A Pharmaceutical Company Developed a Cure for Cancer With Taxpayer Dollars. Now It Owns the Patent.
Novartis' single-dose therapy is curing people with leukemia. Shouldn't the whole world have access to these treatments?
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In 2010 at the medical school of the University of Pennsylvania, a 6-year old girl was cured of her leukemia using a single-dose medicine — a cutting edge form of cell-gene therapy called CAR T-cell therapy (or CAR-T for shorter). Developed by researchers at the university using government funds from the National Institute of Health (NIH), the curative promise of CAR-T got the attention of the mega pharmaceutical company Novartis, which swiftly stepped in to commercialize the treatment.
“We pretty rapidly did a tech transfer from the very, very small manufacturing facility at Penn,” said former Global Senior Director of Novartis Peter Holman. “I think that facility had five little rooms where they were doing [the therapy]. … So they really did not have the capacity to scale up.” Researchers at Penn were savvy when it came to negotiating the new partnership with Novartis. “Penn wasn’t looking for somebody to just commercialize the one product, Holman said. “They were looking for a research partner to work with. Penn said very upfront, ‘If all you want is to license this in, then we don’t want to do business with you. We want a full collaboration.’” And that’s what Penn got, a research collaboration with a lot of money from Novartis that lasted for seven years.
The “CAR” in CAR T-cell therapy refers to “chimeric antigen receptor.” The way the drug works, very basically, is you take blood from the patient, reengineer the immune system T-cells found in the blood to begin destroying specific cancerous cells, and then reintroduce those modified T-cells back into the patient. In order to get the patient’s T-cells to recognize and attack the cancerous B-cells of blood cancers like leukemia and lymphoma, the T-cells are infected with a virus which introduces a new gene into them. This new gene causes the T-cells to express the chimeric antigen receptor on their surface. The chimeric antigen receptor is what recognizes the specific antigens found on the cancerous B-cells, thus allowing the T-cells to target and destroy them.
Every dose of Penn’s CAR T-cell therapy, now owned by Novartis and branded as Kymriah with FDA approval to treat leukemia and lymphoma, is an individualized treatment that is quite time consuming and labor intensive to create. It usually takes around 21 days for the drug to be manufactured at Novartis’ labs, and the pressure is on, given how sick the patients are. Kymriah currently has FDA approval as a third-line treatment, meaning that a patient must have gone through two prior rounds of traditional chemotherapy and have either not responded to those treatments or relapsed both times before Kymriah can be used. “These patients have been on chemo and drugs for years so they’re extremely frail,” Holman said, “We’ve had patients die waiting for product manufacturing to complete.”
Currently, some companies are developing CAR T-cell therapies which attempt to limit common adverse side effects of these treatments by having kill-switches built into the modified T-cells, thus stopping them from attacking normal B-cells. Without built-in kill-switches, you’re just waiting for the modified T-cells to eventually clear from the system. “But we have some patients where we can’t identify any genetically modified T-cells in their system anymore,” Holman said. “And some of those patients have no cancer, so, nobody likes to use the ‘cure’ word, but…”
Even with certain variabilities in different CAR T-cell treatments, mostly having to do with the specific genetic modifications made to the patient’s genes, companies are generally using the same CAR T-cell therapy techniques first pioneered at Penn. “The manufacturing process [Novartis] uses has had improvements to it but it is fundamentally the manufacturing process that Penn was using in their tiny little lab,” Holman said.
Novartis’ CAR T-cell therapy, along with others like Yescarta made by Gilead, can all trace their lineage back to the work that was done at Penn by Dr. Carl June and his fellow researchers starting in the 1980s. The research and development of these therapies was ultimately funded by both the public and the private sectors. Depending on who you talk to, who paid how much for what varies considerably. Neither Novartis nor the University of Pennsylvania responded to my questions asking for an accounting of the funding numbers. This kind of stonewalling is par for the course for Novartis. When asked about the manufacturing costs for these therapies, a Novartis representative said that the numbers have "never been made public and cannot be for proprietary reasons."
