Saturday, March 16, 2013

Big Pharma is the NHS ugly sister

From Brother Ivo:

The Times' Sam Coates put his finger on it very succinctly when he tweeted this week: "The Department of Health press release on antibiotics chilling. Not often gvt release says something is 'catastrophic threat' in headline."

Brother Ivo may be especially sensitive to this problem having recently taken himself, coughing and wheezing, to his bed. But long before that, he had acquired an unfashionable sympathy for that much maligned industrial sector, Big Pharma.

We could debate which industries have proved the greatest benefactors to humankind, but few would disagree that the drugs industry would credibly make any rationally constructed short list. His Grace's erstwhile communicant Henry VIII would have willingly given away half his kingdom during his latter days in return for that for that which the lowliest subject takes for granted today, and, moreover, feels entitled to sue if the dosage should be less than perfectly titrated.

How extraordinary it is, therefore, that we are so swift to criticise and slow to praise such an important benefactor, and valuable industrial and research sector.

We need to take the advice of the Chief Medical Officer seriously, but unfortunately we tend to deceive ourselves as to how short the time frame is to ensure the next generations of antibiotics arrive on time. It is far too grave a situation to leave to chance. Were the problem limited to Brother Ivo's sniffles, it would be bearable, yet the success of the NHS, which we are constantly expected to eulogise, is underpinned by a lengthy and complex supply chain which conceives, develops, tests, refines and manufactures the drugs that make so much of the NHS viable. Effective infection control is the sine qua non of all modern medicine and surgery.

Big Pharma is the NHS ugly sister.

Nurses can neglect patients in their beds and still retain their reputation as ‘angels’, but the people behind the cures are anonymous techies and, worst of all, their successes are partly quantified by profits. They never receive our thanks, still less the flowers or chocolates. As for those deferring present gratification in favour of investing in the sector, what worthless souls they are, profiting from human misery.

The development of anti-microbial drugs is a colossal and expensive business. It needs a constant throughput of money and talent.

Plant materials are randomly gathered from the most far flung quarters of the world, and tested on cultures of the target bacteria/virus which are then minutely studied and recorded to identify potentially winning variations. The Human Genome will be consulted and molecules computer generated, so that processes can be understood and viable research leads can developed. Dosages and treatment delivery needs to be considered in multiple forms and once sufficient confidence has been established, the lengthy and expensive business of clinical trials and securing patents throughout the world has to be undertaken. The latter is the aspect which often offends those who have never thought about the problem in depth.

The number of drugs that make it successfully to market is tiny. It represents a triumph of hope over experience, not least because whatever skill judgment and technique is brought to bear, there remains a high degree of chance involved. Every non-viable drug represents a very expensive time-consuming and disappointing failure.

Yet here lies the oddity. For all this massive, chancy, expensive and vital development work, Big Pharma enjoys a limited exclusive patent period of just 20 years before all that effort is turned over into the public domain to be manufactured generically in Brazil, India or China - none of whom contributed a penny towards the development costs.

That is not 20 years of pure profit taking however. Pharmaceutical companies need to begin the protection some years before the product comes to market and one adverse reaction during clinical trials can cause delay and potentially prove a catastrophic blow to the financial viability of the product. A typical window for securing a return on investment is 8 -12 years.

The absurdity of this kind of dis-incentivising of scientific endeavour can be put into perspective with one simple illustration. The estate of the author of ‘50 Shades of Grey’ will enjoy copyright protection for 70 years after her death.

We appear to be more keen to incentivise the intellectual input involved in writing a female masturbatory fantasy than rewarding those who might save countless millions of lives.

We have heard the Government response. It is to ‘call upon’ the drug companies to put in more efforts. We need much more than that. The Chief Medical Officer warns: “Antimicrobial resistance is a ticking time-bomb not only for the UK but also for the world. We need to work with everyone to ensure the apocalyptic scenario of widespread antimicrobial resistance does not become a reality."

She asks that we place this threat in its proper place of priority alongside the threat of international terrorism.

The last new class of anti-biotic was discovered in 1987.

To her immense credit, Professor Dame Sally Davis is prepared to think the politically unpopular and call for better incentives for the pharmaceutical industry to develop new drugs. She knows that if we are to develop the drugs to maintain anti-microbial safety, the window for start-up is perilously small. If the major players cannot put the resources into this project within this period, it will not happen.

This is the time to advance on two separate but linked fronts. It will involve international agreement and that is notoriously slow so there is not a moment to be wasted.

