Why does it matter what medicines cost?
If you are lucky enough to live in a country with comprehensive state-funded healthcare, such as the UK, you probably have no idea how much medicines really cost. But it can be a lot. Some drugs that have been around for ages are very cheap – aspirin, for instance, costs pence. It’s been out of patent and made by numerous companies competing to undercut each other’s price for decades. But new medicines, protected by 20-year patents, can cost hundreds of pounds a packet and sometimes thousands. The new breast cancer drug Kadcyla weighed in at a starting price of £90,000 per patient per year in the UK in 2015, though the manufacturer has now agreed a hefty discount for the NHS.
It is an increasing pressure on all health systems around the world. In 2017, NHS England put its annual drugs bill at £16bn, £9bn of which is GPs prescribing, and said it was rising at 7% a year – faster than the overall NHS budget.
Isn’t that really just a problem for poor countries?
No. The new drugs that cure the liver disease hepatitis C were launched at a price that elicited squeals of pain from the UK, western Europe and the United States, as well as India and Romania, which both have high numbers of infections. In the US, the drug sofosbuvir (brand name Sovaldi), launched at a cost of $1,000 a pill. In the UK, the manufacturer Gilead was asking £35,000 for a 12-week course, with some patients needing 24 weeks. It was soon clear that no country was going to be able to treat everybody who needed them, even though hepatitis C is a killer in the long term and the drugs are – unusually – a cure.
In the UK, the National Institute for Health and Care Excellence (Nice), which decides whether drugs are value for money, said yes to hepatitis C drugs, provided Gilead gave a discount. The drugs would save years of expensive NHS treatment, including liver transplants. But the government balked at the cost of treating everybody – an estimated 160,000 people are infected. Normally the deal is that the NHS must introduce any drug Nice approves, but in this case it chose to phase it in, treating the sickest first and making others wait, which was unprecedented.
In the US, the cost was out of the question for many people without good health insurance cover. The prices of new cancer drugs have also been prohibitive.
Didn’t drug prices crop up in the US election?
Yes. The cost of drugs became a hot political potato. Hillary Clinton promised to bring down high prices, and Donald Trump also gave the subject a mention. The row wasn’t triggered by hepatitis C, though, or even cancer, but by a scandal concerning the hiked prices of old drugs that caused a huge public outcry in summer 2015 and made Martin Shkreli, then chief executive of Turing Pharmaceuticals (he has had to resign since), the “most hated man in America”. That’s quite an accolade.
Old drugs are out of patent, which means any company can make them, and usually the price drops very low because of the competition. But Shkreli was an entrepreneur who saw no reason why selling drugs should be any different from selling cars: corner the market and hike the price. He did it a few times, but the one that caused all the trouble was a very cheap drug called pyrimethamine, trade name Daraprim. Daraprim had been out of patent for a very long time, having been approved by the US Food and Drug Administration in 1953. It is an anti-parasitic drug given to people with toxoplasmosis infection, particularly where they have weak immune systems because of Aids or pregnancy and cannot easily fight it off. Shkreli bought the drug from another company in August 2015 and hiked the price by 5,000%. It went up overnight from $13.50 per pill to $750.
So medical drugs are not like Chryslers or Porsches in the public mind, then?
It would seem not. The anger was clear evidence that people think medicines are a special case and that people have a moral right to affordable treatment. There is quite a tension between that view and the pursuit by pharmaceutical companies of profit for shareholders in the free market.
So how much does it cost to make a medicine?
Ah – that’s the $64bn question. Well, no, it doesn’t cost $64bn to create a drug, but there is a great deal of heated debate about the real cost. The biggest issue is what you factor in. The big pharma companies say you have to calculate not only the (usually cheap) cost of the raw ingredients and manufacturing, but also the cost of research and development of the drug – and also the R&D costs of all the drugs that fail to get to market. Clinical trials to test new drugs for safety and find out how well they work cost millions of dollars, and many drugs look good in the lab or in animals but don’t work in humans – or there are serious side effects. Research pharma companies need to set those costs for failures against the profits from the drugs that work – it’s the only way they can afford to keep looking for new medicines, they say.
