Outrageous Pricing of Pharmaceuticals – The Nexavar Example
by Don McCanne, M.D.
At a recent forum sponsored by Financial Times, Bayer Chairman Marijn Dekkers caused quite a flap with his comments about their oncology product, Nexavar (sorafenib) (1). So what did he say?
Dekkers complained about the fact that the Indian government granted Bayer a patent for their product, but then said that it was too expensive, so they granted a mandatory license to an Indian generic company to manufacture and distribute the product, while Bayer was to receive a six percent royalty merely for owning the patient. What he said next raised eyebrows:
So, we had a patent, but somebody else is allowed to make this product, and because there is not enough access to this product for poor Indians - I don’t know if you have ever been to India. There are a lot of poor Indians obviously, and the hospitals aren’t that close by (laughs) where they live - So we found that this was extremely politically motivated and essentially, I would say, theft of the Indian government of a capability of a company that has patented and therefore a patent right. So, now is this going to have a big effect on our business model? No, because we did not develop this product for the Indian market - let’s be honest - we developed this product for Western patients who can afford this product, quite honestly. It is an expensive product, being an oncology product.
When this story was covered by Forbes, Dekker submitted a response indicating that he “could have been more circumspect” with his remarks (2). Although he regretted his “quick response” within “the framework of a panel discussion,” he concluded, “I remain firm that there is no excuse for any country to weaken the intellectual property rights. Without new medicines people in developing countries – as well as those in the more prosperous countries – ultimately will all suffer. Bayer, like any other private company, needs a sufficient return on investment to allow for future research and therefore innovation.”
Nexavar (sorafenib) is an oncology drug used to treat liver (hepatocellular) and kidney (renal cell) cancers. It is expensive, costing $96,000 for a year’s course (3). How effective is it? England’s National Institute for Health and Care Excellence (NICE) – an organization that provides guidance to ensure quality and value – released its assessment (4):
“NICE does not recommend sorafenib for people with advanced hepatocellular carcinoma. Sorafenib does not provide enough benefit to patients to justify its high cost, even when special considerations were applied, so NICE did not recommend it.”
“Bevacizumab, sorafenib and temsirolimus are not recommended as first drug treatments for people with advanced and/or metastatic renal cell carcinoma. Sorafenib and sunitinib are not recommended as second drug treatments for people with advanced and/or metastatic renal cell carcinoma.”
So why would anyone want to be treated with sorafenib? One report submitted to NICE during its evaluation stated that sorafenib “on average improves overall survival by 83 days” for hepatocellular carcinoma with Grade A liver function, but “available evidence does not indicate that it delays symptom progression or improves quality of life.”
This example of sorafenib is all too typical of drug development today. New products are designed, in advance, to be very expensive and therefore are marketed where the money is – “for Western patients who can afford this product, quite honestly.” Only individuals with this mentality could characterize being granted a royalty for making the product available to the poor constitutes “theft.”
Dekkers indirectly defends the very high prices of these drugs by citing high costs of research. He remains silent on the fact that much of the basic research is publicly funded, In fact, most pharmaceutical firms spend twice as much on marketing as they do on research. Besides, the fact that a generic company can produce this same product, distribute it, and pay Bayer a six percent royalty, at a total cost of only three percent of Bayer’s price, tends to confirm that Bayer’s markup is outrageous.
Dr. David Hill, Chief Executive of the World Innovation Foundation – an organization supporting open research for the future benefit of all humankind – also responded to the Forbes article on Dekkers (2). Here are excerpts from his comment:
It should be quite clear now that Big Pharma is ‘only’ interested in vast profits and basically has no empathy with humankind other than it being an immense cash-cow for them. Their actions and out-of-court settlements speak volumes and where history cannot lie.
For the major drug companies throughout the world are continually being found out for criminal and fraudulent activity in order to sell their pharmaceuticals. Not me saying this but the world’s media coverage and the out-of-court agreements that they have settled and where in the past 5 years alone fines in excess of $17 billion have been agreed between authorities and the big drug companies. These include but where they are not a fully exhaustive list of examples,
$2.2 billion and $2.5 billion by J&J (2013),
£3 billion by GSK (2012),
$762 million by Amgen (2012),
$1.5 billion by Abbott (2012),
$95 million by Boehringer Ingelheim (2012),
$109 million by Sanofi-Aventis (2012),
$950 million by Merck (2011),
$520 million by AstraZeneca (2010),
$750 million by GSK (2010),
$423 million by Novartis (2010),
$460 million by Allergan (2010),
$2.3 billion by Pfizer (2009),
$1.42 billion by Eli Lilly (2009)
and $425 million by Cephalon (2008) –
Source for all from the US ‘Department of Justice’ and reinforced by Wikipedia listing. Note also that all of these actions had criminal activity as part of their respective settlements. But because these huge global concerns make so much money out of selling drugs, these fines have apparently now become an in-built expense in the corporate cost of their drugs.
But possibly the biggest sadness to date has to come out yet in India where over 20,000 of the poorest children in the world (between the ages of 10 and 14) have been used as human guinea pigs for Big Pharma (5) . Indeed over the past seven years, nearly 2,000 trials have taken place in the country and the number of deaths increased from 288 in 2008 to 637 in 2009 to 668 in 2010, before falling to 438 deaths in 2011, the latest figures available. Therefore the drive for corporate profits has a very dark side to it and everyone should be fully aware of this fact. Apparently this is not a problem for Big Pharma and where vast profits and greed rise above human life itself.
Those of us in the United States fighting for health care justice have been criticized for being too harsh on the pharmaceutical firms (and certainly also on the private investor-owned insurers). After all, they are simply following sound business practices that any successful entrepreneur would pursue. Maybe that’s the problem.
Maybe we can learn from the British NICE program and India’s system of mandatory drug licensing. We need more public stewards supervising our medical-industrial complex. Enacting an Improved Medicare for All would be a great start.
Who Can Pay?” Forbes, December 5, 2013
Indians… we made it for western patients who can afford it': Pharmaceutical chief tries to stop India replicating its cancer treatment,” Mail Online, January 24, 2014
pigs?” BBC News Magazine, October 31, 2012
One liner: The U.S. lacks public oversight of prices and cost-effectiveness of drugs—latest example, Bayer’s cancer drug Nexavar.
Abstract: This blog shows how far removed from the concept of care and service this enormous pharmaceutical company, Bayer, is in marketing its cancer drug Nexavar. We can learn from other countries, such as England’s National Institute for Health and Care Excellence (NICE) how to assure quality and value.
Tag lines: cost-effectiveness of drugs; cancer drug (Nexavar), Bayer, Marijn Dekkers, National Institute for Health and Care Excellence (NICE), Big Pharma, Crime and fraud by drug companies.