A New Social Medicine

[Source: PHILIPPE HUGUEN/AFP/Getty Images][Source: PHILIPPE HUGUEN/AFP/Getty Images]

Do short-term financial interests compromise delivery of long-term scientific objectives? The free market regularly compels companies to maximise profit for shareholders, but this can stifle the development of solutions to big problems. This problem extends across vital sectors such as Energy, Defence, Transport, Finance and Agriculture but it is particularly visible within the Pharmaceutical industry.

Starting from scratch, a new drug takes around twelve years and costs something in the region of $2 billion to develop. For every drug that reaches the market there are hundreds that fail, as the complexity of human chemistry makes drug development notoriously difficult to predict. Drugs reaching the market must pay not only for their own development but also for the cost of the many failures. In addition, the current regulatory system is lengthy, convoluted and corruptible, problems which are well surmised in Dr. Ben Goldacre’s excoriation ‘Bad Pharma’, concerning the withholding and distortion of clinical trail data by drug companies.

An effective pharmaceutical industry is now unsustainable in the free market, a result of the tremendous changes since its inception. The complex way that medicines are regulated prevents small companies from competing effectively with large established pharmaceutical companies (often grouped under the title ‘Big Pharma’). People cannot choose to live without healthcare anymore than they can choose to live without sanitation, food or water. Rushing into an emergency room is not entering a free market; you cannot choose whose bandage to use or which blood to be given. Healthcare is not expected to work like that, so why should drug development?

When it emerged in France in May that 200 new trains were too wide to fit into the stations the French transport minister blamed an ‘absurd rail system’ saying: “When you separate the rail operator from the train company, this is what happens.” Greater public policy control of both the supply and the distribution of public healthcare is needed to ensure that all the decisions are being made in the best interests of patients. The moment of diagnosis is far too late to start lobbying for development of better treatments.

Cuts to Research and Development (R&D) expenditure produce a short-term but immediate rise in profit. This should encourage a company to effectively evaluate risk/reward ratios and to prioritise the most promising projects and drug candidates, making competition between companies healthy and efficient. There are three main problems:

  1. Drug development is a lengthy process but the share price of a company is closely linked to short-term profitability. Resulting cuts to R&D expenditure are difficult and slow to reverse, and have led to many companies spending less than 10% of revenue on R&D, when it should be their primary concern.
  2. Drugs with potential for greater financial reward are prioritised, typically those likely to be taken by a large number of people for a long time (such as drugs to control cholesterol and diabetes). While these are important clinical areas to address, they are not necessarily the most pressing areas of public need. Many important areas are neglected.
  3. Drugs that are later on in development are overvalued. They have already overcome more regulatory hurdles and are thus more likely to be eventually approved, and the resulting financial benefits for the company will come sooner. This leads to companies with ‘top heavy’ pipelines as insufficient emphasis is placed on early discovery.

Clinical drug trials are prohibitively expensive for all but the largest drug companies so smaller companies often focus on earlier, ostensibly cheaper, stages of drug development. As drug patents expire for large companies, their pipeline shifts, exposing a gap in the neglected earlier stages. At any point in time it is quicker to buy drug candidates than to develop them, so the large companies simply buy smaller companies, effectively avoiding risks in early stage R&D. This outsourcing is wasteful as profits from successful patented drugs are tied up in the large companies and prevented from supporting the vital early stages of drug development. The innovative processes and teams that successfully started the process can be lost as the expensive R&D departments in the acquired companies are promptly unified, streamlined or consolidated. Often, in reality this means they are stripped of assets and closed, further lowering the overall spending on R&D and leading to regular jobs crises in the industry. The drug conglomerate continues its thoughtless sojourn across the patent savannah, leaving faint impressions of innovative science in a ghastly train. Do hedge-fund managers, who own large shares in Big Pharma companies, care especially about the drug market 20 years hence, and would they be successful if they did?

It is not the fault of the companies themselves, which have done exactly what the market expects them to do. The problem is that the market is concerned primarily with profitability and not with the delivery of the science or the efficacy of the medicine. While the two are connected, the link is unlikely to be the most scientifically productive – the profit has been too far separated from the process. Many large pharmaceutical companies spend less than a fifth of their annual revenue on R&D, significantly less than they spend on combined marketing and administration. While this produces successful companies, it is evidence that the public should not rely solely upon a free market approach to meet its medical needs.

