RATHER THAN WORKING TOGETHER TO REDUCE RESEARCH & DEVELOPMENT COSTS …
In his State of the Union address in February, President Trump called the prescription drug price discrepancy between the United States and other countries “unacceptable” and “unfair,” and vowed to “stop it fast.”
On May 16, the House Committee on Oversight and Reform followed up on the President’s call by holding a hearing entitled HIV Prevention Drug: Billions In Corporate Profits After Millions In Taxpayer Investments.
May 16, 2019
You can watch the entire 3.5 hour hearing by clicking on this link. However, you really only need to see the first half to understand the contentious issues and political arguments.
The Committee focused their attention on the cost and availability of the HIV treatment and prevention drug called Truvada (tru-VAH-dah), which was FDA approved in 2004 and is manufactured and sold exclusively by Gilead.
Truvada has revolutionized the fight against AIDS. It is the only drug that treats and prevents the transmission of HIV. As opposed to the relatively ineffective HIV drugs available before 2004, Truvada …
- has saved millions of lives around the world
- has extended HIV patient life expectancy from age 40 to age 78
- prevents HIV susceptible people from contracting the disease
- has reduced the drug regimen from 15 pills to just one pill per day
- has no serious side effects
Both Democrats and Republicans agree that the U.S. needs to reduce the cost of prescription drugs, including Truvada. However, as was evident in the hearing, most Democrats (like AOC) don’t understand drug research and development, so they demonize American pharmaceutical companies and propose taking away their patents and profits. Most Republicans appreciate the miracle drugs produced by these companies and believe the efficiency of the public / private research partnership should be improved to reduce the staggering R&D cost of prescription drugs.
Democrat Complaints / Solutions Directed at Gilead:
1 – Only 10% of the 40,000 U.S. adults and adolescents diagnosed with HIV infection each year (mostly gay African-American and Hispanic-American young men, poor African-American young woman, and intravenous drug users) can access or afford Truvada.
2 – Gilead’s high price ($20,000 / year / person) for Truvada in the U.S. versus the generic drug price ($60 / year / person) in Canada and Australia demonstrates Gilead’s greediness and is the cause for its limited accessibility. Therefore, Gilead should reduce its pricing immediately or people will die.
3 – U.S. institutions like the NIH and CDC invested taxpayer dollars in the public / private research partnership and, therefore, have a claim on the patents resulting from the discovery and commercialization of Truvada. Government has the right to ensure reasonable prices and greater availability of the drug.
Republican and Gilead Retorts:
1 – There are multiple social, stigma, educational and testing reasons why Americans with or susceptible to HIV are not accessing drugs like Truvada. Congress can and must address those reasons with bi-partisan legislation.
2 – Gilead invented, developed and commercialized Truvada and lawfully holds the only patent. Gilead’s patent exclusivity in the U.S. expires in 2021, when a generic drug will then be allowed to compete. In the meantime, Gilead must charge its current pricing in the U.S. market to:
a) recoup it’s $6 billion investment in HIV research and $1.1 billion investment in Truvada,
b) pay for normal business costs, like sales, marketing, manufacturing, finance, IT, taxes, etc. and
c) invest in new research to develop a version of Truvada requiring lower and less frequent dosages, a version with fewer side effects, and/or an outright cure for HIV.
3 – Gilead is reducing the cost and increasing the availability of Truvada by taking the following actions:
a) increasing its patient cost assistance programs,
b) donating 2.4 million vials of Truvada per year for the next 10 years to the 200,000 uninsured patients who the CDC says either have HIV or are susceptible to contracting it, and
c) voluntarily reducing its patent exclusivity one year from 2021 to 2020.
Other Takeaways From the Hearing
Patent rights are in the U.S. Constitution — Article I, Section 8, Clause 8: Congress shall have power to promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries.
Drug development is expensive and time consuming — it typically takes $1.7 – $3.2 billion and 11 – 15 years to bring a successful drug to market.
Most drug developments fail — 97% of all drugs entering human testing fail.
Pharmaceutical companies don’t make obscene profits — their return on capital is in the mid-teens, which is nowhere near most tech-company returns.
Trump and AOC are misguided — the President and AOC either don’t understand the concept of patent right protection and the astronomical costs of drug R&D or are simply jumping on the politically expedient “drug companies are evil” bandwagon. Either reason is shortsighted and dangerous to our health.
Conclusion
The President and Congress should work together with America’s great pharmaceutical companies to reduce the cost of life saving drugs by improving the efficiency of public / private research and development, not by taking away the patents and profits necessary for discovery of future innovative cures.