We need to give the pharmaceutical companies a greater period of exclusivity for their work: if a labourer is worthy of his hire, then so are research scientists.

We should also consider legislating for a flexible period of exclusivity to assist the sufferers of rare conditions. Tragically, the development of treatments for such people is financially unviable within the current legislative framework. Yet if we were to afford the producers of such cures the same period of intellectual protection currently afforded to EL James, some hope may well appear on the horizon. It will not happen any other way.

Doubtless there will be those who think that none of this is necessary; the running dogs of capitalism will swiftly be eclipsed by the combined philanthropic scientific might of Venezuela, Cuba and North Korea. Brother Ivo will not hold his breath… which he struggles to do pro tem.

(Posted by Brother Ivo)


Blogger David Hussell said...

An interesting, thought provoking and counter cultural argument. Thank you.
It appears to be human nature that when a risk taking commercial process creates a product, of immense human worth, but also very considerable commercial value, the resulting, justified profit is then resented and envied by those who do little or nothing themselves for the benefit of the human family. Yet large profits are highly necessary both to reward and motivate commercial risk taking, and to provide the seed corn for further research and the relief of human suffering.

16 March 2013 10:49  
Blogger Office of Inspector General said...

Hear hear Ivo. A long overdue salutation to the heroes of research. A much maligned industry criticised by us pitiful ingrates and our oft unrealistic expectations from a science that has pushed our lifespan well beyond the average of 50 odd years it would otherwise be.

One understands that a typical research scientist, in his or her working lifetime, will be involved in just one breakthrough, if they are fortunate. Hardly the most cerebrally rewarding of careers, so their dedication should be all the more praised.

Well done everyone !

16 March 2013 11:14  
Blogger Manfarang said...

Read in the newspaper today about some new medicines for diabetes that have side effects including causing pancreatic cancer.
Thank God for insulin.

16 March 2013 12:10  
Blogger TigerO said...

Bro Ivo me thinks that you have successfully been converted by Big Pharma propaganda.

As a veteran of the Pharmaceutical industry myself, and my father before me, I take their propaganda with a big pinch of salt.

Here are some stats for you;

1.Big pharma constitute 20% of the top 100 companies.
2.Their annual profits are 5 times those of comparative sized companies.

From the above one can deduce that they receive plenty of funding from investors because of their huge returns.

Lets look at how big pharma have quietly colluded to ensure maximization of the territories. Since 1985 most of the smaller pharma have been absorbed into big pharma and nearly all production is now concentrated in a handful of big companies. They have, amongst themselves, carved up the treatment areas so that there is little or no competition in cross research. In effect they have diagnostic areas neatly closed off.

Like many big companies in the global arena (witness the Costa, Amazon etc) they have cleverly organised their structures whereby Governments have found it impossible to get their hands on the taxation due.

Just so there is some clarity on the games being played. For a given product the companies register Intellectual Property (IP) globally. Now lets take a manufacturing facility in location A. The plant manufacturing the product estimates the volume of that product for the half year. Products are produced in bulk runs for cleaning and cross contamination reasons. The quantities of ingredients can only be ordered from the HQ of the company. The HQ is normally situated in a tax haven. Now HQ have calculated the manufacture costs at site A. They know the value of unit sale. The invoiced cost of the raw material for the batch is the Sale value minus the input cost of site A. This equates to the profit. i.e. no profit is made at site A. Profit is made in tax haven.

This process is called "Transfer Pricing". It is illegal in virtually every country because it seeks to defraud the host country of taxes.

Now most of the ingredients of the product are common chemicals available at cheap cost and available on the commodities exchange. The only component covered by the IP is the active ingredient.

In the early 1990's the US congress carried out a detailed investigation of this but because of the globalization of the process it was impossible to get to the bottom of the scam because of foreign entities involved.

Lets look at a practical example of the scam. Product A is manufactured in India and has a unit price tag of US$1. Product A is also manufactured in South Africa and has a unit price tag of US$1000. When the South African authorities told the local unit that they would no longer buy from the South African manufacturer but import from India they were told by the manufacturer they would seek an injunction from the courts based on IP and would go further through the ITO.

16 March 2013 13:12  
Blogger Office of Inspector General said...

{AHEM}. “A rightfully maligned industry”

hmmm. Looks better...

16 March 2013 13:18  
Blogger Gerv said...

You are entirely right that there is an imbalance between the term of copyright for literary works and the patent protection for pharmaceuticals. But the issue is that the term of copyright for literary works is far, far too long.

