — all at the same low price. It could even
leverage existing public institutions like the U.S. Postal Service and the
Veterans Health Administration, both of which have important experience in
pharmaceutical distribution, to ensure that cost-effective medications are
delivered directly to patients and clinics in every community.

Unlike private pharmaceutical companies, publicly owned pharmaceutical
companies would be subject to existing transparency laws for public
entities and could be further required to publish their prices — or even
charge all purchasers the same price. By doing so, they could significantly
improve transparency in the entire pharmaceutical supply chain, giving
citizens and lawmakers real information about where the money goes when
medications are bought, empowering everyone to make more informed decisions
about future policy and regulations.

Pharmaceutical science’s promise — that it can, through human ingenuity,
end or treat the diseases our flesh is heir to — is a modern miracle. But
keeping this miraculous promise for everyone means we need to rethink at a
fundamental level an industry content to let our friends and families die
in the service of its bottom line.

Dana Brown is the director of the Next System Project at the Democracy
Collaborative and author of the report “Medicine for All: The Case for A
Public Option in the Pharmaceutical Industry.” Elizabeth Pfiester is the
founder and executive director of T1International, a global, patient-led
advocacy organization fighting for affordable access to insulin and

About the Authors
Dana Brown
dbrown at democracycollaborative.org

Elizabeth Pfiester
elizabeth at t1international.com

[image: Democracy Collaborative]

*Dana BrownDirectorThe Next System Project*Phone: (202) 559-1473 x122
Email: dbrown at democracycollaborative.org
Web: www.thenextsystem.org

Facebook: fb.me/thenextsystem <http://facebook.com/thenextsystem>
Twitter: @thenextsystem <http://twitter.com/thenextsystem>

More information about the Ip-health mailing list