How Drug Companies Keep Medicine Out of Reach

The promise of delinking research and development from the actual manufacture of drugs, and why the pharmaceutical industry rejects an idea that could turn neglected diseases into profit
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Reuters

For almost a decade, the United States has been standing in the way of an idea that could lead to cures for some of the world's most devastating illnesses. The class of maladies is known as neglected diseases, and they almost exclusively affect those in the developing world. The same idea, if realized, might also be used in more affluent nations to goad the pharmaceutical industry into producing critical innovations that the free market has yet to produce - things like new antibiotics, which are likely to be used judiciously, and are unlikely to be wildly profitable.

But the idea, which advocates have outlined as a treaty, and which will have its fate decided next week at the World Health Organization (WHO) where it has languished for years amid bureaucratic tumult, is "good enough to be dangerous," in the words of one person close to the negotiations. It has thus drawn the fierce opposition of those who benefit most from the status quo, the pharmaceutical giants and the nations that claim them.

"It's a precedent. It's a competing paradigm," Jamie Love, 63, the director of Knowledge Ecology International, a progressive group agitating in favor of the idea, told me. "And the Obama administration, instead of wrapping its arms around it and trying to breathe some life into the future so we don't have $200,000 drugs, is killing it."

jamie_blue_tie_blue_jeans_DSC_0016_800x944.jpgjamiewithfish200.jpg James Love in Alaska, 1974, and at KEI's D.C. ofifces in 2010 [Dashiell Love]

When I met Love in February at his office in Washington, D.C., he had just returned from Geneva, where the WHO is based, and he planned to be on a return flight shortly. Coach class, he assured me. Love has a boyish face with pale blue eyes and an inscrutable energy about him. The energy, according to those who know him, is nothing new. As a young man, he dropped out of college in Washington and moved to Alaska, where he became a longshoreman and cannery worker and opened two small NGOs. The work drew the attention and support of Ralph Nader, and, in 1980, Love moved to Boston on a fellowship to Harvard's Kennedy School. He added a second Master's degree from Princeton, where he studied with Joseph Stiglitz.

"Part of the problem is that nobody understands what we're talking about," Love told me in his office, a small loft beneath a gabled roof on Connecticut Avenue. "There's really only twenty or thirty of us who understand what we're trying to do with this."

Bill Gates, speaking to the Royal Academy of Engineers in London last March, managed to capture the problem that Love's idea would be leveled against: "Our priorities are tilted by marketplace imperatives," Gates said. "The malaria vaccine, in humanist terms, is the biggest need, but it gets virtually no funding. If you are working on male baldness or the other things you get an order of magnitude more researching funding because of the voice in the marketplace."

This fact -- that research-based pharmaceutical companies focus on the most lucrative products, rather than the most needed -- is particularly damning for the global poor, whose diseases will never be profitable enough to attract the industry. The WHO has recognized 17 such diseases, known as either type III or neglected tropical diseases (NTDs). Almost all of them edge on biblical in both scope and horror.

"The needs are pervasive because these diseases have been so understudied," said Peter Hotez, the founding dean of the National School of Tropical Medicine at Baylor University. "Look at a disease like hook worm infection. Well we now know that single dose mebemindizole doesn't work against Nacator americanus, which is the major hookworm. Why is that? We really don't know," Hotez said. "The WHO I think did us a disservice a few years back when they coined the term 'tool ready' versus 'tool deficient' diseases. All neglected tropical diseases are tool ready, and those same diseases are tool deficient," Hotez said, meaning drugs exist to fight all of the conditions, but many are met by severe resistance and others are poorly adapted for low-resource settings.

The WHO list of NTDs includes Chagas disease, which has a burden of disease five times that of malaria in Latin America, and Dengue fever, which 40 percent of the world's population remains at risk of acquiring. It also includes river blindness, which affects 20 million people in sub-Saharan Africa and leads to infections that itch so severely -- as worms die in the flesh -- that sufferers turn to nails, scalding water, and other violent means to numb the sensation. The existing drug for the disease, Ivermectin, requires six doses over three years to be effective, a regiment that would be difficult to deliver in affluent countries with robust health systems, and is nearly impossible to accomplish in rural Africa.

