Vaccine access, now!

 Global equitable access to vaccines, medicines and diagnostics for COVID-19: The role of patents as private governance 

A compulsory licence allows a third party to produce a patented technology without the patent holder’s permission. Article 31 of the TRIPS Agreement allows all WTO States to issue compulsory licences subject to certain criteria.19 First, all cases are considered on their individual merits. Thus, a blanket compulsory licence for certain technologies, for example, medicines, is not possible. Second, prior attempts to negotiate a licence for the invention on reasonable terms with the patent holder must be evident. This requirement can be waived in ‘a national emergency or other circumstances of extreme urgency or in cases of public non-commercial use’ which would likely apply for COVID-19. Third, the scope/duration of the licence must be for the limited purpose it was authorised for. Fourth, the licence is non-exclusive so the patent holder can still enter into licensing agreements with others. Fifth, use of the licence is generally permitted predominantly for the supply of the domestic market of the State where the compulsory licence is granted. Finally, the patent holder must be paid ‘adequate renumeration’ for the compulsory licence.

So, 

 Crucially, it is only by starting a deeper conversation around the role of patent holders within the health context for COVID-19 and of the role of the public interest within patent law more generally that we can address and pre-empt some of the current obstacles posed by patents to equitable global access to healthcare. Given the significant health implications at stake it is vital that this conversation is informed by a global health and bioethics perspective

 

Pharma, Big Pharma (2)

 Government, Big Pharma, and The People. A Century of Dis-Ease

A book to read, with this Table of Contents:

Dedication
Acknowledgements
Preface
Chapter One – Introductions
Health
Woman as a Biological and Social Entity
A Different Paradigm
Health Care and Rights
Drugs and Their Role in Society
Drug Policy
Big Pharma
Drug-Related Problems
The People
What’s Ahead
Conclusion
Chapter Two – The Four "P’s"
Introduction
Marketing as an Actualizing Process
The Marketing Mix/The Four "P’s"
Government and the Four "P’s"
Conclusion
Chapter Three – Investigators and Investigations
Introduction
The Hearings
The Grand Inquisitor
Gaylord Nelson – Son of Torquemada
The Fountain Hearings
Senator Kennedy Joins the Fray
Small Business Problems – Dingell
Drug Efficacy Problems – Fountain
Moss on Drug Abuse
Fountain Redux
Congressman Rogers on Transition
Senator Humphrey and the Literature
A Newcomer – Congressman Van Deerlin
Senator Fountain – "One More Time"
Senator Kennedy Returns
FDA Under the Microscope Again
Kennedy – Not Too Tranquil
Gore on Pharmaceutical R & D
Senator Fountain Again
Claude Pepper for the Old Folks
Zomax in the Spotlight
A Pryor Engatement
The Task Force on Prescription Drugs
Research Findings and Recommendations
Conclusion
Chapter Four – Legislators and Legislation
Introduction
Laws and Policy
Bills and Sponsors
The Process
Conclusion
Chapter Five – Regulators and Regulations
Introduction
The Food and Drug Administration
Other Regulators and Regulations
Federal Trade Commission
Federal Communications Commission
Drug Enforcement Administration
Centers for Medicare and Medicaid Services
Patents and Trademarks
State Regulations
Drug Names
Conclusion
Chapter Six – Non-Government Influence
Introduction
Self-Regulation
Third Parties – Managed Care Controls
Formularies and Prescription Limitations
Lawyers
Advocates and Adversaries
Mail Order Pharmacy
Pharmacy Benefit Managers and Outcomes Management
Conclusion
Chapter Seven – The People and Their Drugs
Introduction
The People as Patients
Health Belief Model
Case – Health Belief Model
Attitudes and Evaluation of Drugs
The Sickness Career
The Sick Role
The Sick Role in Acute and Chronic Illness
Compliance with Medication Regimens
Other Influences on Medication Use
What to Do
Death or Maybe Not
Conclusion
Chapter Eight – Response of Big Pharma
Introduction
Response to Government
Big Pharma Speaks
Response of Big Pharma to the People
Some Ideas for Big Pharma
PMA Monographs
Statesmanship
Conclusion
Chapter Nine – Little Pharma and Friends
Introduction
Generic Pharma – Not So Little
Big Bio
What is Special about Specialty Drugs?
Little Boutiques
Back to the Future – Compounding Pharmacists
Friends
Conclusion
Chapter Ten – Greedy Big Pharma
Introduction
Two Parts of Greedy
AARP and Greedy Big Pharma
Congress and Greedy Big Pharma
Risk vs. Reward
Greedy Big Tech
Conclusion
Chapter Eleven – Whence the Drugs?
Introduction
Origins of Drugs
Drug Product Development
Marketing in the Last Century
Invention, Discovery, Development
Curiosities and Surprises
Recommended Reading
Conclusion
Chapter Twelve – Drugs of the Future
Introduction
But Seriously
Drugs in an Aging Society
Future Drugs for the Aged
Lifestyle Drugs
Conclusion
Chapter Thirteen – The Non-Prescription Products Market-Dr. W. Steven Pray
Introduction
Patent Medicines
Laws That Regulated Non-Prescription Products
FDA’s Review of O-T-C Products
The Prescription to O-T-C Switch
A Third Class of Drugs
Quackery – Lacking Proof of Efficacy
Quackery – New Names Confer False Respectability
Conclusion
Chapter Fourteen – Issues and Studies in Pharmacoeconomics
Introduction
The Emergence of Pharmacoeconomic Research
The Cost of Illness
Quality of Life Assessment
The Economics of Non-Compliance
Economic Epidemiology
Conclusion
Chapter Fifteen – On Drug Prices – Dr. E. M. "Mick" Kolassa
Pricing: The Forgotten "P"
The Growing Importance of Pharmaceutical Prices
Prices, Politics and Problems
Pricing Terminology
What is a Pharmaceutical Price?
Price Decision Making
The Value of Pharmaceuticals
The Future of Pharmaceutical Pricing
Chapter Sixteen – Summary, Ruminations and Apologia
Introduction
Ruminations
Trends
What If’s
Apologia

