Bayer Fights India's Compulsory Licensing Of Cancer Drug By Claiming It Spent $2.5 Billion Developing It
from the ORLY? dept
Back in March last year, the Indian government announced that it was granting its first compulsory license, for the anti-cancer drug marketed as Nexavar, whose $70,000 per year price-tag put it out of reach of practically everyone in India. Nexavar's manufacturer, the German pharmaceutical giant Bayer, naturally appealed against that decision, and the hearing before the India Intellectual Property Appeals Board (IPAB) has now begun. Jamie Love has provided a useful report on the proceedings; here's his summary of what's at stake:
The outcome of this trial, which focuses on the cancer drug Nexavar, is a matter of first impression for the IPAB, and is expected to set precedents on a wide range of issues, including the permissible grounds for granting compulsory licenses, the relationship between the India patent law and the TRIPS Agreement, and the setting of terms and conditions for the compulsory license, including the royalty rates.
Clearly, then, this is a crucially important battle for both sides, and Bayer has started throwing around some huge R&D numbers in an attempt to convince the IPAB that it should be allowed to retain its monopoly in India to recoup those costs:
Bayer presented a January 9, 2013 affidavit from Harold Dinter which made the claim that from 1999 to 2005 Bayer had spent "2 billion euros (approximately US$ 2.5 billion) in the identification and development of anti-cancer molecules leading to the successful approval of Nexavar in 2005." Dinter did not provide detailed support for the numbers, but said they were based upon Bayer's general R&D outlays for anti-cancer drugs, including but not limited to Nexavar, and that the estimate was supported by a new December 2012 study by Jorge Mestre-Ferrandiz, Jon Sussex and Adrian Towse, published by the Office of Health Economics (OHE). Despite its name, the OHE is not part of the government, but rather a largely industry funded private consulting firm. The study itself was paid for by AztraZeneca. Dinter and Bayer's lawyer also made extensive reference to the work of Joseph DiMasi, an academic who is also a drug company consultant.
In other words, it's the usual "don't worry about the details, just take our word for it" lack of transparency that characterizes the entire pharma industry. But this $2.5 billion is insanely high, even for an industry that regularly inflates the outlay on drug development by an order of magnitude. As well as the generic implausibility of such a high figure, Love cites a number of specific reasons why it's extremely unlikely. You can read the details in his post, but here's a key section:
Bayer's partner in the development of Nexavar is Onyx Pharmaceuticals. Onyx published annual estimates of its R&D spending on Nexavar.
…
Bayer paid for all research from 1994 to 1999 ($26.1 million), and this included research on several compounds in addition to the one now marketed as sorafenib/Nexavar. From 2000 onward, Bayer and Onyx split the R&D costs 50:50, and Onyx's share of the R&D costs were $134.8 million. The outlays on the entire R&D program that lead to the 2005 approval of Nexavar for Kidney cancer were $26.1 + (134.8 x 2) = $295.7 million. Of the $295.7 million, only a fraction was spent on the development of Nexavar for kidney cancer, and some of that benefited from a 50 percent tax credit under the US Orphan Drug Act.
To the put the entire $295.7 million into perspective, ignoring the tax credits, that represents a little more than one quarter of the current global sales for sorafenib/Nexavar, a product that will maintain its monopoly in most markets through 2020.
$295.7 [million] is also just 11.8 percent of the $2.5 billion estimate that Bayer wants the IPAB to accept as its R&D costs.
No wonder that Bayer was unwilling to explain how it arrived at that extraordinary figure. But it's hard to see how the pharma company expects to win this case citing numbers that are basically an insult to the intelligence of India's experts.
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Filed Under: drugs, india, ipab, lies, nexavar, patents, r&d
Companies: bayer
Reader Comments
The First Word
“I know where it went
"$295.7 [million] is also just 11.8 percent of the $2.5 billion estimate that Bayer wants the IPAB to accept as its R&D costs."Well, when you add in the lawyer's fees and lobbyists to fight against this law, the $2.5 billion is a tremendous understatement.
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I know where it went
Well, when you add in the lawyer's fees and lobbyists to fight against this law, the $2.5 billion is a tremendous understatement.
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Re: I know where it went
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Sociopaths should be removed from position of power.