According to prior statements made by Novartis’ former CEO Joseph Jimenez (take with a grain of salt), they estimate that they spent more than $1 billion on bringing Kymriah to market. In comparison, according to the consumer advocacy organization Patients for Affordable Drugs, the government-funded NIH spent approximately $200 million on CAR-T research at the University of Pennsylvania. By Novartis’ own forecasts, Kymriah is set to make upwards of $1 billion a year in sales. Add on top of that the approximately $1.2 billion that the company has already made selling Kymriah, and Novartis will have already made back their research and development costs and then some.
Regardless of who ultimately paid how much for what, the initial research, development, and patient trials of CAR-T were conducted by researchers at Penn before Novartis ever came into the picture. Even in the FDA approval documents that were submitted by Novartis to get Kymriah ready for market, Novartis used the critical safety data that came from the original patient trials conducted by Penn alone.
Novartis is currently trying to streamline its manufacturing process to cut down the turnaround time for patients. The company recently performed a clinical trial, known as the “Belinda” trial, to try to get the drug approved for second-line treatment. This would potentially improve the efficacy of the drug itself. Ideally, patient T-cells would be untouched by chemotherapy. “We know that prior therapies can have a big impact on the robustness and how healthy the T-cells are,” Holman said. “I’ve said to people before, if I was diagnosed with [lymphoma] tomorrow, before I had any chemotherapy I would have my T-cells frozen.” Currently, under Kymriah’s FDA approval requirements, 80% of the modified T-cells must be viable, living cells when infused into the patient. Part of Novartis’ manufacturing struggles have been not being able to consistently meet this 80% threshold. But if the drug were approved for second-line treatment, the patient’s T-cells would be healthier, not having gone through two successive rounds of damaging chemotherapy, and may therefore yield more viable cell numbers. To the disappointment of many, the Belinda trial failed to get Kymriah FDA approval for second-line treatment.
Which brings us to the profit problem. Holman said that Kymriah is not at the profitability level that would be desirable for Novartis (surprise! no amount of profit is ever enough for a corporation). The drug is meant to be a one-time dose, so the company cannot rely on ongoing treatment payments the way that traditional drugs would. And the number of patients per year that would qualify for Kymriah is relatively low. Blood cancers like leukemia are less common than hard-cell, tumorous cancers (incidentally they also respond better to CAR-T than tumors do), and most people do respond at least somewhat to chemotherapy treatments. Novartis was hoping that Kymriah would eventually be a “blockbuster” drug, making upwards of $1 billion a year in sales. They have yet to reach that lofty goal since Kymriah first got FDA approval back in 2017.
The advocacy group Patients for Affordable Drugs made the claim that Novartis could price Kymriah at $160,000 instead of the current $475,000 in the U.S. and still make a profit. Novartis would of course dispute this claim. But the price for Kymriah in the U.K. is comparatively low at $361,000. This has something to do with the NHS’s ability to collectively negotiate drug prices in the U.K., something that the U.S. pharmaceutical and health insurance industries will not allow to happen. But if Novartis wants to make the claim that the price of their drugs reflects the costs of development and continued research and manufacture, then how can the company justify such large discrepancies in the prices between countries? Is it maybe just because Novartis and other drug companies price their treatments as high as they think they can get away with in order to maximize the profits earned from ransoming a life-saving cancer therapy?
Another big problem that CAR-T treatments are facing is difficulty in getting hospitals to actually administer the treatment due to its complex nature. There are many hoops which care providers have to go through in order to make sure they can be onboarded as official treatment centers. Firstly, Kymriah requires the patient’s blood to be collected through a process called apheresis, which is similar to dialysis. Apheresis extracts the patient’s blood, separates the necessary T-cells, and then reinjects the blood into the patient. This process requires an apheresis machine that some smaller hospitals may not already have. Once the T-cells are separated, they must then undergo cryopreservation, being frozen down to liquid nitrogen temperatures. This process requires a cell lab, which, again, most smaller hospitals probably do not have. There are some third party companies offering cryopreservation to fill this gap. In contrast, Gilead’s Yescarta therapy does not require cryopreservation, the cells remain fresh. But this then means that the turnaround time for getting Yescarta back into the patient has to be very quick. Kymriah’s freezing process allows for some more breathing room. Once the therapy has been manufactured at Novartis’ labs using the patient’s T-cells, it must then be reinfused and the patient must be monitored for side effects. As Holman points out, CAR-T’s main side-effects, neurotoxicity and cytokine release syndrome, “are not side effects that are things that your general community hospital is used to dealing with.” The drugs that must be on hand for helping to deal with these side effects may not be part of the usual stock of smaller hospitals.
