By Conor J. Lynch
Out of all big industries making billions in profit, the pharmaceutical is probably the most ethically questionable.
These handouts, which allow companies to hold legal monopolies on sometimes life-saving medicines, will cause preventable suffering and deaths around the world. This is especially true for the developing countries in Asia. For example, the Presidents Emergency Plan for Aids Relief (PEPFAR), which relies mostly on affordable generic drugs, would be forced to buy more expensive patent drugs and would greatly diminish access.
What makes these provisions particularly infuriating is that Big Pharma is already doing quite well with the way things are. The pharmaceutical industry is one of the most profitable around, but in capitalism, enough is never enough; regardless of how many lives are at stake. In 2013, the pharmaceutical industry had an astonishing 23% profit margin, equal to that of banks. Twenty year patents allow pharmaceutical companies to overcharge for medicine, even when it is for a terminal illness; hence the bankrupting nature of getting cancer without health insurance.
Out of all big industries making billions in profit, the pharmaceutical is probably the most ethically questionable. Okay, for less consequential conditions like erectile dysfunction, profit is fine. But when companies that make billions every year charge astronomical rates for life-saving medicines, there must be a debate.
In 2013, 100 experts in chronic myeloid leukemia wrote an essay that examined the high prices of cancer drugs and argued that companies had moral obligations to make them more affordable. In 2012, out of the 12 new cancer drugs approved by the FDA, 11 were priced at above $100,000 per year, which is nearly double that from a decade earlier, when the average was $5,000 a month.
When it comes to medicines, terminal illness drugs are as inelastic as they come, kind of like oil in the energy market. When somebody’s life is at stake, they will gladly go bankrupt if necessary. It is the cruel and psychotic drive for profit that leaves very real suffering in its wake. “When do you cross the line from essential profits to profiteering?” asked Dr. Brian Druker, Director of Knight Cancer Institute, referring to the cancer drug Gleevac that made billions in profit.
Me-too defenders of profiteering
The general argument that comes from defenders of this profiteering is that it costs a great deal of money to develop new and effective drugs. This is true, finding new chemical entities and bringing new drugs to the market is an expensive endeavor. Even when new chemicals are found, it takes years of testing, and the majority of them are eventually found to be ineffective or unsafe. It can be a risky business, and deserves to be rewarded. But to say that these highly profitable companies need their great profit rates for research and development is simply wrong.
The truth is that a great deal of research funding does not come out of their extravagant profits, but from government and university funding (i.e. our tax dollars). The first phase of developing a new drug, called basic research, has been estimated to be 84 percent funded by governments and private universities. While an industry-funded study from 2003 estimated that the cost of bringing a new drug to market was close to $1 billion, a new study estimated the real cost to be closer to $59 million, after outside funding and tax breaks are taken into account. Also, a great deal of research is not committed to creating new landmark drugs, but what are called me-too drugs. Have you ever wondered why there are so many variations of anti-depressants? Prozac, Celexa, Lexapro, Paxil, Zoloft, etc. These are all drugs in the same SSRI class, with slight differences in effectiveness or side effects. It is much more affordable for companies to create and patent me-too drugs than brand new ones, which some argue stifles innovation.
Another important reality is that pharmaceutical companies spend much more of their revenue on marketing than R&D. A study reported by the peer-reviewed medical journal The BMJ estimated that for every $1 spent on basic research, $19 goes to promotion and marketing. In the United States, spending on marketing is even more effective, because companies can advertise directly to consumers, which is banned in most of the developed world. This clearly shows where their priorities are in Big Pharma.
TPP tiptoes forward by stealth
The negotiations for the Trans-Pacific Partnership are quietly avoiding public discussion, and it’s easy to see why. Extending patent rights for important life-saving drugs is a clear corporate handout that would greatly effect international access and most definitely cause preventable deaths. The clear objective here is to increase industry profits; plain and simple. This is not surprising, that’s what private industry does, but there is a serious moral dilemma here.
We have already seen that research costs are widely exaggerated by pro-industry advocates to justify the already astronomical profits. So what is the excuse here? There simply is none, because research and development has always been the only excuse. When Jonas Salk developed a safe vaccine against polio in 1955, he was asked who owned the polio vaccine, and astutely responded, “there is no patent. Could you patent the sun?” When it comes to fighting diseases and developing medicines for the better of humanity, there shouldn’t even be patents.
But we are going in the opposite direction. Not only will these provisions extend patents, which monopolize crucial medicines and exploit illness, they will also give companies the ability to renew patents through what is called ‘evergreening,’ by altering the formulas ever so slightly. At this rate, it is only a matter of time until the sun, water, and air we breathe become unaffordable commodities monopolized by private industry. Who knows, maybe they are discussing it in the negotiations right now.
Conor J. Lynch is a writer living in New York City. He regularly blogs on Daily Kos about politics, economics, and science, and has also been published by the Richard Dawkins Foundation. On twitter.
This article originally was published February 14, 2015 at openDemocracy.net, and is republished under a Creative Commons Attribution-NonCommercial 3.0 licence.