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Not possible. Every publicly traded company is almost bound by law to behave as a sociopath. Not doing so would mean that said company is not complying with it's duty to it's shareholders.
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Trial data?
See: http://www.alltrials.net/
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-Giant bonuses for CEOs and other top executives for inventing the drugs! Like say $100 million for each of them.
-Bribes to everyone involved in the IP system for Drug. These bribes are getting more and more expensive each day with darn trouble makers in India demanding more money with threats of Compulsory Licensing of these drugs!
-Buying back some of the company's own stock to artificially inflate their profits per share. Because you can't invent new drugs without massive stock buy backs, even at the cost of laying off of a few thousand employees in R&D.
So see, the $2.5 Billion is actually a LOW BALL number!
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Who cares
NO ONE has a RIGHT to anything that someone else builds/designs/records or whatever. If they cant afford it move along to something they can afford. If they can't afford anything then move along to the grave.
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Re: Who cares
You're the kind of person who the world would not be remiss without.
People comes first before profits. Especially when the R&D costs are nowhere near what they're being made out to be. Put simply, without people Bayer has no one to sell their product to. Meaning they lose. So it's in their best economic interest to keep these people alive, even if that means having to reduce the cost of purchasing their products.
Luckily, some countries, like India in this case, are putting people before companies' profits. And rightly so.
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Re: Who cares
Bayer more than made their money back already, and will continue making money off this drug for some time. I'd say the risk is gone at this point. Now they're just required to accept competition. Competition is good, it forces prices down and quality up.
The whole point of the patent granting a monopoly is to mitigate risk. When you've turned a profit, there's no longer risk. The point of the monopoly is gone once the risk is gone. A monopoly is generally harmful to an economy as well as to the public. The moment the monopoly is no longer needed, it should be removed to lessen the harm caused by the monopoly as much as possible.
The fact that Bayer is resorting to flat out lying to try to maintain its monopoly, even after making a profit on this drug, says all I need to know about them and their motives.
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http://eur-lex.europa.eu/JOHtml.do?uri=OJ:L:2006:157:SOM:EN:HTML
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It's a shame they're so stupid, otherwise it might actually be entertaining.
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Re: Who cares
rights blargh
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Re: Who cares
And our society will be better off for it, so thank you. Tell Ayn Rand "hi" when you're sent to whichever ring of the hell of whichever belief system you subscribe to.
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Re: Who cares
And our society will be better off for it, so thank you. Tell Ayn Rand "hi" when you're sent to whichever ring of the hell of whichever belief system you subscribe to.
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Re: Who cares
This is science, there are only a few "correct" answers to the problem of curing cancer. Because Bayer got the answer first the rest of humanity is not being allowed to use it.
THAT IS INSANE!
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Re: Who cares
There's a quote from Scrubs which seems appropriate here:
Pharma rep: Our drug is very good at what it does due to our patented technology.
Cox: Yeah, it's so darn good that you went ahead and put a 600% markup on it. But who cares about sick people?
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they are scum...
art guerrilla
aka ann archy
eof
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Now does India and the rest have every right to tell them they are out of their mind and abusing the Monopoly right granted them.. Hell yes.
Quite frankly Bayer (and most of big Pharma) would do a much better job and have long lasting sustainable profits if they did a better job of saying the "real" cost of R&D was x and the cost to produce is "y" now lets figure out a way to get this in as many hands as possible at the best price for all ... its called a Win/Win they make some profit they make back the research money, and we get drugs at responible prices (oh and the generic guys most likely stay the hell away to avoid backlash because your already working to lower the prices and everybody wants to see whats next...
The first one to figure it out will bank more money than they ever did with the old ways...
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Re: Who cares
In the absence of artificial restrictions (patent law in this case) anybody would have the right to reverse engineer, manufacture, and sell any drug* as soon as it hit the market, assuming they comply with safety and drug approval regulations. Bayer only has whatever rights India decides to grant them.
* remix songs, rewrite books, etc etc
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Math problems
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Corporate Economy
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Not to mention being violent thugs.
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"The company was founded in 1863. Bayer, with its inventions, has contributed much to improving people�s and animals� lives."
Yes, Bayer contributing to your life as long as you're not broke.
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A dark place
Indeed; they simply could not describe, in polite company, precisely where they pulled their numbers from.
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