Looting the medicine chest: how Bristol-Myers Squibb made off with the public's cancer research.
Taxol, a drug made from the bark of the Pacific yew tree, may be the most important cancer medicine yet. The news media have served up a feast of articles on Taxol, including several sensationalizing a highly misleading conflict between the welfare of cancer patients and the fate of the spotted owl. But very little has turned up in print about how one firm, Bristol-Myers Squibb, gained its monopoly over this drug.
At present, the only approved source for Taxol is the Pacific yew, a rare and slowly maturing tree found mostly on Federal lands. The discovery of Taxol and its cancer-fighting properties was made possible by decades of taxpayer-funded research, which has been widely published and is now in the public domain.
The Federal Government played an extensive and undisputed role in Taxol research. A recent article in the Journal of the National Cancer Institute lists 138 published citations of Taxol research, including reports on studies by the NCI dating to the late 1960s. Early (Phase I) studies of the effect of Taxol on cancer patients were carried out on Government grants at Johns Hopkins Oncology Center, Albert Einstein College of Medicine, Memorial Sloan-Kettering Cancer Center, the University of Texas, Mount Sinai School of Medicine, and the University of Wisconsin.
According to Dr. Samuel Broder, director of NCI, his Federal agency was "totally responsible" for the development of Taxol, including:
[para] collection of the bark;
[para] all biological screening in both cell cultures and animal-tumor systems;
[para] chemical purification, isolation, and identification;
[para] large-scale production;
[para] preclinical toxicology;
[para] filing of an Investigative New Drug Application (INDA) with the Food and Drug Administration, along with all required documentation;
[para] sponsorship of all clinical trials.
Because research on Taxol, including its effectiveness in treating cancer, has been publicly reported in professional journals, neither the drug nor the idea of using it on cancer patients can be patented, even by the Federal Government.
Nonetheless, Bristol-Myers Squibb has secured a monopoly on the drug despite the fact that it was in the public domain and is produced from trees found on public lands. How? It happened through a series of unusual contracts. The Bush Administration gave the company exclusive rights to harvest the Pacific yew trees that grow on Federal lands and exclusive rights to use the millions of dollars' worth of Federal research on Taxol.
One contract gives Bristol-Myers Squibb the rights to Pacific yews growing on lands managed by the U.S. Forest Service, at no charge. A second agreement gives it the rights to Pacific yews growing on lands controlled by the Bureau of Land Management - in this case, at token prices of five to twenty cents per pound for the scarce bark. (Less than forty pounds of bark is needed to produce enough Taxol for a complete course of treatment for ovarian cancer, so the cost to the company per completed patient treatment tops out at $2 to $8.)
By virtue of a remarkable "Cooperative Research and Development Agreement," NCI has agreed to make historical research findings completed before the company entered the Taxol picture, as well as "new studies and raw data" from NCI-funded Taxol research, "available exclusively to Bristol-Myers Squibb," so long as the company is "engaged in the commercial development and marketing of Taxol."
What are these "raw data"? Most important are the medical histories of sick persons who turn to Government-funded programs to receive experimental drugs. Information about whether these people live or die, or how they suffer, has become, under this agreement, the exclusive commercial property of Bristol-Myers Squibb.
Given this monopoly on the Pacific yew bark and the Government's research data, this one company is the only party now holding FDA approval to sell Taxol.
Under the terms of the agreement, Bristol-Myers Squibb asked the UFDA to approve Taxol for the treatment of ovarian cancer, anticipating that the firm would receive exclusive marketing protection under the Federal Government's poorly drafted and much-abused Orphan Drug Act. When this law was enacted a decade ago, its purpose was to promote the development of drugs for rare diseases. Drugs were considered "orphans" when no company found them profitable enough to market. The Orphan Drug Act has since been amended several times, and each time the definition of an "orphan disease" has expanded until, today, ailments such as asthma, AIDS, lung cancer, and chronic pain qualify. Many highly profitable drugs, such as AZT, ddI, and human growth hormone now receive monopoly marketing rights under the Act.
The market for Taxol will be highly profitable. In late December, the FDA approved Taxol for the treatment of ovarian cancer, which has a client population of 160,000 women, after a speedy process taking only five months instead of the average twenty it takes the agency to act.
Taxol also shows promise in treating other forms of cancer. NCI's Broder estimates the taxpayers will spend about $35 million in past and future Taxol research, including clinical trials on thirty types of cancer.
The success of the Government's continuing research on Taxol has added a new twist. NCI-funded trials now show the drug to be an effective treatment for breast cancer, a disease which afflicts 1.6 million women - a client population so large that it doesn't qualify as an "orphan" disease. As a result, Bristol-Myers Squibb has abandoned its request for orphan-drug marketing protections. However, the Government agreements which give the company exclusive rights to the Pacific yew and to all Government-funded research on Taxol have created large barriers to market entry which no other firm can easily overcome.
If the company pays a trivial sum for the Pacific yew trees harvested on public lands and doesn't pay the Government anything for its exclusive rights to Federally funded research information, what do the taxpayers get in return?
The Federal Government will not get any royalties on Bristol-Myers Squibb's sales of Taxol. We get only the company's "best efforts" to commercialize Taxol.
Such a deal! The taxpayers pay for the invention of a promising treatment for cancer and then give a marketing monopoly to one company, complete with a free or nearly free supply of the primary ingredient. And the company's role is to agree to sell it back to us.
The National Cancer Institute says the agreements with Bristol-Myers Squibb were necessary, since firms won't develop new drugs without the prospect of a marketing monopoly.
Moreover, Government officials are quick to point out that new sources for Taxol may lead to future competition in the Taxol market; therefore, Bristol-Myers Squibb is actually facing large risks which need to be rewarded.
