When Frederick Banting, Charles Best, and James Collip filed for a U.S. patent on insulin in 1923 and sold it to the University of Toronto for $1 each, they did it because, as Best once said, “insulin belongs to the world.”
They also believed that securing the patent was a form of publication, and wrote to the university president, “When the details of the method of preparation are published anyone would be free to prepare the extract, but no one could secure a profitable monopoly.”
Sadly, they were mistaken.
Today, three companies — Eli Lilly, Novo Nordisk (NVO), and Sanofi (SNY) Aventis — control virtually the entire global market for insulin. This oligopoly, which may have colluded to fix insulin prices, charges exorbitant amounts for a medicine that people with type 1 diabetes cannot live without. Since the 1990s, they have raised the price of insulin more than 1,200%.
In the past few years we’ve learned about the tragic and preventable deaths of 20-somethings who simply couldn’t afford their insulin, even with insurance. Diabetes-related complications like amputations are on the rise again after decades of decline, and many people who depend on insulin to survive are sacrificing their rent, their cars, and their dignity just to get by.
It’s an unconscionable evolution for a drug developed almost a century ago in a public lab, in the public interest. How did it come to this?
The private pharmaceutical industry has every incentive to game the patent system, extract the highest prices it can, and delay the market entry of competitor drugs as long as possible. With the largest lobby in Washington and a well-oiled revolving door to its regulators — hello, Alex Azar! — large pharmaceutical companies have deftly evaded attempts to rein in their excesses. That’s how Eli Lilly, Novo Nordisk, and Sanofi Aventis have managed to keep their stranglehold on insulins and charge ever-higher prices for years.
In addition to having potentially catastrophic effects on the lives of patients, profit-maximizing strategies responsible for these eye-watering price tags also result in differential pricing practices with discriminatory effects, unnecessary financial strain on the U.S. health care system, and contribute to growing corporate power over our democracy. But as one of us (D.B.) argues in a report released Tuesday, if we act now to institute a public option for pharmaceuticals, we could ensure that this terrible story is never repeated.
By public option we mean the creation or expansion of publicly owned institutions to function across the entire pharmaceutical supply chain — from research and development to manufacturing to wholesale and distribution — in order to assure a safe, consistent, and accessibly priced supply of essential medicines.
It is sorely needed because the private pharmaceutical industry is failing us on a number of fronts. It operates on an extractive model that contributes to inequality and increasingly produces drug shortages, inefficiency, lagging innovation, misinformation and misuse of medications, and, most famously, the world’s highest drug prices.
Essential medicines like insulin, antibiotics, anti-allergy medicines, and more could and should be developed and sold by public institutions in the public interest. A number of other countries, including Sweden, Brazil, Thailand, and Cuba, have successful publicly owned pharmaceutical companies spanning any and all links in the supply chain. It’s high time the U.S. joins their ranks. Moreover, Americans across the political spectrum already support public production of essential medicines.
The incentives for a pharmaceutical industry in the public sector would be radically different than for a pharmaceutical industry in the private sector. Free from the need to satisfy hungry shareholders with ever-higher quarterly returns, public pharmaceutical companies could be designed to ensure that public health needs are the priority.
In fact, the public already funds the majority of the basic research leading to the development of new drugs in the U.S. through the National Institutes of Health and other public entities. Directing those funds to public institutions specifically designed to develop new essential medicines based on society’s greatest needs would be more efficient and effective at ensuring we get true innovation, and not a glut of “me-too” drugs structurally similar to existing products.
A public pharmaceutical R&D institute could patent its inventions and keep them in a public-interest patent pool in order to stimulate further scientific advancement and safeguard those advances from profiteers, thereby securing long-term affordable access to the medicines developed. The private pharmaceutical sector would be welcome to compete with this public sector on the development and production of essential medicines, or it could choose to focus on lifestyle drugs.
Publicly owned manufacturers at the state, local, and regional levels could make new medicines developed by a national R&D institute and also produce low-cost generics. These manufacturers would then work with publicly owned wholesale distributors to assure the medications are available at hospitals and retail pharmacies nationwide — all at the same low price. It could even leverage existing public institutions like the U.S. Postal Service and the Veterans Health Administration, both of which have important experience in pharmaceutical distribution, to ensure that cost-effective medications are delivered directly to patients and clinics in every community.
Unlike private pharmaceutical companies, publicly owned pharmaceutical companies would be subject to existing transparency laws for public entities and could be further required to publish their prices — or even charge all purchasers the same price. By doing so, they could significantly improve transparency in the entire pharmaceutical supply chain, giving citizens and lawmakers real information about where the money goes when medications are bought, empowering everyone to make more informed decisions about future policy and regulations.
Pharmaceutical science’s promise — that it can, through human ingenuity, end or treat the diseases our flesh is heir to — is a modern miracle. But keeping this miraculous promise for everyone means we need to rethink at a fundamental level an industry content to let our friends and families die in the service of its bottom line.
Dana Brown is the director of the Next System Project at the Democracy Collaborative and author of the report “Medicine for All: The Case for A Public Option in the Pharmaceutical Industry.” Elizabeth Pfiester is the founder and executive director of T1International, a global, patient-led advocacy organization fighting for affordable access to insulin and supplies.