A plea for public patents on COVID prevention and treatment

 Funding of Pharmaceutical Innovation During and After the COVID-19 Pandemic

Extensive public investments also are being made in therapeutics. The 2 most prominent monoclonal antibodies (by Regeneron and Lilly) have come to market with substantial governmental support for product commercialization. Both products derive from therapeutic research platforms established with governmental support before the COVID-19 pandemic, but product commercialization and manufacturing received major additional investments in 2020. Separately, the National Institutes of Health (NIH) Rapid Acceleration of Diagnostics program has committed $1.5 billion to supporting development of diagnostic tests related to COVID-19. The specifics of the federal contracts largely remain confidential.

Why do they remain confidential? 

The lesson of the COVID-19 experience is that, when innovation in the life sciences is imperative, the traditional reliance on pharmaceutical industry prices and profits is jettisoned in favor of governmental grants and procurement. Sustained public funding for product development and commercialization will permit the sustained financing of innovation, a renewed attention to major public health needs, and the global position of the US pharmaceutical industry.

If there is public funding, why there aren't public patents? 

Against patents for the current pandemic

Patents vs. the Pandemic

Imagine a world in which a global network of medical professionals monitored for emerging strains of a contagious virus, periodically updated an established formula for vaccinating against it, and then made that information available to companies and countries around the world. Moreover, imagine if this work were done without any intellectual-property (IP) considerations, and without pharmaceutical monopolies exploiting a desperate public to maximize their profits.
This may sound like a utopian fantasy, but it is actually a description of how the flu vaccine has been produced for the past 50 years. Through the World Health Organization’s Global Influenza Surveillance and Response System, experts from around the world convene twice a year to analyze and discuss the latest data on emerging flu strains, and to decide which strains should be included in each year’s vaccine.

This is exactly what Nobel prize David Stiglitz says in his op-ed in Project Syndicate. Absolutely agree.

For too long, we have bought into the myth that today’s IP regime is necessary. The proven success of GISRS and other applications of “open science” shows that it is not. With the COVID-19 death toll rising, we should question the wisdom and morality of a system that silently condemns millions of human beings to suffering and death every year.
It’s time for a new approach. Academics and policymakers have already come forward with many promising proposals for generating socially useful – rather than merely profitable – pharmaceutical innovation. There has never been a better time to start putting these ideas into practice.

Hopper

Value creators and extractors

The Value of Everything: Making and Taking in the Global Economy

The rethorics of value is usually plagued with deliberate misunderstandings. Specially, those that quote themselves as value creators may appear on a close look as a value extractors. This is precisely what the book of Marianna Mazucatto does. It identifies the patterns to assess value creation and extraction and the private of public and private roles.Chapter 7 on Extracting Value through the Innovation Economy is specially helpful. You'll find there the patents as a value extraction process or the pharmaceutical pricing discussed in detail. Therefore, a must read.

