.....Because researchers had published more than 130 articles about taxol in scientific journals, it was impossible for anyone to patent the drug under U.S. law. The government paid for all of the pre-clinical research on Taxol, and it also sponsored a large number of human use clinical trials, including the so-called Phase I, II and III trials which are required for FDA approval in the United States. The government also developed the methods for manufacturing the drug, which was done through a private contractor named Hauser Chemical.
In the United States the government plays a huge role in funding pharmaceutical research and development (R&D), but it rarely, if ever, becomes the agent that sells the drug to the public. Here the federal government entered into a contract with the large Multinational firm, Bristol-Myers (now Bristol-Myers Squibb). The government agency NCI gave BMS a contract which provided the private firm with exclusive rights to use the data from government funded human use clinical trials, and also gave the firm an exclusive "first right of refusal" to harvest the bark of the Pacific Yew tree from federal lands. In return for these privileges and benefits, BMS only agreed to provide the government with a few kilos of Taxol for use in research that BMS would "own," and to use BMS's "best efforts" to commercialize Taxol, a drug with world wide sales of hundreds of millions of dollars per year. BMS was not obligated to pay the government any money in royalties for the exclusive use of its research data, but it did agree to a vaguely written "fair pricing" clause in the contract.
When Taxol entered the U.S. market it was priced at a wholesale price of $4.87 per milligram, or more than $9,000 for a completed treatment for some types of cancer. We investigated the pricing of Taxol and found that BMS was acquiring clinical grade Taxol from Hauser Chemical, the firm that was once the government's contractor, for less than $.25 per milligram. In other words, BMS was charging U.S. consumers about 20 times its cost of production for the drug.
In response to our criticisms of the price, BMS made a number of what appears to be rather common exaggerations about its role in the development of Taxol. For example, BMS claimed that it had spent more than $114 million to "develop" Taxol, but the company refused to provide any specific accounting of how this was calculated. It turned out that most of this money was simply the long term drug supply contracts that BMS had signed with Hauser and other companies, it would be highly misleading to refer to these production contracts as R&D investments.
Several Congressional hearings were held on Taxol and on many other high priced drugs which benefited from government funding. Based upon our experience with Taxol, we initiated a number of new studies.
We found, for example, that of the 37 cancer drugs which were invented after 1955 (the beginning of the modern NCI drug screening program), 34 were developed with significant funding by the government. This high degree of government funding was true for many other drugs as well.
Another TAP study looked at all of the "important" new drugs approved by the FDA from 1987 to 1991. During this 5 year period the FDA issued 2,270 drug approvals, but most were for generic drugs or new combinations of existing compounds. Only 117 of the new drug approvals involved so called "New Molecular Entities" (NMEs), which is the name given to drugs which are distinctly different from drugs already on the market. Of these 117 NMEs, only 30 were judged by the FDA to be drugs that were used in the treatment of severe illnesses (FDA class E drug) or to represent a substantial gain in therapeutic value (FDA efficacy rating of A).
Of these 30 "important" new drugs approved by the FDA, 15 benefited from significant funding by the U.S. government. But when one considers the country where the drug was first discovered the government's role is even more important. 17 of the "important" new drugs were discovered in the U.S. Of these drugs, 12 were developed with significant government funding - that is, 71 percent were developed with significant government funding.
The U.S. government spends an enormous amount of money on health care research, and this investment has been very productive. On the basis of our research, we have concluded that
while the private sector's R&D investments are also large, they tend to be directed at the lower risk ventures, and often are directed the development of so called "me too" drugs, which do not represent significant improvements in therapy, but rather are marginally different methods of treating illnesses which represent large markets, as measured by the companies in the dollars they will receive from consumers.
the drugs developed with government funding were about 3 times more expensive than the drugs developed with private funding. Clearly the drug companies were not "passing" on the benefits of government funding to the U.S. consumers, who pay for the research.
Over the past several years there have been many news reports about investigations into particular government drugs which are excessively priced. One of the most interesting cases concerns the drug Ceredase, which is used to treat Gaucher's disease, a rare affliction which affects only a few thousand persons in the United States.
The U.S. National Institutes of Health (NIH) spent several million dollars to develop Ceredase. The original research was funded at Tufts University. The scientists at Tufts University closed down the program at the University and created a new start-up company, named the Genzyme corporation, which became the marketing company for Ceredase. The "roll-out"price for the drug was extremely high -- some patients were required to pay as much as $550 thousand for a single year of treatment. The company was able to generate more than $100 million in revenue for one year from about 300 patients. Because the U.S. has no program for controlling drug prices, nothing could be done about the enormous burden this high price placed on the patients who received the drug. Many of the stories from patients who suffer from Gaucher's disease were heart breaking. Genzyme employees a number of "reimbursement specialists," who met with individual patients to help them find ways to pay for the drug. One women testified before Congress that the company salesman recommend such procedures as getting a divorce so the patient could become eligible for welfare payments. Some patients were asked to sell homes, and in some cases the umbrella benefits from private insurance were exhausted, leaving the entire family without health insurance.
Another case which received wide attention was the drug Levamisole, which is used to treat cancer of the colon.
Levamisole was first used to remove worms from sheep, and was priced at $.06 per bill for that purpose. An NIH funded study found a way that the drug could be used to treat colon cancer. However, the "patent" rights to the "idea" of using Levamisole to treat cancer were owned by the drug company Johnson and Johnson (J&J), even though the principal researcher on the project described the company's contribution to the research as trivial - just supplying the drugs for the clinical trials. When Levamisole entered the market for humans, it was priced at $6 per pill, a 100 fold increase in the price, and a difficult burden for many of the patients who take the drug regularly, many without the benefit of health insurance coverage.
One of my favorite case studies involves the drug cisplatin, which is a widely used cancer drug. Cisplatin is one of many drugs which is marketed by BMS (the world's largest seller of cancer drugs, even though it has never discovered a cancer drug on its own).
Cisplatin was discovered at Michigan State University on a government grant. The University licensed the drug to BMS on an exclusive basis for 5 years. When the exclusive license expired in 1983, several companies wanted to obtain non-exclusive licenses to manufacture and sell the drug. Instead, however, the U.S. government allowed BMS to have the exclusive license, on the condition that the company lower its prices by 30 percent, and fund $35 million in cancer research, which was carried out under the direction of the NIH.
We are now seeing new drug prices which are far above anything we have seen before, and things are only getting worse.
The U.S. still does not collect data on industry R&D expenditures, and indeed, the U.S. government really does not even organize data on its own R&D efforts in ways that make it clear how much the private sector relies upon government funded research.
Pharmaceutical drugs are necessary for good health, and high prices will deprive many persons throughout the world of the benefits of these technologies.
I was surprised and saddened to learn that the U.S. government is so aggressively protecting a handful of large corporate interests, and that it is opposing many reasonable proposals to resolve the current dispute over patents.
* Center for Study of Responsive Law. P.O. Box 19367, Washington, DC 20036. Voice 1.202.387.8030; Fax 1.202.234.5176; Internet
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I support the idea of putting people with disabilities in these kinds of jobs....but you can forget your drive-thrus and quick service...Not only that...think of the money lost thru mistakes that would be made. So you also think that someone with an IQ significantly below average would be a good person to have roaming your schools cleaning up and doing repair work? Who would redirect them, help them reason out what they need to do, etc, etc....
