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

Monarchs of the Sea – American Boats, Ships, & their Captains – 40 Resources for High School Students

In Pioneer’s ongoing series of blogs on curricular resources for parents, families, and teachers during COVID-19, this one focuses on: Celebrating American Boats, Ships, & their Captains.

Alzheimer Breakthrough Disillusionment: Confusion on FDA’s Approval of Expensive and Possibly Ineffective Drug

Hubwonk host Joe Selvaggi talks with precision medicine expert Hannah Mamuszka and Pioneer Institute's Bill Smith about the promises and pitfalls of the newly approved Alzheimer’s drug Aduhelm, and the challenges presented when new, expensive drugs of dubious benefit are introduced to the nation’s formulary.

Umesh Bhuju Seeks a Fair Deal for Immigrants, Farmers & the Environment

This week on JobMakers, Host Denzil Mohammed talks with Umesh Bhuju, owner of Zumi’s Espresso in Ipswich, Massachusetts, about how a business model based on selling nothing but fair-trade products can thrive in a world driven by profit. He describes his early experiences in his homeland of Nepal, where he witnessed child labor, and how that has shaped his pursuit of the American dream.

New York Times Best Seller Paul Reid on Winston Churchill, WWII, & the Cold War

This week on “The Learning Curve," Cara and guest co-host Kerry McDonald talk with Paul Reid, co-author, with William Manchester, of the New York Times best-selling biography of Winston Churchill, The Last Lion: Defender of the Realm, 1940-1965. Reid shares how he was enlisted to complete William Manchester’s biographical trilogy on the greatest political figure of the 20th century, which became a best-seller.

Comparing Covid-19 Vaccination and New Infection Rates in Suffolk County: Is Vaccination Working?

0 Comments
/
Massachusetts ranks fourth nationally for the highest percent…

The People’s House The U.S. House Representatives – 40 Resources for High School Students

American schoolchildren need to know more about the basic civics and history of our key democratic institutions. To remedy this, we’re offering a variety of resources to help parents, teachers, and high schoolers:

Dr. Babak Movassaghi on Winning in Football & Healthcare Innovation

0 Comments
/
This week on JobMakers, Host Denzil Mohammed talks with Dr. Babak Movassaghi, founder of InfiniteMD (acquired last summer by ConsumerMedical), which connects patients with top U.S. medical professionals through second-opinion video consultations, guiding patients to better care. When the world shut down due to COVID-19, Dr. Movassaghi's company was already prepared to serve patients via telehealth. In this episode, they discuss his fascinating pivot from physics and professional football in Germany, to healthcare and innovation here in the U.S., an extension of his ability to navigate multiple identities as an Iranian-German living the American Dream.

COVID-19 and Unemployment Rates in the Cape and Islands 

0 Comments
/
  The COVID-19 pandemic has had a large impact on unemployment…

Nina Rees on the 30th Anniversary of Charter Public Schools in America

This week on “The Learning Curve," Gerard and Cara celebrate the 30th anniversary of charter schools with Nina Rees, President and Chief Executive Officer of the National Alliance for Public Charter Schools.

This Is No Time for a Tax Increase

This is no time to threaten Massachusetts’ prospects for an immediate economic recovery and the long-term competitiveness of the Commonwealth’s businesses. As Massachusetts lawmakers prepare to vote on whether to send a proposed constitutional amendment that would impose a 4 percent surtax on residents who earn $1 million or more in a year to the statewide ballot in 2022, Pioneer Institute urges them to recognize that tax policy sizably impacts business and job location decisions and that jobs are more mobile than ever.

The Spirit Enlightened Celebrating Classical Music – 50 Resources for High School Students

In Pioneer’s ongoing series of blogs on curricular resources for parents, families, and teachers during COVID-19, this one focuses on: Celebrating Classical Music.

Putting in the Extra Hours: The Spike in Mass. Department of Public Health Overtime Pay during COVID-19

During the heat of the COVID-19 pandemic, Massachusetts Department of Public Health (DPH) payroll data presented a 29.09% increase in the average employee’s overtime pay from the previous year. Pioneer wanted to dig deeper into the Department’s compensation trends to put the $5M bump in 2020 DPH overtime pay into perspective.