One of the world’s biggest pharmaceutical firms is holding the NHS to ransom—and the lives of around 1,500 women with advanced breast cancer hang in the balance.
New drug Kadcyla—also known as trastuzamab emtansine—can give women with inoperable “HER2 positive” type cancers almost six months longer to live than existing drugs, and with fewer side effects.
But manufacturer Roche is charging a whopping £90,000 per patient.
Kadcyla is available in England through the Cancer Drug Fund until it closes in March 2016. NHS regulator Nice issued draft guidance last week that Kadcyla was too expensive to buy outside the fund.
The row is also part of a broader debate about rationing. There are many who would like to make rationing the norm for the NHS.
They want deeper cuts—and a bigger role for private healthcare, which would become the only option for those with rarer or harder to treat conditions.
Of course, with a properly funded NHS there would be more than enough to pay the £135 million projected bill for Kadcyla. It is a fraction of the billions the NHS pays to its private financiers. Not to mention the profit creamed off by private health contractors or bloated commissioning bureaucracies.
But it is vastly higher than what the drug actually cost Roche to make.
Branded medicines protected by patent cost between 1.25 and ten times more than unbranded “generic” versions. The average cost of generic drugs to the NHS is £3.79, compared to £19.73 for branded.
Intellectual property laws give drug companies a monopoly that they use to keep prices high. There have been many legal battles over the rights to make generic medicines—and firms such as Roche have resisted every step of the way.
The difference, according to the bosses, is what they need for finding new drugs. But research and development costs only make up about 10 percent of the price of each drug.
And drugs like Kadcyla with a small target market have their prices pushed up higher still. Bosses say they need to inflate the price of successful drugs to subsidise the research for those that never reach the market.
But barely a fifth of Roche’s total revenue goes on research and development—substantially less than what goes to profit.
Monopoly patents also make research harder. Instead of collaborating, scientists must compete. Manufacturers waste time and resources duplicating each others’ research to find the recipe for generics, or to create “biosimilars” that mimic an existing drug.
Nice is hoping for a repeat of prostate cancer drug abiraterone. Its owners, a subsidiary of Johnson & Johnson, were forced to cut the price after a rejection. But this is anything but guaranteed. Kadcyla is the third breast cancer drug made by Roche to be turned down on cost grounds.
This absurd situation is the price of the monopolies that have cost millions of lives around the world and made bosses very rich.
Big Pharma to get bigger
The financial markets are currently in a frenzy over deals that will make Big Pharma even bigger. Novartis—which, like Roche, is based in Basel, Switzerland—is taking on GlaxoSmithKline’s cancer medicine business in a multibillion pound asset swap.
This could eventually see it overtake Roche, which became the world’s biggest cancer drug maker in 2009 with a £28 billion takeover of Genentech.
At the same time Pfizer, the world’s second largest pharmaceutical firm and a “repeat offender” in US courts, is in talks to buy up AstraZeneca, the seventh largest, for around £60 billion. A Pfizer-AstraZeneca deal would rival the £44 billion merger between GlaxoWellcome and SmithKline Beecham in 2000.
Decades of merger deals have given these mega companies even more clout to set their own prices.
Tricks of the monopolies
It takes 20 years for a patent to expire in Britain, and pharmaceutical companies uniquely have the option of applying for an extra five. But even this unwarranted privilege isn’t enough for them. Firms use strategies of “evergreening” to keep their monopolies even after the original patents expire. Some drugs have as many as 30 or 40 patents covering their different uses, or minor variations in the less important ingredients.
These can be as small as changing the shape, colour or dosage of a pill. Some of this can be in response to patient demand, some of it isn’t, but it all comes under a deliberate strategy to safeguard profits.
Drugs with more than one use can be out of patent for one and not for others, leading to what can seem like painfully arbitrary rules that determine what can and can’t be got on the NHS. One study of eight different drugs in Geneva estimated that these sneaky tweaks cost hospitals in the city £25 million over eight years. This would mean a cost of billions for the worldwide medicine market.
Scam to rig vitamin prices
Roche led a group of 13 companies fined £523 million in 2001 for a global conspiracy to rig vitamin prices. Even European Commission bureaucrat Mario Monti said the scam was the worst the commission had ever investigated, as it involved substances vital for health.
Rules on firms set to slacken
The British government is about to sign away its right to tighten the rules on pharmaceutical giants and other predatory corporations. The new corporate-friendly Transatlantic Trade and Investment Partnership (TTIP) between the US and European Union would allow these firms to sue governments over any laws that threaten their all-important profits.
Tamiflu was a waste of money
Roche made headlines earlier this month over its antiviral Tamiflu. It was widely stockpiled for a bird flu pandemic. But data suggests it is far less effective than originally claimed and was “money thrown down the drain”.