Marie Antoinette’s misquoted revolutionary line can be amended for 21st-century America: LET THEM TAKE DRUGS. From skipping doses to unnecessary deaths, stories of Philadelphians being outpriced of life–saving medication are becoming all too common. As one of the leading healthcare providers and research institutions in Philadelphia, the University of Pennsylvania and Penn Medicine respectively invent and prescribe many of these expensive drugs. Biden’s efforts to lower pricing have been met with positive reactions, but Penn has spoken out against one in particular.
The United States has exorbitantly high prescription drug prices—2.78 times that of other developed countries across all drugs, and 3.22 times higher for brand drugs in particular. Biden wants to change this. But part of his proposed guidance might affect research institutions, including Penn, because of changes to laws surrounding government funding. It’s not clear that these changes will actually lower drug pricing; further, these proposed changes could have far–reaching implications for other areas of research, including that of technology.
The most controversial changes to legislation would affect the Bayh–Dole Act of 1980, prompting the #SaveBayhDole campaign. The federal act has allowed institutions receiving government funding to commercialize and own their research. Bayh–Dole has always had a provision for the government to “march–in” and take control of the research, but only if no attempt has been made to commercialize or for health and safety reasons. The Biden administration’s changes can be viewed as strengthening the march–in rights: if drugs made with the help of government–funded research are too expensive, the government reserves the right to seize the product.
However, this change might not have the intended effect that lawmakers hope for. “It only works if a drug is covered exclusively by federally supported inventions,” says John Swartley, the chief innovation officer at Penn, who is responsible for the commercialization of research. The number of currently marketed drugs that are exclusively covered by federal funding is “abysmally small.” A recent study found that 92% of drugs produced between 2011 and 2020 are not exclusively funded through the government, thus would not qualify for march–in.
Further, drugs take a long time to produce. “Over that course of that time, there’s a lot of additional intellectual property created, but it’s usually created by the companies that are developing drugs, and the companies aren’t using federal funds for the most part to do that,” Swartley notes. This means that by the time the drug hits the market, additional patents for the same drug are filed that are owned by the company, not the government. In these cases, which are frequent, the government would not be able to use march–in.
If the proposed changes would not affect too many drugs, then why might so many institutions be reacting negatively? One answer is this: Drugs are not the only research product that falls under Bayh–Dole. Swartley notes that these changes would “damage other parts of the innovation ecosystem,” including research in technology. In these endeavors, it’s much more likely to find projects that are solely funded by the government. If the changes were implemented, Washington would be able to step in and take control of the product if it were deemed necessary, affecting deals that institutions make with companies and prompting hesitancy for continued research–commercialization agreements. If there is a chance the product will never reach market before march–in rights are utilized, there won’t be many deals made at all.
Swartley emphasizes that Penn is committed to lowering drug prices and does not want to appear opposed to Biden’s overall plan, but they are against the specific change that would affect Bayh–Dole. Further, Swartley notes that the point of research at Penn is not to maximize profits but to continue to take part in the “virtuous cycle” of reinvestment in research. This cycle begins with inventors, for example Drew Weissman and Katalin Karikó, who recently won a Nobel Prize for their research of mRNA vaccines, which was instrumental in fighting COVID–19. From here, the research is commercialized, perhaps with the help of Swartley and his team. In the case of the vaccine, the research was sold to drug companies. The drug then goes to benefit multiple actors, such as the company that sells it, the institution, the original inventor, and then, of course, consumers like patients.
It would be a mistake to characterize research commercialization as “making Penn rich.” The virtuous cycle continues to bring new research to the public and in doing so stimulates academic ingenuity and continued relationships with the private sector. Of course, it is not that simple once the invention leaves Penn. By looking at who benefits the most from drug research, we can see a disproportionality.
While institutions like Penn might benefit, and to a lesser extent patients might as well, the biggest profits go to drug companies. This is where the problem lies—in the larger economy—not necessarily with research institutions. While institutions must be cognizant of their role in potential harm done to people, the mechanism to amend the Bayh–Dole Act seems ultimately misguided. This does not mean, however, that there is nothing that can be done to lower drug prices.
The Biden administration has proposed other measures to combat high drug pricing, which include letting Medicare negotiate more drug prices. Previously, this health insurance for those aged 65 or older was only able to negotiate the prices for 20 drugs or fewer per year. This change would help to lower the prices for drugs that treat diabetes, cardiovascular disease, and cancer.
Additionally, Biden wants to implement a change that would expand the out-of-pocket cap to “all private insurance plans,” which is $2,000. This, according to Biden, will give “peace of mind … ” because people “won't have to choose between filling their prescription or putting food on the table.” These measures are necessary in the first place due to the interconnected problem of drug pricing. The main players in this are insurance companies, pharmacy benefit managers, and pharmaceutical companies.
Pharmaceutical companies usually push the following line: Research and development of a drug is very costly, which raises the price. However, as this study published in 2022 has shown, this claim does not hold up. There is “no association between estimated research and development investments and treatment costs based on list prices at the launch of the product or based on net prices a year after launch.” As Robert Shmerling from Harvard Medicine points out, the prices of drugs in Europe, where prices are negotiated, are much lower, even if research and development are the same.
Drug companies also undergo advertising campaigns that cost billions per year, which is banned in other countries but not in the United States. Marketing costs might factor into the cost of drug prices. The ads effectively stimulate interest in new drugs, which are developed sometimes merely for the sake of continuing the cycle of selling and advertising. Companies also undergo legal procedures for maintaining sole control over a drug; sometimes, when another company has a drug, they merely tweak it slightly and file a patent for a new drug. Other times, companies acquire drugs from other companies that patients need and jack up the price. All of these drugs are then heavily marketed to consumers.
Another piece of this puzzle are pharmacy benefit managers, who “negotiate drug prices with health insurers and pharmacies.” These PBMs take part in the decisions of which drugs get covered by insurance and also how much they will cost. The problem is, PBMs effectively hike up the price of drugs through fees. Health Finance found that “rebates and fees received by PBMs account for 42% of every dollar spent on brand medicines in the commercial market.”
Finally, insurance companies, as Shmerling says, have “increasingly shifted costs to patients through higher copays, deductibles, and premiums.” These higher costs have disincentivized patients to seek out drugs when they need them.
Patients For Affordable Drugs (P4AD) highlights the stories of real patients and their struggles in affording necessary drugs across the nation. As one Philadelphian named Evan says, “Due to several health problems since I suffered a stroke in 2002, the amount of prescriptions I take are impossible to keep up with. Sometimes I have to choose between scripts and buying food! I need help to afford all the medication I take!”. This echoes similar stories of many other Philadelphians presented on P4AD's interactive map. Drug prices are simply unaffordable.
While ultimately the changes that would affect research institutions might have missed the mark, many of the other criticisms of high, predatory drug pricing are valid. In 2023, nearly 36% of Americans found it either “very difficult” or “somewhat difficult” to afford prescription drugs. To many, this disparity seems not only unnecessary but also unjust.
For urging Biden to change this, some Democratic lawmakers seem to be on the right track, even if all the proposals are not equally successful. In light of exorbitant drug industry lobbying and campaign contributions, those that are engaged in this fight realize it is more important than ever to temper market forces and skip “Big Pharma” handouts in order to protect people.
