Bayer CEO Says Cancer Drug is for Insured Western Patients, not for Indians

I’m curious what you folks think of this article.

I never, ever respond to Facebook posts, but I did to this one.

What do you folks think? Is Bayer allowed patent exclusivity, or should an Indian company be allowed to legally manufacture a generic version?

I am not a fan of the current setup vis a vis drug patents but it does seem that the judge is flouting patent laws.

I’m thinking there needs to be a compromise between a drug company which frequently spends a billion dollars to develop a drug and bring it to market wanting a return on its investment (in part to help it develop more drugs), and the needs of people in poorer countries.

*"A (University College of London) report on medical innovation claimed that, provided scientific momentum was maintained, it was possible that disease-related deaths among the under-70s could be almost eliminated by 2050.

However, it said such progress was under threat from measures to weaken the intellectual property rights of drug companies and other innovators.

David Taylor, professor of pharmaceutical and public health policy at UCL, highlighted disputes in South Africa and India where drug patents had been called into question.

His report argued for “a rational balance” to be struck between strong intellectual property rights for drug developers and an obligation for the industry to ensure affordable universal access to essential treatments.

This could involve a lengthening of patent protection in return for drugs being sold at lower prices in poorer countries, Prof Taylor said."*

http://www.ft.com/cms/s/0/2ecc6a86-8838-11e3-8afa-00144feab7de.html

It’s a complicated messy issue.

In an ideal world, drug research would be considered a public service and be funded by the government. Instead of Bayer spending billions and having to defend their IP in courts and look like evil bastards in the processes by denying free/cheap meds to poor people, governments could do it and not have any pressure to profit from it.

But, that would be socialism I guess.

I thought it had been India’s national policy for decades to take and copy whatever drugs it deems needful. Is there something new in this I thought this had been going on a long time?

Bias the discussion much with the title?

The reality is that Bayer invested mightily in the R&D on multiple products with likely quite a few swings and misses and swung and hit a solid one with this one. The marginal cost of production is obviously not much but those sunk fixed costs were borne by them and not by the generic drug maker. Can’t say I have a strong sense of what is fair for each hit but allowing companies who have not borne those costs to profit by Bayer’s work seems unfair.

That said it also seems that Big Pharmas could figure out a way to get their profits while also giving the med for marginal cost plus a per unit profit to the poor who otherwise would be no sale at all.

Glaxo, after years of bad blood over costs for their AIDS meds in Africa, has seemedto learned this, maybe Bayer can too.

And they seem to have followed through.

If the product’s manufacturing rights are essentially stolen from the company that invented it, where would the incentive be for any drug company to spend its resources on developing any new drugs? Not only does it take billions to develop and test a drug, the specific one that works is probably one in a hundred (or a million) that were attempted.

It’s the title of the article: not my title.

Anyway, I disagreed with the Facebook comment that I responded to that basically said:

What’s the point of investing millions in R&D only to hand over the rights to a generic manufacturer. Holy shit.

Maybe if they didn’t incentivize IP theft by pricing their product at $69,000 per person per year, they would find there is a little more respect for the rights they claim.

Marijn Dekkers could probably use some PR training, but I think the crux of his argument is valid.

That sounds pretty dickish as a stand alone statement, but it was almost certainly made in the context of a larger statement or conversation. Bayer spent vast resources to bring a drug to market and that market was not suffering people with no money. It’s cold and seems unkind but Bayer is not an NPO.

The entire concept of patents is based on the premise that people and corporations should be given the opportunity to benefit financially from their work. The patent holder is required to fully disclose their process in exchange for a finite period of exclusive financial benefit. The concept is sound but the implementation is messy, which of course is a problem as common as dirt.

Bayer claimed US$ 2.5 billion in R&D costs bringing Nexavar to market. Here is an article that supposes $296 million is probably being generous. However, an article that concludes with:

is probably not written by an unbiased party. Pharmaceutical development is not the private domain of corporations but it’s certainly better served by them than by public research at this point in time. Corporations aren’t in business to break even and benefit humanity, they exist to earn profit. If they can do so and benefit humanity at the same time, we’re all better off.

It would be nice if pharma manufacturers worked harder to make their patented drugs more available to patients at lower profits to countries and individuals who otherwise couldn’t afford them, but gray market redistribution makes this problematic at best and frankly, they’re under no obligation to do so.

