Why Is The US Government Letting Big Pharma Charge Insane Prices On Patents The US Owns?

from the big-questions dept

As we've discussed plenty of times in the past, when the federal government creates something that could be covered by copyright law, US copyright law requires it to be put into the public domain for the benefit of the public. I've never quite understood why the same is not true for patents. Instead, the US government does big business licensing off patents. While some may argue that this is a good revenue generation scheme for the US government (which theoretically should lower taxes elsewhere), it has significant downstream effects. And that's especially true in the healthcare market.

As we've discussed before, you'll often hear big pharma insisting it needs patents because it takes some ungodly sum to research and bring a patent to market. That number goes up every year. By a lot. In the early 2000s, the numbers was clocked at $800 million. Last year, drug companies were now claiming $2.7 billion. But much of that is a total myth. Indeed, research shows that big pharma is often adding up the costs that the federal government itself spends on encouraging new drug development and adds it to the total cost as if that cost is borne by the pharmaceutical industry, rather than the taxpayer.

And yet, even though the US taxpayer tends to pay for a significant share of the research and development in new drugs, big pharma companies which take over the project down the road get to keep 100% of the profits -- and, thanks to a totally broken patent system that gives them a literal monopoly, they jack up the prices to insane levels (and this works because of our idiotic healthcare setup in which no one ever knows the cost of what we're buying, and insurance companies act as weird middlemen).

I'm reminded of all this in reading a new piece by Dr. Eugene Gu, talking about the absolute insanity of Truvada, an important drug for HIV patients, which is controlled by pharma company Gilead Sciences. Gu outlines a story that reflects exactly what we discussed above. Gilead charges impossibly high fees for Truvada even though most of the development was paid for by US taxpayers:

While the generic version of Truvada is available in many countries outside the United States for around $840 annually per patient, Gilead uses its patent on the drug to charge Americans close to around $24,000 annually per patient. That’s for the exact fixed dose combination of tenofovir and emtricitabine that costs around $60 annually per patient to produce. [....] What's infuriating is that American taxpayers funded much of the research and development for Truvada. So much, in fact, that according to the Yale Global Health Justice Partnership it's the CDC that actually owns the patent for the drug. So Gilead has basically been making $3bn a year selling a drug that actually belongs to Americans themselves.

And, as Gu notes, the situation gets even more ridiculous and more corrupt:

And that’s not all. Gilead recently partnered with Secretary of Health and Human Services Alex Azar and President Donald Trump to roll out a public relations scheme to fool the public. During this, Gilead declared that it would be donating enough Truvada to treat 200,000 patients each year until 2030. While it sounds great on the surface, that basically means it will donate around $12m a year while making billions in profits and getting a tax break.

There are all sorts of reasons why our healthcare system is truly messed up, but the fact that taxpayers pay for the development of critical life saving drugs, but then the government allows big pharma companies to effectively control the patent, extract massive monopoly rents, and then give them tax breaks for donating a tiny percentage... seems particularly fucked up.

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Filed Under: drug development, extortion, funding, healthcare, monopolies, monopolies rents, patents, pharmaceuticals, truvada, us government

Companies: gilead sciences