In modern capitalism, value-extraction is rewarded more highly than value-creation: the productive process that drives a healthy economy and society. From companies driven solely to maximize shareholder value to astronomically high prices of medicines justified through big pharma's 'value pricing', we misidentify taking with making, and have lost sight of what value really means. Once a central plank of economic thought, this concept of value - what it is, why it matters to us - is simply no longer discussed.

 The logical outcome of a combination of monopoly and rigid demand is sky-high prices, and this is precisely what is happening with specialty drugs. It explains why pharmaceutical companies enjoy absurdly high profit margins: in addition to the normal profit rate, they earn huge monopoly rents.59 A value-based assessment of the kind NICE carries out can be helpful because it reduces demand for the monopolists’ drugs and prevents them from charging whatever price they choose. The downside, however, is that increased elasticity of demand for drugs comes at the cost of leaving some patients without the medicines they need, because pharmaceutical companies may not cut their prices enough to treat everyone who needs the drug if doing so would reduce profit margins by more than the companies want.

Changing the production function of diagnostic tests

Next-generation diagnostics with CRISPR

Last week while reading Science I noticed a short and crucial article. Up to now CRISPR technology was focused on gene editing, now we can say that its usefulness is widening into diagnostics. It may change completely molecular diagnostics of "infectious diseases through detection of Zika virus (ZIKV), Dengue virus (DENV), and human papillomavirus (HPV) in human  samples, and noninfectious diseases, such as detection of gene mutations in circulating cell-free DNA from lung cancer patients." The production founction of lab testing would change completely.
Several articles explain details about it. The fight for patents is going to start again on CRISPR diagnostics. And this are unfortunately bad news.
Anyway, Science article reminds us:

These emerging diagnostic tools will by necessity be compared to standard diagnostics to ensure sensitivity and specificity and will need to be field-tested to guarantee performance in patient care settings, as environmental conditions and end-user application might affect performance. Proven assays, if affordable, promise to improve care in resource-limited settings where undifferentiated febrile illness is the norm and where gaps or delays in diagnosis, targeted care, and infection control contribute to infectious disease mortality and spread.

More details in The Verge.

Genome editing, closer than you think

Human Genome Editing Science, Ethics, and Governance

Last week the US patent office ruled that hotly disputed patents on the CRISPR revolutionary genome-editing technology belong to the Broad Institute of Harvard and MIT. In a former post I explained the dispute. Genome editing in my opinion shouldn't be patented and will see exactly the impact of such ruling in US and elsewhere in the next future.
If you want to know in detail what does genome editing means for the future of life sciences, have a look at NASEM book.

It is now possible to insert or delete single nucleotides,interrupt a gene or genetic element, make a single-stranded break in DNA, modify a nucleotide, or make epigenetic changes to gene expression. In the realm of biomedicine, genome editing could be used for three broad purposes: for basic research, for somatic interventions, and for germline interventions.

CRISPR (which stands for clustered regularly interspaced short palindromic repeats) refers to short, repeated segments of DNA originally discovered in bacteria. These segments provided the foundation for the development of a system that combines short RNA sequences paired with Cas9 (CRISPR associated protein 9, an RNA-directed nuclease), or with similar nucleases, and can readily be programmed to edit specific segments of DNA. The CRISPR/Cas9 genome-editing system offers several advantages over previous strategies for making changes to the genome and has been at the center of much discussion concerning how genome editing could be applied to promote human health.

I would just want to say that these patents destroy the soul of science, since access should be available with no barriers for the development of  innovation. Patents are not the incentive for discovery in this case, as I explained in my post, natural processes should'nt be patented. And this is why today is a really sad day.

PS. My posts against patents

Michael Kiwanuka. Home again

Stimulating ideas for drug development and pricing

New Health Technologies. Managing Access, Value and Sustainability

This new OECD report sheds light over several issues in an heterogeneous way, but the pharma chapter has a box that I want to highlight. It is really suggestive:

Future scenarios about drug development and drug pricing

These disruptive scenarios result from an expert consultation led by ShiftN and commissioned by the Belgian Health Care Knowledge Centre of Expertise and the Dutch Health Care Institute. The aim of the consultation was to imagine disruptive ways to finance R&D that could potentially better respond to public health needs.

