Drug companies will make a killing from Coronavirus
Unless we fix the system, American taxpayers will get gouged on a vaccine they paid to produce.
Authors: Mariana Mazzucato and Azzi Momen | Twitter: @MazzucatoM and @azzimomen
The search for treatments and vaccines to curb transmission of the new coronavirus is in overdrive. Fortunately, there are a number of promising candidates thanks to the U.S. government’s investment in biomedical research and development.
Since the 2003 SARS outbreak, the United States has spent nearly $700 million of taxpayer money on coronavirus research — more than any other country — through the National Institutes of Health. Yet the question right now for Americans — thousands of whom are forced to ration their insulin and face astronomical bills for live-saving drugs — is not only when these treatments and vaccines will become available, but at what price.
As the world’s leader in public financing of biomedical research, the U.S. government has the opportunity to set a precedent to ensure that medicines developed with public funding are accessible and affordable to the public; this will have enormous implications not only how for we deal with the coronavirus, but also for the crisis of unaffordable medicines in America.
Health Secretary Alex Azar recently said that he could not guarantee coronavirus treatments or vaccines would be affordable, despite taxpayers’ significant investment in their development. Faced with public backlash led by the House speaker, Nancy Pelosi, Mr. Azar backtracked, although details on how the administration would keep prices down remain unclear.
One way was spelled out in a letter sent on Feb. 20 by 46 lawmakers: It demands that coronavirus vaccines and treatments developed with taxpayer money should be produced without giving an exclusive license to private manufacturers.
Yet that is not how our system works. Instead, the government grants exclusivity to pharmaceutical companies to conduct later stage drug development on publicly funded inventions, without requiring that these drugs be widely affordable or accessible. These exclusive licenses allow drug companies to enjoy a monopoly and charge exorbitant prices for medical technologies developed with public funds.
We are once again handing over the fruits of publicly funded research to for-profit corporations with no strings attached.
Under a deal struck with Regeneron Pharmaceuticals, the federal Biomedical Advanced Research and Development Authority agreed to pay 80 percent of the costs of developing and manufacturing coronavirus treatments — without any requirement that the final products be affordable. Regeneron has the two highest-paid executives in the pharmaceutical industry.
Similarly, another promising experimental drug to treat coronavirus, remdesivir, was developed with the help of taxpayer-funded research. Gilead Sciences, famous for its price gouging of other medicines developed with public funding like Truvada for PrEP and Sovaldi, owns the exclusive rights to remdesivir. In the case of coronavirus vaccines, nearly every candidate in development involves public-private partnerships that builds off publicly funded research, like Johnson & Johnson and Sanofi’s collaborations with the government’s biomedical research authority.
Despite Democratic lawmakers’ push for stronger access and affordability protections for coronavirus vaccines and treatments, the pharmaceutical lobby got these protections removed from the coronavirus spending bill recently approved by Congress, which included $3 billion in federal funding for research and development of coronavirus vaccines, tests and treatments.
The National Institutes of Health pours $40 billion annually into health innovation, and it is on track to spend billions more for Covid-19. In fact, N.I.H. funding contributed to every one of the 210 new drugs approved by the Federal Drug Administration from 2010 to 2016.
Yet the pricing of medicines does not reflect this contribution. While the reasons for this are varied, including the lobbying power of the pharmaceutical industry, it reflects an entrenched but misguided belief that the private sector is the primary driver of innovation and should reap all the rewards. Recent studies show that large pharmaceutical companies like Johnson & Johnson and Pfizer are focusing less and less to research — instead acquiring smaller biotech firms with promising drug candidates that rely on public funding — and spending more on strategies to inflate executive pay, such as share buybacks.
The United States needs a system where public and private sectors work together. This is not about bashing Big Pharma; it is about reclaiming the focus on health and the public interest in an industry that has for too long been driven by profiteering. The Covid-19 crisis demands that we urgently find vaccines and treatments, and do so in a way that fixes some of the fundamental failures of our current system. Hopefully these lessons will last beyond the current crisis and prepare us better for the next.
Originally published in the New York Times.
Mariana Mazzucato is Professor of the Economics of Innovation and Public Value, Founding Director of the UCL Institute for Innovation and Public Purpose (IIPP), and the author of The Value of Everything.
Azzi Momenghalibaf is a senior program officer at the Open Society Public Health Program.
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