For as long as a work is copyrighted, it cannot enter the cultural commons on which new works are built. The only possible reason for copyright is the practical one of incentivising the creation of work. (There is definitely no God-given right to it - or did the author of Chronicles sin when he cribbed from the author of Kings?) And recent economic analysis shows authors-life-plus-70 is about an order of magnitude overly-long. A copyright term of 14 years (the original length in the US) would be a good start in returning normality to the system, and it could perhaps be made even shorter than that.

There has also been recent work showing that all patents (particularly those on software, but the analysis is wider) are a tax on innovation, not a spur to it. See:

Pharma patents are perhaps the most defensible of all patents, in that they are the epitome of an industry where research costs are high and reproduction costs are low. But, as others have commented here, they still manage to make vast profits even with the current term of patenting. I have no issues with companies making a profit; however, we should be concerned if they are only doing so by charging ill people, using laws that we have put in place to give them monopolies they would not otherwise have.

16 March 2013 14:32  
Blogger Elby the Beserk said...

"Not often gvt release says something is 'catastrophic threat' in headline."

Umm. Climate change?

16 March 2013 16:17  
Blogger Elby the Beserk said...

"Not often gvt release says something is 'catastrophic threat' in headline."

Umm. Climate change?

16 March 2013 16:20  
Blogger TigerO said...

To her immense credit, Professor Dame Sally Davis is prepared to think the politically unpopular and call for better incentives for the pharmaceutical industry to develop new drugs. She knows that if we are to develop the drugs to maintain anti-microbial safety, the window for start-up is perilously small. If the major players cannot put the resources into this project within this period, it will not happen.

The US Congress in their investigations in the early 1990's established that Big Pharma spent 8% on R&D and 24% on marketing.
Here is some interesting reading about what was goes on in the industry in this regard;

16 March 2013 16:37  
Blogger carl jacobs said...

The problem, of course, is that health care is a commodity. If you say this to the wrong audience, you will induce paroxysms. The response will come back "Health care is a fundamental human right!" No, it's not. You can't change the nature of a commodity by changing its name anymore than you can change the nature of a cat by calling it a dog. In fact, the whole debate between public and private health care is really a debate about managing scarcity. Do you ration by price or availability? That in itself admits to the fact that health care is a commodity.

But people don't think in macro-economic terms about themselves. They think "I am sick, and I want to get better." They don't think of their own suffering and death in terms of supply and demand. They think "My life is of infinite value (to me at least) and therefore the laws of economics should not apply (to me at least)." In absolute economic terms, a man's life is not even close to infinite value. And therein lies the problem. Pharmaceuticals are developed with macro-economic goals in mind. But people use those drugs on an individual level. The individual who dies today is not greatly concerned about the millions who will live tomorrow.

There is also something else at work that is much more subtle. Drugs - especially antibiotics - have isolated people from the omnipresent shadow of death. My great grandfather once lost two children to pneumonia within two weeks of each other. That was not an uncommon occurrence in the 19th century. Such a tragedy is a very rare in the developed world today. And this isolation from death has made an atheistic worldview much more palatable. Pharmaceuticals keep the wolf outside the door. It allows for the expectation of a long and healthy life in which to seek meaning through experience. It's much easier to deny God when the expectation of death is safely kept far in the future.

Man has made of his health an idol. He now believes that any illness is a violation of his true nature. He doesn't see illness as a result of sin. He sees it as the result of man not yet sufficiently progressed. The ironic thing is that medical progress against illness has simply made dying that much harder. We demand long life but fear the toll that time inevitably exacts. We fear incapacity and dependency, and dementia. We see ourselves as independent by nature and dread the humiliation that attends dependency. We know intrinsically that technology only allows us to delay the inevitable, but man will worship any god if only that god will satisfy man's immediate demands.


16 March 2013 17:25  
Blogger Brother Ivo said...

Brother Ivo is well aware of the criticisms that may be made of Big Pharma's behaviour, but whatever it may do to exploit / engage with / evade the legislative framework, needs to be viewed with the clear understanding that we are
removing for our purposes, the value they created.

If we want new antibiotics, Brother Ivo is at a loss to imagine any other mechanism more calculated to achieve purpose than giving Big Pharma a proper incentive to do its work.

16 March 2013 17:41  
Blogger non mouse said...

Kudos for bringing up the subject, Ivo! Well done.

Though I think it's one of those highly complex, tangled affairs. As comments here already suggest, we can only begin to scratch one small facet of the pharma iceberg. And I think (know, even) that the real heavyweights, the executives in the biggest companies --- well they aren't telling.

