Lives and Profits in the Balance: The High Stakes of Medical Patents
“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 companies.
“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 month.
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.
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.”
CLYDE HABERMAN, a regular contributor to Retro Report, has been a reporter, columnist and editorial writer for The New York Times, where he spent nearly 13 years based in Tokyo, Rome and Jerusalem. Subscribe to our newsletter here and follow us on Twitter @RetroReport.
This article first appeared in The New York Times.