Scenario 1: Needs-oriented Public-Private Partnerships
Public actors and drug developers are tackling public health priorities in vigorous and pragmatic partnerships. The public actor identifies indications representing high public health needs; specifies criteria for the performance levels of drugs to be developed for those indications; and indicates his willingness to pay. Through procurements with enforceable contractual commitments, the public actor enters into a partnership with drug developers to
find solutions for these needs. Developers are prepared to enter into the partnership and to give price concessions for a pre-negotiated fixed agreement on price and volume, and speedier access to market, which reduces their development risk. This drug development and pricing model is close to existing governmental procurement practices in researchintensive areas such as public transport, defence and space exploration.

Scenario 2: Parallel Drug Development Track
EU member states set up a parallel, not-for-profit drug development track that exists alongside, but independent of, the pharmaceutical and biotechnological industry. The aim of the parallel track is to develop cheaper drugs without compromising safety and effectiveness. After having made up an inventory of the public health gaps and priorities in health care, EU member state authorities ask leading public research institutes which
discoveries, assets, tools and capabilities they possess to develop solutions addressing (some of) the needs that were identified. Starting from the match between demand and available expertise, coalitions are built between these (not-for-profit) research institutes, payers, authorities and patients’ organisations. All these partners make the commitment to participate in an open and transparent way in clinical research projects. Intellectual
property (IP) rights are acquired early on in the development process by the partners of the consortium, and ownership is shared. Alternatively, the parallel research infrastructure can completely deprioritise ownership; i.e. inventions and developments in the parallel track are not protected and are in the public domain.

Scenario 3: Pay for Patents
A consortium of European countries join forces and establish a “Public Fund for Affordable Drugs”. Each of the participating countries deposits a fixed annual percentage of what it currently spends on drugs into the Fund. Private payers (including insurance companies) can also join the Fund. The Fund continuously screens the research market for “interesting” drugs that are being developed in Phase II or in Phase III for indications with clear health priorities. The Fund buys the patent from developers, conducts or commissions the last phases of research in public research institutes or subcontracts to private partners (with strict public oversight), and guides the submission process for market authorisation. Because the drug is then put on the market at a relatively low price, substantial savings are generated for the public payer. Once the system is functioning “at cruising speed”, these
savings can (partly) serve to replenish the Fund. The “Pay for Patents” model delinks R&D from manufacturing and sales. The prices decrease because the partners in the Fund consider medicines as public goods that should not be financed through monopoly prices.
Hence, once the patent is owned by the public sector, after a successful development and authorisation trajectory, the rights to produce, distribute and sell the drug can be licenced to manufacturers and distributors that provide the best deal in terms of quality, safety and accessibility for the lowest cost. As a rule, various private partners compete with each other, with the result that “new drugs enter the market at generic prices”.

Scenario 4: Public Good from A to Z
Drug development is essentially a public enterprise, and is radically re-oriented from serving private profits towards serving the public interest and patients’ needs. In a drug development system that is essentially a public enterprise, private drug companies still have a role, albeit with a completely different business model. They mainly manufacture drugs and deliver services to the public provider on a competitive basis. With drugs and other health technologies essentially public goods, patents and monopolistic prices have no role.
Patients and public health providers, not corporations, choose which unmet needs research should address. Public authorities regularly publish lists of research priorities, based on objectively established and patient-informed unmet medical needs. Governments organise and fund that research through a variety of mechanisms, including requests for proposals based on well-defined targets that any research team, public or private, can compete for, or milestone compensation, and active management of the innovation process. By paying directly for R&D and active management of the drug development pipeline, nations and health care systems pay much less than the patent-protected prices of the past. Ultimately, drug prices are set on the basis of the real costs of manufacturing, quality control and distribution, which are decoupled from R&D.
Source: Vandenbroeck, Ph. et al. (2016), “Future Scenarios About Drug Development and Drug Pricing”, Health Care Knowledge Centre (KCE) Report 271, D/2016/10.273/59, Health Services Research (HSR), Brussels.

