Dr Brian Druker, the physician whose work resulted in the development of Glivec, the leukaemia-treating wonder drug that the Supreme Court prevented Novartis from monopolizing, treaded a delicate middle ground between the life-saving needs of the patients and researchdriven imperatives of Big Pharma in an interview to Chidanand Rajghatta
What is your reaction to the Indian Supreme Court's decision in the Novartis/Glivec case?
Well, obviously we need to make medicines affordable. As a physician I want to see patients get the best treatment at an affordable cost. But we also need a healthy pharmaceutical industry to make more drugs. If we erode profits too much we will be in trouble. There is a delicate balance here, a delicate eco-system , and frankly I don't know what the right answer is. The reality though is the price of medicines is too high, at least in the US. So there is no simple right or wrong answer to this.
So if you agree that price of medicines is too high, is it fair to put a cap on profitability? Can there be a formulaic solution that makes all sides happy?
I doubt there can be any formulaic solution. We have to think in terms of a global economy , but we can also see how much each country can afford... perhaps have a sliding scale.
Do you think the Indian court's decision will be seen as a precedent that will apply to other drugs and even other countries?
I suspect it will be seen as a precedent. So I can understand the concern of the pharma industry — how do they stay in business and how do they innovate?
But at the same time, you agree drug companies are incredibly profitable?
Yes, I do agree with that. But I don't think the solution is necessarily to legislate how much companies can make. The companies cannot be viewed as evil. After all, they do make medication that saves people and lives. We have to control and manage costs. It is not like they are selling soft drinks.
In this particular case, is it fair to say the research that led to the breakthrough resulting in Glivec was also publicly funded?
There is a nuanced answer there. Purely in terms of the discovery and synthesis of Glivec, 99 per cent of the funding came from Novartis. But if you are talking of the discovery of the target, about who funded some 30 years of research that led us to this path...yes, that came from the National Institute of Health to the tune of tens or even hundreds of millions of dollars depending on how you count it.
We understand that you collaborated with researchers from Novartis in arriving at Glivec. How would you characterize the partnership?
It was an extremely collaborative relationship. We exchanged phone calls, faxes, data and we complemented each other's work. But having said that, I think companies only look at profit from drugs, I only look at it from the patients' point of view.
What is your view on generics - particularly the generic industry in India and what it has done for drug availability and affordability?
Having access to affordable drugs is essential for managing patients, so in the short term this is going to benefit patients. I do worry a little bit about long term. If you erode the patent regime, where will the next generation of medicines, not the modification, but the next new innovated products, come from? Patents are important, and in the long run, if India gets stronger, why shouldn't the Indian health care system contribute more to the pharma industry?
So we come to the crux of the problem, which is companies claiming patents for minor modifications , which is what the Supreme Court was knocking down...
I'm going to stay away from the legal judgment ... but as a physician, I do recognize that the advances will come from new products, not modifications.
-ET
West should learn from India’s high patent standards
The Supreme Court's denial of a patent for Glivec, an anti-leukaemia drug made by Novartis of Switzerland, has been widely but wrongly hailed by NGOs and castigated by pharmaceutical companies as an attack on patents and a victory for cheap medicine. Actually, the Court fully upheld the principle of patents, but set a high bar for deciding what's innovative and what's mere tweaking.
Instead of attacking the verdict, Western countries should raise their standards too. Their overliberal grant of patents has led to the tiniest design changes becoming patentable. This was exemplified by last year's ridiculous battle between Samsung and Apple on whether features like a rounded rectangular cellphone screen and finger movements were patentable. Smartphones are a great invention, but hardly justify the grant of as many as 25,000 patents, many for piffling details.
Till 1995, India refused to patent drug molecules. But as a consequence of WTO membership, India in 2005 allowed product patents for drugs, but only for innovations after 1995. This meant no patent for Glivec, which was patented first in 1993. To get around this, in 2006 Novartis tried to patent a new variation of Glivec, for which it claimed improved efficacy. Some other countries granted patents for this variation. But the Indian Patents Office rejected the claim as insufficiently innovative. So too has the Supreme Court.
Many NGOs hailed the judgment for the wrong reason. The Cancer Patients Aid Association, which led the fight against Glivec, declared: "We are happy that the apex court has recognised the right of patients to access affordable medicines over profits for big pharmaceutical companies through patents."
False: no such right was recognized by the court. It simply said Novartis had not proved that the new variation was innovative enough. The court clarified that it would grant patents for variations that were more efficacious, but set a higher standard for proof than many western courts do.
