This is the third article in our general election series on Labour’s “Medicines for the Many” policy. To view the previous articles, click here.
In Medicines for the Many, the Labour Party recognises the role public sector funding plays in drug development and proposes that this can be leveraged to secure highly favourable terms from grant recipients. Labour’s initial proposals are that public funding should only be awarded to a recipient who:
commits to making its product affordably available;
reinvests a portion of its profits into “productive innovation activities” or a public innovation fund;
grants open access to its research; and
discloses its R&D data, including development costs.
Although these conditions could be imposed as soon as a Labour government came to power, it seems likely they will follow a period of consultation with “current and future stakeholders”. This could include representatives from universities and the pharmaceutical industry but may also look to draw on wider civic groups.
Implemented in the right way, closer monitoring and management of public sector investment could both support the pharmaceutical industry in the UK and maximise returns for taxpayers. Vertex, the manufacturer of Orkambi, received funding in the region of $40 million from a US charity, the Cystic Fibrosis Foundation (CFF). In return for its investment, CFF received a share of the royalties of Orkambi, which it sold in 2014 for $3.3 billion, and reinvested in funding new innovative treatments. Closer to home, the Institute of Cancer Research, London receives and reinvests royalties based on its investment in the discovery of the drug Zytiga. Arrangements like this have been in place for a while – as Labour itself recognises, early MRC work on antibody libraries generated significant royalty returns.
However, there is a risk overly restrictive conditions on grant recipients could limit opportunities for the UK to realise productive profits from its scientific investments. Restrictions on profitability could drive research on potentially high value products to other jurisdictions, which might lead to reduced returns for any public innovation fund. One option to maximise returns from public investment through a centralised medical research agency, with oversight responsibilities to ensure adequate compensation has been received.
The United States’ National Institutes of Health (NIH) is the largest public funder of biomedical research in the world. Recipients of NIH grants are required to comply with its policies and inventions resulting from federally funded research must be reported to the government agency that funded the project. Alongside the NIH sits the Bayh-Dole Act of 1980. Referenced in Medicines for the Many based on the “march-in” rights it grants the US government, in practice this safeguard has never been used. The Act was introduced to encourage the commercialisation of federally funded research. It confirmed that recipients of federal research funding would own title to the inventions arising directly from their research activities. As a result of the Act, there was a tenfold increase in patents filed by U.S. Universities between 1980 and 2002 and publicly funded institutions have been able to reap the rewards of their innovations.
While UK public funding traditionally focuses on the early stages of drug development, the NIH will support studies through Phase 2 of clinical trials, meaning the products are worth more when they are sold into industry. The drug pregabalin (Lyrica) provides an example of this in action. Pregabalin was invented at Northwestern University before being licenced to Pfizer for further development. In 2017, royalties from pregabalin were responsible for 18% of the University’s endowment.
Used in the right way, and with the right incentives in place, conditions on public funding can be part of a successful, innovative funding system. Labour’s current proposals will be subject to a consultation process and the policy recognises some of the benefits which can be gained from funding later-stage clinical trials. However, stated outcomes such as the ability to “force the private sector to accept conditions if they want to licence publicly funded technology” will be uncomfortable for many of the private companies active in the industry.
Our next article will look at Labour’s long-term proposals: the abolition of patent protection / intellectual property rights for pharmaceutical products and the creation of a state-owned generics company.