Given the barriers of these kinds of cell therapies to smaller community hospitals, the alternative would be to have those hospitals refer their patients to larger oncology centers that are already registered to use these cell therapies. But that presents another problem, namely financial competition. As Holman explains:
Community hospitals are not always thrilled about referring their patients to big oncology centers because they often don’t get their patients back. The oncology centers take the referral and they hold onto the patients. And in our, let’s say, capitalistic world, the hospitals are making money off of their patients. And so when they lose patients to other hospitals, that’s a revenue steam that they’re losing. And so, probably not the most altruistic thing for them to hold onto patients that might be able to get a good product or therapy elsewhere, but it does happen.
Because of the for-profit healthcare system in the U.S., rural community hospitals with small patient populations simply do not have the support that they need. As an article in Democratic Left magazine points out, “More than 120 rural hospitals have gone out of business nationwide since 2005, and the trend is accelerating. Large swaths of the Mid-west lack rural hospitals, especially in those states that declined to expand Medicaid.” Not only are low profits leading many hospitals to close down, it is also causing the ones which remain standing to avoid sending their patients to other hospitals where they may receive better treatment.
Another issue that hospitals face when using these CAR T-cell therapies are the many inspections and audits from the pharmaceutical company. Pharmaceutical companies that have these cell therapies are currently required by the FDA to ensure that the “inputs” into their system for manufacturing these therapies, namely the patient’s own T-cells, are harvested safely and correctly. And so these companies are closely monitoring the hospitals to make sure that they are doing everything right. However, as Holman explains, this a rather unusual way of doing business. Normally, with traditional chemical drugs such as ibuprofen, pharmaceutical companies get the raw material for their drugs from a supplier, and then the company manufactures their drugs with those raw materials. The pharmaceutical company is responsible for ensuring that their suppliers are all above board by doing inspections. But now, with these new CAR T-cell therapies, the only supplying that is done for the treatment is the hospital giving the patient’s own T-cells over for manufacture. Under FDA rules, any treatment center that is involved with processing human tissue, such as T-cells, needs to be registered with the FDA as a tissue establishment. This means that the FDA is the organization responsible for monitoring the hospitals that are dealing with tissue processing. When it came time to figure out how these new CAR-Ts would be managed, it seemed that the FDA would be the most appropriate entity to monitor these therapies through their tissue establishment guidelines. But that’s not what happened. Novartis specifically asked the FDA if these hospitals need to register with the FDA or update their current tissue establishment licenses since they’ll be doing white blood cell collections. “And the FDA explicitly said ‘No,’” Holman said, “‘[The hospitals] should not register with the FDA. They should not update their registration. This is an input to [Novartis’] manufacturing process. You are responsible to ensure that inputs to your manufacturing are appropriate, not the FDA.’”
So now every pharmaceutical company that has CAR T-cell therapies on the market is responsible for inspecting the hospitals for the work that they’re doing in providing the starting cells. The companies are treating the hospitals the same way that they would treat a supplier for traditional chemical drugs. But hospitals and drug companies are not used to this kind of arrangement. “The hospital is providing these cells, it’s a critical starting material for manufacturing, but a hospital is not a supplier in the sense of what is typically a supplier,” Holman said. “They’re not in the business of supplying anything to anybody. They’re a healthcare provider and that’s their business.” These audits by the pharmaceutical companies present several problems.
Firstly, as mentioned above, hospitals are not used to being treated like a supplier in the drug manufacturing chain. They do not have the staff and the resources to deal with all the audits from pharmaceutical companies. Secondly, every company has different requirements for their cell therapies, some of which are ridiculously exacting. Holman said that different companies even have different standards for exactly how long the tubes on the blood bags that hold the patient’s plasma need to be. “Some say we want a 12-inch tube, some are saying we want a 6-inch tube, some are saying we want an 8-inch tube that has two crimps in it, some say we want three crimps.” This level of detail and variability takes a toll on hospitals that only have so much bandwidth.