Indeed, progress is being made on the development of new sources for Taxol, and several companies are spending millions of dollars to find ways to enter the market. For example, Rhone-Poulenc Barr is testing Taxotere, a synthesized product obtained from the leaves of the European yew tree, to treat ovarian, breast, and lung cancer.
But the fact that other firms are spending millions of dollars hoping to find some way to compete against Bristol-Myers Squibb is compelling evidence that NCI did not need to create a monopoly in the first place. NCI and Bristol-Myers Squibb also assert that the exclusive contract will speed up the development of Taxol. However, consider a different view: Bristol-Myers Squibb was shielded from the possibility that other companies would have obtained Taxol or used the Government's own clinical data on Taxol trials to file an earlier FDA application - a particularly important issue when it was thought Taxol would be protected under the Orphan Drug Act.
In fact, NCI never gave any serious consideration to a nonexclusive development plan, though several companies expressed interest in marketing Taxol. As things stand now, Bristol-Myers Squibb's monopoly will substantially reduce competition for Taxol or Taxol analogues for several years.
Even if the exclusive agreement had been necessary, couldn't the Government have driven a harder bargain? After all, the Government discovered Taxol in the first place and did all the early development work. What important ingredient does Bristol-Myers Squibb bring to the table?
According to NCI officials, Bristol-Myers Squibb's main asset is its marketing expertise; it already sells more cancer drugs in the United States than any other firm. But this oncology empire is built on a number of other drugs that were also invented through taxpayer-funded research, including cisplatin, carboplatin, carmustine, and lomustine, to mention a few.
"Marketing expertise" seems like a slender reed to justify this deal, since a promising new drug does not exactly require a hard sell, like a new brand of perfume. Before Bristol-Myers Squibb entered the picture, the Government was able to manufacture Taxol for about 60 cents per milligram, or $1,000 for an entire course of treatment, and this cost should have fallen with larger-scale production. But Bristol-Myers Squibb prepared the public to pay more.
In a March 1992 interview on The Mac-Neil/Lehrer NewsHour, Bristol-Myers Squibb's Dr. Zola Horovitz said the company had made a "huge" investment, and that "Taxol will probably cost more than any other oncology product that's ever been developed." What does it mean to say that Taxol will "cost more"? More than Pentostatin, sold by Warner-Lambert for more than $10,000 to some cancer patients? More than Roferon A, which costs some more than $50,000?
When questioned later, Dr. Horovitz said he did not mean to imply that Taxol would be the highest-priced cancer drug, but rather that it was the most costly to develop. How can this be? The Government invented the drug, developed the manufacturing process, and funded extensive clinical trials.
Bristol-Myers Squibb refuses to say how much it spent to bring the drug to market. According to Dr. Horovitz, the "huge" investments he was referring to were primarily related to the development of new sources for Taxol, including synthetic analogues. The company also hopes to gain ownership or control of the patents for developing these "new sources."
Bristol-Myers Squibb wants to apply the profits from Taxol to its research-and-development budget for new drugs. Does this make sense? No. Consumers of Taxol should pay only for Bristol-Myers Squibb's costs of testing, manufacturing, and marketing Taxol. If the company wants to make investments in the development of new Taxol analogues, it should get the money from investors just as others drug companies do.
Cancer patients have already financed the invention of Taxol once as taxpayers. Why should they be forced to pay Bristol-Myers Squibb a second time, as consumers?
Can NCI stop Bristol-Myers Squibb from gouging the public?
In fact, the agreement between NCI and Bristol-Myers Squibb includes a so-called "fair pricing" clause, which appears to deal with this problem. But it is so weakly worded and lacking in enforcement measures that it may only serve the public-relations interests of the company.
The National Cancer Institute has waived its right to set Taxol prices, and it doesn't even require disclosure of Bristol-Myers Squibb's cost of development.
Rather than focus on the company's actual costs, NIH officials reportedly told the firm that it expects the drug to be priced similarly to other cancer drugs. Given a list of the monthly wholesale prices of fifteen drugs, Bristol-Myers Squibb was asked to price Taxol at no more than the median for the group. In essence, NIH has told the company that it could price Taxol, a Government-funded invention, the same as other cancer drugs regardless of who paid for the drug's development.
The median cost of the drugs on the list is reportedly more than $1,700 for a month of treatment. In December, when the FDA approved the marketing of Taxol, Bristol-Myers Squibb announced it would price the drug at $986 per three-week treatment cycle. This figure was based upon a dose of 202.5 milligrams at $4.87 apiece - more than eight times the Government's manufacturing cost of sixty cents.
According to NCI officials, the actual amount of Taxol used in cancer therapy will be considerably higher than the amount cited by Bristol-Myers Squibb in its press releases. Patients in clinical trials currently receive from 210 to more than 300 milligrams of Taxol per dose. A patient who receives 240, a common dose, will pay $1,169. A patient who responds favorably to tretment receives up to eight cycles of Taxol injections, for a total treatment cost of $9,350. The Government's manufacturing cost for this much Taxol was $1,152.
Representative Ron Wyden, an Oregon Democrat and critic of the Government's Taxol agreements with Bristol-Myers Squibb, has scheduled hearings on the pricing of Taxol and other Government-developed drugs for late January.
While it is important to encourage the development of new drug discoveries, it is also important to protect the interests of the millions of Americans who bear the increasing burden of health-care costs. Price gouging on Government-developed drugs is a costly abuse of ailing patients.
Ralph Nader is a consumer advocate in Washington, D.C James Love is director of the Taxpayer Assets Project, which was started by Nader to monitor the management and sale of Government property, including Government-funded inventions.
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|Date:||Feb 1, 1993|
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