Patients for Affordable Drugs (P4AD) is the faux patient group fronting for the Laura and John Arnold Foundation funded syndicate pushing for European style price controls on drugs. Along with other Arnold funded academics and organizations, including ICER- P4AD is demanding that Novartis price it’s breakthrough gene therapy for acute lymphocyte leukemia ‘fairly’ because “of the fact that U.S. taxpayers invested hundreds of millions of dollars to develop CAR-T before your company became seriously involved.”
The demand was part of a letter sent by P4AD founder David Mitchell (formerly an executive in a PR firm that received $12 million in drug company funding for Obamacare ads) to Novartis CEO Joe Jimenez. According to a fawning article by Arlene Weintraub in Fierce Pharma, “Mitchell requested a meeting with Jimenez, even offering to bring along two experts in drug pricing: Steven Pearson, president of the Institute for Clinical and Economic Review (ICER), and Aaron Kesselheim, professor at Harvard Medical School and head of its program on regulation, therapeutics and law.”
Mitchell never reveals that Pearson and Kesselheim also receive funding from the Arnold Foundation. Weintraub never mentions it either.
This factual oversight is important since Mitchell proposes that Novartis hold its “price in the United States to the average of prices you receive in six other wealthy nations.” Or “accepting a value price as established by an independent organization such as the Institute for Clinical and Economic Review (ICER), discounted to reflect American taxpayers’ contributions and assumption of risk.”
Mitchell’s assertion that NIH invested $200 million in CAR-T that directly contributed to the Novartis drug is a well-crafted lie. But before dealing with that deception we should explore why discounting the prices of newly developed products that have benefitted in some way from federal support of basic research is a bad idea:
1. It penalizes companies that are successful.
What if the Novartis drug had failed. Most new medicines never make it to market. Should companies get an NIH rebate when companies invest in products that don’t work?
2. Why shouldn’t this principle be applied to all successful products developed by people or organizations that at some point in time received federal funding for basic research?
The government had provided billions in support for computing research. About 40 percent goes to universities and 60 percent going to industry and government labs.
Applying Mitchell’s logic, we should demand that Google, Facebook, Apple, Oracle, etc. should be setting prices “discounted to reflect American taxpayers’ contributions and assumption of risk”.
3. Why stop there? The government hands out $33 billion a year in Pell Grants to college students. Shouldn’t these kids starting salaries be “discounted to reflect American taxpayers’ contributions and assumption of risk.” A third of students getting Pell Grants do not graduate. Should that money be given back?
When we sell or buy houses, should the prices be “discounted to reflect American taxpayers’ contributions and assumption of risk” in the form of mortgage interest tax deductions?
4. So-called fair pricing requirements reduce private sector investment in NIH sponsored research.
In 1989 the NIH imposed a reasonable pricing clause on drugs developed using federal basic research support. The number of direct partnerships between NIH and biotech companies declined steadily declined from 42 in 1989 to 32 in 1995.
In 1995, the clause was removed. The NIH director -- Harold Varmus -- noted at the time that the pricing clause had driven industry away from many collaborations with N.I.H. scientists that could have benefited the public. "Eliminating the clause will promote research that can enhance the health of the American people," he said.
By 1997 the number of partnerships surged to 153. (The NIH averages about 80 such agreements each year. )
Mark Rohrbaugh who ran the technology transfer office at the institutes from 2001 to 2013 and is now an adviser to the agency states that “Companies will not take technologies from us if we say the government will decide in the future what the price will be,” said Mark. He goes on to say (as noted above) that “after the “reasonable price” clause was struck, he said, there was a threefold increase in partnership deals.”
Now let’s turn to the canard that the NIH invested $200 million in CAR-T research before Novartis dropped a dime. P4AD claims it found 356 NIH projects from1993-2017 containing the phrase “chimeric antigen receptor” (CAR) totaling $204 million.
There are several problems with this analysis:
1. It includes NIH funding after 2012, the year Novartis began investing. Replicating PD4D’s search and limiting to 1993-2011 generates 43 grants totaling $18.9 million.
2. Its search is overly broad. It should have at least searched for CAR therapy since CARs are engineered for a variety of research purposes apart from T cell therapy.
A search using the phrase CAR “ therapy” from 1993-2017 yields 33 projects receiving $22.9 million. But all that funding came AFTER 2011. Which means that the NIH spent zero dollars on zero CAR therapy projects until Novartis stepped into the picture and after the first results of the CAR-T therapy were published (in 2011).
Indeed, the Association of Cancer Gene Therapy provided Dr. Carl June who developed the genetically engineered CAR-T approach all the initial funding. NIH provided no funding.
Dr. June received two grants from ACGT in 2004 and 2008 for his studies in CAR-T therapy for lymphoma and leukemia, and ovarian cancers. On August 10, 2011, Dr. June’s study results were reported in the New England Journal of Medicine and Science Translational Medicine. The results exceeded everyone’s wildest expectations.”
When the FDA advisory committee approved the therapy, June noted: “The funds from ACGT sustained us. When other organizations, including the NIH, considered gene therapy too risky, ACGT believed in the science and funded us when no one else would. ACGT really kept us going and kept the research alive. Without them, we wouldn’t have had a clinical trial and I don’t think we’d be where we are today.”
In 2012, the University of Pennsylvania and Novartis announced a major partnership, in which Penn granted Novartis exclusive rights to its CAR-T therapies. In return, Novartis gave Penn $20 million to fund CAR-T research. Additionally, Novartis is spending hundred of millions of dollars to support clinical trials, manufacturing of genetically engineered T cells and the actual production of the CAR-T therapy which must be tailored to a person's specific genetic and tumor profile. An innovation is something that can be widely used.
P4AD was hoping that the public and media would accept it’s phony $200 million NIH funding estimate at face value to support its equally bogus assertion because it fits the narrative that drug companies are simply free riding off taxpayer funded research or that NIH supported the riskier part of the development process.
Neither is true. P4AD is running a deceptive campaign on behalf of the Arnold Foundation to promote policies that have reduced private investment in NIH research. If Novartis had been required to negotiate the launch price of CTL019 it would not have provided the $20 million. It would not have spent hundreds of millions of dollars developing a pilot facility for producing genetically modified T-cells. In short, many people who were are death’s door and who are alive today – as well as thousands of people in the future facing the same fate – would be dead.