Neglected diseases, even when coupled with type II diseases, things like malaria and tuberculosis that primarily affect the global poor, receive less than two percent of the $160 billion spent on medical research and development (R&D) each year.

The idea, which has gained the support of a range of academics and economists from around the world, as well as Doctors Without Borders/Médecins Sans Frontières (MSF), Oxfam, Health Action International (HAI), and DNDi, aims to develop new cures for those diseases, and to manufacture the drugs and vaccines at prices affordable to the global poor.

It hinges on the incredible discrepancy between the cost of developing a drug or vaccine -- an expensive and risky enterprise -- and the actual cost of manufacturing a drug, which is often astoundingly cheap.

"Once you sort of turn that corner and you realize that intellectual property rights are really man made policies ... then it just opens your mind up."

"So there is the idea that there are gaps in research," Love told me in February, "and the second idea is that linking the cost of R&D to the price of the drug through the grant of a monopoly is inherently problematic, and the problems are diverse." The existing system relies on the promise of drug sales under patent to incentivize innovation -- an effective monopoly on production, typically lasting more than a decade. That system leads drug makers to set prices at whatever level they think the market can bear, regardless of the cost of manufacture or even the cost of development. The point was driven home last year, when Memorial Sloan-Kettering Cancer Center, in New York, refused a new colorectal cancer drug priced at over $130,000 per year. The drug maker, Sanofi, promptly cut the price in half.

The point is also particularly egregious in the case of lifesaving antiretroviral drugs (ARVs) for those suffering from HIV/AIDS. The fight to make those medications accessible to the global poor was another battle in which Jamie Love was intimately involved.

"If you're looking for sort of the intellectual driver for the idea, it's undoubtedly Jamie," said Robert Weissman, who now runs the storied advocacy group Public Citizen. Weissman was alongside Love in 2001 when Love made the most important play of his career: He asked Yusef Hamied, a chemist and the director of the Indian pharmaceutical manufacturer Cipla, for a rock-bottom price to produce a cocktail of ARVs. At the time, the pill regiments were selling for over $10,000 per year under patent-protected prices. Hamied said that Cipla could produce the drugs for a dollar a day per person.

"Jamie got that it had to be a dollar a day, that it wasn't $400 a year, that the price of a dollar a day would move the whole debate," Weissman said.

Hamied's offer made headlines around the world. It set a floor in the market and lead the prices for name brand drugs to fall precipitously.

"Before all this, we had a meeting with the U.S. Trade Representative and we were talking about how keeping these prices and patents in place was costing millions and millions of lives in Africa," Weissman recalled, referring to Love and himself. "And the Trade Rep. said to us -- I'll never forget this -- 'I don't work for millions of people in Africa.'"

The $10,000 that pharmaceutical companies were willing to charge for ARVs -- and that their US government was willing to defend as reasonable at the WTO -- was egregious in part because the drugs can be produced so cheaply, as Cipla proved. But the prices were also impossible to justify because the development cost for the first generation of ARVs was close to nothing for private industry. The drugs, known as dideoxynucleotides, were almost all developed in the 1960s at Wayne State University under National Institutes for Health (NIH) grants to research cancer therapies. And, in the 1980s, it was again NIH researchers who thought to test the compounds against the AIDS virus.

Love traces the genesis of the idea to a similar situation, this one involving cancer drugs. In the early 1990's, Love began investigating Taxol for Senator Ron Wyden of Oregon. The drug is used to treat breast and ovarian cancer, and was developed by the NIH and produced for less than a dollar per milligram for clinical trials. Bristol-Meyers Squibb, once effectively given the patent, sold the drug for $4.87 per milligram, roughly moving the price from $100 per dose to $850 per dose.

"I do a lot of historical research on the things I do. I like to go back and look at earlier disputes and case studies on particular drugs or legislation or just try to figure out how we got where we are," Love said. One of the cases Love climbed into involved Cisplatin, the drug that saved Lance Armstrong's life. The drug was also developed within NIH and effectively handed to Bristol-Meyers.

"In the old days, the government would grant five year monopolies on government-funded inventions that were done by NIH or universities or something, but if you wanted more than five years, you could ask the government to extend the monopoly," Love said.

