Why Is The US Government Letting Big Pharma Charge Insane Prices On Patents The US Owns?

from the big-questions dept

As we’ve discussed plenty of times in the past, when the federal government creates something that could be covered by copyright law, US copyright law requires it to be put into the public domain for the benefit of the public. I’ve never quite understood why the same is not true for patents. Instead, the US government does big business licensing off patents. While some may argue that this is a good revenue generation scheme for the US government (which theoretically should lower taxes elsewhere), it has significant downstream effects. And that’s especially true in the healthcare market.

As we’ve discussed before, you’ll often hear big pharma insisting it needs patents because it takes some ungodly sum to research and bring a patent to market. That number goes up every year. By a lot. In the early 2000s, the numbers was clocked at $800 million. Last year, drug companies were now claiming $2.7 billion. But much of that is a total myth. Indeed, research shows that big pharma is often adding up the costs that the federal government itself spends on encouraging new drug development and adds it to the total cost as if that cost is borne by the pharmaceutical industry, rather than the taxpayer.

And yet, even though the US taxpayer tends to pay for a significant share of the research and development in new drugs, big pharma companies which take over the project down the road get to keep 100% of the profits — and, thanks to a totally broken patent system that gives them a literal monopoly, they jack up the prices to insane levels (and this works because of our idiotic healthcare setup in which no one ever knows the cost of what we’re buying, and insurance companies act as weird middlemen).

I’m reminded of all this in reading a new piece by Dr. Eugene Gu, talking about the absolute insanity of Truvada, an important drug for HIV patients, which is controlled by pharma company Gilead Sciences. Gu outlines a story that reflects exactly what we discussed above. Gilead charges impossibly high fees for Truvada even though most of the development was paid for by US taxpayers:

While the generic version of Truvada is available in many countries outside the United States for around $840 annually per patient, Gilead uses its patent on the drug to charge Americans close to around $24,000 annually per patient. That’s for the exact fixed dose combination of tenofovir and emtricitabine that costs around $60 annually per patient to produce.

[….]

What’s infuriating is that American taxpayers funded much of the research and development for Truvada. So much, in fact, that according to the Yale Global Health Justice Partnership it’s the CDC that actually owns the patent for the drug. So Gilead has basically been making $3bn a year selling a drug that actually belongs to Americans themselves.

And, as Gu notes, the situation gets even more ridiculous and more corrupt:

And that’s not all. Gilead recently partnered with Secretary of Health and Human Services Alex Azar and President Donald Trump to roll out a public relations scheme to fool the public. During this, Gilead declared that it would be donating enough Truvada to treat 200,000 patients each year until 2030. While it sounds great on the surface, that basically means it will donate around $12m a year while making billions in profits and getting a tax break.

There are all sorts of reasons why our healthcare system is truly messed up, but the fact that taxpayers pay for the development of critical life saving drugs, but then the government allows big pharma companies to effectively control the patent, extract massive monopoly rents, and then give them tax breaks for donating a tiny percentage… seems particularly fucked up.

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Comments on “Why Is The US Government Letting Big Pharma Charge Insane Prices On Patents The US Owns?”

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45 Comments
Anonymoussays:

Insulin

You want to see a particularly stupid version of this?

Insulin was first used to treat diabetic patients in 1922. Biosynthetic insulin was first derived in 1978. Any patents on the drug itself, or the methods used to create it, have long since expired.

The wholesale cost of insulin (per 1,000 iu) is about US$2.30; in the UK, that amount retails for about US$9. In the US, the cost for that amount is $134.

A 5700% profit margin, on an off-patent, life-saving drug, just by the sheer logic that people with diabetes will either have to pay up or die, is evil, no mistake about it.

Qwertygiysays:

Re: Re:

I am not sure whether you left out a word or are speaking of something that is mostly unrelated to the issue. Prescriptions are not prescription medication — there is a big difference. A prescription is only a piece of paper, no more.

It functions much the same as a driver’s license: when you get your driver’s license, you are now legally able to drive a car. You still have to go buy a car, though.

When you get a prescription, you are now legally able to buy a drug. You still have to go buy the drug, though.

While free prescriptions are still a very good thing (I have to pay on average of $20 per prescription, in doctor’s appointment fees) that eliminates the fees to visit the doctor, not the fees to obtain the medication from the pharmacist.

Anonymoussays:

Re: Re: OOO! OOO! OOO!

Because no one ELSE in the world would pay these prices unless FORCED to…

Who’s being forced? People have a choice. They can choose to do without, for example. Or maybe even die. But don’t dare try to work around the system. That’s what the DEA exists to prevent. See how that works?

