Why Is US Government Giving A Pharma Giant Exclusive Rights To A Zika Vaccine Whose Development Was Paid For By The US Public?

from the please-tell-me-again-why-making-drugs-unaffordable-will-save-lives dept

Fri, Jun 23rd 2017 8:07am — Glyn Moody

Here on Techdirt we've written much about the way Western pharma companies fight for their "right" to charge unaffordable prices for medicines in emerging and developing economies. In particular, they routinely take governments and local generic suppliers to court in an attempt to shore up highly-profitable monopolies on life-saving drugs. But to be fair, it's not only poorer people who are dying as a result of Big Pharma's desire to maximize profits: Western drug companies are equally happy to charge even higher prices in richer countries -- notably in the US. That's old news. But there is a pharmaceutical saga unfolding that manages to combine all the worst aspects of this kind of behavior, and to throw in a few new ones.

It concerns something really exciting and important: a vaccine that shows great promise against the devastating Zika virus, which can cause microcephaly, blindness, deafness, and calcification of the brain in children whose mothers were infected during their pregnancy. If effective, such a vaccine could be a tremendous boon not just for developing countries, but for Western ones too, since the Zika virus has already begun to spread in the US, and Europe. The vaccine was developed at the Walter Reed Army Institute for Research, and the Department of the Army funded its development. Great news, you might think: the US public paid for it, so it's only right that it should have low-cost access to it. Moreover, as an act of compassion -- and to burnish its international image -- the US could allow other countries to produce it cheaply too. But an article in The Nation reports that the US Army has other ideas:

the Army is planning to grant exclusive rights to this potentially groundbreaking medicine -- along with as much as $173 million in funding from the Department of Health and Human Services -- to the French pharmaceutical corporation Sanofi Pasteur. Sanofi manufactures a number of vaccines, but it's also faced repeated allegations of overcharges and fraud. Should the vaccine prove effective, Sanofi would be free to charge whatever it wants for it in the United States. Ultimately, the vaccine could end up being unaffordable for those most vulnerable to Zika, and for cash-strapped states.

The Knowledge Ecology Institute (KEI), led by Jamie Love, made a reasonable suggestion to ensure that those most at need would have access to the drug at a reasonable price. KEI asked that, if Sanofi does get an exclusive deal, it should be obliged to make the vaccine available at an affordable price. The Army said it lacked the ability to enforce price controls, but it would ask those nice people at Sanofi to commit to affordable pricing on a voluntary basis. According to The Nation, those nice people at Sanofi refused. Speaking of nice people at Sanofi, the article notes the following:

Sanofi's record also includes a number of controversies related to its pricing practices, from a $190 million fine to settle charges that it defrauded Medicare and other government programs, to a $109 million fine to settle charges that it illegally provided product kickbacks to doctors. In 2014, a whistle-blower alleged the company engaged in another kickback scheme and the destruction of legal evidence. KEI maintains a comprehensive list of Sanofi's fraud fines, including the latest: a $19.9 million settlement, reached this April, for overcharging the Department of Veterans’ Affairs.

When there is an entire Web page dedicated to listing Sanofi's problems going back to 2009, you really have to wonder why the US Army is so keen to give the company a monopoly on this promising new treatment. The usual argument for the sky-high prices of drugs is that firms must be rewarded for taking on the financial risk of drug development, otherwise they won't proceed, and the world would be the poorer. Except, of course, in this case that risk was entirely borne by the US public, which paid for the early stage development of the vaccine with their taxes. So Sanofi risked nothing, but now looks likely to reap the benefits by being allowed to price the vaccine out of the reach of the people who most need it. You might think there ought to be a law against this kind of behavior. It turns out that there is:

KEI's Jamie Love pointed out that under the Bayh-Dole Act of 1980, it is already illegal to grant exclusive rights to a federally owned invention unless the license holder agrees to make it available at reasonable pricing. But that provision has rarely, if ever, been enforced.

Now would be a really great time to start enforcing that law.

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Filed Under: army, patents, public funding, vaccine, walter reed army institute, zika
Companies: sanofi

58 Comments

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That One Guy (profile), 23 Jun 2017 @ 6:27am

"We're helpless, really."
The Army said it lacked the ability to enforce price controls, but it would ask those nice people at Sanofi to commit to affordable pricing on a voluntary basis.

Putting aside the fact that from the sounds of it this particular company shouldn't be trusted to so much as run a lemonade stand, the idea that the army was helpless to enforce price controls is complete and total crap. There are a multitude of pharma companies in the world, the army could have easily made selling the drug at a certain rate a condition to any company interested in selling the drug.

