Will Big Pharma Fleece Us On A COVID Treatment That We Helped Fund?

Taxpayers bankrolled research into a potential COVID treatment -- the return on our investment may be unaffordable prices that enrich the pharmaceutical industry

The pharmaceutical industry and its political allies are trying to use the COVID crisis to portray drug companies as modern-day Jonas Salks -- the hero from history who refused to patent and profit off the polio vaccine. It’s a nice tale, but it can obscure the other story of pharmaceutical price gouging and the laws that may help corporations unduly profit off public health crises.

An emblematic example is today’s New York Times column by Bret Stephens, purporting to review “the story of remdesivir.” That drug has indeed shown some promising early results for a relatively small group of coronavirus victims, and Stephens touts Gilead Sciences for “distributing it on a compassionate-use basis” to a limited group of people in late January. 

This, we are told, is proof that “there should be no big-pharma haters in pandemics” — a shot across the bow of longtime critics of the drug industry’s corporate practices.

And yet, in this alleged “story of remdesivir,” Stephens wholly omits the role played by you, me and every other taxpayer in the development of the drug. That’s almost certainly no accident, because telling that story would require him to debunk his own free-market anti-government ideology, undermine the drug-companies-as-altruistic-heroes mythology, and admit that our laws actually help drug companies fleece Americans.

The Real Story of Remdesivir

Remdesivir has been developed with an infusion of public resources -- specifically, “the ​U.S. Army, the Centers for Disease Control and Prevention and the National Institutes of Health/National Institute Allergies and Infectious Diseases subsidized the preclinical and clinical development of remdesivir,” according to a recent report from Knowledge Ecology International. Some of that research was conducted in collaboration with public universities.

Drug companies often justify their high prices by insisting that when a medicine comes to market, they need to recoup the money they spent on R&D, some of which inevitably ends up being a loss as they chase promising but unsuccessful therapies. That same return-on-investment logic could also apply to taxpayers -- when we take the financial risk of funding original medical research, our ROI could be in the form of affordable prices for the medicines that eventually come from that research. 

In fact, that was the very concept embedded in our laws during the Bush I administration, after criticism of the high price of a leading anti-AIDS drug developed at taxpayer expense.

The NIH rule’s principle was simple: drugs developed at taxpayer expense and then licensed to commercial pharmaceutical companies must ultimately be offered to consumers at a fair and reasonable price. The idea was that if the public has already paid once to develop a drug, then the public should not have to pay exorbitant prices for that drug — the same principle that informed Salk’s decision to avoid trying to patent the polio vaccine.

That NIH rule, however, was rescinded by Bill Clinton’s administration -- a big win for “the biotechnology and pharmaceutical industries, which campaigned against the pricing clause,” according to a contemporaneous report from the New York Times (and just yesterday, Donna Shalala — the Clinton official who ran HHS when the pricing rule was rescinded — was appointed by Speaker Nancy Pelosi to the government panel charged with overseeing coronavirus stimulus funds).

The upshot: remdesivir or any other COVID-related medicine developed at American taxpayer expense could ultimately be offered to American taxpayers at the world’s highest prices. 

Taxpayers Subsidize Pharmaceutical Industry Profits

Now sure, maybe you’re thinking Gilead could decide out of the goodness of its corporate heart to offer any future remdesivir treatment at an affordable price.

However:

  • Gilead is the same company that “raked in billions in profits from exorbitantly priced hepatitis C medications that were developed with taxpayer dollars, and then shifted those profits to offshore tax havens where it dodges U.S. taxes,” according to a 2016 report by Americans for Tax Fairness.

  • Gilead is the same company that took an HIV drug developed at taxpayer expense and “nearly tripled (the price) in the U.S. to more than $20,000 over the past 15 years,” making more than $36 billion off the medicine, according to the Los Angeles Times and Bloomberg News.

  • Gilead is also the same company that already made a preliminary move to try to juice profits off a potential COVID treatment (it only backed off when it was publicly shamed) — and it seems investors think Gilead is going to make a jackpot off the pandemic.

OK, so maybe now you’re thinking yeah, this taxpayer rip-off might be a problem with one drug, but it’s just an isolated anomalous incident.

Nope, sorry: a recent report published by the National Academy of Sciences found that $100 billion of taxpayer funding contributed to “every one of the 210 new drugs approved by the FDA from 2010–2016.” That funding is on top of the lucrative tax breaks the industry already benefits from. The industry returns the favor by charging Americans the world’s highest prices for medicine.

Congress & Trump Could Do Something, But They Refuse

To prevent profiteering on COVID treatments, Congress and/or HHS Secretary Alex Azar could right now begin the process of reinstating some version of a reasonable pricing rule -- and, in fact, back in 2000 when I worked for Bernie Sanders, the Vermont congressman passed an amendment through the GOP-controlled House to do just that.

The companion measure in the Senate was sponsored by Democrat Paul Wellstone, who in a floor speech noted that “all this says is, when it is our public dollars--taxpayer money, our constituents' money--we expect that the drug companies, when they benefit from all this, will agree to charge our constituents a reasonable price.”

But Republicans and a handful of corporate Democrats joined together to kill the initiative.

Democrats who control the House could have demanded this amendment be included in the first coronavirus bailout bill -- and they could still insist it be included in any new stimulus legislation. Who knows, they may even find support from a few Republicans. 

In absence of that, though, we will likely get more and more deceptive propaganda like Stephens’ column -- which ultimately props up both the pharmaceutical industry’s profiteering, as well as the dangerous arguments made by the Trump administration. 

Remember, it was none other than Azar -- a former pharmaceutical executive -- who went before Congress in late February and insisted with a straight face that when it comes to coronavirus treatments, “We would want to ensure that we work to make it affordable, but we can’t control that price because we need the private sector to invest.” 

That word “can’t” is being used as a substitute for “won’t.”

It is certainly true that we do need innovation and research from the pharmaceutical industry in this crisis. But it is also true that we could limit the price of drugs that were produced with public sector investment. The problem is that a government run by pharma-bankrolled politicians simply refuses. 

That is the real “story of remdesivir” -- and so many other medicines developed at taxpayer expense.

Sirota