For example, there is currently little financial incentive to research new antibiotics, as they are uncommonly expensive to develop, and compete in what is currently a crowded market. Even where antibiotic research has continued it has been slow however it is of the utmost public interest to have varied antibiotics constantly in development. The incidence of drug-resistant infection in both the developing and developed world has reached pandemic proportions despite scientists repeated warnings. New antibiotics are likely to be vastly commercially successful, however individuals lack the required scale to benefit from this foresight and large companies are hamstrung by shorter-term financial considerations. The public bears the risk of falling through the gap in provision and the consequences are predicted to be devastating.

Another example is the recently announced ‘Prime Minister’s Challenge on Dementia’ which includes a much-lauded doubling of the spending on dementia research unwittingly highlights a chasm between the cost of research and the cost of care: Governmental research funding will be raised to £66 million by 2015. However, the estimated cost of dementia to the UK economy in 2012 was £23 billion, a cost that will continue to accelerate as the population ages. Obviously there must be an effort to prioritise funding for research in this area – even modest improvements in dementia treatment or prevention would save a vast sum. Alzheimer’s disease constitutes a significant portion of the dementia burden and is a particularly difficult field for drug discovery – with 99.6% of drugs failing to reach the market it is easy to see why many companies choose to avoid the field altogether (8). A grander vision for long-term policy is required to reconcile such inconsistencies in cost. It must be a matter of public policy to identify problems such as these and fund and protect efficient delivery of scientific solutions to them.

There are similar inefficiencies in many other science and engineering sectors: As in pharmaceuticals, Energy, Defence and Transport are dominated by a small group of companies, exploiting what are effectively monopolies. All are facing challenges due to their short-term financial perspectives. The results are clear: the loss of energy independence as nuclear power stations are built by French companies with Chinese loans; the degradation of military capability caused by a dearth of vital equipment such as aircraft carriers, and high speed rail that is 25 years late and billions over budget. It is the governments responsibility to ensure these sectors are managed sustainably. While there is more work to be done on understanding the most productive scale and structure in each sector, a market in which profit is the primary metric has been shown to stall time and again.

The culture is difficult to change. Politicians might feel overwhelmed by a scientific industry many do not understand. Science is frequently misrepresented as a sort of faintly academic witchcraft perpetrated by unapproachable ‘experts’. It is important to realise that the public are not only the beneficiaries but also the guarantors of these industries. Political and not just economic pressures must be exerted for the public interest.

There is potential for a partial nationalisation of drug development. By working together and sharing some risks with Big Pharma the state could ‘outbid’ shorter-term market pressures and skew the results towards a more sustainable long-term drug policy, one that mutually supports the National Health Service. Within 20 years the state could part own the largest and most diverse drug portfolio in the world. Cost-price drugs for NHS prescriptions and improvements in patient outcomes would save billions of pounds a year, making any such project quickly self-sustaining. Overseas licenses of the drugs developed in Britain could finance a revolution not just for social medicine, but for the state sponsoring of Science as a whole. Scientific direction should become more independent from the solvency concerns of a few global companies. Projects that are less financially viable but more publicly vital could be properly supported in a way that is currently impossible. Scientific decisions about value could be made purely by clinicians, not accountants. In a relatively short time a partially socialised drug pipeline could pay for itself many times over, re-employ and retain many of the scientists who might otherwise head abroad and develop a productive symbiotic relationship with the UK’s growing Biotech industry. The public ownership of the drug trial data and the resulting transparency would also be a huge step forwards for the drug regulatory process. There is a fantastic opportunity to redefine the relationship between the public and science in the way it is directed, practiced and shared.

Ultimately new drugs are still going to have to come, in one way or another, from Big Pharma companies. Clinical trials are likely to remain too expensive to be run by anyone else, and a competitive relationship between Big Pharma will be important to maintain. However the public should not blindly trust that their best interests are necessarily being put at the fore. Policy may prove to be the only way to refocus the industry and salvage a more public and sustainable medicine.