On the germination and flowering of academic insight itself: maybe it's fair to infer that we have a problem insofar as socio-economic theorists and power-mongers try to control genius -- because genius is what it takes to conduct research that is both meticulous and knowledgeable; to make connections; and then to synthesise results to the point of "discovery." Of course, we need further to refine our understanding of what genius actually is.

For now, suffice it to observe that - apart from withholding antibiotics - pharmaceuticals haven't presided over many major breakthroughs since Fleming (1928) identified that mould. And even his first-published findings attracted little attention.

I think it signifies that negative reaction to hard-working and original ("unorthodox") thinkers often follows this pattern. I mean, Galileo wasn't the only one to suffer opprobrium. For example: Einstein was initially ignored; Whittle had trouble obtaining funding; and even as we did terrible things to poor Turing, Flowers had to fight to be taken seriously ...

So maybe power-freakery and the search for truth aren't as compatible as big business would have us believe? It's far more comfortable to keep promoting their friends and favorites (some of whom are very bright), while disabling the "misfits" and "mad" ones who threaten to 'compete.' The 'elite' can (and do) plagiarise their work eventually, after all.

Add to that the present-day decline said lefty-librul-elites have engineered in educational standards --- and the socio-economic mess they preside over (in the 3rd world too) --- Well, I think you're quite right. It's unwise to hold one's breath in anticipation of incipient progress!

16 March 2013 17:52  
Blogger non mouse said...

Oh, there may be another important aspect of discoveries and advances: Motivation. They tend to respond to great social need or fight for survival - and that's why so many of them surface in wartime. Many of our own discoverers served their time in the armed forces, during WWI & II.

Having diminished massive war efforts, national pride, and plagues; having sated the masses with bread and circuses ... what's left for serious minds to seek? ["Oh Brave New World" indeed.*]

cf both WS (The Tempest) and AH Brave New World.

16 March 2013 18:08  
Blogger TigerO said...

carl jacobs said;
"Health care is a fundamental human right!" No, it's not.

Well said and its something that many in the health professions have been saying for a long time.

To many it this sounds very harsh. In the period 1980 -2000 the percentage spend on pharmaceuticals has gone from 15% to 33%. The annual inflation in price of original pharmaceuticals (not generics) has risen annually at over 20%. Generics and generic prescribing has kept a lid on costs particularly in the UK.

The International Pharmaceutical Manufacturers Association has driven the cost saving of original product against other intervention strongly over the period and continues to drive new innovations against existing generics. Where studies have been done they have found that many of the older cheap treatments are as successful as the newer ones.

Back in the early 1990's I produced a paper for the Pharmaceutical Society of South Africa on the impact of HIV/AIDS on medicine spend in South Africa. Based on the exponential spread of the disease in Southern Africa I estimated that spend in treating predatory diseases associated with the pandemic would be 4 times bigger than the spend on all other existing diseases. Note that this did not include spend on retrovirals.

HIV/AIDS is an example of disease that relates to individual behaviour. By embarking on proper education and changing African society's attitude to their promiscuous behaviour would counter the spread of the disease. They choose to accept this behaviour as normal custom and try and deal with the consequence of the disease. This decision could ultimately lead to the entire economy grinding to a halt. The infection rate is unofficially in the region of 25% of adults and initial estimates were that for every 10% there would be a drop of 1% of GDP.

So we get to these situations where diseases like HIV/AIDS, alcoholism and obesity are social problems and not medical problems. At some point the politician has to make the difficult decision as to the responsibility involved for the sake of the economics.

16 March 2013 19:29  
Blogger Manfarang said...

Non Mouse
"Add to that the present-day decline said lefty-librul-elites have engineered in educational standards --- and the socio-economic mess they preside over (in the 3rd world too)"
3rd world too?
The rotten education system was a result of years of military dictatorship.
I get my medicine from the GPO and it is not too expensive.The government hospitals give better treatment than the private ones.
Anyway on this day I raise my cup of green tea (jasmine flavoured) to you all.

17 March 2013 10:11  
Blogger non mouse said...

Manfarang ... thanks for that; it seems we agree on the damage marxism has done to education and all the infrastructures it informs.

I didn't, of course, specify any 3rd world countries, let alone all of them - however we may be defining them! Many of those are under communist influence, though, whether or not they are military dictatorships.

And - I'm curious - if your government services are better than private ones, is that a function of better funding for one, or of more ('big' business) corruption for the other? Or is it because of military discipline?

17 March 2013 20:33  

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