And as more cell therapies are developed, each with its own set of requirements and inspections from the company, at some point a hospital will not be able to take on any new treatments simply because they do not have the time and the staff to manage all the variability. This isn’t just a barrier to getting already approved cell therapies into hospitals, but in-development drugs as well. Pharmaceutical companies often rely on hospitals to conduct clinical trials for new treatments seeking FDA approval. If a hospital is already overburdened by too many cell therapies then they are less likely to take on a new clinical trial as well. “And that’s not good,” Holman said, “because that small company that comes along may have the next great thing. And maybe it’s having a hard time getting into trials because the hospitals are saturated by too much variability already.” Because of this over-complication, the hospitals are asking the drug companies to get together and simplify their requirements.
Despite a lower profitability level than Novartis would like, the company has invested a lot in CAR-T. As Holman said: “It’s a unique product in the field, it’s a first in the field, it’s a potentially curative therapy, so I think Novartis is giving it a bit of wiggle room.” Even if it may be challenging for large companies to find a sustainable pricing model for these kind of therapies, they would much rather figure it out for themselves than have to compete with (or acquire) a smaller, more nimble startup firm that developed its own curative CAR-T therapy. But the likelihood of the small guys beating the big guys is slim. “I think those little companies will have a hard time,” Holman said. “If big pharma is fully in and fully invested, the amount of resource that a company like Novartis can throw at a product is enormous.”
Smaller companies with less funding are at a disadvantage because of all of the patents involved in the cell-gene therapy space, let alone the pharmaceutical industry in general. The economist Dean Baker notes that patents “can make the research to develop new drugs and medical diagnostic products considerably more expensive and thereby slow the process.” In an area like biotechnology, the equipment, tests, and biological materials are all subject to patents requiring payments for their use, with the licensing and legal fees being enormous. These “patent thickets” prevent smaller developers from being able to bring new drugs to market. And even if a patent allows free use for research and development purposes, if a small company gets to the point of having a CAR-T therapy ready for commercialization, those patents will then kick in to take a cut of the sales.
It must be noted that patents raise prices so consistently and immensely that it would be fair to say this is their primary purpose. As Baker explains: “These protections can often raise the price of protected items by several multiples of the free market price, making them comparable to tariffs of several hundred or even several thousand percent.” Baker points to the example of a hepatitis C drug sold in the U.S. for $84,000 for a three month round of treatment, while generic versions are available in India for as low as $300. High drug prices also ensure the perpetuation of both the for-profit health insurance industry and the bloated administrative staff of healthcare providers. As Baker points out: “With drugs selling at prices that even middle-income families could readily afford, the whole industry of middle-men that has grown up around mediating between the drug companies and insurers, hospitals, and patients would disappear. There would be no need for it.”
Besides pharmaceutical companies patenting their own CAR-T therapies, the University of Pennsylvania has said that some researchers involved in the invention of technologies used in CAR-T currently own patents on those technologies. This allows those researchers and the university to have continued revenue from their use. Universities are able to patent their technologies because of a 1980 law called the Bayh-Dole Act. This law, as explained by Baker, allows for “universities, research institutions, private companies, and individuals operating on government contracts to gain control of patents derived from their work, thereby creating the opportunity for universities to earn large rents from patents and for researchers to form their own companies, all relying on knowledge and expertise obtained on government contracts.”
The Bayh-Dole Act came after decades of the corporate class whittling away the protections in place that kept public research in the hands of the public. Prior to Bayh-Dole, any patents that arose from government-funded research would be held by the government, freely available for anyone in the public to look up and build on the research. Greedy companies began engaging in cynical PR campaigns, disseminating misleading talking points about how U.S. companies needed to maintain “global competitiveness” by securing more patents from government-funded research.