Besides, who else is going to look out for the rich? Big houses, fancy cars and yachts don’t pay for themselves, you know.

hegemon13says:

Re: Re:

You didn’t read the article at all, did you?

"…a company that innovated a drug…"

Or, you know, not. At all.

From the article: "What’s infuriating is that American taxpayers funded much of the research and development for Truvada. So much, in fact, that according to the Yale Global Health Justice Partnership it’s the CDC that actually owns the patent for the drug."

Anonymoussays:

Re: Re: Re: Re:

TD regularly rails against patentees, saying that the act of invention palls in comparison with the act of innovation. Here some people at the CDC appear to have invented something during the course of primate studies, but done nothing thereafter to take a drug to market for human applications. IOW, Gilead appears to have innovated as has been repeatedly and consistently applauded here. Why an innovator is now being lambasted is not readily apparent.

Anonymoussays:

Re: Re: Re:2 Re: Re: Re: Re:

No, it is because of the total absence of relevant facts allowing one to ascertain the relationship, if any, between Gilead and the cognizant federal agency as it relates to Truvada. The only things we know is that the CDC did some research and eventually received some patents, and that Gilead performed research and conducted clinical studies that culminated with the marketing of Truvada.

Virtually all of the comments here rely on facts that are not in evidence.

ECAsays:

Re: Re:

ok..
A PEN, not the drug goes up in Price over 600x..
This is the most popular pen, most available, and Hospitals get a cut and so do Doctors for prescribing this PEN…Where are the other pens? that cost 600x less?

WOW, a pharma buys a drug from a college or Uni… easy to make and easy to distribute… School dont get anything more and the Pharma charges 100x the price that the School could have it made for..

Pharma dont want to loose a Drug that makes Lots of money, to Generic, so add’s a Stomach aid, and remarkets it and has NEW IP..and keep the price up..

Drug goes generic, Pharma Wages war on Generic maker, who settles, because he aint making TONS of money on the drug, give PART of his profit to Pharma, so they stay off his back, and he raises the price of generic..

Drug goes generic, pharma loved that drug, it has many uses, so Creates 2nd company to make generic, and over prices it, and Chases all the others trying to MAKE the generic out of market..

Should I continue?? WHAT IS FAIR??
We could goto Mex/can and get the drugs <1/2 the prices, and FORCE our system to COMPETE. But Pharma has a law to fight that also..

ECAsays:

When the capitalist has enough...NEVER

Most of this is based on a few things..
When the Capitalist is gaining enough money FROM consumers that he CAN buy the gov. and not loose his own money..HE WILL.
We are stuck in a no rules card game…WE used to be the cards, and now they dont need/want us. They want to SPREAD out to the rest of the world, and they are. Adding more and more cards, as the old cards are worn nad falling apart, and wont take much more.
Then we can talk about the stock market..Look this up if you wish, but a STOCK in a corp is worth nothing anymore. Because a Stock certificate can be given with Nothing in it. you get no vote, you dont even get money back if they DONT want to give money.. REALLY. its a long term long with 0% interest, and NO time limit. It used to be, that you Could own a part of a business, and its profits.
The idea of being on the TOP, used to mean you Shared the profits, and not much in wages…NOW you get wages, bonus for those that did the work, Extra bonus because you did something, AND the PROFIT.. And if fired, you get severance Equal to 10 years retirement..
At least Sports teams have a life expectancy..

then lets talk Gov.
What is a 40 year politician…DEAD, there should be no such thing.
What is a 20 year politician..retired, there should NOT be such a thing.
What is a ballot box…a Choice between 2 person you probably have never seen or met, and would rather vote NONE OF THE ABOVE…but that isnt a vote, so they Count and see who got enough votes, not counting yours..
being a politician, is a family business..(most time) 1 knows the ins/outs and passes it to the next..with all the corruption.

the good politicians QUIT. starting back in the 70’s when they voted a SALARY, for themselves. and has been Falling ever since. Before that time they worked in gov, about 6 months out of the year, and then WENT HOME to work (mostly farms) and the gov. paid travel(bus/train) and a few other expenses while in DC. nothing more. They didnt get paid, then bonus’s, a 2nd or 3rd home, and retire in 20 years to 3/4 wages.
they pester the rich and corps to give money for the next Election they need, and pay it back by cutting regulation/restriction and looking the other way.. and not paying attention to those that ELECTED THEM..