NGOs are wrong to paint Novartis as a bloodsucker that pauperizes patients. Glivec has saved lakhs of leukaemia patients from death. This is a great boon, and we must encourage more such life-saving boons by granting patents for new drugs. However, this does not mean giving patents for mere tweaking and "evergreening" of existing drugs through minor variations.
Normally, governments promote competition and prohibit monopolies. But temporary monopolies (patents) are justified to promote innovation in drugs and other fields. The patent regime should ensure that the public benefit from innovation far exceeds the cost imposed by monopoly profits. This implies a high bar for granting patents. But the US and other western countries have been giving patents so liberally and broadly that these lead more to lawsuits than innovation, leaving lawyers as the chief beneficiaries . Patents are supposed to spur innovation, but when granted over-liberally they create so much lawsuit risk and cost that they end up hampering innovation, not aiding it.
The Economist (UK), no basher of multinationals, acknowledges that over-liberal "proliferation of patents harms the public in three ways. First, it means that technology companies will compete more at the courtroom than in the marketplace. Second, it hampers follow-on improvements by firms that implement an existing technology but build upon it as well. Third, it fuels many of the American patent system's broader problems, such as patent trolls (speculative lawsuits by patentholders who have no intention of actually making anything); defensive patenting (acquiring patents mainly to pre-empt the risk of litigation, which raises business costs); and "innovation gridlock" (the difficulty of combining multiple technologies to create a single new product because too many small patents are spread among too many players)."
Patent trolls buy up patents in bulk, typically from bankrupt companies, not for actual use but simply to hit other innovators with lawsuits for patent infringement, forcing them to settle to avoid fat legal bills. One US study estimated such legal costs at $ 29 billion in 2011 alone.
Last year, Google bought Motorola's failing smartphone business for $ 12.5 billion, to access its 17,000 patents. Microsoft and others paid $ 4.5 billion for 6,000 patents from Nortel. Most of these will never be used in actual production: they are simply kept as legal weapons for possible lawsuits. This has nothing to do with innovation, which patents are supposed to promote.
The West's over-liberal patent system is broken. It should learn from India's much tougher system. Patents should be seen as monopolies, to be given sparingly only for genuine innovations where the public benefit clearly exceeds the monopoly cost. This means setting a high bar for innovation. High standards are desirable for patents, as for everything else.
-ET
Busting the R&D myth
What is your reaction to the Indian Supreme Court's decision in the Novartis/Glivec case?
Well, obviously we need to make medicines affordable. As a physician I want to see patients get the best treatment at an affordable cost. But we also need a healthy pharmaceutical industry to make more drugs. If we erode profits too much we will be in trouble. There is a delicate balance here, a delicate eco-system , and frankly I don't know what the right answer is. The reality though is the price of medicines is too high, at least in the US. So there is no simple right or wrong answer to this.
So if you agree that price of medicines is too high, is it fair to put a cap on profitability? Can there be a formulaic solution that makes all sides happy?
I doubt there can be any formulaic solution. We have to think in terms of a global economy , but we can also see how much each country can afford... perhaps have a sliding scale.
Do you think the Indian court's decision will be seen as a precedent that will apply to other drugs and even other countries?
I suspect it will be seen as a precedent. So I can understand the concern of the pharma industry — how do they stay in business and how do they innovate?
But at the same time, you agree drug companies are incredibly profitable?
Yes, I do agree with that. But I don't think the solution is necessarily to legislate how much companies can make. The companies cannot be viewed as evil. After all, they do make medication that saves people and lives. We have to control and manage costs. It is not like they are selling soft drinks.
In this particular case, is it fair to say the research that led to the breakthrough resulting in Glivec was also publicly funded?
There is a nuanced answer there. Purely in terms of the discovery and synthesis of Glivec, 99 per cent of the funding came from Novartis. But if you are talking of the discovery of the target, about who funded some 30 years of research that led us to this path...yes, that came from the National Institute of Health to the tune of tens or even hundreds of millions of dollars depending on how you count it.
We understand that you collaborated with researchers from Novartis in arriving at Glivec. How would you characterize the partnership?
It was an extremely collaborative relationship. We exchanged phone calls, faxes, data and we complemented each other's work. But having said that, I think companies only look at profit from drugs, I only look at it from the patients' point of view.
What is your view on generics - particularly the generic industry in India and what it has done for drug availability and affordability?
Having access to affordable drugs is essential for managing patients, so in the short term this is going to benefit patients. I do worry a little bit about long term. If you erode the patent regime, where will the next generation of medicines, not the modification, but the next new innovated products, come from? Patents are important, and in the long run, if India gets stronger, why shouldn't the Indian health care system contribute more to the pharma industry?