Genome editing: a potential weapon of mass destruction

The Patent Dispute Over Gene Editing Technologies: The Broad Institute, Inc. vs. The Regents of the University of California

Nobody could imagine two decades ago that a small part of wide range of bacteria's immune system could represent so much for genome editing. Known as CRISPR, clustered regularly interspaced short palindromic repeats, such mechanism can recognise and defend against viruses. The other part of the defense mechanism is a set of enzymes called Cas that can cut DNA and avoid the invasion of viruses. Mostly, these research was originated in Les Salines d'Alacant by Francisco Mojica a microbiologist.
As far as this is a natural process Dr. Mojica didn't show interest in patenting it. Now the row over patents is hot between UC Berkeley and the Broad Institute. I will skip details, you may find it in The Economist.
It seems that the fight is only to determine who was the first, and the Court will have to decide on March 9th. However, my question is: why is it still possible to file a patent over human nature?.
Meanwhile the public debate may be moved towards the use of such CRISPR technology for genome editing, and Science was publishing an article about the threat that misuse represents for human beings. Are we facing a new weapon of mass destruction?
Both issues, patents and bioethical implications are crucial at the moment. Former examples provide clear guidance of outcomes that should be avoided. Unfortunately, the race for the biggest size of the pie (billions of $) seems to be a priority over health and humanity.

The Theranos contretemps as a serious scandal

Last Thursday WSJ released a long article on Theranos clinical lab. In this blog you may check my February and July posts on this firm under the title: A closely guarded secret. As you may imagine, such a title was not coincidental. There were some clues that justified it, something unusual was happening. And WSJ has contributed to shed light on the issue. All the details in it. Basically, the summary is that analytic validity and clinical validity is under compromise. This is an exemple:



If you want to read a first person account, you'll find it here and here. Some additional articles: Wired, New Yorker, Clinical Chemistry and Laboratory Medicine (CCLM), Forbes, NYT, WP,...
This is not only a contretemps, it is a serious scandal and a huge problem to credibility for this start-up.
From Wired:

Theranos got a lot of traction by tapping into the frustration—both from consumers and the medical community—that diagnostic testing is too painful, too slow, and too expensive. “Their problem is they tried to do it with existing diagnostic instrumentation, instead of innovating new diagnostic instrumentation,”

Theranos is a black box that has touted results rather than process. “The ability of the lab medicine community to police and correct itself depends on that flow of information,” says Master. Instead, Theranos’ research was internal, and rather than submit their work to peer review the company cited their FDA approvals as evidence that the technology worked.

At least in the USA there is a regulator, the FDA, lab regulation in Europe was enacted in 1998, completely outdated under a third party scheme, not a direct public regulator. Therefore, there is a pressing motive to speed up new and different rules in Europe. Microfluidics and nanotechnologies are calling for and urgent overhaul.


 PS. An statement from WSJ:

In 2005, Ms. Holmes hired Ian Gibbons, a British biochemist who had researched systems to handle and process tiny quantities of fluids. His collaboration with other Theranos scientists produced 23 patents, according to records filed with the U.S. Patent and Trademark Office. Ms. Holmes is listed as a co-inventor on 19 of the patents.

The patents show how Ms. Holmes’s original idea morphed into the company’s business model. But progress was slow. Dr. Gibbons “told me nothing was working,” says his widow, Rochelle. In May 2013, Dr. Gibbons committed suicide. Theranos’s Ms. King says the scientist “was frequently absent from work in the last years of his life, due to health and other problems.” Theranos disputes the claim that its technology was failing.

Efficiency in drug patents buyout

Panning for gold: sourcing pharmaceutical innovation

Once upon a time there were pharmaceutical firms that invested mostly in internal R+D departments. Long time ago, the door was opened to contracting out, buying patents and licensing. The most recent step is to the acquisition of firms with promising molecules.
A short article in Nature sheds some light about the efficiency of recent mergers and acquisitions. And the summary is:

Our analysis suggests that most companies have a considerable opportunity to get better at deploying capital and resources efficiently when sourcing innovation externally. In our experience, we have found that the best performers develop robust forecasts for the key assets, are fiscally disciplined, and set up their innovation-sourcing teams and transaction capabilities to ensure that the right internal expertise is brought to bear and to ensure smooth hand‑offs through the life cycle of a deal.

The success lies within, the internal expertise is crucial. Have a look at the figure and you'll notice that the most efficient (defined as the commercial impact of the products acquired relative to capital deployed in M&As) is Roche. This is not by chance.

PS. Unfortunately, the study doesn't reflects any consideration to value in health or lobbying efforts in drug prices.
PS. FT's summer books 2015 

Statistical vs. identifiable lives

Do We Really Value Identified Lives More Highly Than Statistical Lives?

