Barely, MD

Drug companies deserve their billions in profit.

The outspoken public is largely united against the pharmaceutical industry and the cut-throat economics that govern drug sales – and with good reason. As health spending in the United States quickly approaches 20% of GDP, it seems perfectly justified to ask why the ten drug companies listed on the Fortune 500 far exceed all other sectors in net return. Couple that corporate image with documentaries about patients who cannot access lifesaving medications and you have an image of an evil, soulless corporatocracy. Of course, it is of little help that Medicare Part D, in all of its convoluted bureaucracy, was conjured up by PhRMA lobbyists to squeeze every last dollar out of public health coffers.

Granted, it is difficult to sympathize with businesspeople who treat lifesaving compounds as “products” and make billions in the process, but who is really to blame? Or does the current state of affairs even merit assigning someone the blame?

Daniella Vasella, the author of Magic Cancer Bullet and the CEO of Novartis makes a compelling case for the stance of his industry. Gleevec, a magic bullet used to treat chronic myelogenous leukemia (CML) is made by his firm and costs around $30,000 USD per year. It is unclear whether Gleevec can cure CML, so for now, patients undergoing treatment can expect to stay on the drug for the entire course of their natural lives. As one might imagine, public outcry over the exorbitant cost of this drug has been loud, relentless and, given the stakes, emotionally charged. In his book, Vasella notes that prior to the introduction of Gleevec, CML therapies using interferon and Ara-C were similarly expensive. Moreover, so few people suffer from CML in the United States (no more than 8,000 at any given time) that prices must be high to justify the resources invested in drug research and development. To broaden the argument, Genzyme was recently granted approval to sell Myozyme, a treatment for Pompe disease, for $300,000 USD per year.

Indeed, it currently takes an average of 12 years and $880 million to bring a drug to market, and the entire process is prone to collapse at any point in the process. One poor trial result, one acutely adverse reaction, or one unexpected toxicity study and a potential drug can become trash. Aside from the high risk involved, the industry experiences tremendous failure as only 1 of 10,000 compounds actually makes it to the market. It would seem logical in any other industry that such poorly stacked odds should promise tremendous reward to those rare few who do manage to succeed – but in medicine things are different. When a “miracle cure” is discovered, the patient population feels a right to benefit from the innovation. That one’s life can hinge on ingesting a single pill is such an abstract and wonderful notion that it is difficult to grasp how market-theory and econometrics may become barriers to life.

The U.S. government has taken some action in alleviating the market pressures by legislating the Orphan Drug Act. This piece of legislation allows for the speedy and relatively inexpensive approval of drugs that treat rare diseases. Without this law, drug companies would have little incentive to develop products to treat CML and similarly rare diseases. The problem, however, is that the savings do not appear to filter down to the consumer. Orphan drugs are still exorbitantly priced and patients are still pressured out of the market.

Fortunately, it seems some drug makers do have a soul. Novartis has enacted a patient access program whereby those CML sufferers earning less than $43,000 per year are offered Gleevec for free. Not even for the minimal production cost – for FREE. As reported by Novartis, there are currently over 10,000 patients receiving this benefit and more are enrolling each year. Other firms have similarly arranged programs where patients who cannot afford lifesaving treatments are subsidized by the companies themselves. Indeed, the programs are probably not perfect and one can be certain that many patients fall between the bureaucratic cracks, but the numbers do speak loudly. There are impoverished, uninsured, very sick patients who are getting their drugs for free, solely because some drug companies are aware of their responsibility to society. The argument could be made that this goodwill is, in effect, a public relations campaign to ensure that the firms are not derided for withholding live-saving treatments – and this may very well be true. A company that willingly allows people to die or economic reasons will not have a very happy consumer base. It will also not hold as much sway in government and will certainly have few friends in its own industry. But how many other private sectors offer their products for free when consumers are in dire need?

The pharmaceutical sector in the United States certainly makes large profits, sometimes to the point of obscenity, but is that its fault? Profit-minded shareholders ultimately run all of these firms and the actual people on the lab floor have little to do with pricing and marketing. The existence of drug access programs run by the firms themselves seems a cry for help directed at legislators and regulators – they are the only ones poised to do something about the ludicrous state of healthcare economics in this age.