I wish for…
a button that says NONE OF THE ABOVE on election day, COUNTED..
A VOTE of "No confidence" of our gov. and representative..
they dont like these options. and have voted them Down many times in the past. And they have NO RIGHT to do that, its OUR VOTE.

Anonymoussays:

Re: Re: Re:

The forms of society are not mutually exclusive. But let me clarify it for you, because you seem to have a few misunderstandings.

Fascism requires all of the following things:

  • promotion of violence (strongest and the best, conquer everyone who is lesser)
  • complete government control (control where you live, control where you work, control what you read, and they own all of them)
  • anti-liberalism (no government-funded ways to make life easier), anti-conservatism (doing what is best for the state, even if it means destroying the past status quo), and anti-communism (no government-endorsed sharing and distributing of resources, government owns all)

Capitalism requires only one thing:

  • individuals have ownership of property, which can be traded for other property
Qwertygiysays:

Re:

A "None of the above" option generally results in having no elected officials for long periods of time, resulting in the current ruling class maintaining an "interim leadership" for long periods of time at best. At worst, the state dissolves into political chaos from lack of functional government.

In short, "None of the above" is a vote for anarchy — "an" – no, "archy" – government. And as has been proven many times, anarchy is not a sustainable method of government. Someone will gather force and take over eventually, and it will probably not be someone with good intentions.

A better solution is a ranked vote system, where you can list your candidates in preferential order, such as within Australia. This way, you can still vote for your Libertarian or Green candidate above the Democratic candidate you don’t like as much, above the Republican candidate you really don’t like. Candidates are then eliminated by least number of votes, and when your #1 candidate is eliminated, your vote counts for your #2 candidate.

Additionally, there is no need for the biggest source of corruption in elections: party primaries. In our current system, if two Democrats ran, then the vote would be split between them — say, 35% Bernie, 15% Clinton. But even though the Democrats had more votes, that leaves 50% for a lone Republican candidate. So the Democrats have reason to ensure only one of them runs.

But with ordered voting, the voting order could be, for example, Bernie (D), Warren (D), Biden (D), Clinton (D), Rubio (R), Trump (R). The four Democrats do not lose ground to the two Republicans just because some people put Biden-Warren-Bernie-Clinton-Rubio-Trump and other people but Warren-Clinton-Biden-Bernie-Trump-Rubio. All three orders would result in a vote that does not directly or indirectly support any Republican candidate over any Democratic candidate.

Personanongratasays:

Business as Usual

There are all sorts of reasons why our healthcare system is truly messed up, but the fact that taxpayers pay for the development of critical life saving drugs, but then the government allows big pharma companies to effectively control the patent, extract massive monopoly rents, and then give them tax breaks for donating a tiny percentage… seems particularly fucked up.

This is the creed of the criminal class – they take the dough and you take it in the ass.

Medicinal Chemistsays:

Details are important

Upfront disclaimer: I work for a small pharma company (I’m one of the guys in the lab trying to design new drugs), so take my comments as you will.

It’s really worth reading the linked pdf in the article that has the summary of the GHJP findings. It’s a little dense if you’re don’t have some familiarity with pharmaceutical patents, but it’s ultimately only two pages and paints a rather different picture than the summary.

Before going into details, it’s worth laying out a general picture of what’s involved in pharmaceutical patents. There’s almost never just a single patent around drugs, but multiple overlapping patents. The most fundamental type is a composition of matter patent, which describes what the actual chemical is that’s the active ingredient in the drug. Beyond that, though, you’ll also usually have formulation patents (describing the crystalline form if there is one, and any additives that are compounded with the active ingredient to form the actual drug product sold), process patents (describing the manufacturing process for making the drug product on scale), and sometimes patents describing new uses for drugs.

The patent situation around Truvada is particularly complex. Truvada is actually a combination of two different drugs- tenofovir disoproxil and emtricitabine. Tenofovir was actually patented back in 1984 in the Czech Republic; while it showed activity against HIV in in vitro studies, it doesn’t look like it was ever taken into clinical trials to try to get it approved as a drug. It wasn’t until it was off-patent, in 1997, that it was shown to have anti-HIV effects in humans through a collaboration between Gilead and UCSF. However, tenofovir itself has poor pharmacokinetics (how the body absorbs, distributes, and metabolizes a drug), and because of that Gilead modified it to create a pro-drug, tenofovir disoproxil, which is what is used in Truvada. Gilead holds the composition of matter patent on tenofovir disoproxil, although I believe this patent has either expired or is close to expiration.