In the Cisplatin case, when Bristol-Meyers wanted to extend the patent, the government negotiated a 30 percent drop in the drug's price, and for Bristol-Meyers to contribute $40 million in grants to research of the NIH's choosing.

The case fundamentally changed how Love thought about intellectual property.

"Once you sort of turn that corner and you realize that intellectual property rights are really man made policies and they're designed to do something, and there's other ways to induce that same thing that can compete those ideas, then it just opens your mind up."

Love's idea suggests the use of cash prizes -- rather than patents -- to incentivize research; say, $2 billion for an effective therapeutic drug for Chagas disease. A cure, once developed, proven, and awarded a prize, would then exist as open-access intellectual property, with manufacturers around the world competing to produce the drug in the most cost effective manner. Implementing the idea, Love said, "is effectively leveraging the power of the free market twice, once to produce the thing you want and then again to manufacture it as economically as possible." The concept is known as delinking.

The prospect also has interesting second-order effects. "The numbers have to be big enough," Love said. "You can't replace monopolies that involve billions of dollars with prizes that involve thousands of dollars, but it's financially easy to do that because the savings from delinking are so big." Because drug makers are no longer dependent on sales, delinking would relieve huge strains on budgets beyond research and development; the industry only spends about 16 cents on the dollar for R&D. Massive ad campaigns, for instance, would become obsolete in such a system, because the innovator's profits are no longer tethered to sales, the same for gifts and meals to woo physicians.

Love's concept of delinking is outlined in a proposal for an R&D treaty, which remains in limbo at the WHO in Geneva. It will have its fate decided in late May, at the annual World Health Assembly (WHA), the democratic forum of members states that governs the WHO.

The proposal adds a second, equally powerful idea to Love's, one inspired by open-source software models.

A post-doctoral student in Edinburgh, Scotland, who had been tracking the project's open lab books online, produced a compound that Todd's own lab couldn't figure out how to synthesize.

Historically, basic research and drug innovation has been done in silos, with little communication across companies and labs. That isolation guarantees that researchers repeat failures that have already occurred elsewhere, a problem that becomes glaring in the case of neglected diseases, where the total research investment is a fraction of what it is for profitable diseases. The lack of information sharing also guarantees that some labs remain stymied by problems that researchers in other places may know how to solve.

"The existing funding structures are competitive, national grant based," said John Wilbanks, who works at the non-profit Sage Bionetworks and is a fellow at the Kauffman Foundation. "So, for most people, the rational economic decision is not to share, not to collaborate, in order to obtain additional taxpayer grants to continue the research and to keep employment."

Wilbanks's background is largely in tech, and the group he works for is building a platform for computational biology akin to GitHub, a system that lets computer programmers track their contributions to open-source code.

"The fear is that by spending my time working on your project, for which I don't have a system to get credit that the existing system recognizes, I will be less competitive over time than someone who participates in the traditional system of information hoarding and publication," Wilbanks said. "We're trying to fix that problem through openness, similar to the R&D treaty."

To combat the problem, the R&D treaty would create an observatory, an open platform for researchers in disparate corners of the globe to pool data and coordinate their work. Grants given to fund their studies would come with provisions requiring that the research exist on that public, cloud-based observatory.

Such an open system also means that help can come from unexpected places. Mathew Todd, a chemistry professor and researcher in Sydney, is currently running an open-source malaria project. He explained how a post-doctoral student in Edinburgh, Scotland, who had been tracking the project's open lab books online, produced a compound that his own lab couldn't figure out how to synthesize.

"The chemistry wasn't working out, and we were being open with this," Todd said. "And he looked at it and said, 'Well I can make that.' And so he went off and made it, and we were interacting with him by Twitter, sort of following his progress and he was posting his experimental data to our lab books online, and he made it."

"It's that kind of example where you think, 'Well if everything's open and it's clear what needs to be done and anybody can chip in, then that means you're going to attract the expertise you need without actually knowing who those people are," Todd said.

Todd told me he's put forward a proposal to host a panel focused on the future of intellectual property and drug development at the February meeting of the American Association for the Advancements of the Sciences. "I think the time is right to have that discussion about whether the patents are working, and whether they're necessary for drug discovery," Todd said. "I want to hear from people on both sides. I think we just have to have that conversation."

