P.O. Box 19312
Washington, D.C. 20036
October 24, 2005
President George W. Bush
The White House
Washington, D.C. 20500
Dear President Bush.
As you know, the world faces the possibility in the near future of an avian flu outbreak that many experts say could take millions of lives worldwide. The United States may not be spared from this devastation. According to the Centers for Disease Control,
There are a number of steps that need to be taken to address this threat. We are writing about just one component of a public health response to the prospect of an avian flu outbreak: that is the stockpiling of antiviral medications.
As you also know, the World Health Organization and other public health experts have recommended that countries which can afford to do so should stockpile appropriate antivirals sufficient for 20 percent of their population or more. But the United States is far below this level. The U.S. stockpile is sufficient to provide medications to less than 2 percent of Americans. U.S. government officials state that they believe stockpiling is important; therefore their failure to obtain stockpiles is simply a failure of organization and prioritization. Secretary Leavitt has indicated the United States will work to increase its stockpile, but the single manufacturer of a key antiviral, oseltamivir (sold by Roche under license from Gilead under the brand name Tamiflu), says it cannot meet demand.
With pressure escalating on Roche, last week it indicated it will issue licenses to other manufacturers. It remains to be seen what the terms of these licenses will be. If they are collusive and continue to restrain supply or keep prices artificially inflated, and assuming a public health finding that stockpiling is important, then the government should invoke 28 U.S.C. §1498, authorizing the government and its contractors to use the patents on oseltamivir. §1498 permits the government to use any patent it deems necessary, conditioned only on payment of appropriate compensation to the patent holder.
For the longer term, there must be a serious assessment of how the United States finds itself hostage to pharmaceutical manufacturers who cannot manufacture sufficient quantities of drugs or vaccines to deal with priority public health concerns, or who charge too much for what they do sell.
The federal government has long offered major subsidies to the pharmaceutical industry, including through federally funded research at the National Institutes of Health and technology transfer and licensing giveaways, as well though extensive tax credits. The public may reasonably ask what kind of treatment it receives in return, especially in emergency situations.
With some exceptions, shortfalls in pharmaceutical and vaccine supplies and high prices do not relate to manufacturing challenges. Rather, they are due to the policy choice of relying on patent monopolists who for one reason or another fail to adequately supply the market or choose to use their monopoly power to price gouge.
There are at least two appropriate remedies to prevent a recurrence of these problems. We urge you to pursue both.
First, the provision of a marketing monopoly to drug innovators invites abuse. Innovators — to the extent they actually innovate with their own monies — must be compensated, including for the risk they take that their investments might fail. But there is no reason they should be rewarded with a marketing monopoly. The marketing monopoly gives them the ability to restrict supply dangerously — whether by inattention to public health needs or otherwise. It enables them to price gouge. It gives them an incentive to pour resources into marketing and advertising, which themselves hurt public health by leading to overuse and inappropriate use of pharmaceuticals. And it gives them an incentive to conduct research in areas where a marketing monopoly will give them the biggest dollar payouts (frequently copycat drugs, and less important treatment areas) at the expense of higher public health priorities (such as vaccines, or products to treat diseases of high prevalence in developing countries with little buying power). There are many ways that innovators could be compensated other than with a marketing monopoly. One such proposal is for a Medical Innovation Prize Fund2, which would have an independently administered government fund pay innovators, but not grant innovators a marketing monopoly. Under this proposal, generic versions of any pharmaceutical or related product would be available from multiple suppliers immediately or shortly after a product received FDA approval.
Second, there should be an expanded role for government in the development and manufacture of pharmaceuticals and vaccines. The federal government is already a major funder of basic drug research through the National Institutes of Health and other agencies, and contributes as well a large amount of funding to drug and vaccine development. But at some point along the line, the government turns over the fruits of its investment to private corporations, frequently for little or no compensation. They complete the development process and then typically gain monopoly rights to manufacture the resultant product, with the familiar attendant abuses. Rather than turn over the fruits of its investment, the government should consider carrying forward the development process to conclusion and licensing the final products on a nonexclusive basis to generic makers. Or, it might manufacture the products itself, especially during a fast-developing emergency.
In light of the oseltamivir shortfall, as well as ongoing problems in securing adequate flu vaccines, it would seem not imprudent for the government to develop and maintain some significant manufacturing capacity for drugs and vaccines. It seems clear that the United States, and the world, will be faced with an ongoing series of evolving and relatively sudden public health demands; and the corporate sector has demonstrated that it will frequently fail to provide sufficient supply of essential medicines and vaccines at appropriate prices. It was such a recognition of the pharmaceutical industry’s resistance that led the Pentagon to expand the Walter Reed Army Institute of Research, with naval research participation, during the Vietnam war, to do successful, efficient malaria and other drug and vaccine development, at costs far below those of the private drug companies.
The first responsibility of a government must be to provide for the safety of the citizenry. We must take measures to ensure we are not held hostage to the whims of profit-before-people drug corporations. That means ending the marketing monopoly for pharmaceutical and vaccine innovators and expanding the government role in pharmaceutical and vaccine development and manufacture, especially for emergency conditions.
1. Centers for Disease Control, “Information About Influenza Pandemics,” October 17, 2005, available at <http://www.cdc.gov/flu/avian/gen-info/pandemics.htm>.
2. For an iteration of this proposal, see H.R. 417, The Medical Innovation Prize Fund Act, introduced by Representative Bernie Sanders. In the Sanders proposal, the fund would come from general tax revenues. The amount expended would be equal to .5 percent of gross domestic product (roughly $60 billion currently). This is more than the industry now spends on research and development. However, the expenditure would enable a huge net savings for the United States as a whole, which currently spends more than $200 billion a year on pharmaceuticals. Under the Medicare prescription drug benefit, the U.S. is on course to spend $849 billion over the next 10 years, according to the Congressional Budget Office. The Medicare savings alone from H.R. 417 would go a long way to funding the prize fund.