Corporations use public funds for research while profiting privately
In September 2015, the Washington Post published an article containing the interesting history of one of the drugs making headlines recently because of its skyrocketing price.
“In 1953, a new drug was released by Burroughs Wellcome, a pharmaceutical company based in London. Pyrimethamine, as the compound was named, was originally intended to fight malaria, after the microorganisms that cause the disease developed resistance to earlier therapies. The drug was used against malaria for several decades, often in combination with other compounds. It’s mostly used now to treat toxoplasmosis, a parasitic infection that can be life-threatening in people whose immune systems are suppressed, for example, by HIV/AIDS or cancer.
“More than 40 years later, Burroughs Wellcome merged with the British pharmaceutical giant Glaxo. In 2010, the company, now GlaxoSmithKline, sold the U.S. rights to pyrimethamine — which is marketed under the brand name Daraprim — to another firm, CorePharma. By then, the patent on the drug had long since expired, but because nobody bothered to make a generic, Daraprim was essentially a monopoly.
“A course of treatment for toxoplasmosis is about 100 pills, which under the new pricing would run $75,000. Why the astonishing increase? The answer is: Why not?”
The Post went on to point out (pointedly) that “Unlike every other advanced country, the United States permits drug companies to charge patients whatever they choose.
The daily set Britain in contrast, noting that, there, “GlaxoSmithKline sells the drug for 66 cents a pill.”
“Daraprim illustrates the way most drugs are priced: They are invented not by the companies that sell them now but by someone else. Then, like big fish swallowing little fish, larger companies either buy small firms outright or license promising drugs from them,” said the Post.
The article also went on to explain that “Very often, the original discovery occurs in a university lab with public funding from the National Institutes of Health (NIH), then licensed to a start-up company partly owned by the university and then to a large company.
“There is very little innovation at the big drug firms. Instead, their major creative output is trivial variations of top-selling medications that are already on the market (called ‘me-too drugs’), to cash in with treatments just different enough to justify new patents. For example, the first of the statins, drugs that lower cholesterol, was Merck’s Mevacor, which came on the market in 1987. There followed a whole family of me-too statins, including Zocor (also made by Merck), Lipitor, Pravachol and Crestor. There is little reason to believe that one is more effective than another at equivalent doses.
“Drugmakers are now getting some pushback from the public in response to their claims that they need the money, but they fall back on the rhetoric of the free market.
“But the pharmaceutical market is hardly an example of unfettered capitalism, because the companies are totally dependent on government support,” said the paper. In addition to receiving huge tax breaks and government-granted exclusive marketing rights, they are permitted to acquire drugs that resulted from NIH-funded university research.