So we come to the crux of the problem, which is companies claiming patents for minor modifications , which is what the Supreme Court was knocking down...
I'm going to stay away from the legal judgment ... but as a physician, I do recognize that the advances will come from new products, not modifications.
-ET
West should learn from India’s high patent standards
The Supreme Court's denial of a patent for Glivec, an anti-leukaemia drug made by Novartis of Switzerland, has been widely but wrongly hailed by NGOs and castigated by pharmaceutical companies as an attack on patents and a victory for cheap medicine. Actually, the Court fully upheld the principle of patents, but set a high bar for deciding what's innovative and what's mere tweaking.
Instead of attacking the verdict, Western countries should raise their standards too. Their overliberal grant of patents has led to the tiniest design changes becoming patentable. This was exemplified by last year's ridiculous battle between Samsung and Apple on whether features like a rounded rectangular cellphone screen and finger movements were patentable. Smartphones are a great invention, but hardly justify the grant of as many as 25,000 patents, many for piffling details.
Till 1995, India refused to patent drug molecules. But as a consequence of WTO membership, India in 2005 allowed product patents for drugs, but only for innovations after 1995. This meant no patent for Glivec, which was patented first in 1993. To get around this, in 2006 Novartis tried to patent a new variation of Glivec, for which it claimed improved efficacy. Some other countries granted patents for this variation. But the Indian Patents Office rejected the claim as insufficiently innovative. So too has the Supreme Court.
Many NGOs hailed the judgment for the wrong reason. The Cancer Patients Aid Association, which led the fight against Glivec, declared: "We are happy that the apex court has recognised the right of patients to access affordable medicines over profits for big pharmaceutical companies through patents."
False: no such right was recognized by the court. It simply said Novartis had not proved that the new variation was innovative enough. The court clarified that it would grant patents for variations that were more efficacious, but set a higher standard for proof than many western courts do.
NGOs are wrong to paint Novartis as a bloodsucker that pauperizes patients. Glivec has saved lakhs of leukaemia patients from death. This is a great boon, and we must encourage more such life-saving boons by granting patents for new drugs. However, this does not mean giving patents for mere tweaking and "evergreening" of existing drugs through minor variations.
Normally, governments promote competition and prohibit monopolies. But temporary monopolies (patents) are justified to promote innovation in drugs and other fields. The patent regime should ensure that the public benefit from innovation far exceeds the cost imposed by monopoly profits. This implies a high bar for granting patents. But the US and other western countries have been giving patents so liberally and broadly that these lead more to lawsuits than innovation, leaving lawyers as the chief beneficiaries . Patents are supposed to spur innovation, but when granted over-liberally they create so much lawsuit risk and cost that they end up hampering innovation, not aiding it.
The Economist (UK), no basher of multinationals, acknowledges that over-liberal "proliferation of patents harms the public in three ways. First, it means that technology companies will compete more at the courtroom than in the marketplace. Second, it hampers follow-on improvements by firms that implement an existing technology but build upon it as well. Third, it fuels many of the American patent system's broader problems, such as patent trolls (speculative lawsuits by patentholders who have no intention of actually making anything); defensive patenting (acquiring patents mainly to pre-empt the risk of litigation, which raises business costs); and "innovation gridlock" (the difficulty of combining multiple technologies to create a single new product because too many small patents are spread among too many players)."
Patent trolls buy up patents in bulk, typically from bankrupt companies, not for actual use but simply to hit other innovators with lawsuits for patent infringement, forcing them to settle to avoid fat legal bills. One US study estimated such legal costs at $ 29 billion in 2011 alone.
Last year, Google bought Motorola's failing smartphone business for $ 12.5 billion, to access its 17,000 patents. Microsoft and others paid $ 4.5 billion for 6,000 patents from Nortel. Most of these will never be used in actual production: they are simply kept as legal weapons for possible lawsuits. This has nothing to do with innovation, which patents are supposed to promote.
The West's over-liberal patent system is broken. It should learn from India's much tougher system. Patents should be seen as monopolies, to be given sparingly only for genuine innovations where the public benefit clearly exceeds the monopoly cost. This means setting a high bar for innovation. High standards are desirable for patents, as for everything else.
-ET
Busting the R&D myth
Big Pharma has consistently used the argument that it costs over a billion dollars to discover a new drug, as justification for monopolies granted in the form of patents, and for the high prices of new drugs. But realistic calculations put drug discovery costs between $200 million and $400 million. The billion-dollar question then is whether the high-cost of R&D is really as high as it's made out to be.
