The Pharmaceutical Market: "But aren't they all Evil?"

Working in marketing in the medical field, I have occasionally been drawn into discussions about the 'Evil' pharmaceutical companies, usually accompanied by finger-wagging and frowning.  I generally deal more with devices and non-prescription supplements, but it's still something I feel quite strongly about.

"Which ones do you believe are evil?" I will ask.
"All of them!" will inevitably be the answer.  "I mean, they've had a cure for cancer for ages and the pharma companies won't sell it because they'll loose money from all the people who aren't ill anymore! And none of them will make a cure malaria for Africa!"

This isn't an uncommon reaction.  The pharmaceutical industry is demonised more than most by the general public, with possibly the exception of the financial sector.

I'll give you a made up example.  Imagine if Yves Saint Laurent bought out a new £20,000 dress in a haut couture show which is beautiful and suits most people.  This cannot be afforded by many, but everyone accepts that it's the design and the work behind it that costs.  It will be lauded, worn by celebrities and shown in fashion magazines. Teenage girls will put pictures of it on Instagram with 'My Dream Dress' and fashion bloggers will gush in a positive way. Several months later, generic fashion chains create versions of it, and sold at a cheaper price to suit mass market.  Everyone wears it, and it is hailed as a triumph.

Now think of the same made up example in the pharmaceutical industry. Novartis bring out a new drug against Dementia which is amazing and will save many lives. It cannot be afforded by many which is criticised, but it will be noted in the press as a great step forwards, those that have private health care will say how amazing it is, and reports will go into clinical journals. There will be a public backlash against how unfair the pricing is and there will be petitions on government sites demanding the new drug is made available for specific people by their family members. Protest websites sites will be launched about Novartis destroying lives just for their own profit levels by sitting on the drug.  Several years later (could be up to 10 depending on the patent and the difficulties of manufacture), other drug companies come out generic versions at a cheaper price to suit the mass market.  Everyone uses it, and it is incorporated into medical regimes, and everyone talks about how great the drug is, now it's affordable as Novartis isn't hoarding the research.

Sounds familiar?

The reason is simple: with drugs, it's one of the industries where the actions of a few can have life and death ramifications on many.  Not getting a dress isn't going to kill you.  Not getting access to new drugs might, and that makes everyone invested and emotional. In no other industry is maximising shareholder value a dirty word to the public.

The core issue is rooted in our current free market/capitalist system.

Costs and times are variable, but it shows
a good basic example summary

• Governments do not fund intensive medical research; it's generally individuals doing things like doctorates or funded by charities for specific illnesses.  There are no specialist labs funded by the public into Dementia Research, for example.  This means that research has to happen in the privately funded (either business of charity) sphere.
• Drug development is hugely expensive. Even the cheapest drug will cost millions to licence. According to the TCSDD (Tufts Center for the Study of Drug Development) last year, the average cost for developing a human prescription drug that gets mass market approval is around $2.6 billion.  That's £1.7 billion in UK money.  And I'm not even touching on the drugs that start development and then don't make it in the clinical trials.  
• It's massively time consuming.  Drugs can take 20 years+ to develop and trial, which is a huge amount to time to be investing your £1.7 billion with no return.
• In order to try and enforce a level of competition companies can only patent a drug for a limited amount of time (unlike something like Coca-cola: the recipe is still secret after over 100 years) and so have to recoup their huge R&D costs within the first 10 years, and ideally have some extra to be able to: 
• Hand over to the shareholders to show the company is viable and should still be supported.
• Invest in the next set of research for the next drug to help people and create a profit.

What this means is that for new research to happen, pharmaceutical companies have to be able to cover their costs in the first ten years before the generics come and take market share.  It's not a case of exploitation but simple economics. Should the companies be forced to drop the prices of their products in those first golden years, or provide a lot free, then they will simply stop developing new drugs. So the child on the latest petition might be helped, but untold numbers might not get the benefit of later research on the next project.  It's a sad case of the needs of the many outweighing the needs of the one.

The other option is to extend the period where the patent is protected so the costs can be clawed back at a slower rate (the 25 year mortgage vs 15) but that has the trade off that the price point moves to be affordable to a greater range of people, but still not mass market, and again, somewhere, someone who needs the drug won't get it.

For the reasons of recouping costs, it's also the reason that complaints against holding a cure for cancer are ridiculous: no amount of potential return on radio therapy drugs which are into generics would recoup billions in research. There may have been promising research that failed at clinical trials, but to get that far the relevant companies would have lost millions.

Money is a strong decider in many business decisions.  It's not always the ultimate decision maker because it depends on what the raison d'etre is for the business (and some have much more altruistic mission statements), but in pharmaceuticals due to the sheer scale of the money involved, investment dictates research.  Whilst it would be amazing and laudable for companies to afford to research drugs for the sake of it, there just isn't enough money to justify such high levels of spend.  If your target market can't afford to recoup those costs (such as a disease that hits poorer countries) then sadly it just won't happen.  In all honesty, we're much likely to find a cure for Diabetes than we are for Ebola, because of the populations - and their related incomes - that are affected.

I am aware that the above paragraph is likely to cause discord, and that is exactly what I mean when I talk about expectations being different for medical companies.  We don't demand that Kurt Geiger ships shoes out to countries where footwear is limited, nor do we demand that airlines give free flights in third world countries for poorer citizens who cannot afford to see their relatives elsewhere.  I'm not saying the dependence on market forces is wrong or right, simply that pharmaceuticals are businesses, not public concerns and resources.  In an ideal world, research to cure illness would be open access, and available to everyone immediately.  But that's not how capitalism works, and once you start to discuss ideas of getting governments to fund research through extra tax, it becomes a political and not a business issue.  

However, I would like to finish on what has turned into a slightly depressing post on a positive note.  One of the reasons I like working in marketing in the medical field is that I honestly believe the products enhance the lives of the people or animals for whom they are intended. Medical devices, therapies, drugs, supplies: all of them help people (and animals) live longer, healthier lives and sometimes, save their lives completely.  Money funds investment, yes, but every investment that works is an improvement overall, and ultimately, everyone wins.  It's painful that the route to research involves choices based on market forces and return and that some people will suffer, but in the end, patents run out and then everyone gets cheap access to drugs that will save lives, from penicillin to ibuprofen and aspirin.  And that - enabling some very clever bods to create new therapies to save lives and keep doing it - is what it's all about.