They didn't lack the ability to set terms, they simply didn't care to, because why would they care if a taxpayer funded drug is priced out of range of those that need it?
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Anonymous Coward, 23 Jun 2017 @ 8:16am

Re: "We're helpless, really."
"They didn't lack the ability to set terms, they simply didn't care to, because why would they care if a taxpayer funded drug is priced out of range of those that need it?"

Until they find themselves in the situation of wanting the drug but it is too high a price to pay for it then somehow i think they will care when it happens to them.
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Anonymous Coward, 23 Jun 2017 @ 8:19am

How the fuck is this vaccine not in the public domain?
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Anonymous Coward, 23 Jun 2017 @ 8:22am

Does not compute
How is it that the army has the power to grant a monopoly but lacks the power to control pricing?

And since when does the army have the power to grant exclusive rights to manufacture a drug? It's great that they paid for the development but handing out what amounts to a drug patent seems like a stretch.
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Anonymous Coward, 23 Jun 2017 @ 8:22am

who got the kickback for this?
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That Anonymous Coward (profile), 23 Jun 2017 @ 8:23am

Because while Corporations are people, even though they can't smile... giving them a blowjob is impossible to, so they gave them the next best thing... the right to bareback the world without lube or consent after making us pay for dinner.
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Anonymous Coward, 23 Jun 2017 @ 8:32am

The shock!!!
There is a lot of money involved.
what did you think was going to happen? Oh right, lets call for more regulation... that will do the trick!
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Anonymous Coward, 23 Jun 2017 @ 8:32am

US drug pricing is priced for profiteering and not as affordable healthcare. It's really sad that this is the norm with a lot of lifesaving drugs: https://en.wikipedia.org/wiki/Flucytosine#Economics
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SirWired (profile), 23 Jun 2017 @ 8:34am

This isn't entirely accurate
"Except, of course, in this case that risk was entirely borne by the US public, which paid for the early stage development of the vaccine with their taxes."

"Early-Stage Development" != Ready to Inject Into Humans by the Millions. There's quite a lot of risk (and expense) involved to bring a drug fully to market.

That's not to say the Army got a good deal (far from it), or that Sanofi isn't a bunch of greed bastards (they are), just that the deal isn't quite as awful as claimed.
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Anonymous Coward, 23 Jun 2017 @ 8:35am

Re: Does not compute
Congress...

ah forgot about those guys did ya?
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Machin Shin, 23 Jun 2017 @ 8:36am

Re:
I am betting it will be very clear in a year or two. It will be the guy who leaves the army and gets a nice cushy job at Sanofi.

Of course that very very sweet job offer will have had nothing at all to do with this.... nope... nothing at all....
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Anonymous Coward, 23 Jun 2017 @ 8:37am

Re: Does not compute
Because IP is a transferable right, and and those who manufacture stuff covered by IP rights almost always insist on gaining full control over the rights so that they can recoup their investment, and make a reasonable profit, like 10,000 percent.
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ShadowNinja (profile), 23 Jun 2017 @ 8:38am

But Glyn, obviously the US government wouldn't have been motivated to develop the vaccine if they couldn't give the patent away to a foreign corporation and give them monopoly powers to charge whatever they want for the vaccine!
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JoeCool (profile), 23 Jun 2017 @ 8:41am

Re:
It's worth too much.
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Anonymous Anonymous Coward (profile), 23 Jun 2017 @ 8:53am

Re: This isn't entirely accurate
That risk is being mitigated by the US Army giving the recipient of the rights grant $173 million in funding. This boggles the mind, as well as a bunch of other body parts.
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Anonymous Coward, 23 Jun 2017 @ 9:06am

Re:
Eh, don't worry about it too much. Big corporations are just scared because when the baby boomers die off, they're going to have a hell of a fight to win the minds and souls of the people they fucked.
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Daniel Audy (profile), 23 Jun 2017 @ 9:12am

Re:
Your comments are usually so good that this unnecessarily unproductive and crude one stands out.

Please don't feel the need to pad your comment count.
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scotts13 (profile), 23 Jun 2017 @ 9:23am

Vaccines? Aren't those bad for you? (GRIN) Then why such interest in this one?
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Anonymous Coward, 23 Jun 2017 @ 10:23am

Re: Re: Does not compute
Like they do anything but take money
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Anonymous Coward, 23 Jun 2017 @ 10:24am

Re: Re:
Like they treated BB so well - not.
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Anonymous Coward, 23 Jun 2017 @ 10:26am

Re: Re:
You no like euphemisms ?
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Anonymous Coward, 23 Jun 2017 @ 10:29am

Re: This isn't entirely accurate
As if they will accept their responsibilities when said risks become reality .. in typical style they will not pay a plug nickel from their ill gotten gains.
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Anonymous Coward, 23 Jun 2017 @ 10:32am