Emtricitabine was discovered independently by a team of researchers at Emory University, and was then licensed to a small company called Triangle Pharmaceuticals for development in 1996. Triangle Pharmaceuticals was acquired by Gilead in 2003, right around the time development of emtricitabine was finishing up (it was also approved by the FDA in 2003). The composition of matter patent on emtricitabine has also expired.

There are also formulation and use patents for the combination of tenofovir disoproxil and emtricitabine as a fixed dose therapy, which is what could be considered the actual "Truvada patent". Gilead owns this patent and it was due to expire in 2017, although Gilead was trying to get it extended (I’m not fully caught up on the status of this fight).

The patent the CDC owns, which this article discusses, is a use patent, describing the use of Truvada for pre-exposure prophylaxis (PrEP)- in plain language, treating people who are not infected with HIV yet to reduce the risk of infection if they’re exposed to the virus. There are actually three patents the CDC owns around this, the first of which was issued in 2015. What this patent would allow the government to do (which they have currently declined to do), is to file patent infringement suits against any companies (Gilead and generics) that have been selling Truvada specifically for the purpose of PrEP from 2015 and onwards. If the government prevailed in these infringement suits they would be able to ask for damages plus impose licensing fees on any further sale of Truvada for PrEP. They could alternatively offer to waive these damages and fees in exchange for concessions (such as the companies selling the drug at reduced prices). What the actual effect of these actions would be depends on the details of the sales of Truvada- it could result in reduced prices if agreeing to that condition proves the most profitable course for the companies involved; it could result in higher prices if the government just decides it wants a cut of the profits; it could result in Truvada no longer being offered for PrEP if there aren’t enough PrEP sales to make the hassle of continuing to deal with the situation worth it to the companies involved.

I’ll let everyone sort out their own feelings on how they believe the government should act in this situation.

For those who have managed to read this far, thank you for taking the time to do so, and I hope that this has proved informative, and above all has demonstrated the importance of understanding the finer details in situations like this. As someone who works in the pharmaceutical industry I’d just like to say that there are a lot of good people and companies in it that are trying their hardest to do solid science and develop new medicines for people, while contending with many of the harsh economic realities in the industry. There are also, unfortunately, also a lot of bad people and companies in the industry who are trying to use the deficiencies in our healthcare systems, legal systems, and regulatory systems to wring out as much profit as they can regardless of the cost to patients (both monetary cost and health costs). The reasons for most of the issues with healthcare and the pharmaceutical industry are complex, with the enabling factors cutting across many legal and regulatory areas, and because of this it is important to take the time to try to understand the details in order to meaningfully discuss the source of the problems. I would implore those reading to dig deeper on stories like this to better understand just what the actual problems are.

Anonymoussays:

I was watching a documentary on the fight against polio and was impressed with the manner in which the problem was addressed. There was no sky high pricing, there was a concerted effort to find a cure. There were several people that could have taken advantage of the situation and charged whatever they please, but they didn’t. If they had, I imagine they would’ve been tarred and feathered but I doubt that is why they gave the "IP" to the public.

My … how things have changed.

Anonymoussays:

Re: Re:

The false dichotomy projected by GOP and friends has become a bit tattered over the years and perhaps is need of replacement. Is it time to put to rest that over used derogatory term "socialist"? It’s not like most who use it understand what the word means or anything about the political system it describes.

The choice (as if we have one) is not between capitalism or socialism or whatever … it is between whether one acts like a human being or like an animal.

Uriel-238says:

Re: Re: Human Beings and Animals

We human beings do like to pretend we are not animals ourselves, that we are somehow removed from them, that by implication we’re superior to the other inhabitants of the earth.

Generally, when we do so, when we say that this group is behaving as humans while that group is behaving as animals, its a celebration of our capacity to reason, or rather, a derision of those who fail to do so.

But while we’re capable of reason, we suck at it. Not just because we have a library of biases that steer us away from reasonable, measured judgement, but because it takes effort, and we have countless instincts that that we tend to favor over cold reason, so we only engage in rational thought when we stop and will ourselves to do so. That being, infrequently.

This is how trained scientists will apply evidence-based logic to all religions except their own or how we vote for candidates in diametric opposition to our personal best interests. It’s how lie-fueled tyranny can sustain a relatively high approval rating even when it runs rampage over the rights, resources and capacity for happiness of the people it rules.

So statements that suggest some of us are animals and some of us aren’t serve as exemplary of our tendency to fall to our primal natures rather than engaging our capacity for rationality.

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