In 1979, during a Senate subcommittee convened to discuss the proposed Bayh-Dole Act, Navy Admiral Hyman G. Rickover stated bluntly in opposition: “Government contractors should not be given title to inventions developed at government expense. These inventions are paid for by the public and therefore should be available for any citizen to use or not as he sees fit.”
This same debate about the proper placement of patent rights had already happened during the post-WWII years, when government-funded research exploded at U.S. universities. In 1946, during a senate hearing discussing the issue, Horace M. Gray, an associate dean of the graduate school at the University of Illinois, put it even more pointedly than Admiral Rickover did:
[It is] quite unthinkable that the Federal Government should tax the citizens of this country to secure funds for scientific research, on the grounds that such research promotes the general good, and then turn the results of such research over to some private corporation on an exclusive, monopoly basis. This amounts to public taxation for private privilege and violates one of the basic tenets of our democratic faith.
Bayh-Dole was a revolution for corporations seeking to maximize their profits at the public’s expense. Research takes time and is risky so why not let the taxpayer take on that risk? Once a drug seems commercially viable then the big adult capitalists can step in to soak up the rents made from selling that drug back to the citizens who originally funded it. But are the taxpayers who help fund the NIH reaping the benefits? The money that corporations give to public institutions in these private-public “research” partnerships needs to be weighed against the billions of dollars in profit that Novartis and these other companies stand to gain. Our public institutions wouldn’t even have need for corporate capital if the state actually chose to value and fund public health and education instead of wasting trillions of dollars on military interventionism.
This taxpayer funded research, mostly supported by the NIH, is essential for laying the groundwork for further medical breakthroughs. As one study pointed out, NIH funding “was associated directly or indirectly with every drug approved from 2010–2016.” Not just some drugs, every drug. This same study also noted that any decrease in NIH funding would not likely be made up for by the private sector due to “the limited incentives for companies to make investments toward basic research that would negatively impact near-term earnings, offer uncertain competitive advantage, and may not generate profitable products for decades.”
Another study found that global competition levels were affected by firms shifting funding away from basic research and towards “commercial application and protection of existing knowledge,” meaning asserting their continued patent protections. The study’s authors also noted that “[u]nless public funding can make up the [research] deficit,” which it won’t, unless there is a huge shift in the way taxpayer dollars are spent in this country, then “technical progress will slacken and eventually reduce productivity growth.”
Speaking to Noam Chomsky about this stifling patent system in the U.S., Chomsky told me, “The patent regime imposed by the ‘free trade’ agreements are a disgrace. If such an extreme patent regime had existed in the past, the US would never have developed, or others. They provide virtual monopoly pricing rights for drugs and vaccines that taxpayers largely pay for and could bring to the market for a fraction of the cost.”
None of us have a say in any of this. When universities decide to license their medical breakthroughs to corporations, it’s basically a private deal without much public input. The NIH is technically responsible for approving commercialization of drugs developed by universities that receive NIH funding. But this is effectively just a rubberstamping process — more on that later. And even if universities were using their patent rents to fund further research and development, where is the democracy in that decision making? We’re not talking about a university patenting a new and improved fidget spinner. We’re talking about universities selling off the rights to cutting edge, life-saving drugs that have tremendous import for all of humanity. The control of these therapies are being given over to the worst institutions imaginable: giant pharmaceutical companies. These corporations have perfected the actuarial science of setting drug prices as high as possible while still retaining the most amount of customers, while the rest suffer and die because they can’t afford the treatments.
What if somebody wanted to challenge the practice of universities giving over their developments of life-saving drugs to private ownership? Well, we have an example of just such a case. In 2018 the nonprofit organization Knowledge Ecology International (KEI) sued the NIH over exclusive licenses for CAR-T therapies that the government gave to the company Gilead. KEI claimed that the development for these CAR-T therapies were funded in part by public dollars and so the NIH’s decision to grant an exclusive patent to Gilead was both anticompetitive and against the interests of the public.
The NIH countered back and filed a motion to dismiss the case, claiming that KEI had no standing to bring the lawsuit (a common tactic). The court agreed. The judge wrote that KEI could not demonstrate that someone represented in the case had suffered an “injury-in-fact” caused by the proposed patenting of the CAR-T therapy, and therefore had no standing.