***

Last November, the Obama administration made its most strident effort to date to stall the idea. Because successive U.S. administrations have stonewalled the process so effectively, negotiations on actual language for an R&D treaty have never begun. That hasn't prevented the intellectual scaffolding beneath the idea from developing, though.

To fund the system -- research grants and an observatory to produce and coordinate the foundational science, and prizes to incentivize the pharmaceutical industry to spring off of that basic research -- the treaty would commit member states to spending 0.01 percent of GDP on neglected diseases each year. The U.S. already spends at that level, and would have no further financial obligations. No other country comes close.

Nonetheless, the idea of binding financial commitments by way of treaty has been a centerpiece of US opposition.

"They are using a process argument, saying we are against the form, but in fact what they are opposing is the content of the negotiations," said Judit Rius, the U.S. manager of Doctors Without Borders/Médecins Sans Frontières Essential Medicines Campaign. "When governments get serious about an issue, they agree to binding global norms and they agree to be held accountable. And that's what we want," Rius said. "What the U.S. is really opposing is a conversation about the how this funding should be spent. They are protecting the current business model, the status quo innovation models."

At the November meeting, the U.S. hammered through a resolution effectively neutering the idea in a late night vote. It was held four hours after simultaneous translation of the debate ceased, with only 25 of the original 194 member state representatives remaining in the negotiating hall.

"At least with the Bush guys you could have a conversation with them about this kind of stuff."

"I've never seen something like that happen in an international negotiation," Carlos Correa, the representative from Argentina, told me. "The meeting should have been terminated, because clearly some of the delegations were not able to follow the debate. In these cases, the governments generally say, 'Well this is not possible to go on, so we'll finish and inform the assembly there was no conclusion.'"

According to delegates present at the meeting, which took place behind closed doors, it was clear from the outset that the U.S. had no intention of negotiating in good faith. "The U.S. was delaying the issue and opposing it totally," one negotiator said. "Very little real negotiation, they were very radical. They were even insisting on some ideas that were not totally correct."

The resolution that emerged from the November session will be taken up in late May, at the annual meeting of the World Health Assembly. If the measure is adopted, further consideration of the idea will be pushed until at least 2016. The resolution also includes the unusual provision of being sealed, barring any further discussion at the WHA.

The document also suggests the creation of a pilot program and an observatory to monitor research, but does so without allocating funds, and with such vague language as to render the resolution moot.

The U.S. has promised to bury the resolution altogether if other countries try to reopen negotiations in May.

"We saw in January that the U.S. negotiator said publically what we had been told he was saying in November behind closed doors, which is that, 'If you change even one comma, we'll kill it altogether," Rius said.

Early in the November meeting, the U.S. moved to quiet a Colombian negotiator. Nils Daulaire, the lead U.S. representative in Geneva, has made a habit of using backchannels to sideline other delegates voicing positions he does not share.

The negotiator in question declined several requests for comment for this piece.

"She was very well prepared, and she was taking the floor several times during the first day," another delegate told me. "And I saw that the U.S. delegation was a little bit nervous, because usually Colombia -- in the last years -- they never take the floor on these issues and they always support the U.S. position. Around four o'clock on the afternoon of the first day, she was called outside the room, and one hour after she came back to the room and she never took the floor again in the next two and a half days. She stayed until two o'clock in the morning the last day, but she never took the floor again."

512px-Dr._Nils_Daulaire_at_May_17_Press_Conference_cropped.jpgNils Daulaire [Wikimedia Commons]

In March, when I spoke with Daulaire, an assistant secretary for global affairs at the Department of Health and Human Services (HHS), I asked what had provoked his complaint. His response took the kind of emphatic tone that conveys both displeasure and the desire to say a great deal more: "I'm not familiar with any formal diplomatic complaint against the Colombian representative," he said. "I don't know where that comes from." Daulaire struck the same tone later in our conversation, when I asked at what level within the Obama administration the U.S. position had been crafted. "I do not discuss internal administration processes," he said.

