Pluralistic: Uncle Sam paid to develop a cancer drug and now one guy will get to charge whatever he wants for it (19 Oct 2023)

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A roulette wheel. A pill is sitting in the 7 slot. A drawing of Uncle Sam stands behind the wheel, lifting a Champagne coupe in a toast.

Uncle Sam paid to develop a cancer drug and now one guy will get to charge whatever he wants for it (permalink)

The argument for pharma patents: making new medicines is expensive, and medicines are how we save ourselves from cancer and other diseases. Therefore, we will award government-backed monopolies – patents – to pharma companies so they will have an incentive to invest their shareholders' capital in research.

There's plenty wrong with this argument. For one thing, pharma companies use their monopoly winnings to sell drugs, not invent drugs. For every dollar pharma spends on research, it spends three dollars on marketing:

And that "R&D" isn't what you're thinking of, either. Most R&D spending goes to "evergreening" – coming up with minor variations on existing drugs in a bid to extend those patents for years or decades:

Evergreening got a lot of attention recently when John Green rained down righteous fire upon Johnson & Johnson for their sneaky tricks to prevent poor people from accessing affordable TB meds, prompting this excellent explainer from the Arm and A Leg Podcast:

Another thing those monopoly profits are useful for: "pay for delay," where pharma companies bribe generic manufacturers not to make cheap versions of drugs whose patents have expired. Sure, it's illegal, but that doesn't stop 'em:

But it's their money, right? If they want to spend it on bribes or evergreening or marketing, at least some of that money is going into drugs that'll keep you and the people you love from enduring unimaginable pain or dying slowly and hard. Surely that warrants a patent.

Let's say it does. But what about when a pharma company gets a patent on a life-saving drug that the public paid to develop, test and refine? Publicly funded work is presumptively in the public domain, from NASA R&D to the photos that park rangers shoot of our national parks. The public pays to produce this work, so it should belong to the public, right?

That was the deal – until Congress passed the Bayh-Dole Act in 1980. Under Bayh-Dole, government-funded inventions are given away – to for-profit corporations, who get to charge us whatever they want to access the things we paid to make. The basis for this is a racist hoax called "The Tragedy Of the Commons," written by the eugenicist white supremacist Garrett Hardin and published by Science in 1968:

Hardin invented an imaginary history in which "commons" – things owned and shared by a community – are inevitably overrun by selfish assholes, a fact that prompts nice people to also overrun these commons, so as to get some value out of them before they are gobbled up by people who read Garrett Hardin essays.

Hardin asserted this as a historical fact, but he cited no instances in which it happened. But when the Nobel-winning Elinor Ostrom actually went and looked at how commons are managed, she found that they are robust and stable over long time periods, and are a supremely efficient way of managing resources:

The reason Hardin invented an imaginary history of tragic commons was to justify enclosure: moving things that the public owned and used freely into private ownership. Or, to put it more bluntly, Hardin invented a pseudoscientific justification for giving away parks, roads and schools to rich people and letting them charge us to use them.

To arrive at this fantasy, Hardin deployed one of the most important analytical tools of modern economics: introspection. As Ely Devons put it: "If economists wished to study the horse, they wouldn’t go and look at horses. They’d sit in their studies and say to themselves, ‘What would I do if I were a horse?’"

Hardin's hoax swept from the fringes to the center and became received wisdom – so much so that by 1980, Senators Birch Bayh and Bob Dole were able to pass a law that gave away publicly funded medicine to private firms, because otherwise these inventions would be "overgrazed" by greedy people, denying the public access to livesaving drugs.

On September 21, the NIH quietly published an announcement of one of these pharmaceutical transfers, buried in a list of 31 patent assignments in the Federal Register:

The transfer in question is a patent for using T-cell receptors (TCRs) to treat solid tumors from HPV, one of the only patents for treating solid tumors with TCRs. The beneficiary of this transfer is Scarlet TCR, a Delaware company with no website or SEC filings and ownership shrouded in mystery:

One person who pays attention to this sort of thing is James Love, co-founder of Knowledge Ecology International, a nonprofit that has worked for decades for access to medicines. Love sleuthed out at least one person behind Scarlet TCR: Christian Hinrichs, a researcher at Rutgers who used to work at the NIH's National Cancer Institute:

Love presumes Hinrichs is the owner of Scarlet TCR, but neither the NIH nor Scarlet TCR nor Hinrichs will confirm it. Hinrichs was one of the publicly-funded researchers who worked on the new TCR therapy, for which he received a salary.

This new drug was paid for out of the public purse. The basic R&D – salaries for Hinrichs and his collaborators, as well as funding for their facilities – came out of NIH grants. So did the funding for the initial Phase I trial, and the ongoing large Phase II trial.

As David Dayen writes in The American Prospect, the proposed patent transfer will make Hinrichs a very wealthy man (Love calls it "generational wealth"):

This wealth will come by charging us – the public – to access a drug that we paid to produce. The public took all the risks to develop this drug, and Hinrichs stands to become a billionaire by reaping the rewards – rewards that will come by extracting fortunes from terrified people who don't want to die from tumors that are eating them alive.

The transfer of this patent is indefensible. The government isn't even waiting until the Phase II trials are complete to hand over our commonly owned science.

But there's still time. The NIH is about to get a new director, Monica Bertagnolli – Hinrichs's former boss – who will need to go before the Senate Health, Education, Labor and Pensions Committee for confirmation. Love is hoping that the confirmation hearing will present an opportunity to question Bertagnolli about the transfer – specifically, why the drug isn't being nonexclusively licensed to lots of drug companies who will have to compete to sell the cheapest possible version.

Hey look at this (permalink)

A Wayback Machine banner.

This day in history (permalink)

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Colophon (permalink)

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