The recent Ebola evacuated case exemplifies the concept created by Shelling a long time ago, the difference of how a society allocates resources according to 2 different rules:

In 1968, in a paper about valuing ways to reduce the risk of death, Thomas Schelling1 distinguished between “identified lives” and “statistical lives.” Identified lives are the miners trapped in a mine or the child with a terminal disease—specific people who need help now. Statistical lives are those people, unidentifiable before the fact and often after as well, who will be saved by a new safety regulation, public health program, or environmental standard. Schelling observed that people seem to be willing to pay more to save an identified life: “Let a six-year-old girl with brown hair need thousands of dollars for an operation that will prolong her life until Christmas, and the post office will be swamped with nickels and dimes to save her. But let it be reported that without a sales tax the hospital facilities of Massachusetts will deteriorate and cause a barely perceptible increase in preventable deaths—not many will drop a tear or reach for their checkbooks.

Really such a case goes beyond Shelling insight because of uncertainty and unavailability of effective treatment. Bioethics field has argued over what they called "rule of rescue", a different perspective of the same issue. In this respect, NICE statement helps to understand both views:

When there are limited resources for healthcare, applying the ‘rule of rescue’ may mean that other people will not be able to have the care or treatment they need. NICE recognises that when it is making its decisions it should consider the needs of present and future patients of the NHS who are anonymous and who do not necessarily have people to argue their case on their behalf. NICE considers that the principles provided in this document are appropriate to resolve the tension between the needs of an individual patient and the needs of present and future users of the NHS. The Institute has not therefore adopted an additional ‘rule of rescue.

The article by Louise B. Rusell reflects precisely the theoretical and practical controversy and ends with this paragraph:

Adjustments and controversies aside, the evidence provided by VSL estimates suggests that people’s willingness to pay for statistical lives may be consistent with their willingness to pay for identified lives. The apparent existence of 2 different decision rules may have been no more than an artifact of the economic method for valuing statistical lives in use at the time the distinction was proposed. Now that economists’ methods more fully reflect “the interests, preferences and attitudes to risk of those who are likely to be affected by the decisions,” their estimates of the value of a statistical life support the idea that there just may be a single rule: Identified and unidentified lives may be equally valuable. This is good news for decision makers who use cost-benefit and cost-effectiveness analysis to inform decisions.

The theoretical suggestion sounds good, nowadays the political decision making reality goes in the opposite way, at least close.

PS. A must read post on GCS blog about the same topic.

PS. Ebolanomics, the economics of ebola at the New Yorker. Nothing new, prizes instead of patents to promote R&D, a good idea with difficult implementation.

PS. How much would you pay for a quality adjusted life year?

Walt  Khun.  From Tita Cervera  St. Feliu exhibition

The forthcoming systemic drug industry?

While reading WSJ this week I found that big changes are happening in the pharmaceutical industry. We all know that the former message was: if the industry business model is broken, the best is to manage its decline (John Kay FT dixit). I also explained such trend in this post. Consultants predicted 5 alternative strategies, now the 6th is in place.
The trend is focused towards a new industry structure after the failure of the two parts model: innovative and generic. WSJ says:

A wave of mergers and acquisitions is reshaping the global pharmaceutical industry. Many drug companies are narrowing their focus, dropping out of noncore businesses and bulking up where they have the size and expertise to generate significant sales growth.

The deals would leave fewer competitors with larger revenue streams in each segment of the drug business, from prescription medicines and vaccines to drugs for livestock and pets.

 After the failure of the standard innovative model throught patents, the alternative is to concentrate on rare diseases, and on highly profitable market segments -low volume and high profit-. Concentration is taking place also in commoditizated markets (generics).
Such a level of market concentration should lead to competition policy concerns, since the rivalry is not at industry level, it is at therapeutic group level. Unfortunately regulators are on vacation again. Maybe one day we will complain about a systemic industry that some of its parts may collapse and creates larger risks than returns, but it will be too late.

PS .Def: Systemic risk can be defined as the likelihood and degree of negative consequences to the larger body. With respect to federal financial regulation, the systemic risk of a financial institution is the likelihood and the degree that the institution's activities will negatively affect the larger economy such that unusual and extreme federal intervention would be required to ameliorate the effects

PS. Pharma megamergers, do they work?
PS. Reinhardt, as clear as ever in his blog: Congress and the Belief That Human Life Is Priceless

