Text: Interview by Erik Freudenreich
Photo: Gilles Weber (SAM)

“There is no relationship between drugs’ manufacturing costs and their sales prices”

American economist James Love is fighting to bring down drug prices. For In Vivo, he explains how innovative treatments against cancer could become much more widely available.

For nearly four decades, James “Jamie” Love has been committed to lowering drug prices around the world. He was involved in the negotiations that brought down the price of cocktail therapies for AIDS in the early 2000s. Now, as the director of Knowledge Ecology International, he is arguing for a paradigm shift in the global health system. By removing the link between money spent on drug research and sales prices, he believes, access to new treatments would become more equal.

You’ve been involved in the battle to lower HIV drug prices for decades. Why are you now focused on the newest cancer treatments?

It’s a disease that affects so many people. It’s a very important battle, but it’s not yet obvious how it’s going to end. Pharmaceutical companies can influence everyone under the sun. It’s just mind-boggling how much money they make: it’s not unusual for a cancer drug to generate a couple of billion per year, some orphan drugs even reach $2 billion per quarter. What political problem can’t you solve when you’re making $100 million profit per month from one drug?

Political influence reaches many different levels when you make such high profits. In addition to normal things, like hiring former government officials and financing campaigns, you also have money to hire smart academics to be your mouthpieces. They can create narratives, whether completely false or highly misleading, to persuade the public at large to accept the rip-off and inequality associated with their policies.

Some of the new cancer drugs, like immunotherapies using patients’ genetically modified cells, can cost up to $400,000 a year per patient. Are such prices ever justified?

No, there’s just no relationship between the price you pay and manufacturing costs, which are trivial in most cases. Recently we helped a group based in the Dominican Republic take a look at the price of Ibrance, a drug used to treat breast cancer.

The US price per pill is over $500, while the cost of the active pharmaceutical ingredients is closer to 80 cents. And this is without even negotiating for large quantities.

Pharmaceutical companies argue that high drug prices offset fruitless research and development work. Is there any truth to that?

It’s true that drug development is risky, but so are all businesses, whether you’re making a movie, launching a new line of clothing or opening a restaurant. Now how many drugs end up not being approved? The answer is about 25% in the last decade or so. Yes, that’s risky but the truth is, the more you expect to make out of drug development, the more investment you will get.

To allow equal access to new drugs, you suggest adopting a model that delinks R&D costs from product prices. How would that work?

Right now, companies develop drugs which are paid for by governments and insurance companies based on their usage. But what if, instead, that money was paid into a fund that rewarded new drug development? And if at the same time drugs were made available to patients at marginal cost? This would allow doctors to prescribe the best medicine for each patient. And if a treatment cost $100 or $200 a year, it wouldn’t even matter if you were insured. With such a system, you’d have better access and more equality.

What other advantages would this delinked system offer?

Drug companies would have to compete against each other, with those developing better drugs getting more money from the prize fund. And you could pay off the reward over a decade while checking a drug’s performance every year, based on updated data, making the number of patients treated part of the equation. But it would be even better than that: over time, you could change incentives in ways that would make R&D more useful. Under the current system, it’s easier to invest in me-too products than to innovate. This describes many cancer drugs, which don’t offer a dramatic change in outcomes.

A delinked system would be a big gain for healthcare and society. It would also reduce the role of salesmen because when you have a drug that doesn’t really improve things, you have to market the hell out of it to make a return on investment.

Would there be enough money to finance innovation in a delinked model?

I’ll give you a really simple example. The HIV market worldwide is currently worth around $25 billion in sales, while in the last 30 years you got one, maybe two new drugs a year. This just shows that it’s not a very efficient system. Because even if you take the most absurd assessment on drug development costs, you’re going to get something less than 10% of the overall market any given year. Now, let’s suppose the US put up a $3 billion reward fund for new drugs for HIV. You could throw in Europe and Canada to match the US’s contribution, so let’s say $6 billion a year. Do you think that would be a sufficient reward for developing new drugs? It would be a lot cheaper than the current system and make drugs available to patients for $10 dollars a month.

How have policymakers reacted to this idea?

There is generally a lot of support from NGOs and politicians. Prominent figures such as Bernie Sanders or Nobel Prize winning economist Joseph Stiglitz support our work. The problem is that many people are afraid of the drug companies and their allies. We’ve had some good moments, but the reason things are moving forward slowly is because the opposition is intense.

Bringing about such an ambitious change seems almost impossible?

I wouldn’t be doing this if I didn’t think it was achievable. Some things that are hard to do simply take a long time to achieve. The question is: do you think inequality towards cancer treatments will continue to be acceptable in the future? Because we’ll never get equal access without delinkage. The inequalities are becoming more pervasive, and that’s coming home to people more and more. And how will the current system work when 20% of the population is 65 and over, whether in the Western world or in developing countries? The important thing for policymakers is not to think exclusively of the short term, but to take a step back. Having an idea of where you have to end up and then working backwards can be a really helpful exercise for achieving your goals.



James Packard "Jamie" Love is the director of Knowledge Ecology International, a non-governmental organization with offices in Washington, D.C., and Geneva. An American economist with degrees from Harvard and Princeton, Love specialises in governance and intellectual-property issues. He advises NGOs as well as national and international health agencies.