The Tufts Center for the Study of Drug Development in Boston, Massachusetts, which produces estimates for the cost of making a medicine every few years, accepts that argument. Drug development is a long process, taking as long as 10 years, it says. It’s expensive. The centre’s latest figure for the cost of developing a prescription drug that gets marketing approval, published in the Journal of Health Economics in March 2016, is a colossal $2.558bn. The analysis, Tufts says, was based at least in part on information from 10 pharma companies on 106 randomly selected drugs that were first tested in human subjects anywhere in the world from 1995 to 2007.
Does anybody contest that figure of $2.6bn per drug?
Yes. There are now a lot of campaigners calling for greater access to medicines in both rich and low-income countries. They are not impressed with the argument that pharma should cost in its failures. And furthermore, they say that often the best drugs were invented in university labs, paid for from public funds, so that should also be taken into account. In these cases, they say, the pharma companies buy up promising potential drugs and do the large-scale testing and development.
But if pharma companies insist they have to charge high prices because of their high costs, what can be done?
That’s been much debated in recent years. The first big access-to-medicines movement was sparked by Aids in Africa. The inequity of thousands dying for lack of drugs while people with HIV in San Francisco were alive and well on medication became a huge issue. Campaigners succeeded in enlisting the Indian generic company Cipla to make super-cheap versions of the HIV triple-drug combinations in 2001 that cost $100 a person a year instead of $10,000.
Why didn’t the rules on patents stop that?
Patents normally apply for about 20 years but have to be registered in each country where the drug is sold. That stops other companies making rival copies that might compete to push the prices down. But India had different intellectual property rules at the time, which meant the HIV drugs patents did not apply there. So India’s generics companies became the pharmacy for the developing world. But the rules have since changed and attempts to make cheap copies of new drugs such as the hepatitis C medicines in India have been subject to long battles in court.
At least health services can save money by using cheap copies once drug patents run out.
Yes. The good news for hard-pressed health services everywhere is that it is now possible to make cheap copies of “biologics” as well. These are much harder to copy, because they contain living cells or blood or proteins, not just simple chemicals. Many cancer drugs are biologics and for some time many doctors had doubts that the so-called biosimilars would work as well as the originals. But now it is clear they do. And the Royal Marsden cancer hospital in London says one year’s use of the first cancer biosimilar, a version of rituximab to treat lymphomas, has saved the NHS £80m. They estimate the health service could save £200m to £300m a year – maybe more – by embracing the biosimilars coming along, which include a version of the breast cancer drug trastuzumab, better known as Herceptin.
But campaigners say patients with cancers and other life-threatening diseases who don’t have loads of money cannot just wait for the patents to run out.
Is it just radical campaigning groups that are trying to get the prices of the patented medicines down?
No. Médecins Sans Frontières, winner of a Nobel prize, has played a big part through its access campaign, which started in 1999, proclaiming “medicines shouldn’t be a luxury”, but the issue has also more recently been taken up in the United Nations. It’s about the cost of drugs that the entire world needs, including new antibiotics the pharma companies have stopped trying to invent because they can’t make a profit on them.
The World Health Organization is strong on access to medicines for all and also has a list of essential medicines that all countries are advised they should stock. A UN high-level panel on access to medicines spent the best part of a year deliberating over the issues, with members from pharma companies as well as civil society and academics. It said the current setup has failed to come up with the drugs we need, whether antibiotics for all of us or cures for Zika and Ebola in low-income countries where there isn’t a market because people have no money (and because some terrifying diseases are rare). It tried to balance the conflicting demands of trade and the right to health in its final report in September 2016, in which it backed “delinkage” of the costs of R&D from the eventual price of the drug. That’s possible if you can have some sort of deal funded by governments or philanthropists that rewards companies for getting a much-needed drug like an antibiotic into the hands of doctors, so they would not make their money from sales.
The UN report has given everybody food for thought and is still being discussed. “The world must take bold new approaches,” it said, but that won’t happen quickly. The majority of big pharma, with the possible exception of GSK, whose then chief executive Sir Andrew Witty was on the panel, was unenthusiastic about the report. That might be mainly because it supported governments’ right to invoke a get-out from the World Trade Organization’s Trips agreement to bypass drug patents and make cheap versions in the interests of public health (the 2001 Doha declaration). But as happened with Aids, each new crisis over access to medicines – whether concerning a common liver disease or a rare cancer, and particularly over the antibiotics that are under threat and vital to all our lives – is likely to put pressure on companies to find ways to bring the costs of medicines down.
Access to Medicines Foundation annual index on how leading pharma companies make their drugs available in poorer countries
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