by DAVID MITCHELL, CANCER PATIENT AND FOUNDER, PATIENTS FOR AFFORDABLE DRUGS

The growing crisis around COVID-19 brings into stark view America’s broken drug pricing system. Currently, taxpayers are paying billions of dollars for research that will help lead to the development of a new vaccine, treatment, or cure for COVID-19. Once government funded research identifies a vaccine or treatment, under current policy, a drug corporation will bring that product to market at any price — and without regard to the taxpayer’s integral role in its discovery. 

Drugmakers are key players in the quest for medicines to treat and defeat COVID-19, and they should make fair profits for doing their job. But unless appropriate regulatory guardrails are established, drug companies will turn public investment on COVID-19 into potentially massive and unjustified private profits, as they have with so many other drugs. 

MY CANCER + COVID-19

I am one of those most at risk of death from COVID-19. I have an incurable blood cancer called multiple myeloma which compromises my immune system. My chemotherapy regimen further weakens my ability to fight COVID-19. Plus, I’ll be 70 years old in May. Even though I am taking all the precautions I can and am staying home, I must go to a clinic for cancer treatment every two weeks. 

It is an understatement to say I would like scientists to find drugs to treat and prevent COVID-19. I now could face two life-threatening health conditions: cancer and COVID-19.

But drugs don’t work if people can’t afford them. And treatments and vaccines for COVID-19 are no different. 

TAXPAYER FUNDING INTO COVID-19

Governmental and tax-advantaged philanthropic funding are especially prominent in the work on COVID-19.

• NIH has invested almost $700 million in research into coronaviruses — research that now underpins the search for COVID-19 treatments and vaccines.¹ 
• Early in March, Congress allocated $3 billion more to COVID-19 research.²  The same bill also set aside $300 million in funding that would be used to purchase the very vaccines and therapeutics the research money is being used to invent.³ 
• One of the treatments showing promise in COVID-19 patients, Gilead’s remdesivir, was developed as a result of taxpayer funding through the NIH.⁴  In February, the NIH launched a study into this drug that will cost taxpayers $30 million this year alone.⁵, ⁶ 
• The NIH is funding the United States’ first clinical trial on a vaccine specific to COVID-19.⁷ 
• The Biomedical Advanced Research and Development Authority (BARDA) awarded Sanofi and Janssen funding to develop vaccines and expanded existing partnerships with Regeneron and Janssen in order to develop a treatment for COVID-19.⁸, ⁹, ¹⁰, ¹¹
• The Coalition for Epidemic Preparedness Innovation (CEPI), an organization funded by the Gates Foundation and multiple countries, was founded due to lack of corporate investment in emerging infectious disease vaccines.¹² CEPI funding is now responsible for eight of the leading candidates under consideration as a COVID-19 vaccine. ¹³

Drug corporations are notoriously uninterested in vaccines, treatments, and cures for emerging infectious diseases because they typically affect smaller patient populations and carry time-limited need. In other words, investment in these therapeutics is unattractive to profit-seeking drug corporations. In fact, the pharmaceutical industry has largely neglected research into vaccines for infectious diseases.¹⁴ In response to this — and the growing threat of a global pandemic — public and private funders have stepped up, including US taxpayers.

The government’s system of giving drug corporations or tech companies exclusive rights to sell a product is intended to reward the research and development efforts of corporations. But given the significant contribution to COVID-19 research by American taxpayers, the drug corporations that eventually market products should not be able to set prices at any level they choose — perhaps out of reach of individuals and entire nations. In order to ensure an equitable response to this public health crisis, both a fair profit and a fair price should be established with public investment in mind.

SOLUTIONS: FIX THE SYSTEM AND DEFEAT COVID-19

If we allow the current drug system to price COVID-19 vaccines and treatments, Americans will end up paying twice — first as taxpayers investing in research through the NIH and second as patients at the pharmacy counter. In addition, this virus will likely take a considerable toll on Americans covered by Medicare and Medicaid — America’s largest health insurance programs that are both paid for by taxpayers. The US government could be facing billions in additional spending for a COVID-19 vaccine, treatment, or cure that it helped invent. 

So how can we avoid the all-too-common situation where taxpayers help invent a medicine and drug companies make unjustified profits? Here are five ideas proposed by economists and health experts that seek to balance incentives and protections for drug corporations with protections for public health:

1. Solicit bids from drugmakers before the drugs are invented: The pharmaceutical industry decides which drugs to develop based on assessments of risk and the potential commercial market — not public health needs. Dr. Peter Bach and Mark Trusheim argue the US government should put out a request for proposals for COVID-19 drugs and vaccines.¹⁵ This proposal would invite drug manufacturers to project their costs for development and propose an eventual price. Companies would put forth their best bids and the winners, chosen by the US government, would be rewarded with an enormous market. Experts estimate that 50 to 75% of the US population will need to be infected by or vaccinated against COVID-19 in order to establish widespread immunity, so it is safe to assume the US market for a potential vaccine will be vast.¹⁶, ¹⁷ In return for these bids, the US government will choose the most efficient investment and be rewarded with a fair, predictable price.
2. Utilize advanced market commitments: Advanced market commitments (AMCs) are used to encourage commercial investment in vaccines by guaranteeing that a certain amount of vaccines will be purchased upon successful development of the product.¹⁸ The US government would pay a predetermined price until a predetermined number of products was purchased. As proposed recently by professors Rena Conti and Josh Sharfstein, additional purchases exceeding the preset amount could potentially “drop to close to their incremental manufacturing costs” within the terms of the agreement.¹⁹
3. Offer a massive prize fund:  This idea has long been championed by Knowledge Ecology International’s Jamie Love and others.²⁰Sometimes referred to as “delinking” a drug price from R&D, the idea is to offer a significant monetary prize to the first companies to produce effective treatments and vaccines. The government would make the prize of sufficient size to warrant the risk and to provide a handsome return for the developer. Having rewarded the development of the medicines, the intellectual property would be available to produce and distribute at low cost to all who need it.
4. Allow the federal government to negotiate directly with drug corporations: Democrats and some Republicans have long supported reforms to allow the federal government to negotiate with pharmaceutical corporations over drug prices. Negotiated prices can be extended to the private market and be based on: the value the drug provides to patients, taxpayer contribution to development of the drug, R&D investment by the manufacturer, cost to produce the drug, and a fair profit. 
5. Assert existing patent authority: According to various public health advocates, the federal government already has two tools at its disposal to ensure a fair price on drugs developed with taxpayer funding.²¹ First, under 28 U.S.C. section 1498 — and in the event of an unreasonable price — the government can acquire a patent and give it to another company to produce. Similarly, a provision within the Bayh-Dole Act (35 USC § 203) could permit the federal government to “march in” and buy patents on intellectual property created with government funding in the event of a public health emergency. In both cases, the originator company is still entitled to “reasonable compensation”.²² At least three countries have recently exercised similar rights in light of the COVID-19 crisis.²³, ²⁴, ²⁵
   

CONCLUSION

Although more urgent in the face of a growing pandemic, the need for COVID-19 medicines and vaccines is no different than any other new drug researched by taxpayers that will protect and save lives. We cannot and must not leave our fate to drug corporations to charge whatever prices they think they can get away with. 

We must fix the system and demand balance to get the innovation we need at prices we can afford. Big Pharma cannot continue to have unlimited pricing power that puts profits for drug corporations ahead of public health — for COVID-19 or any disease.

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