Bayer Fights India's Compulsory Licensing Of Cancer Drug By Claiming It Spent $2.5 Billion Developing It
from the ORLY? dept
Back in March last year, the Indian government announced that it was granting its first compulsory license, for the anti-cancer drug marketed as Nexavar, whose $70,000 per year price-tag put it out of reach of practically everyone in India. Nexavar’s manufacturer, the German pharmaceutical giant Bayer, naturally appealed against that decision, and the hearing before the India Intellectual Property Appeals Board (IPAB) has now begun. Jamie Love has provided a useful report on the proceedings; here’s his summary of what’s at stake:
The outcome of this trial, which focuses on the cancer drug Nexavar, is a matter of first impression for the IPAB, and is expected to set precedents on a wide range of issues, including the permissible grounds for granting compulsory licenses, the relationship between the India patent law and the TRIPS Agreement, and the setting of terms and conditions for the compulsory license, including the royalty rates.
Clearly, then, this is a crucially important battle for both sides, and Bayer has started throwing around some huge R&D numbers in an attempt to convince the IPAB that it should be allowed to retain its monopoly in India to recoup those costs:
Bayer presented a January 9, 2013 affidavit from Harold Dinter which made the claim that from 1999 to 2005 Bayer had spent “2 billion euros (approximately US$ 2.5 billion) in the identification and development of anti-cancer molecules leading to the successful approval of Nexavar in 2005.” Dinter did not provide detailed support for the numbers, but said they were based upon Bayer’s general R&D outlays for anti-cancer drugs, including but not limited to Nexavar, and that the estimate was supported by a new December 2012 study by Jorge Mestre-Ferrandiz, Jon Sussex and Adrian Towse, published by the Office of Health Economics (OHE). Despite its name, the OHE is not part of the government, but rather a largely industry funded private consulting firm. The study itself was paid for by AztraZeneca. Dinter and Bayer’s lawyer also made extensive reference to the work of Joseph DiMasi, an academic who is also a drug company consultant.
In other words, it’s the usual “don’t worry about the details, just take our word for it” lack of transparency that characterizes the entire pharma industry. But this $2.5 billion is insanely high, even for an industry that regularly inflates the outlay on drug development by an order of magnitude. As well as the generic implausibility of such a high figure, Love cites a number of specific reasons why it’s extremely unlikely. You can read the details in his post, but here’s a key section:
Bayer’s partner in the development of Nexavar is Onyx Pharmaceuticals. Onyx published annual estimates of its R&D spending on Nexavar.
…
Bayer paid for all research from 1994 to 1999 ($26.1 million), and this included research on several compounds in addition to the one now marketed as sorafenib/Nexavar. From 2000 onward, Bayer and Onyx split the R&D costs 50:50, and Onyx’s share of the R&D costs were $134.8 million. The outlays on the entire R&D program that lead to the 2005 approval of Nexavar for Kidney cancer were $26.1 + (134.8 x 2) = $295.7 million. Of the $295.7 million, only a fraction was spent on the development of Nexavar for kidney cancer, and some of that benefited from a 50 percent tax credit under the US Orphan Drug Act.
To the put the entire $295.7 million into perspective, ignoring the tax credits, that represents a little more than one quarter of the current global sales for sorafenib/Nexavar, a product that will maintain its monopoly in most markets through 2020.
$295.7 [million] is also just 11.8 percent of the $2.5 billion estimate that Bayer wants the IPAB to accept as its R&D costs.
No wonder that Bayer was unwilling to explain how it arrived at that extraordinary figure. But it’s hard to see how the pharma company expects to win this case citing numbers that are basically an insult to the intelligence of India’s experts.
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Filed Under: drugs, india, ipab, lies, nexavar, patents, r&d
Companies: bayer
Comments on “Bayer Fights India's Compulsory Licensing Of Cancer Drug By Claiming It Spent $2.5 Billion Developing It”
The other 88.2% is the 150,000 per infringement cost for the generic drug that India has been selling.
Re: Re:
Are you sure they didn’t spend the difference on advertising and kick-backs to doctors?
Back in 2007 I saw the formula of the active compound in Nexavar and I was like “oh wow that must be complicated to produce”. And that was just the main compound, there are certainly support substances that will further improve that main compound efficiency to some degree. My point is that Bayer had a head start and already has the expertise to produce said drug and enhance its attributes. The fact that they’d rather lie about the money spent and keep the medicine inaccessible when it already has all the advantages of a head start is simply disgusting.
I know where it went
“$295.7 [million] is also just 11.8 percent of the $2.5 billion estimate that Bayer wants the IPAB to accept as its R&D costs.”
Well, when you add in the lawyer’s fees and lobbyists to fight against this law, the $2.5 billion is a tremendous understatement.