This case shows that the current U.S. courts are the worst way to go about securing any protections for people against corporations. Since the adoption of the Bayh-Dole Act, the U.S. government, as well as people bringing cases against it and the corporations it protects, are now the ones that have the burden to prove that public ownership of a patent better serves the public than a private monopoly, not the other way around. Going up against the government or a well-funded corporation will always be an uphill battle. Justice department officials often go on to represent the corporations they had previously been watchdogs for, and vice-versa, bringing with them valuable insider knowledge. For example, the current top three officials with the Department of Justice that brought federal charges against assassin Luigi Mangione (after pressure from the healthcare industry) all represented healthcare companies before serving in government.
Court cases taking on corporate hegemony may be valiant, but they are also Sisyphean. As the late great labor organizer Jane McAlevey pointed out: “In the United States, we are stuck with a high court that will rule against workers and the planet for another thirty to forty years. Lawsuits, legal approaches, and advocacy, the modus operandi of choice since the early 1970s for those who self-identify as progressives, simply will not work.”
And where do all these untouchable corporate profits go? They goes less and less to research of new medicines and more and more to advertising and political lobbying. Pharmaceutical companies will constantly rationalize their monopolized drug prices as necessary in order to fund continued research. This argument is nicely summed up by Alan Sager, a professor of public health at Boston University: “The promise of innovation persuades many Americans that high drug prices are warranted. An emotional and intemperate metaphoric formulation of the drug makers’ implicit position might be ‘give us all your money or you’ll die.’”
The problem with this argument put forth by patent apologists is that companies are in fact spending less money on any form of research, instead leaving that work to the woefully underfunded NIH. In their book Against Intellectual Monopoly, economists Michele Boldrin and David K. Levine point out that Novartis spends approximately 33% of its sales on promotion, while only spending 19% on R&D. They found that these numbers were similar industry-wide, showing that “the top 30 firms spend about twice as much in promotion and advertising as they do in R&D.” They also point to the work of Sager, who found that the number of R&D employees in the pharmaceutical field declined between 1995 and 2000, “while the number of people working in marketing shot up 59 percent.”
The patent system also leads companies to shift what research they actually still do towards drugs that have already proven commercial value. If a current drug is making a lot of money, other companies would rather develop copycat drugs in order to get a share of the profits than try to develop new drugs for illnesses with unproven market potential. This means that development of treatments for rare terminal illnesses — which by definition will be less profitable than common ailments — slows to a crawl while resources spent on “me-too” drugs continues to grow. Boldrin and Levine summarize the effects of this behavior well: “Money spent in obtaining a ‘me-too’ drug that can be patented is money denied to society and charged to consumers.” We lose out on new treatments for rare forms of cancer while pharmaceutical companies are busy relentlessly hawking their patent-protected heart burn and erectile dysfunction medications to baby boomers watching CNN.
Instead of relying on for-profit pharmaceutical companies to develop and manufacture new drugs, we could expand NIH funding to focus on treatments for illnesses that would otherwise garner little attention from the private sector. As Richard D. Braatz, professor of chemical engineering at MIT told me, “If I could change things, I would have the U.S. government invest 100 times more funds into university research to invent advanced technologies that have the potential to massively drop the costs of manufacturing all of the new biotherapeutics being invented that are hard to manufacture reliably at low costs. … The funding would be weighted heavy on high-risk research where the gains can be the largest, rather than low-risk research that companies are doing anyway.” The U.S. government, through the NIH, currently spends more than $41 billion a year on medical research. Let’s shift some of the money from the ridiculous $895 billion set aside for the military in 2025 to the NIH instead.
Additionally, the process of publicizing patents, where new technologies are written up and disseminated publicly to supposedly let other people learn about them, is actually not great at sharing this knowledge because firms deliberately write up their patents in opaque, unintelligible language so as to keep competitors from learning how the protected material works. Why are pharmaceutical companies and healthcare providers keeping secrets from each other and fighting over access to patients when, ostensibly, their goal is to improve the collective health and wellbeing of society? It’s because their profit motive far outweighs every other concern. No human being is worth more than what can be extracted from their ill-health.
