Editorial Staff

Study Finds Pandemic Likely to Negatively Impact Biopharmaceutical Sector

/in , , , , , , /by Editorial Staff
Share on Facebook
Share on Twitter
Share on
LinkedIn
+

Threats to intellectual property, political pressure to lower prices, disruption of clinical trials will cause long-term harm

BOSTON – Contrary to conventional wisdom that says the coronavirus pandemic will generally benefit biopharmaceutical companies, a new Pioneer Institute study finds many companies will emerge from the pandemic commercially weaker, dealing with delays in new product launches and with fewer resources to invest in research and development.

“There will certainly be worldwide demand for COVID-19 treatments,” said William Smith, author of “The Negative Impact of COVID-19 Upon the Biopharmaceutical Sector.”  “But they will also require massive investments in clinical development and manufacturing, and political pressure on pricing makes it impossible for companies to recoup those investments.”

Cipro is an antibiotic well-suited to treat anthrax, which began arriving in mailboxes in the weeks after September 11, 2001.  The Centers for Disease Control recommends that patients exposed to the bacteria take Cipro twice a day for 60 days.  Despite the fact that the entire course of treatment would only cost $219, Bayer agreed to cut the price in half after the U.S. Secretary of Health and Human Services at that time threatened to take away the company’s patent.

More recently, when Gilead announced it would invest $1 billion in Remdesivir, a promising COVID-19 treatment, one would have thought the company’s stock would rise.  Instead, it fell 5 percent.  A number of analysts remarked that the reason was fears that political pressure would result in very low prices or threats to Gilead’s patent.

Some investors and industry leaders may conclude that investments in major public health emergencies should be avoided in favor of research on lifestyle treatments or medications for less serious conditions that aren’t accompanied by threats to intellectual property or pressure to reduce prices.

Political pressure to cut prices is likely to be most acute in the area of vaccines, where the federal government is providing grants to companies such as Johnson & Johnson and Moderna.  Many policymakers will likely see any new vaccine that emerges from research that was partially funded by the government as public property.

“There may be humanitarian reasons why companies choose not to profit from their treatments,” said Pioneer Executive Director Jim Stergios.  “But policymakers should also be aware that threats to intellectual property create significant disincentives to investment.”

In 2018, Massachusetts institutions received nearly $3 billion in National Institutes of Health funding, the second highest amount among the states.  That same year, private venture companies invested $4.8 billion in the Commonwealth’s life sciences companies.  In terms of new businesses, more than a third of U.S.-based biotechs that went public in the first half of 2019 were Massachusetts-based.

These companies also face delays in clinical trials for non-COVID-19 treatments, which could significantly disrupt long-term product pipelines.  Since firms typically file patents before clinical trials begin, significant delays eat up the period during which treatments can be sold under patent before opening up to competition from generic makers.

The delays are particularly damaging to small firms, whose future may depend on a successful trial.

Smith’s recommendations include extending patent life on products by the period clinical trials were delayed by the pandemic, and that COVID-19 treatments in which companies made significant investments should be priced to allow a reasonable return on that investment.

About the Author

Dr. William S. Smith is Visiting Fellow in Life Sciences at Pioneer Institute. He writes about public policy issues impacting the life sciences industry with particular emphasis upon pharmaceuticals. Dr. Smith has 25 years of experience in government and in corporate roles. He spent ten years at Pfizer as Vice President of Public Affairs and Policy. He later served as a consultant to major pharmaceutical, biotechnology and medical device companies, and was President of a small medical device company for three years. His career has also included senior staff positions for the Republican House leadership on Capitol Hill, the White House, and in the Governor’s office in Massachusetts. He is affiliated as Research Fellow and Managing Director with the Center for the Study of Statesmanship at The Catholic University of America (CUA). He earned his PhD at CUA and a bachelor’s degree from Georgetown University.

About Pioneer

Mission
Pioneer Institute develops and communicates dynamic ideas that advance prosperity and a vibrant civic life in Massachusetts and beyond.

Vision
Success for Pioneer is when the citizens of our state and nation prosper and our society thrives because we enjoy world-class options in education, healthcare, transportation and economic opportunity, and when our government is limited, accountable and transparent.

Values
Pioneer believes that America is at its best when our citizenry is well-educated, committed to liberty, personal responsibility, and free enterprise, and both willing and able to test their beliefs based on facts and the free exchange of ideas.

Get Our COVID-19 News, Tips & Resources!

  • This field is for validation purposes and should be left unchanged.

Related Content

New Policy Brief on Federal Relief Act’s Impact on Massachusetts

0 Comments
/
Greg Sullivan and Charlie Chieppo review the impact of the Coronavirus Aid, Relief, and Economic Security Act on Massachusetts' budget.

Congress should fix aid, provide block grants

0 Comments
/
This op-ed by Greg Sullivan and Charlie Chieppo appeared in the…

New Brief Calls on the USED for School Closure Guidelines During COVID-19

Pioneer calls on the federal government to quickly release a single report identifying which federal laws - and which aspects of those laws - are relevant to the topic of school closure during the COVID pandemic, and providing concrete guidance on how schools can comply in the coming weeks.

Public Statement: Extend Massachusetts’ Income Tax Filing Deadline

0 Comments
/
Massachusetts must extend the tax filing deadline, just as the federal government and 34 of the 41 states that tax income have done.

COVID-19 Roundup from Pioneer: Why the divergent fatality rates?, Time for Telehealth, Missing the Greatest Generation, Senator profiting from COVID-19 & more!

0 Comments
/
Pioneer staff share their top picks for COVID-19 stories highlighting…

Why Are We So Scared And Impatient?

0 Comments
/
This op-ed by Barbara Anthony appeared in WGBH News on March…

Financial Disclosures – As Important Now as Ever

0 Comments
/
News sources report that certain senators sold stocks just before the market crashed when the economic impact of Coronavirus came to light. Now more than ever, financial disclosures must be accessible to the media and to the public.

COVID-19 Roundup from Pioneer: Tracking COVID-19 in MA, unemployment tsunami, cancel MCAS?, cell phone hygiene, salute to James Taylor, state tax filing & more!

0 Comments
/
Pioneer staff share their top picks for COVID-19 stories highlighting useful resources, best practices, and questions we should be asking our public and private sector leaders.

Baker needs to expand telehealth further

0 Comments
/
This op-ed appeared in Commonwealth magazine on March 25th, 2020. Coronavirus…

7 Tools to Keep Your Child Engaged in Math During COVID-19

0 Comments
/
Proven resources that every parent can and should make use of now and well beyond COVID-19.

Public Statement on Massachusetts’ Emergency Order Aiming to Curb the Spread of the Coronavirus

Governor Baker’s issuance of an emergency order is a wake-up call to recognize the extraordinary actions needed at this moment to stem the upsurge in coronavirus infections. It is also a reminder to be vigilant about our liberties. 

COVID-19 Roundup from Pioneer: How some countries are succeeding, Tips for maintenance staff safety, Shelter in place?, Equity in remote learning policies

0 Comments
/
Pioneer staff share their top picks for COVID-19 stories highlighting useful resources, best practices, and questions we should be asking our public and private sector leaders.