Re: I know where it went
Not to mention the lobbying to get IP law to the craziness it is today. That doesn’t come cheap.
if the yearly cost of this drug is $70,000 and only the minutest number of people can afford to buy it, would someone like to explain to me how Bayer is going to recoup it’s money and how long it’s likely to take? on top of that, how many people have to die simply to keep Bayer not getting much in the way of a return on it’s investment? isn’t it better, as the recoup process isn’t ever going to actually recoup anything much at all, for more people to get the drug and survive? but then i keep forgetting. having money and control are the most important things. people are at the bottom of the pile yet again!
Re: Re:
Maybe, instead of trying to charge Israel with crimes against humanity (as was suggested in a recent EU report), we should charge corporations such as Bayer with such. Because the best way to hit these companies is in the pockets.
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Crimes against humanity will hit more than just the pocket book if convicted, but I still agree.
Sociopaths should be removed from position of power.
Re: Re: Re: Re:
Not possible. Every publicly traded company is almost bound by law to behave as a sociopath. Not doing so would mean that said company is not complying with it’s duty to it’s shareholders.
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The real irony would be if Bayer ends up making more money via compulsory licensing than they do without it.
Trial data?
Every big pharma story I see now makes me wonder if the companies involved have even properly published the trial data for the drugs concerned.
See: http://www.alltrials.net/
But you forgot a few big expenses Glyn!
-Giant bonuses for CEOs and other top executives for inventing the drugs! Like say $100 million for each of them.
-Bribes to everyone involved in the IP system for Drug. These bribes are getting more and more expensive each day with darn trouble makers in India demanding more money with threats of Compulsory Licensing of these drugs!
-Buying back some of the company’s own stock to artificially inflate their profits per share. Because you can’t invent new drugs without massive stock buy backs, even at the cost of laying off of a few thousand employees in R&D.
So see, the $2.5 Billion is actually a LOW BALL number!
Who cares
Bayer spent the R&D money, they spent the time and research and took the risk.. They have every right to sell their product for whatever they want, and no other company has a right to sell what they didnt develop.
NO ONE has a RIGHT to anything that someone else builds/designs/records or whatever. If they cant afford it move along to something they can afford. If they can’t afford anything then move along to the grave.
Re: Who cares
I hope you get cancer and can’t afford treatments and drop dead. Cause who cares, right?
You’re the kind of person who the world would not be remiss without.
People comes first before profits. Especially when the R&D costs are nowhere near what they’re being made out to be. Put simply, without people Bayer has no one to sell their product to. Meaning they lose. So it’s in their best economic interest to keep these people alive, even if that means having to reduce the cost of purchasing their products.
Luckily, some countries, like India in this case, are putting people before companies’ profits. And rightly so.
Re: Who cares
The problem is that the drugs aren’t affordable at all, and Bayer has a monopoly on this drug. What alternative is there when no one else is allowed to make the drug?
Bayer more than made their money back already, and will continue making money off this drug for some time. I’d say the risk is gone at this point. Now they’re just required to accept competition. Competition is good, it forces prices down and quality up.
The whole point of the patent granting a monopoly is to mitigate risk. When you’ve turned a profit, there’s no longer risk. The point of the monopoly is gone once the risk is gone. A monopoly is generally harmful to an economy as well as to the public. The moment the monopoly is no longer needed, it should be removed to lessen the harm caused by the monopoly as much as possible.
The fact that Bayer is resorting to flat out lying to try to maintain its monopoly, even after making a profit on this drug, says all I need to know about them and their motives.
Re: Who cares
You missed one RIGHT. India has the sovereign right to set any laws it wants. And the attitude “you can’t afford it, just go and die” usually does not sit well with voters.
Re: Re: Who cares
Sure. And they can be punished by WTO for doing that…
Re: Re: Re: Who cares
No they can’t. Compulsory licenses can be issued for drugs treating serious illnesses, under the TRIPS agreement, specifically the Doha declaration, which has legal effect in the EU.
http://eur-lex.europa.eu/JOHtml.do?uri=OJ:L:2006:157:SOM:EN:HTML
Re: Re: Re:2 Who cares
Gotta love how the trolls disappear as soon as someone quotes laws at them that prove them wrong. Especially when they love to state “the law is the law” when it favours their agendas.
It’s a shame they’re so stupid, otherwise it might actually be entertaining.
Re: Who cares
garrgh blarrhgg Didn’t read…blagh
rights blargh
Re: Who cares
I trust that you believe so firmly in your assertions that you’ll be killing yourself now to prevent you from using things that others built that you can’t afford. Hint: You can’t go through a day without using something that someone else built that you couldn’t afford on your own.
And our society will be better off for it, so thank you. Tell Ayn Rand “hi” when you’re sent to whichever ring of the hell of whichever belief system you subscribe to.