Other countries besides the U.S. that have adopted patent laws have predictably suffered the same deleterious effects. After Italy adopted the use of patent protections for its pharmaceutical industry, development slowed considerably. Regarding this, Boldrin and Levine point out that, “neither the size, nor the innovative output, nor the economic performances of that industry have improved, to any measurable extent, during the thirty years since patents were adopted.” These same effects have been seen throughout history. Boldrin and Levine point to a 1961 study that found that countries with no patent protections developed 10 times as many drug inventions as countries with patent protections, and had lower drug prices.
Companies often argue that patented drug prices allow them to fund the costly clinical trial process for new drug approvals. This argument would be disappeared if we instead used government funding for the clinical trial process. Boldrin and Levine note that since a pharmaceutical company will be the first to market its new drug after getting out of the clinical trial phase, they have a strong conflict of interest in regards to setting up their trials and publishing their results — they don’t want all their time and money to go to waste. But if the clinical trial process were publicly funded through “competitive and peer-reviewed NIH grants,” then there would be no need to rely upon monopoly drug prices to fund new drug development and the pricey clinical trial process. Sager also proffers that we could abolish patents altogether and instead award monetary prizes in proportion to a new drugs’ determined societal value, thereby maintaining the economic incentives for innovation that free-market capitalists adore while also abolishing the privatization of societally important technologies.
Another unfortunate characteristic of the current patent regime is that it incentivizes corruption. In efforts to protect their patents, companies will often collude to buy out smaller competitors or pay them to delay bringing a generic drug to market. A 2010 study by the Federal Trade Commission estimated that the annual cost to consumers for these pay-to-delay tactics was $3.5 billion. Pay-to-delay is considered illegal under current law, but those laws are barely enforced.
Some examples of even more naked corruption than this: In both 2010 and 2020, Novartis paid $422.5 million and $678 million, respectively, to settle whistleblower-initiated fraud lawsuits over bribes the company gave to doctors to get them to prescribe drugs owned by Novartis. These bribery schemes went on for over a decade. Doctors were treated to lavish meals, gifts, entertainment, and vacations all on Novartis’ dime with the express purpose of inducing these doctors to sell their drugs. And who ultimately paid for these drug prescriptions? Well, most of them were paid by Medicare, Medicaid, and VA benefits — the U.S. taxpayers, you and me. Novartis behaves more like a cartel intimidating and conniving its way out of actually competing with other companies. Nobody went to prison for this fraud, as would be expected in a country where corporations and Wall Street can do whatever they want with impunity but if you possess a single gram of crack you’re going to prison for the rest of your life.
After these lawsuits, Novartis got itself a new CEO, Vas Narasimhan, a former researcher at the company, and it now says that it’s more committed to its stated ethics and values. I suggest that trying to apply ethics and values to a private for-profit pharmaceutical company is like trying to mix oil and water. The very nature of its business is both undemocratic and unethical. As Boldrin and Levine point out, an industry whose business model depends on patent protections “must end up practicing rent-seeking and bribery, it must conceal or suppress relevant research findings, it must monitor doctors’ prescription behavior, it must employ a sales force three times the size of its research team, it must, finally, become one of the top donors of ‘political campaign contributions’” — a polite euphemism for legalized bribery.
As Baker points out, “Pharmaceutical companies that produce pain relief medication have been leading the fight against medical marijuana . . . There can be major consequences for public health as patients take stronger and more addictive medications when marijuana may be an effective treatment.” In this way, pharmaceutical companies are no different than street drug dealers staking out their territory, pushing their products onto the populace, bribing doctors, and making sure that no other alternatives are available. Apologies, street drug dealers are different — they mostly get criminalized, whereas pharmaceutical companies are completely immune from criminal charges and have the express support of Western governments.
