WARNING!
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Drug companies are often portrayed as benevolent companies that pour billions of dollars into the creation of new drugs and vaccinations for the greater good. This was certainly the case in a New York Times column on the antiviral drug remdesivir, which has shown some promise in treating COVID-19.1
Biotech giant Gilead Sciences, which produces the drug, began distributing it on a compassionate-use basis in January 2020. Compassionate use is a form of expanded access to a drug, describing “the individual patient use of an investigational medicinal product outside of a clinical trial that is intended to treat a serious or life-threatening condition.”2
That drug companies offer such medications to patients in crisis is again deemed a noble, altruistic endeavor. The Times column even noted, “Given the stakes involved, it seems perverse not to root for Gilead's success … there should be no Big-Pharma haters in pandemics.”3
The reality, however, is far less rosy, as the pharmaceutical industry is developing drugs using taxpayer money, then turning around and selling them at exorbitant prices.
Political commentator David Sirota wrote in TMI that this alternative story is hardly ever shared by the press, and that’s no accident, because doing so would “… undermine the drug-companies-as-altruistic-heroes mythology, and admit that our laws actually help drug companies fleece Americans.”4
Remdesivir Was Developed Using Public Resources
In an April 2020 study published in The New England Journal of Medicine, remdesivir was provided on a compassionate-use basis to 61 patients hospitalized with severe Covid-19, and data were analyzed for 53 of them.5 Clinical improvement was observed in 36 of the 53 patients (68%).
Although this wasn’t a placebo-controlled study, the initial results suggest some potential usefulness in treating the condition. Gilead chairman and CEO Daniel O’Day, in a press briefing in March 2020, stated:6
“I’m really pleased to say that there’s an advanced investigational medicine called remdesivir that Gilead has been working on now for a decade. Spent really billions of dollars trying to develop this medicine that we are in late stage clinical trials with now, in both the United States and China and soon to be other countries.”
What he doesn’t say, however, as noted by Sirota and reported by Knowledge Ecology International (KEI) — a not-for-profit nongovernmental organization focused on social justice — the U.S. Army, the Centers for Disease Control and Prevention and the National Institutes of Health (NIH)/National Institute Allergies and Infectious Diseases (NIAID) subsidized the preclinical and clinical development of remdesivir.7 KEI laid out the drug’s discovery and preclinical research as follows:8
• CDC scientists used a Gilead library of 1,000 compounds in a search for possible candidates to treat the Ebola virus; they identified a precursor to remdesivir, which was further developed by Gilead scientists and researchers with the U.S. Army Research Institute of Infectious Diseases (USAMRIID)
• USAMRIID scientists tested remdesivir against several pathogens, including Ebola, which showed 100% of rhesus monkeys infected with Ebola survived when treated with the drug; the results reported the drug had broad-spectrum activity against pathogenic RNA viruses, including coronaviruses
• In a study published in the Journal of Medicinal Chemistry, it’s stated, “The partnership with government organizations, including CDC and USAMRIID, that generated the screening data and conducted the rhesus efficacy studies was critical to the successful identification of 4b [remdesivir]”9
An additional series of studies was then conducted by scientists with the University of North Carolina, Chapel Hill, Vanderbilt and Gilead looking into remdesivir to treat Middle East respiratory syndrome (MERS) and severe acute respiratory syndrome (SARS), which are caused by coronaviruses.
The research, which found the drug to be effective in preventing replication in coronaviruses, was funded by NIH grants, while later studies received funding from NIAID grants and federal funds from the Biomedical Advanced Research and Development Authority.
“Because this research was conducted, in large part, by U.S. scientists funded by U.S. taxpayers, it is not accurate to state or imply that remdesivir was developed by Gilead alone,” KEI stated.10 Later clinical research into the drug’s effects on Ebola also received funding from NIAID and NIH.
Rule Against Price-Gouging on Taxpayer-Funded Drugs Rescinded
In an article for the Journal of Legal Medicine, Rebecca Wolitz, J.D., from Yale University’s department of philosophy, explains:11
“The federal government subsidizes the research and development of prescription medications. Thus, a captivating critique of expensive medications is that prices are too high because of taxpayer co-financing. This critique is often framed in terms of ‘paying-twice’ — first for the research and second through the above market pricing of resulting products.”
Reasonable pricing clauses, which put limits on prices for federally funded drugs, have been proposed and put in place in the past to prevent price-gouging. One such clause was put in place by the NIH after high prices of AIDS drugs, developed using taxpayer dollars, were heavily criticized. The drug industry campaigned against the pricing clause, however, and it was rescinded years later.
