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

Study: Massachusetts Should Retain Additional Healthcare System Flexibility Granted During Pandemic

Massachusetts’ emergency declaration for COVID-19 ends on June 15, and with it some enhanced flexibility that has been allowed in the healthcare system.  Some of the added flexibility highlighted barriers that make the system more expensive, harder to access and less patient-centered, and the Commonwealth should consider permanently removing these barriers, according to a new study published by Pioneer Institute.

Blended Learning Expert Heather Staker on Student-Centered Lessons During COVID-19

This week on “The Learning Curve," Gerard and Cara talk with Heather Staker, founder and president of Ready to Blend. They discuss her work with the late Harvard Professor Clayton Christensen and Michael Horn on disruptive innovation and schooling, as well as her book, Blended: Using Disruptive Innovation to Improve Schools, and her recent publication, Developing a student-centered workforce through micro-credentials. 

“Ballast for the Ship of State” – The U.S. Senate – 40 Resources for High School Students

The U.S. Senate’s vital, though sometimes dormant, authority in the face of the Imperial Presidency means few Americans and schoolchildren truly understand its constitutional role and inner workings. To remedy this, we’re offering a variety of resources to help parents, teachers, and high schoolers.

BU’s Dr. Farouk El-Baz on NASA’s Moon Landing, Remote Sensing, & STEM

This week on “The Learning Curve," Gerard and Cara talk with Dr. Farouk El-Baz, retired research professor and director of the Center for Remote Sensing at Boston University. They discuss his remarkable, varied, and pioneering career in the sciences, surveying both the heavens and the Earth, and key teachers and scientists who have influenced him. Dr. El-Baz shares what it was like serving as supervisor of Lunar Science Planning for NASA's Apollo program, and working on the world-changing project of putting a human on the Moon.

Neptune’s Domain – Oceans, Seas, & Their Creatures- 25 Resources for K-12 Students

Since water is all around us and in us, students should know more about the major bodies of water that shape our planet and our lives, including: what we eat, how we travel, our trade, our wars, and the many fascinating creatures who live in the oceans and seas. In fact, scientists estimate that 91 percent of ocean species remain unclassified, and over eighty percent of our ocean is unmapped and unexplored. We clearly have more work ahead of us to better understand the water that covers most of our world. To assist in this aquatic discovering, mapping, and exploring, we’re offering a variety of resources to help parents, teachers, and K-12 students.

Origin of COVID-19: As Animal Source Evidence Eludes Scientists, Lab Leak Hypothesis Gains Purchase

This week on Hubwonk, host Joe Selvaggi talks with author and former New York Times science journalist Nicholas Wade about his recent article in the Bulletin of the Atomic Scientists on the possible origins of the SARS2 virus that caused the COVID-19 pandemic. In their conversation, they consider the possibility that, absent finding evidence of a natural jump from animals, the SAR2 virus may have come from a lab.

Mahmud Jafri Builds on a Pakistani Legacy in America

This week on JobMakers, Host Denzil Mohammed talks with Mahmud Jafri, who built on a legacy started by his grandfather and began importing hand-knitted rugs from his native Pakistan, creating opportunities especially for women who traditionally couldn’t work outside the home. Today, he has three Dover Rug & Home stores across Massachusetts, including the Back Bay.

A Republic of Laws – The U.S. Supreme Court – 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 the U.S. Supreme Court.

Study Calls for Better Reporting on Impact of COVID-19 in Eldercare Facilities

Over time, the Massachusetts Executive Office of Health and Human Services and Department of Public Health (DPH) have improved reporting about cases and deaths from COVID-19 in state-regulated eldercare facilities, but flaws and omissions remain and should be corrected, according to a new study published by Pioneer Institute.

“The Road to the Stars” – U.S. Space Exploration – 25 Resources for K-12 Students

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

Amar Sawhney on Sikhs, STEM & COVID

On this week's episode of JobMakers, host Denzil Mohammed talks to Dr. Amar Sawhney about his journey from India to Boston, and how he is using his chemical engineering background to save lives through remarkable local therapy innovations. To date, he has founded eight companies accounting for 4,000 jobs and more than $2 billion in revenue.

Heritage Foundation’s Jonathan Butcher on Edu Federalism, School Choice, Learning Pods

This week on “The Learning Curve," Gerard and Cara talk with Jonathan Butcher, the Will Skillman Fellow in Education at The Heritage Foundation. They discuss the growing popularity of learning pods, an education innovation propelled by K-12 public education’s failure to meet the COVID-19 moment. With as many as three million children enrolled in learning pods, 35 percent of parents participating in them, and another 18 percent interested in joining one, Butcher shares findings from his report on the role of pods in expanding parent-driven educational choice options.