Re: Who cares
I trust that you believe so firmly in your assertions that you’ll be killing yourself now to prevent you from using things that others built that you can’t afford. Hint: You can’t go through a day without using something that someone else built that you couldn’t afford on your own.
And our society will be better off for it, so thank you. Tell Ayn Rand “hi” when you’re sent to whichever ring of the hell of whichever belief system you subscribe to.
Re: Who cares
No.
This is science, there are only a few “correct” answers to the problem of curing cancer. Because Bayer got the answer first the rest of humanity is not being allowed to use it.
THAT IS INSANE!
Re: Who cares
Here’s the thing: 90% of all medicines currently on the market are directly derived from publically-funded research, with the main exception of cancers, in which case Cancer Research charities fund it.
There’s a quote from Scrubs which seems appropriate here:
Pharma rep: Our drug is very good at what it does due to our patented technology.
Cox: Yeah, it’s so darn good that you went ahead and put a 600% markup on it. But who cares about sick people?
Re: Re: Who cares
also, Big Pharma uses ALL KINDS of bullshit accounting tricks, etc to inflate the ‘costs’ of their ‘R&D’: for instance, a LOT -the preponderance- of ‘R&D’ costs are actually MARKETING COSTS that they throw into the ‘R&D’ budget to make it look ginormous, when it is all their MARKETING crap that is a huge expense…
they are scum…
art guerrilla
aka ann archy
eof
Re: Who cares
Glad all government employees can keep the bridges built, reports written, and your private records for personal gain since no one, but the original creator has rights to the materials….
Re: Who cares
Yes and No… Ill agree they figured it out, and property rights need to be respected.
Now does India and the rest have every right to tell them they are out of their mind and abusing the Monopoly right granted them.. Hell yes.
Quite frankly Bayer (and most of big Pharma) would do a much better job and have long lasting sustainable profits if they did a better job of saying the “real” cost of R&D was x and the cost to produce is “y” now lets figure out a way to get this in as many hands as possible at the best price for all … its called a Win/Win they make some profit they make back the research money, and we get drugs at responible prices (oh and the generic guys most likely stay the hell away to avoid backlash because your already working to lower the prices and everybody wants to see whats next…
The first one to figure it out will bank more money than they ever did with the old ways…
Re: Who cares
NO ONE has a RIGHT to anything that someone else builds/designs/records or whatever.
In the absence of artificial restrictions (patent law in this case) anybody would have the right to reverse engineer, manufacture, and sell any drug* as soon as it hit the market, assuming they comply with safety and drug approval regulations. Bayer only has whatever rights India decides to grant them.
* remix songs, rewrite books, etc etc
Math problems
Turns out, the exchange rate for euros to dollars is a bit higher. $1.36 per euro, that ends up being $2.72 billion. That would make the correct percentage 10.8% going by my math.
Corporate Economy
I wish I lived the world that is described by the corporations. The trillion dollar copyright economy. The billion dollar research economy. Billions spent on clean energy by the oil companies. Our economy would be ten to twenty times larger if that world actually existed anywhere other than their greedy little minds.
The sad thing is they probably don’t think they’re lying. Just some creative accounting so they can blurt out preposterous numbers with a straight face. I would guess there’s a lot of double-counting or something. Like, “Oh, we need a DNA sequencer” so $2 mil or whatever to buy that. Then they probably charge themselves for using it, like $1000/hour to cover the probability of breaking it, then probably a few hundred thou a year in “depreciation.” Next thing you know buying a $2 million dollar machine “costs” the company $5 million!
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I wish I could be that optimistic, and give them the benefit of the doubt, but more likely it’s simply a matter of them being used to being able to say anything they want, throw any number out that they can think of, and just have the politicians accept it all at face value, no questions asked.
Re: Re:
Heck, maybe they can add more “losses” to the figure by claiming all the money they’re not making in India because their would-be customers can’t afford $70k a year for the drug. Multiply that by the number of cancer patients in the country, round up for good measure, and you could be getting a sizeable tax refund due to “losses” for years to come. It’s not your fault they’re too poor for your company to try to impoverish them by leeching wealth via unethical monopolies.
Isn’t this the time for those of us on the less IP is more side to say…”But, think of the children!”
They are taking into account inflation and compound interest.
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So, if we downloaded them we’d be accused of terrorism, child pornography, piracy and fraud.
Not to mention being violent thugs.
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i don’t think many places can claim 1000% percent inflation and compound interest…
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I missed the /s mark.
So what are the odds the acountants that came up with these figures are also responsible for Copyright math and balancing Hollywood’s budget sheet?
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probably around 70-80% since the math is shockingly similar
This is from their homepage.
“The company was founded in 1863. Bayer, with its inventions, has contributed much to improving people?s and animals? lives.”
Yes, Bayer contributing to your life as long as you’re not broke.
A dark place
Indeed; they simply could not describe, in polite company, precisely where they pulled their numbers from.