The seed of efficient genomic sequencing

Technology: The $1,000 genome

Imagine for a moment that you have back ten years, and as the health research responsible in the government you decide to allocate $230 million to achieve a $1000 individual genome sequencing. At that moment there was a monopoly by one company, Sanger. Your effort was to promote genomic applied research, better sequencing, and doing so, the monopoly would be undermined.
This is precisely what the US government did through the Advanced sequencing technology awards and right now has achieved its aim, a more efficient sequencing. They have been extremely successful and are closing the program  (NHGRI) this year: the goal has been achieved.
The funds allowed to break the former monopoly (Applied Biosystems) and at the same time, ten years later, a new quasi-monopoly has appeared (Illumina). This extraordinary story is well explained in Nature:

Researchers are optimistic that another technology will emerge to challenge Illumina. Most think, in fact, that the crucial questions for the field will shift away from technology. Now that sequencing is cheap enough to talk about scanning every patient's genome, or at least the protein-coding portion of it, it is still not clear how that information will translate into improved care (see Nature http://doi.org/rvq; 2014). These more complex issues will require another great leap in genomic science — one that could make the trouncing of Moore's law seem easy.

 

PS. For those that support patents, this is a good example of how prizes substitute patents to spur innovation and confirms Mckinsey article.

Against patents, again

Deadly Monopolies: The Shocking Corporate Takeover Of Life Itself – And The Consequences For Your Health And Our Medical Future

I've just finished reading a book on patents in life sciences. As you know from previous posts , I'm convinced that there is an enormous welfare loss from current patent system. If you have the opportunity to read this book, you'll finally will arrive at the same conclusion. Although it was written before the Supreme Court ruling over the Myriad case, the message is still the same: patents contrain innovation and are extremely costly to the society. The case of Hepatitis C is explained in detail. Until some patents were exhausted there was no possibility to start research. Without such patents, new succesful and (costly) treatments have arisen (and afterwards have been patented again).
An interesting interview in Forbes magazine highlights the key issues of the book. Unfortunately times go by and alternatives to patents are not taking off.

Courts as market makers

Recent decision invalidating Myriad patents has had immediate results. The market of genetic tests on breast and ovarian cancer has new entrants. The price of the test has decreased 40% (!) in just four months after the resolution. More entrants are expected in the next future for more tests.
The question is still the same, is there any clear cost-effectiveness analysis available for such tests? Why homebrew tests (LDT) are beyond any regulation? Does any regulator care about all this issues?. The answer is: up to now, we can't see any efforts. Patents create artificial monopolies, courts may create markets when invalidate patents,  but patients are concerned about health improvement and value. In an asymetric information environment, the regulator can't take permanent holidays. Overdiagnosed population doesn't necessarily mean healthier population.

 Forbes Healthcare Summit 2013

Insurance Companies Enter A New World

Humanity cannot be owned

Gene Patenting — The Supreme Court Finally Speaks

In light of recent resolution of US Supreme Court on gene patenting, beyond technicalities, the most important is the final decision. All nine Justices of the Court agreed that the segments of DNA that make up human genes are not patentable subject matter. The Myriad case has raised expectations, now the business model is more clear than yesterday, at least in US. However, nobody talks about those patents already acknowledged and what it happens.
The best summary is in the NEJM article:

The Myriad decision will be an important symbol for those who seek to foster scientific discovery by protecting and expanding the public domain. It also has symbolic resonance with the ideal that our common humanity cannot be owned. The Universal Declaration on the Human Genome and Human Rights declares the human genome to be “the heritage of humanity” and that “the human genome in its natural state shall not give rise to financial gains.”

In Europe the patentability of genetic materially is legally protected by the EU's Biotech Directive, which holds that "biological material which is isolated from its natural environment or produced by means of a technical process" may be patentable "even if it previously occurred in nature." FP says: European firms may now have a lot more leeway than their American counterparts.
Does this make any sense? We should start a review process of genetic patents legislation immediately.

Against patents

The case against patents

Some months ago, a WP blog hightlighted a paper by Boldrin and Levine with a straightforward title. Now you can read it at the Journal of Economic Perspectives. The summary is in the first paragraph:

The case against patents can be summarized briefly: there is no empirical evidence that they serve to increase innovation and productivity, unless productivity is identified with the number of patents awarded—which, as evidence shows, has no correlation with measured productivity. This disconnect is at the root of what is called the “patent puzzle”: in spite of the enormous increase in the number of patents and in the strength of their legal protection, the US economy has seen neither a dramatic acceleration in the rate of technological progress nor a major increase in the levels of research and development expenditure.