“The upshot,” Sirota says, “remdesivir or any other COVID-related medicine developed at American taxpayer expense could ultimately be offered to American taxpayers at the world’s highest prices.”12 He then makes a valid point to anyone suggesting that Gilead will do the right thing and offer remdesivir at affordable prices “out of the goodness of its corporate heart” — history suggests Gilead will have other plans:13
• Sovaldi, a hepatitis C drug made by Gilead, was under investigation for 18 months by the Senate Finance Committee. The Committee decided that the price of the drug — $1,000 per pill, or $84,000 per treatment — "did not reflect the cost of research and development and that Gilead cared about 'revenue' not 'affordability and accessibility,'" according to The Epoch Times.14
• Gilead’s drug Truvada, which is approved to treat and prevent infection with HIV, costs more than $20,000 in the U.S., but less than $100 per year in other countries;15 Truvada’s use for HIV prevention was discovered via research by a CDC scientist and then further developed by research funded by $50 million in federal grants.
The U.S. government patented the treatment in 2015, but Gilead has argued the patent isn’t valid and brought in $3 billion in sales for Truvada in 2018. It has paid no royalties to the U.S. government either.16
“Gilead is also the same company that already made a preliminary move to try to juice profits off a potential COVID treatment (it only backed off when it was publicly shamed),” Sirota continued, referring to Gilead’s receipt of the orphan drug designation for remdesivir, which is reserved for drugs treating rare diseases and would have given Gilead seven years of exclusive marketing for the product, which would likely drive up prices. After outcry, Gilead submitted a request to the FDA to rescind the orphan drug designation.17
NIH Contributed to Every New Drug Approved From 2010 to 2016
In addition to R&D tax credits, the pharmaceutical industry enjoys, in the case of vaccines, shields from liability if their products cause harm. In fact, vaccine manufacturers are the only corporations selling products in the U.S. that cannot be sued, even when there is evidence the company could have made a product less likely to injure or kill people.18
Taxpayer funding is also par for the course not only for Gilead but for Big Pharma as a whole. In a report published in the Proceedings of the National Academy of Sciences, it’s stated that NIH funding contributed to published research associated with every new drug approved by the FDA from 2010 to 2016 — 210 drugs in all.19
“Collectively, this research involved >200,000 years of grant funding totaling more than $100 billion,” the researchers noted, adding:20
“The analysis shows that >90% of this funding represents basic research related to the biological targets for drug action rather than the drugs themselves. The role of NIH funding thus complements industry research and development, which focuses predominantly on applied research.
This work underscores the breath and significance of public investment in the development of new therapeutics and the risk that reduced research funding would slow the pipeline for treating morbid disease.”
Another example is Taxol, a cancer drug marketed by Bristol-Myers Squibb starting in 1993. The U.S. government spent $484 million on the drug’s development, then negotiated a licensing agreement with Bristol-Myers Squibb to market the drug. From 1993 to 2003, Bristol-Myers Squibb raked in $9 billion in Taxol sales globally, but paid the NIH just $35 million in royalties.21
In Utah, meanwhile, a price-gouging complaint was filed against the Utah pharmacy Meds in Motion, which sold 20,000 doses of experimental antimalarial drugs for COVID-19 to the state for $800,000. The complaint states that the price per tablet from Meds in Motion is nearly 10 times the price of the drugs for consumers.
“As if price gouging wasn’t bad enough, price gouging of an unproven drug during a pandemic in a transaction that uses public funds is truly beyond the pale,” said Chase Thomas, Alliance for a Better Utah’s executive director, in a statement.22
Drug company Jaguar Health also hiked the price of its antidiarrheal medication Mytesi by almost threefold. According to Axios, “The price hike coincides with the company's push to get its drug to more patients — specifically those diagnosed with COVID-19.”23
Overall, despite the heavy taxpayer funding for drug development, Congress has stalled in reinstituting a reasonable pricing clause to protect Americans from exorbitant drug costs, even in the era of COVID-19. Sirota added:24
“Remember, it was none other than [HHS Secretary Alex] Azar — a former pharmaceutical executive — who went before Congress in late February and insisted with a straight face that when it comes to coronavirus treatments, ‘We would want to ensure that we work to make it affordable, but we can’t control that price because we need the private sector to invest.’ That word ‘can’t’ is being used as a substitute for ‘won’t.’”