Of course, though our healthcare system is a towering crime of exploitation, big pharma simply will not allow any reforms to it. As Zephyr Teachout points out in her book Break ‘Em Up, in 2019 pharmaceutical companies “spent a record $200 million on lobbying, working to make sure the government doesn’t start regulating prices, blocking their mergers, or reforming patent law.” This behavior holds true even beyond U.S. borders. When India passed a law restricting drug companies from carrying out “evergreening,” the practice of making slight modifications to existing drugs in order to continuously extend their patent protections, Novartis sued the Indian government and took the case all the way to the Indian Supreme Court in order to ensure it could charge its monopolistic price for its cancer therapy Glivec. Thankfully, in 2013, the Indian Supreme Court decided against Novartis, refusing Glivec patent protection and thereby ensuring a generic market. As an article in Intellectual Property Watch points out, the price of Glivec in India dropped from $2,200 for one month of treatment down to just $88. But drug companies have continued, predictably, to chip away at the Indian ruling and will treat future international infringement of their patents as an act of war.
If you want to actually bring the insurance and pharmaceutical industries back under the regulatory umbrella of antitrust laws, end the for-profit healthcare system, and abolish privatization of medicines, then forget about trying to take people to court. We shouldn’t just be trying to stop the government from giving away our publicly funded technologies to corporations. We should be making sure that the corporations that try to steal them from us don’t even exist in the first place — in other words, nationalization.
There are pathways to nationalization, unpalatable though they may be to our establishment capitalist politicians. Economist Robert Pollin has suggested a mechanism for nationalization of fossil fuel corporations, where the government could buy out the top three polluters, ExxonMobil, Chevron, and ConocoPhillips, and convert them to public utilities. “The cost to the government to purchase majority ownership of these three oil giants would be about $420 billion at current stock market prices,” Pollin writes. “This is a formidable sum, but it is only slightly more than 10 percent of the roughly $4 trillion that the Federal Reserve authorized to spend to bail out the corporate sector in 2020, during the COVID lockdown and recession.”
This must also be done for pharmaceuticals.
If the pharmaceutical industry were a publicly controlled entity, then the price of its many drugs would fairly reflect their manufacture and administration costs, not the overinflated salaries of the company’s executives. Why do we let our healthcare outcomes be dictated by profit-seeking pigs? Our current system ensures continued death and economic ruination for anyone living below the upper classes. Given that healthcare and pharmaceuticals affects everyone at some point in the immediate here and now, in ways that are much harder to ignore than the climate catastrophe, their nationalization is a potential populist rallying cry and therefore a more proximate feat.
Circling back to CAR-T specifically, these potentially curative cancer therapies are not widely known in the public consciousness. Every time I tell someone about these therapies they react the same way that I did when I first heard about them years ago. They are surprised that such an effective therapy even exists and they are just as surprised that they hadn’t heard of it before. Perhaps if more people knew about the fantastic possibilities of cell-gene therapy then there would be a greater public outcry for their privatization to be abolished.
There should not be any for-profit healthcare companies, health insurance providers, or pharmaceutical companies. Anything that is remotely related to public health and well-being must be publicly funded and administered by public organizations. At the very least, in the more immediate term, patent protections must be abolished so as to extricate the profit motive from new drug development. Until then, the pharmaceutical industry is nothing but a bloated protection racket, a cartel, a den of gangsters bilking their sick customers for all they’re worth and flaunting the blood money in our faces.
And with the profit motive dissolved from the hospital industry, rural hospitals with low patient levels could be properly funded and receive sufficient support so they could actually administer complex CAR-T therapies. Hospitals wouldn’t have to fight over patients. Patients could feel confident that they are receiving quality care no matter which hospital they go to. If the state could administer its own CAR-T therapies, if we had universal healthcare free at the point of service, then taxpayer money would go directly towards the administering of these treatments. There would be no private company upping the price in order to give its CEO an obscene bonus. There would be no private insurer weaseling its way in to take its cut. If we made a commitment to fully fund our healthcare institutions for the good of the public then we would fundamentally transform the way healthcare is thought about in this country — not as a commodity, but as a human right. Imagine the potential human flourishing that could happen if people no longer had to worry about being bankrupted by health emergencies, if worker unions did not have to waste their energy fighting for health insurance benefits, if illnesses were treated because they are illnesses, not because they are sources of profit.
It is past time to put our healthcare system under democratic control, so that it may serve us, the people who pay for it anyway, not the vultures who profit from death and disease. Until then, I say, it’s open season.