A risky statement unless there is a clear support from research. However, once you continue reading you'll have arguments to be convinced about it. The impact on pharmaceutical industry is analysed in detail:

There are four things that should be born in mind in thinking about the role of patents in the pharmaceutical industry. First, patents are just one piece of a set of complicated regulations that include requirements for clinical testing and disclosure, along with grants of market exclusivity that function alongside patents. Second, it is widely believed that in the absence of legal protections, generics would hit the market side by side with the originals. This  assumption is presumably based on the observation that when patents expire, generics enter immediately. However, this overlooks the fact that the generic manufacturers have had more  than a decade to reverse-engineer the product, study the market, and set up production lines. Lanjouw’s (1998) study of India prior to the recent introduction of pharmaceutical patents there indicates that it takes closer to four years to bring a product to market after the original is introduced—in other words, the fifi rst-mover advantage in  pharmaceuticals is larger than is ordinarily imagined. Third, much development of pharmaceutical products is done outside the private sector; in Boldrin and Levine (2008b), we provide some details. Finally, the current system is not working well: as Grootendorst, Hollis, Levine, Pogge, and Edwards (2011) point out, the most notable current feature of pharmaceutical innovation is the huge “drought” in the development of new products.

And the proposal is a controversial one:

we could either treat Stage II and III clinical trials as public goods (where the task would be financed by National Institutes of Health, who would accept bids from firms to carry out this work) or by allowing the commercialization of new drugs—at regulated prices equal to the economic costs of drugs—if they satisfy the Food and Drug Administration requirements for safety even if they do not yet satisfy the current (overly demanding) requisites for proving efficacy.

The last sentence sounds far from what should be a "fair" regulatory process in pharmaceuticals. Anyway, it seems that we have entered in a new perspective on patents and more scholars will be supporting it in the future.  I'm close to this perspective, but the details are important, as usual.

Countdown

I'm strongly convinced that strong patent rights spur innovation. In the case of genetics and biomarkers, the impact is even stronger. The Supreme Court has to decide over the Myriad case next April 15th and it is really crucial to follow what will be the definite resolution about genetic patents (at least in US). You'll find a good summary at FT.
The verdict is relevant for society as a whole. The access to new biotech benefits will be cheaper if resolution is finally against patenting. Of course, biotech industry has great concerns about it. But the problem is not on biotech, is on expectations that Wall Street has created. It is again, Wall Street vs. Society, a well known fight. Don't forget, the issue is not about patents. It is about ownership rights that spureously create and distort the economy.

PS. You'll find more previous posts on the same topic, here, there and everywhere.

PS. Uwe Reinhardt on healthcare prices, must read, as usual.

L'estimball de la indústria farmacèutica

Poseu "pharmaceutical cliff" a Google i us sortiran 711 resultats. Deu n'hi do!. A què es refereixen? Doncs a un tema cabdal en el model de negoci farmacèutic, estan caducant les patents de medicaments que han aportat ingressos notables a la indústria sense una renovació equivalent. És clar que no afecta tothom per igual. Si voleu saber quin és l'impacte a la indústria, FT ho va explicar fa uns mesos. Per algunes companyies suposa una reducció de les vendes totals respecte l'any anterior, de prop d'un 20%.
No ha d'estranyar doncs que es vulgui cercar des de fa uns anys un altre model de negoci que encara no ha aparegut. Els intents de la medicina estratificada, han donat de si tant sols 15 proves diagnòstiques autoritzades ("companion diagnostics") per la FDA, la majoria dels quals es refereixen a HER2 i per tant als tractaments amb trastuzumab. Altres intents encara són embrionaris, i el forat de les malalties orfes així com la seva protecció excepcional s'ha vist com un filó a explotar, i alguns ho han aprofitat d'allò més.
És clar si hi afegim la crisi econòmica que ens sacseja, encara ho dificulta més. Per això moltes companyies veuen la sortida cap a mercats emergents, on la sanitat encara hi ha molt per organitzar i per tant on aixecar demanda trigarà el seu temps.
Fa temps en vaig parlar, ara ja ha arribat el moment, la sortida d'aquesta dificultat encara està per veure. 

PS. Estimball 1 m. [LC] Lloc per on hom pot estimbar-se. 
PS. Ahir vaig fer una breu intervenció al TN del migdia de TV3. El tema ja el coneixeu els lectors del blog. Però vaig tenir ocasió de parlar de moltes més coses, fins i tot més interessants. Em caldria recuperar la mitja hora que vam gravar.

 Mapplethorpe a la Galeria Senda