The Supreme Court's recent rejection of a patent for Novartis drug Glivec in India was followed by dire predictions about R&D for drug-discovery being hit. The Indian market is a mere 2% of the global market, and so is unlikely to affect pharma revenues, unlike the US (38%), Europe (26%) or Japan (11%), which together account for about 75% of the global pharma market. Moreover, in India, even the biggest companies, Novartis, Pfizer and GSK, don't spend even 1 % of their turnover on R&D. What ever little they do spend is on clinical trials, for which India is among the world's cheapest destinations.
Inflated calculations
Several researchers and scientists have challenged what they call the "mythic R&D cost of pharma". They estimate the cost to be roughly $200- $400 million for a new drug, if that. So where did the one billion dollar figure come from? It started off at $802 million from a study in 2000 by the Tufts Center for the Study of Drug Development in Boston. Interestingly, the centre received substantial pharma-industry funding for years. The study was based on data provided by 10 companies, which accounted for 42% of total industry R&D expenditure. The industry upped the $802 million figure to $1.3 billion in 2010.
In the Tufts study, the average number of patients per drug trial was estimated at 5,303 while the FDA calculates average patients per trial as almost half that, 2,667. The study estimated cost per trial patient as $23,572 while the US's National Institute of Health calculated it as $3,861. The Tufts Center also added "the cost of capital" to the drug discovery cost. Capital cost is the money the company would have made had it invested in the stock market instead of R&D. The return on this hypothetical investment is calculated at 11%, compounded over 7.5 years, the time required to complete clinical trials and get FDA approval. However, researchers argue that a more realistic return from the stock market is 3-7 %. The FDA and the US government calculated the time required for trial and approval as just four years.
In their paper 'Demythologising the high costs of pharmaceutical research' , Dr Donald W Light of Stanford University in the US and Dr Rebecca Warburton of the University of Victoria, Canada point out that tax subsidy (39-50 %) — given on companies' R&D expenditure — isn't included in the $802 million figure. They show drug discovery cost would be $200mn- $400mn.
Me-too pills instead of innovation
Pharmas crib about the billions they spend on R&D without talking about the bigger amounts spent on marketing including freebies to doctors and sponsorships for glitzy conferences. Annual reports of three big multinationals, Pfizer, J&J and Novartis, for three years, 2009-11 , reveal that marketing/ administration costs were 29-32 % of revenue. R&D cost was just 11-16 % for the same period. Adjusting for R&D tax breaks, the expenditure is just 9.5-14 %.
The highest R&D costs are for original new drugs. However, of drugs that came to the market between 1998 and 2002, according to the FDA, only 14% were innovative, 9% were old drugs with significant improvements and the remaining were me-too drugs, very similar to the existing ones. Yet, the industry claims the highest R&D cost for every drug brought into the market.
According to a US pharma body, the cost of producing an original drug has gone up 80-fold from 1950 to 2008. Reports of top 12 pharma majors in the Fortune 500 list reveal that in the same period profits increased from $61.8 million to $63.1 billion, increasing 1,000-fold. Adjusting for inflation, profits had still grown 125-fold.
Drugs almost as profitable as oil
Even assuming the inflated bill of $1 billion for drug discovery, companies earn many times that amount in a year. For instance, Novartis has grossed over $30 billion since Glivec's launch in 2001. The profitability of most industries is 4.6% of revenue. The pharma industry, even after the hefty spending it claims to make on R&D, has an average profitability of 19%. No other sector has such high profitability except oil, slightly higher at 19.8%.
Yet, pharma MNCs have been threatening that if patents aren't protected they'd have to cut R&D spend hindering progress on drugs for diseases without treatment. That's a hollow threat considering the well-documented fact that only 10% of worldwide expenditure on health research is for problems that affect the poorest 90% of the world's population. Basic science research and research based on disease- burden priorities come from publicly funded institutions and not an industry whose focus is on ever higher profit margins.
WHO PAID FOR GLIVEC R&D?
Funding source for Brian Druker's lab 50% National Cancer Institute — public 30% Leukaemia and Lymphoma Society — public 10% Oregon Health and Science University — public 10% Novartis — private Novartis bore cost of three Phase II trials with 1,028 patients Estimated cost of these trials — $38mn to $96mn The $96mn includes hefty overheads and the cost of capital Novartis sales for Glivec in 2012 — $4.7bn or $390mn per month — over $100mn every 13 days Source: James Love, Director of Knowledge, Ecology International.
(Full blog post - http:// keionline.org/node/1697)
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