Re: "We're helpless, really."
"The Army said it lacked the ability to enforce price controls, but it would ask those nice people at Sanofi to commit to affordable pricing on a voluntary basis."

how the hell does it NOT have that control? I would say in this scenario they had all the power. Want to be the distributor of drug X then here is the agreement you sign, don't want to agree to the terms? ok we will find someone else to be the distributor.
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Anonymous Coward, 23 Jun 2017 @ 10:34am

Re: Re: Does not compute
I was going to reply and say "follow the bribe money" but I see you got there already
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ECA (profile), 23 Jun 2017 @ 1:17pm

I cant say anything..REALLY.
.... (insert comments here)
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Anonymous Coward, 23 Jun 2017 @ 1:28pm

Re:
GOP
(welcome to health care reform, Trump style)
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That Anonymous Coward (profile), 23 Jun 2017 @ 1:54pm

Re: Re:
My comment count is way down actually.
But I don't pad it, I post where I feel I have something to add.

I'm offensive, and I'll never apologize for it.

We paid for the research.
It's been handed to a Corporation with a PROVEN track record of ripping off customers, including the Government that just handed them the golden ticket.
We can't even bother to enforce the law that is supposed to shield us from being price gouged.

That does pretty much sound like they have gone out of their way to appease a corporation at the expense of the citizens they are supposed to care about.

We got sold out after they used our money to develop it & we'll pay some of the highest prices to benefit from OUR research which will be locked away & protected by our own laws so we can't get a cheaper alternative for a very long time.

Remember I'm the guy who turns fun phrases and uses profanity often to interesting results.

https://www.techdirt.com/articles/20120606/06512419218/filmmaker-compares-copyleft-supporter s-to-anti-gay-marriage-advocates.shtml#c74
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Anonymous Coward, 23 Jun 2017 @ 2:11pm

Headline inaccurate. Vaccine in the development stage, with funding being provided by both the US Army and Sanofi. Success is not assured...substantial capital is at risk since failure of the project always looms in the background.
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zyffyr (profile), 23 Jun 2017 @ 2:14pm

Re: Re: "We're helpless, really."
This is the US Army we are talking about... lets go with "If you decide to overcharge for this, remember that we have Cruise Missiles, Drones, and lots of bored guy with guns"
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Anonymous Coward, 23 Jun 2017 @ 3:22pm

Re: Re: "We're helpless, really."
When prices increase, so does funding. It is the magic of government spending on military! Military spending is even getting the congress to investigate some of the fraud. It must be very bad...
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Châu, 23 Jun 2017 @ 10:00pm

Foreign company
I read correct?: US Army give drug formula to FRENCH company? Why not give to American company?
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stine, 23 Jun 2017 @ 10:40pm

Re: Re: Re: "We're helpless, really."
I wouldn't call the soldiers 'bored guys.'
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Bill Ronani, 24 Jun 2017 @ 11:51am

Standard Practice
Make sure you mandate this vaccine. Make everyone get it and hold those down who refuse this, violating every imaginable ethical canon and law.
After you murder, maim and mangle countless children, get one or more of your sociopaths to lie about the damage done.
That way, the program will be completely consistent with how vaccines are marketed and used today.
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Anonymous Coward, 24 Jun 2017 @ 12:19pm

Re: Foreign company
Major presence throughout the US via US subsidiaries. Development program, a CRADA (Cooperative Research and Development Agreement) is between the Army and a US subsidiary.
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That One Guy (profile), 24 Jun 2017 @ 3:30pm

Beats the alternative
They should be unless something's gone wrong.
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Anonymous Coward, 24 Jun 2017 @ 3:54pm

Re: Standard Practice
Talk about sociopaths.
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Bob, 24 Jun 2017 @ 7:47pm

Crony Capitalism
Corporations run the government through a process of legalized (sometimes) bribery, greasing the way for overcharging the taxpayers and customers. It's terrible really.
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Anonymous Coward, 24 Jun 2017 @ 9:49pm

Re: "We're helpless, really."
This abusive company is not necessarily going to make the financial killing that nearly everybody expects. Google for "zika wolbachia". The idea is that wild mosquito populations can be infected with the wolbachia bacterium, then the mosquitoes can no longer transmit a variety of viral diseases, such as dengue fever, zika and some others. The wolbachia can maintain itself in the mosquito population.

The wolbachia technique has been highly successful in the Australian cities of Cairns and Townville, against dengue fever. If nobody is getting infected, then the price of the treatment for infected persons can be high, without causing significant economic losses. Wolbachia was mentioned in a recent episode of the Science Show on ABC Radio National.
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Chuck, 25 Jun 2017 @ 1:26pm

Re:
Except the only reason the US Army is finding this at all is that they want it for their troops when they deploy them to Zika-heavy areas. This means that, no matter how many different attempts they have to make to find a working vaccine, they'll keep trying things until something works.