Daulaire has a round nose and soft chestnut hair with a beard and glasses, lending the overall affect of a college dean. He is -- according to his official biography -- the speaker of seven languages, and a graduate of both Harvard College and Harvard Medical School. He is known as exceedingly ambitious, and is rumored to have put himself forward to replace Eric Goosby as U.S. AIDS Coordinator. The position is one of the most vaulted in the field of global health.

"He is very trenchant in his views, and I'm not sure whether that is because he's hearing that from the industry or whether he's hearing that from the administration, but he's looking at where the political wind is going," one source with intimate knowledge of the debate said.

Daulaire's efforts to derail the November meeting started more than a month before he and his staff arrived in Geneva. His office sent representatives to a WHO regional meeting in Angola to discourage support for the treaty amongst African states, and Daulaire himself made bilateral calls to number of negotiators and ministers of health. On the calls, he asked whether the officials were prepared, at the November meeting, to commit their governments to financing the treaty. None of the officials Daulaire called have the power to make such a commitment, nor does Daulaire himself. Moreover, the treaty he asked them to commit to financing has not yet been written, largely because of Daulaire's own intransigence.

"Nils says, 'The U.S. is the biggest funder of R&D, and we don't think anyone else is going to put up the money,'" one civil society member said. "But the bizarre thing about that is when developing countries said, 'We will put some money up, whether we will reach sort of figure that the experts came up with, we might not but we're prepared to do it incrementally,' he just said, 'No I don't believe you, let's just take the whole thing off the table.' It's very strange to me that the U.S., being the largest funder, is actively undermining putting pressure on other countries to step up to the plate."

"I was sort of looking forward to working with the guy," Jamie Love said of Daulaire. "Everybody knew that he was close to the industry, but that's not necessarily a bad thing. But he really changed when he got the job [at HHS]. At least with the Bush guys you could have a conversation with them about this kind of stuff."

Daulaire's deputy at HHS, Holly Wong, previously worked for the drug industry's main lobby group, PhRMA, and as director of public affairs at Schering-Plough Pharmaceuticals. The company was acquired by Merck in 2009.

Before his appointment to HHS, Daulaire ran a nonprofit called the Global Health Council (GHC) for close to a decade. The group was based in White River Junction, Vermont, where Daulaire lived. The organization had an annual budget of close to $7 million, although it didn't actually provide any health services. After Daulaire left, the organization was handed off to Jeff Sturchio, a former Vice President at Merck. Sturchio drove the group into the ground in less than three years. "It was really a lobby group," one observer said, speaking of the GHC. "At the World Health Assembly meetings they would rent huge halls in the Intercontinental with very expensive food and drinks," another recalled.

The GHC's main function appears to have been providing briefings for incoming members of Congress and new presidential administrations. "I don't think anyone has filled that role," Jonathan Quick, who is trying to revive the GHC, told me. Quick spent eight years working at the WHO as the Director of Essential Drugs and Medicines Policy.

Quick and several others in the global health space pushed back against questions about GHC's lobbying, arguing that the organization served as a kind of hub for advocates of greater U.S. involvement in global health. I asked Quick about his thoughts on the U.S. opposition to the R&D treaty, and whether he, having worked at the WHO, had misgivings about U.S. negotiators having such strong ties to the pharmaceutical industry.

"The U.S. is interesting, having seen it from the WHO side," Quick said. "Most countries when they come to the World Health Assembly lead with their health policies. And they bring to the WHA the values and policies they have at home. There are a few countries where that's difficult, because there are such strong commercial interests that there's a tension. That's always been a very difficult challenge for people representing the U.S. in the international health sphere."

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Brian Till is a Research Fellow with the American Strategy Program of the New America Foundation in Washington, D.C., and the author of Conversations With Power. More

Brian Till is a Research Fellow with the American Strategy Program at the New America Foundation in Washington, D.C. He writes on foreign policy, the strengths and shortcomings of the millennial generation, and the perils of the digital age. Previously a nationally syndicated columnist, he is the author of a book of interviews with former global leaders, including Mikhail Gorbachev, Fernando Henrique Cardosso, Bill Clinton, F.W. de Klerk, and Pervez Musharraf: Conversations With Power.

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