Regarding this particular situation, I think India, as a World Trade Organization member, was wrong to issue a compulsory license to Natco to manufacture a Nexavar equivalent. WTO member countries shouldn’t feel entitled to ignore core values when they’re inconvenient.

And that doesn’t even take into account the countless billions they’ve wasted in testing drugs that didn’t work or had unacceptable side effects.

Costs to develop and a smallish target market then equals a large unit cost. This is not a cholesterol med or antidepressant that will be used by millions. Yes in 2012 it brought in about $700 million (and expected $900 million in 2013) which means the market of pateints using it for the year was about 10 to less than 15K. Indications are so far only unresectable liver cancer and advanced kidney cancer.

How much costs to develop? Averageis quoted as over $4 billion and often higher. (On preview they got off cheap wth this one.)

Yeah, and maybe Apple should sell iPhones for $50 in India. That’s probably all it costs to manufacture one. Oh hell, make it $60 so they can eek out a meager profit.

It’s probably that the discrepancy between the two numbers (2.5B, 296M) is because of that.

Granted that research-related IP is a difficult system of property to optimize, why do you think pharmaceutical development is better served by private orgs than gov’t? Pharmaceutical research is a non-rival good and, without the gov’t-granted temporary monopoly, would be non-excludable as well. Non-rival, non-excludable goods are often better provided by gov’t than for-profit organizations.

This is the part where it gets messy. What if Bayer really invested $2.5 billion to bring Nexavar to market? That’s 36,000 patient years to break even. I have no idea what the worldwide market is like for liver cancer pharmaceuticals, but I guess Nexavar is worth something near $1 billion in annual revenue right now.

What if Genentech came out with a more effective drug before Bayer broke even on Nexavar? What if they beat Bayer on the next five patents, resulting in billions of lost R&D costs for Bayer? What if they already beat them on the last five?

It’s easy to say “holy shit, $69,000 a year is ridiculous” but in the multi-billion dollar development cycle of pharma, it’s a pretty narrow view.

(Upon preview, others have beaten me to this.)

I have a somewhat jaundiced view of the medical products industry, but I do not think them entirely in the wrong here.

Or, government could allow the private companies to assume all the risks in developing the drug, but, if they are so concerned for their citizens, pay the going rate for the drug.

Bayer still takes the risks, as is appropriate in a capitalist economy.

You are touching on a very important point - clinical trials for new drugs. Where are the trials conducted? According to Helsinki, the subjects of clinical trials should benefit from the drugs if they are found effective. How can a government not address the issue of availability when allowing the trial?

Sorry, I presented that awkwardly. I said that private pharma better served development which you were justified in interpreting as my opinion that public research was inferior, though it wasn’t my intention. I shouldn’t have said development. Pharmaceutical corporations have proven ability to bring the results of research to market. It’s possible that in the absence of for-profit pharma government and NGOs would fill the gap, but I think we’re better off with them than without them.

Excludability (patent protection) is the only thing that makes private development profitable and worth doing from a corporate point of view. I believe that the private pharmaceutical industry is an extreme positive in the big picture of medical treatment, though certainly not without faults. I wasn’t trying to denigrate the contribution of non-profit work. Please clarify your statement, though:

I’m assuming this is meant only to include public research, correct?

Again, I apologize for poorly expressing my thoughts. What I was trying to say was that we’re much better served by a combination of public and private research and for-profit sales of pharmaceutical products than we would be in a system where research and distribution were the exclusive domain of non-profit. That’s still an opinion of course, and you’re free to disagree with it, but I hope it’s at least presented a little better. I probably could have avoided the misunderstanding with the inclusion of one word:

Closer to $200, but I don’t disagree with your point.

Methinks the CEO of Bayer in Germany hasn’t changed it’s outlook in the last 100 years. India can do this according to its laws, and it has the moral high ground compared to $69,000 for a year’s treatment. India is under no obligation to honor Bayer’s claims to intellectual property rights and let its citizens die. Bayer is probably worried that poor westerners will go to India just for the treatment rather than die.

They are not worried about the poor westerners, They are worried about the rich ones who will happily head for india for a few months of treatment staying at a plush resort with the other $68K they would have spent on medications.