In other words, failure is NOT an option. If this fails, they'll just grant more money and try something else. The "risk of failure" in a traditional (albeit bulls**t) patent sense is mitigated by the knowledge that ALL R&D costs WILL get covered, even if those costs exceed the current grant.

So, again, this is basically granting a drug patent without even the ACTUAL RISK usually used (as a BS, and very incorrect) argument used to justify said patents.
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Chuck, 25 Jun 2017 @ 1:27pm

Re: Re:
*funding, not finding. I swear I make that typo every week now...
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Anonymous Coward, 25 Jun 2017 @ 4:30pm

Re: Re: Re: "We're helpless, really."
Naaaah, the US Army is the origin of all problems in this world.
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Anonymous Coward, 25 Jun 2017 @ 4:32pm

Re: Re: "We're helpless, really."
Sure. Then why not put the drug in the public domain anyway?
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Anonymous Coward, 25 Jun 2017 @ 4:34pm

Re: Re:
No, it is not worth that much, all the research and risk has been paid already by tax payers. It could be easily used by many pharma companies so they actually compete in price.

It will be worth too much again, for a few people, after is put behind a paywall monopoly.
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Anonymous Coward, 25 Jun 2017 @ 4:36pm

Re: Does not compute
If it was funded by tax payers money then people should decide.
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Anonymous Coward, 25 Jun 2017 @ 4:38pm

Re: Re: Does not compute
"Because IP is a transferable right"

Yes but who funded everything? We the people, the taxpayers, you, me...and none of us voted on how our patent should be used.
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Anonymous Coward, 25 Jun 2017 @ 4:44pm

Re: Re: Re:
That is because most of american citizens are too blinded by consumerism, trying to be famous and narcicissm.
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Anonymous Coward, 25 Jun 2017 @ 4:46pm

Re: The shock!!!
The news here is not that it happens or that has been happening for a while now, the news is HOW it happened: US Army granting a patent to a foreign company.
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Anonymous Coward, 25 Jun 2017 @ 4:47pm

Re: The shock!!!
Yes, with this mentality is how now you WILL be fucked if you ever get infected with Zika.
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Anonymous Coward, 25 Jun 2017 @ 4:49pm

Re: This isn't entirely accurate
Still, no one who funded this project ie us the people, was asked what to do with this patent.
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Anonymous Coward, 25 Jun 2017 @ 4:51pm

Re:
Yes but people funded this vaccine in dev stage. And nobody asked the people what should be the direction of their funding.
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Anonymous Coward, 25 Jun 2017 @ 4:52pm

Re:
If there is so much research and still to be taken why not spread it among many companies?
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Anonymous Coward, 25 Jun 2017 @ 4:52pm

Re: Re:
If there is so much research and RISK still to be taken why not spread it among many companies?
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Anonymous Coward, 25 Jun 2017 @ 4:56pm

Re: Foreign company
Does not matter if it is French or American company. People from around the world including american citizens will be fucked! And only a few people will rip great profit while the vast majority will be left with a monopoly and sky high prices.

Understand! Stop this US vs France, or US vs Russia, or this vs that country. It is nonsense, in the end your beloved american company or french company or whatever won't give a fuck if you are american or french, they will just require from you to pay an unreasonable and ultra-inflated price!
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Anonymous Coward, 25 Jun 2017 @ 4:58pm

Re: Foreign company
Yes, the patent would be better off in the hands of an american organization such as the US Army! Which is trying to give it away to a French company! How stupid can you be?
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Anonymous Coward, 25 Jun 2017 @ 5:00pm

Re: Re: Standard Practice
...who don't understand an irony or a sarcasm.
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Anonymous Coward, 25 Jun 2017 @ 11:38pm

Re: Re: Re: Re: "We're helpless, really."

I wouldn't call the soldiers 'bored guys.'

I guess you've never heard the line about war being months of boredom punctuated by moments of extreme terror.
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Wendy Cockcroft, 26 Jun 2017 @ 5:23am

Re: Re: Re: "We're helpless, really."
Making vaccines to fight Zika is the last thing I'd leave to the "free market" on the grounds that there ain't one.
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Anonymous Coward, 27 Jun 2017 @ 9:08am

Re: Re:
You really should read research articles deliniating the medical problems associated with this specific virus before making claims about Army motives. Try reading about microcephaly associated with fetal development, and an extremely rare condition (even among those infected by this virus) known as Guillain-Barre syndrome. Neither of these pose a meaningful threat to military personnel.

The primary motivator for development of a vaccine appears to be the avoidance of birth defects that may arise if one who is pregnant becomes infected by the virus. This does not strike me as a significant concern for military readiness.
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