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In recent months, I’ve been taking a medication called Revlimid, given as a ‘late therapy’ for multiple myeloma. Since it looks like I may be Revlimid-dependent for a while, I decided to educate myself about the drug. As the chemistry is beyond me, I focussed my attention elsewhere.
The first thing I discovered was that Revlimid is phenomenally expensive.
A single 21-day cycle of treatment at the lowest dose of 5 mg daily costs the NHS £3,570. As the dose rises, so does the price, but not proportionally: for a single 21 day cycle at the high dose of 25 mg, it’s £4,318. The increment is small because the costs of actually manufacturing the drug are minimal. But whatever it is that we’re paying for, we’re paying for it through the nose: between £42,000 and £51,000 per patient for a year’s treatment. This is a treatment we need and to which we have a right. That does not, however, mean that its cost should be taken for granted.
Revlimid, it turns out, is a major profit generator for a medium-sized pharmaceutical company called Celgene, based in New Jersey. Though it directly employs only 4,000 people, Celgene’s 2012 revenues were $6.2 billion, up from $5.5 billion the previous year. After paying tax (at an effective rate of only 5%), profits on that revenue amounted to $1.6 billion, a 26% profit-to-sales ratio, high even by pharma industry standards.
Sales of Revlimid contributed more than $1 billion to Celgene’s revenues last year, making it by some way the company’s biggest cash cow. The Revlimid patent extends to 2027 and according to the company, ‘revenue is not near its potential peak’. (The drug has recently been approved for use in China.) Not surprisingly, Celgene’s NASDAQ listed share price has risen steadily, up 113% over the last year.
Celgene also makes the version of thalidomide used in the treatment of multiple myeloma as well as a new myeloma therapy called Pomalyst, licensed in the USA and currently under review by NICE.
Who knew so much money could be made out of multiple myeloma? It’s considered a rare disease, accounting for only one per cent of all cancers. Currently there are about 14,000 people in Britain and 75,000 in the USA living with multiple myeloma. Not a vast market but clearly a profitable one, though still only a sliver of the $1.1 trillion global pharmaceutical industry.
Like other pharmaceutical companies, Celgene claims its high prices are needed to sustain research and development. However, like other pharmaceutical companies, Celgene spends the majority of its revenue not on R&D, but on sales, marketing, lobbying, legal fees, acquisitions, plus the 26% dispersed in profits. In keeping with an industry-wide trend, revenues and profits have grown faster than investment in R&D.
Celgene can charge exorbitantly for Revlimid because it owns an exclusive license to produce it. The formula itself is easy to replicate and if it were not for legal restraints, could be produced generically for a fraction of the cost. This multi-billion dollar business is built on a state-enforced monopoly of an essential good.
On examination, the rationale for that monopoly crumbles. Scientific research is cumulative and collective. The development of Revlimid was only possible because of a chain of advances in molecular biology and other disciplines. On what basis does the fruit of that process belong exclusively to Celgene’s shareholders?
In a revealing trend, pharmaceutical companies increasingly out-source core functions, including drug discovery itself. This reduces fixed costs but vitiates the neoliberal argument that innovation is inextricably tied to private ownership of the final product. It shows that innovation can be paid for and rewarded as a separate function, and that patent-holding exclusivity is not a necessary component of the process.
According to Big Pharma, their corporate model is the only way to advance research. Historically, however, medical advances have largely depended on public institutions (hospitals and universities); the corporate model is relatively recent. It is also a model compromised at its scientific core. The reliance on capitalist incentive for investment, as opposed to investment determined by public need, distorts the field as a whole. Increasingly, research is dictated by marketing. The aim is to produce a profitable drug; R&D priorities are set accordingly. As can be seen in the long-running resistance of Big Pharma to full publication of clinical trials data, the imperatives of competition put a brake on the sharing of information, which is the basis of scientific advance.
Jonas Salk, who discovered the first polio vaccine in the early 1950s, refused to take out a patent for the drug. Explaining his logic, he asked rhetorically, “Could you patent the sun?” He also noted that he had already been paid for his work on the drug through his regular salary as a university-based research scientist. (Not surprisingly, he was placed under surveillance by the FBI.)
Celgene has been criticised for its involvement in the American Legislative Exchange Council (ALEC), a body described by John Nichols in The Nation as a ‘collaboration between multinational corporations and conservative state legislators’. ALEC’s causes include reducing corporate regulation and taxation, privatising public services, tightening voter identification rules (making it harder for minorities, students and the poor to vote), minimizing environmental protection and promoting gun rights. It’s also zealous for ‘tougher’, longer sentencing, which directly benefits ALEC members like the Corrections Corporation of America and the GEO Group, two of the US’s largest for-profit prison companies.
ALEC also promotes ‘Stand-your-ground laws’ of the type used in Florida to justify the murder of Trayvon Martin. In response to that atrocity, activists announced a boycott of Coca-Cola because of its support for ALEC. Within hours, the company announced it was ending its relationship with the right-wing lobbying group. Others followed, including Wendy’s, Kraft Foods, McDonald’s, Apple, Procter & Gamble and even Wal-mart. But not Celgene, or indeeed GlaxoSmithKline, Bayer, Pfizer, or PhRMA (the pharmaceutical trade group). Alongside Big Pharma, tobacco, oil and energy giants also remain committed to ALEC.
Responding to criticisms of Celgene’s support for ALEC, Greg Chesmore, the company’s Senior Director of State Government Relations, declared last year that ‘participation in ALEC is consistent with Celgene’s vision, mission, values, and fully aligned with our commitment to improve the lives of patients worldwide’. In a perverse way, all that’s true.
In July 2012, The Guardian reported that ALEC had extended its operation to Britain, where it is lobbying against plain packaging of cigarettes. So it appears that some, admittedly small, part of the money the NHS hands over every year to Celgene ends up funding a campaign to undermine the health of people in Britain, adding to the NHS burden.
The NHS is spending a lot of money keeping me going. It was indeed the ‘cost-effectiveness’ of Revlimid that made NICE initially reluctant to approve it. After a vigorous public campaign by patient advocacy groups, NICE changed its position and Revlimid was made available on the NHS. I’m a beneficiary of this campaign, but so is Celgene. The clamour to save or prolong lives like mine undermined NICE’s bargaining position and strengthened Celgene’s. It’s a pattern seen in other controversies involving NICE, where health charities collaborate with pharmaceutical companies in pressing for rapid approval of new drugs.
Of course, the very idea of determining the “cost effectiveness” of a life-prolonging treatment is grotesque. What formula can possibly measure this kind of value? But anger at NICE is misdirected. The real problem is the extortionate prices demanded for life-prolonging drugs, and the real culprits are the pharmaceutical companies, who too often get away with making NICE the fall-guy for their rapacity.
In effect, companies like Celgene are hostage-takers: pay the ransom, they demand, or someone dies. The ruthlessness is breathtaking but is accepted as a corporate behavioural norm. What makes it more arch is that the hostage-taker claims to be on the side of the hostages. Though I’m one of those being held hostage by Big Pharma, I’ve experienced no trace of Stockholm Syndrome. On the contrary, I resent the way my illness, my vulnerability, has been exploited, used by a group of self-serving parasites to gouge the public purse.
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