When companies spend billions to control the sale of a drug, we all pick up the bill
In recent decades large pharmaceutical companies have spent billions of dollars purchasing small startups to gain control of a drug. If the medication lacks FDA approval, the large company does the testing and paper work necessary. When it’s approved, the buyer charges a lot for the medication and markets it aggressively.
In 2011 Gilead bought Pharmasset for $11 billion. I assume they desired to be the company that eradicated hepatitis C—or they wanted the media to take notice–or maybe the CEO wanted to show he was exceptional —or perhaps they thought they could reap a big profit when they sold their product.
Pharmasset’s drug (taken with a second less effective medicine) cures Hepatitis C quickly and with minimal side effects. That was great news for the 2.7 to 3.9 million Americans who carry the bug, and for the 71 million people worldwide who are chronically infected with Hep C and might someday develop cirrhosis or liver cancer. The disease is responsible for the deaths of 400,000 people each year.
The virus was isolated in the 70’s by researchers in at the Emeryville startup called Chiron. It’s one of several that inflames the liver, makes people yellow and drains their energy. It becomes chronic in 70-85% of those infected when they are adults. A third of the continual carriers develop liver inflammation and die within 20 years. A third never have significant problems. And, in a third the liver becomes slowly and progressively inflamed
By contrast, hepatitis A doesn’t become chronic. Hepatitis B usually causes a self limited illness in adults, but becomes a lifelong problem for infants who acquire the disease from their infected mother.
For decades “C” was treated and often cured with interferon. A year long ordeal, the treatment consisted of weekly injections that caused fever and exhaustion. The bad effects usually lasted a few days and people recovered before it was time to get their next shot.
The doctors who developed the curative drug were scientists at Emory University. One of them, Raymond Schinazi was a Jew who was born in Alexandria Egypt. In 1956 Israel and Egypt fought a war and Egyptian Jews became personae non grata. His family moved to Italy, then the UK. He studied in Boston and learned about “chemicals similar to Nucleosides.” When the world learned HIV was caused by a virus, Schinazi was a professor of Pediatrics at the VA hospital in Atlanta. As he explained (in interviews) he “couldn’t just sit around and do nothing. We had the tools, the brains and the information” (He had done research on the Herpes Virus.) He wanted to attack the virus with nucleoside analogues. The VA resisted then assented, and Schinazi helped develop two of the more significant anti HIV drugs. Profits from the sale of the medication went to his university.
Encouraged by his success Schinazi wanted to try to develop an anti Hepatitis C drug. The NIH, allegedly, turned down his application for the project. He got venture funding, founded Pharmasset, and developed Solvadi. In 2011 Gilead bought Pharmasset for $11bn. (Schinazi received $440 million and went on to do further research.)
Gilead now had to sell and charge a lot for the medication. The original list U.S. price for the company’s two drug combination, Harvoni, was $94,000.
For most of those infected treatment wasn’t urgent, but Gilead had to move a lot of their product before competitors developed a drug combination that worked as well as Solvadi. The company spent $60 to $80 million on TV ads in which people said they were “ready” to be cured.
In August of 2017 the FDA approved a second combination of anti Hepatitis C drugs. Mavyret, sold by AbbVie it will reportedly sell for $26,400 for 8 weeks. (People with certain “genotypes” of the virus are usually cured in 8 weeks.) 12 weeks of the drugs sell for $39,000.
In 1999, as part of a hostile takeover Pfizer paid $90 billion and swallowed Warner Lambert–the corporation that owned/controlled Lipitor. Pfizer went on to sell a lot of the medication–Lipitor became the world’s best selling drug. In a 12 year span (1997-2009) Pfizer sold more than $80 billion of the pharmaceutical for $5-$6 per 20mg pill.
To understand the drug’s appeal we have to remember that one in three deaths in this country are the result of a heart attack or stroke: 800,000 people die annually. 92 million adults are living with heart disease or the after effects of a stroke. Vascular disease isn’t preventable, but it’s more likely to occur in people with a family history, high blood pressure, diabetes, or to those who smoke or have a high serum cholesterol.
Since the 1950s doctors have believed that if they could lower the level of cholesterol in the blood they could prevent some heart attacks.
In 1973 a researcher in Japan, Akira Endo, after years of effort, extracted a statin from a blue-green mold. When taken by a human it caused the blood cholesterol level to drop. After confirming Endo’s findings, Merck scientists, used an aspergillus (and Endos methods) to create the cholesterol lowering drug Lovastatin. (Robert Hauser, Heart Stories, chapter 11) A 1994 Scandinavian study showed that statins “led to a sharp drop in fatal heart attacks for patients with heart disease.” The following year Merck sold more than 4 billion dollars worth of Simvastatin and Lovasatin.
Many tried to make a superior statin. Bruce Roth, a researcher at Warner Lambert in Ann Arbor synthesized Lipitor and showed it was very potent –the strongest available.
After it was tested and FDA approved, Warner Lambert joined forces with Pfizer, and the drug was “aggressively” priced and promoted.
Then (apparently) something went wrong and Warner sought to be acquired by someone other than Pfizer. Pfizer wasn’t having it. In 1999, as part of a hostile takeover Pfizer paid $90 billion, swallowed Warner Lambert, and went on to sell lot of Lipitor. When Pfizer’s monopoly ended their profits dropped and the company attempted to avoid U.S. taxes by moving their headquarters to Ireland.
“To sustain a $20 billion-a-year business (a firm like Pfizer”) needs to add one new blockbuster medication to its portfolio each year”…” to maintain their revenue base large companies need four “$1 billion-per-year drugs…,” (That’s the conclusion of Bernard Munos, a leading thinker.) He says the pharmaceutical industry of the 1980s was a “haven” for creative scientists whose work was based on “cutting edge discoveries coming mostly from academia.” Proceeding at their own pace and pursuing clues as they went, these researchers steered their own course and pace. Industry assumed they would eventually create a commercial product. The approach was “risky”– but it led to a lot of innovative medications.
In the 1990s business savvy CEOs became the leaders of most of the large corporations. They tended to be scientifically untrained or illiterate, and they were troubled by the apparent disarray in their R and D divisions. Scientists kept changing course. There were no deliverables. “To them (what they saw) epitomized mismanagement.” So the CEOs changed the culture. Researchers were now expected to be “responsive to the marketplace”. A “process” driven–goal driven culture was created, and true innovation was largely “destroyed.” Munos believes leading edge innovators aren’t focused on the existing customers and markets. They want to make something that “transforms—obliterates” the status quo.