The problem with Orkambi

Orkambi is a very expensive drug to treat a relatively rare condition, cystic fibrosis. Jeremy Corbyn is suggesting that a Labour government would break the patent and manufacture a generic version. There’s a problem with this idea:

Labour has pledged to create a publicly-owned company to make cheap versions of medicines the NHS needs but cannot afford, such as Orkambi, which is denied to thousands of children and young people with life-shortening cystic fibrosis.

The problem being exactly the argument that is being used in support of the plan:

Orkambi campaigners welcomed Corbyn’s speech. Christina Walker, Luis’s mother, said: “My child’s future is being put in jeopardy by the behaviour of one pharmaceutical company: Vertex.

“But it’s not the first or the last time that excessive profits have been put above patients’ health, and with 7,000 rare diseases currently without an effective treatment or cure, our situation could be replicated many times over in the future if the government doesn’t intervene now.

It costs up to $2 billion to gain approval for a new drug. That money has to come from somewhere, the current system is to give patent protection for a limited period so that the investment can be made back. Not, far from it, to insist that people have a right to a profit. But so that people are incentivised to invest in the next new drug to cure one of those 7,000 diseases.

So, we change the system so that the patent protection doesn’t work, money isn’t made back, what then happens to capital going into developing the next set of new drugs? That capital vanishes.

Ah, but, of course! Government can make the investment! But as ever Mariana Mazzucato is on the wrong end of this discussion:

Prof Mariana Mazzucato, director of the University College London Institute for Innovation and Public Purpose, said: “It is welcome that the Labour party is addressing key failures of the pharmaceutical sector.

“When the government funds the development of new medicines, it must do so in a systematic way to make sure that the benefits reach the patients who need them.

“Instead, we currently have a system where the risks of innovation are socialised, while the benefits are privatised through dysfunctional uses of intellectual property rights, a financialised business model and a pricing system that does not recognise taxpayer investment.”

Government doesn’t fund the expensive part of drug development, the clinical trials.

But let’s leave that aside and think of what an actual government run drug development system would be. Including the one vital number we’ve already got. The NHS, using the NICE guidelines, will only pay £30,000 per qualy - quality adjusted life year. Orkambi doesn’t have any known as yet effects upon life span. In fact, the benefits in general are regarded as marginal. There are some 5,000 sufferers from cystic fibrosis who may or may not gain those marginal benefits (the drug doesn’t work for all cases).

That’s, at very best, a marginal case for investing to create this drug, isn’t it? $2 billion spent to gain, at absolute maximum, £150 million a year of those qualys. Without taking into account any of the costs of failures and so on.

Now let’s do the same thing again for truly rare diseases. Where there are some few hundred who suffer. We’ve still got our budgetary boundary there imposed by the efficient use of public monies.

The problem with a government run drug development system is exactly the same as that with a public drug payment system. The costs of developing drugs for small groups of patients don’t pass the public spending efficiency test. This being nothing at all to do with profit, capitalism, socialism, business or government. Drug development is expensive therefore drugs for small numbers of patients are expensive per patient.

Or, as we should put it, a government drug development process will - righteously - never develop drugs for any one of those 7,000 rare diseases. Which really isn’t the nirvana we’re being promised by cutting the capitalists out of the deal, is it?