The pharmaceutical industry is often touted as the most profitable industry in the world. A common defence for expensive drugs is that pharmaceutical companies need to recoup their research and development (R&D) costs.

But in fact, marketing costs often outstrip R&D costs, and as recent research shows, the top pharmaceutical firms spend more on share buy-backs and dividends than on R&D.

The companies’ claim is further undermined this week by a new report by Global Justice Now and STOPAIDS which argues that the public purse is a major contributor of health R&D.

Denied access

In particular, treatments for multiple sclerosis, prostate cancer and rheumatoid arthritis are among drugs that have had significant contributions to their R&D from public money, but are now costing the NHS vast sums of money.

Public money into R&D should lead to positive outcomes for public health rather than lining the pockets of big pharmaceutical companies.

Instead, we are seeing a big rip-off taking place. Last year the NHS spent more than £1 billion on drugs that were discovered with significant public funding.

But rather than ensuring they are publicly available for all patients who need them, these drugs have been priced to maximise drug company profits.

Two of the top five most costly medicines for the NHS have received substantial public research funding. As pharmaceutical companies reap the profits, the people who need the treatments are denied access.

Too expensive

This is a classic case of socialising the risks but privatising the rewards. The public pay twice – first for the research and then in high prices and some would say they pay a third time as patients suffer needlessly.

Innovative discoveries based on public funding are often bought up by drug companies who then sell the drugs produced back to the NHS at extortionate prices. Take the drug abiraterone (brand name: Zytiga), a treatment for advanced prostate cancer (where the cancer has spread to other parts of the body) and where other hormone treatments have not worked.

The drug has the potential to help some men to live longer and can also help control symptoms.

Abiraterone was discovered at the Institute of Cancer, part of the University of London, and tested in clinical trials with the Royal Marsden NHS Foundation Trust.

Through a number of acquisitions, the drug was bought up by Janssen, which is part of Johnson and Johnson. But the drug was initially marketed at a price that was deemed too expensive for the NHS.

Government action

In the five years of negotiations, spanning two reviews, and following pressure from patient groups and the Department of Health, the drug was finally approved for NHS use only after the price was dropped to just below the limit of acceptable cost.

During the period of the second review, 5,900 people could have benefited from the drug. Eligible patients had to take their chances of getting the drug through the NHS’s Cancer Drugs Fund, which rationed its use. For those untreated patients, abiraterone could have been a life-saver – a recent trial showed a 37% improvement in survival rate three years after treatment.

Even today, the NHS now spends £98 per day per patient on the drug, despite an estimated cost of production of £11 per day.

It is far beyond time for public investment in medicines to yield public returns, with health outcomes and patient access prioritised over profits.

We need to attach conditions to taxpayer funded research and development  to ensure that drugs produced as a result are both affordable and accessible.  This needs government action – as NHS England has this week suggested, in response to our report.

String of controversies

There also need to be stronger measures to ensure transparency around the contribution of public money to the development of drugs. In the long run, a radical overhaul of the whole R&D model is needed.

This has been recognised internationally, at the UN. But without urgent action now, the cost to the cash-strapped NHS will be unsustainable. And the even bigger human cost, where people can’t get hold of much-needed treatment, will only grow.

The industry has been marred by a string of controversies, from suing the South African government for importing non-branded life-saving medicines during the height of the AIDS pandemic, to charging extortionately high prices for a drug that could cure hepatitis C. The inflated price of drugs should be the next. 

This Author

Heidi Chow is senior campaigns officer at Global Justice Now, which is hosting a Sick Of Corporate Greed speaker tour from 31 October to 9 November 2017.