Al Jazeera: The great billion-dollar drug (and vaccine) scam?

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The pharmaceutical industry often trots out some pretty stunning numbers to explain why their drugs cost so much. A journalist and South African scholar scrutinizes the numbers for Al Jazeera.

In the first part of a two-part series called “The great billion dollar drug scam,” investigative journalist Khadija Sharife begins her analysis (interestingly, oddly, labeled by Al Jazeera as an opinion piece) with a focus on the Gates Foundation-backed global vaccination project known as GAVI, the Global Alliance for Vaccines and Immunization:

Alongside pneumococcal diseases such as meningitis and pneumonia, rotavirus-related diarrhoea is a primary childhood killer in developing countries, thought to snuff out the lives of 500,000 children each and every year. An overwhelming 85 per cent of these children are African and Asian. The need for medical miracles is as great as ever, but corporate mispricing generates huge profits, while driving up the price of life saving medicines.

British-based drug corporation GlaxoSmithKline (GSK) recently offered a five-year deal to supply poor nations with 125 million doses of the rotavirus vaccine – Rotarix – at $2.50 a dose, just five per cent of the current going price in Western markets. Through the GAVI group, the international vaccine agency financed by developed nations such as the UK, it is hoped that GSK and pharmaceutical multinational Merck – who, between them, dominate the rotavirus vaccine market – will provide a secure line of low-cost drugs for as many as forty countries in the near future.

But is it really a discount, and if so, who is paying the cost?

I think this is easy enough to answer: Yes, these are clearly discounts (about one-tenth what the vaccine costs in the U.S.) and we in the rich world are basically subsidizing cheaper vaccines for the poor world.

Is it enough of a discount? Some think not. Others think we’re getting a pretty good deal and need to be more sympathetic to the much-maligned drug industry.

The other question here is: Should wealthy countries pay more to cover for poor countries? Many think so, but it’s actually not that easily done. This was vigorously discussed at the recent Pacific Health Summit in Seattle and which — after gathering all the necessary permissions to write and speak — I will post on tomorrow.

The real question that Sharife appears to be seeking to answer is if the drug companies are gouging us and making up these numbers to cover for that.

In this first part for Al Jazeera, she goes into great detail to examine evidence for the claim drug companies often make — that it costs about $1 billion to bring the average drug to market — and noting that much of that cost is not research and development but marketing and sales efforts.

Others have challenged this claim before, and still are today. Here’s a recent story in Boing Boing saying the numbers are grossly inflated.

I think it’s pretty clear that the “one-billion” claim is pretty squishy. But so are most averages.

PATH recently showed that you can develop a vaccine — against a particularly severe form of meningitis in Africa — and do it cheaply enough to distribute at 50 cents a dose in poor communities. Other vaccines needed to save lives in poor countries, such as a new pneumococcal vaccine, appear more complicated and costly to develop.

There’s no question that it costs a lot to develop a new drug or a vaccine. But what does it really cost? Is the price fair?

We’ll see what Sharife comes up with in her second installment, reportedly in a week or so.

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Tom Paulson

Tom Paulson is founder and lead journalist at Humanosphere. Prior to operating this online news site, he reported on science,  medicine, health policy, aid and development for the Seattle Post-Intelligencer. Contact him at tom[at]humanosphere.org or follow him on Twitter @tompaulson.