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We Just Barely Averted a Gigantic Pandemic Grift by Big Pharma

The pharmaceutical giant Gilead tried to pull a fast one by seeking a special status that would restrict the supply of its coronavirus drug and boost profits. Luckily, healthcare advocates, left-wing journalists, and Bernie Sanders were having none of it.

Tremaine Fredericks rides on an empty Staten Island Ferry to Manhattan on Tuesday in New York City. (Spencer Platt / Getty Images)

The Food and Drug Administration (FDA) has a special classification reserved for medicines intended to treat rare diseases: “orphan drug status.”

Pharmaceutical companies covet this classification. Orphan drugs face less intense regulation and are therefore less expensive to develop. The classification also comes with tax breaks and a guarantee of seven years without generic competitors.

These incentives are meant to encourage pharmaceutical companies to develop drugs for which there is low market demand. And once they’re developed, they can be sold at whatever price corporations can fetch. Every single one of the world’s ten most expensive medicines is an orphan drug, making the classification an enormous cash cow for pharmaceutical companies.

The latest drug to be granted orphan status by the FDA is remdesivir, in development by the pharmaceutical giant Gilead, which has the potential to treat COVID-19 and other coronaviruses. Of course, we’re currently in the middle of a global coronavirus pandemic. Billions of people could be infected. If COVID-19 were a rare disease, the kind of disease the orphan classification was meant for, the world wouldn’t be panicking right now.

Gilead was able to secure orphan status for remdesivir because not that many people have COVID-19 yet, according to reporting by Sharon Lerner and Lee Fang in the Intercept. Once the designation was announced, the company’s stock price immediately saw a 2 percent bump. Gilead was poised to profit mightily from the unfolding pandemic.

This posed a problem for humanity. Orphan drug status “could severely limit supply of remdesivir by granting Gilead Sciences exclusive protection over the drug and complete control of its price,” wrote Fang and Lerner. The status blocks generic versions, meaning that if you want the orphan drug, you or your insurer (if they want to) pay whatever price the patent holder asks.

Exclusive rights and restricted supply of a coronavirus treatment meant a pretty penny for Gilead — and needless suffering and death for untold numbers of people.

Fortunately, the maneuver didn’t go unnoticed. While pharmaceutical companies often abuse patent laws and get away with it, the quality and volume of public attention on drug development is different when a pandemic threatens to undo the social and economic fabric of society, and the whole world is desperate for a cure.

The first reports on Monday of Gilead receiving orphan status were neutral. Politico reported simply that “Gilead’s antiviral gets a rare disease nod ensuring 7 years of market exclusivity,” with no editorialization. The Washington Post said gently that it might “seem inappropriate given the rapidly expanding threat of the outbreak” but then quoted an analyst calling it “pretty standard.”

A separate article in US News and World Report reveals that the analyst quoted in the Washington Post is a financial analyst at an investment bank and asset management firm called Piper Sandler. In that article, the Wall Street analyst further defended Gilead’s procurement of orphan drug status: “It says nothing about profiting off of the pandemic, but it does provide protection if remdesivir turns into a business in subsequent years.”

The media coverage of the orphan drug classification was neutral or at most lightly critical — until Lerner and Fang’s article was published on Monday evening in the Intercept. Outrage on social media soon followed. On Tuesday, several more critical news stories followed in the left and mainstream press.

Also on Tuesday, Bernie Sanders took up the charge. His statement read in full:

It is truly outrageous that after taxpayers put tens of millions of dollars into developing remdesivir, Trump’s FDA is exploiting a law reserved for rare diseases to privatize a drug to treat a pandemic virus. The Trump Administration must rescind this corporate giveaway to Gilead and make any treatment and vaccine free for everybody.

Now is not the time for profiteering in the pharmaceutical industry. Now is the time to bring our scientists together to develop and produce the best treatment for the coronavirus as quickly as possible.

When Jonas Salk developed the polio vaccine 65 years ago, he understood the tremendous value it would have for all of humanity, and he refused to patent it. Right now, we must put human life above corporate profit. We cannot give pharmaceutical corporations a monopoly on treatments that could save millions of people during this crisis.

Sanders was right to link the Trump administration to the decision. As Fang and Lerner pointed out, a member of the White House coronavirus task force was a lobbyist for Gilead between 2011 and 2017.

In addition to public-facing criticism, Gilead also faced pushback from health advocacy groups. For example, consumer group Public Citizen published an open letter signed by multiple high-profile community and health organizations. Many of them were HIV/AIDS-related organizations, which was no surprise: Gilead has faced scrutiny in the past for its handling of the drug Truvada, the brand name of pre-exposure prophylaxis, or PrEP, which prevents the transmission of HIV.

If Truvada were universally available, widely used, and cheap or free, new HIV infections could grind to a halt. But Gilead has repeatedly hiked the price of this miracle drug, raking in billions of dollars in profits per year. To improve its public image, the company has entertained compassionate use requests, including offering to subsidize copays, but it has not always honored its promises. (In a similar maneuver, it just suspended its compassionate use program for remdesivir.) In February, Gilead lost a patent feud with the US government, which accused it of profiting off a drug, Truvada, that taxpayers paid to develop.

Gilead appears to have been afraid of another public relations fiasco, especially one linked to an acute pandemic. On Wednesday, as the pressure mounted, the company backpedaled and announced that it would be asking the FDA to rescind remdesivir’s orphan status. The company claimed altruism, declaring that it had only pursued orphan status because it offered a faster development track, but that it will now be seeking to expedite development of the drug through other means instead.

The announcement is a victory for those keeping a watchful eye out for pandemic profiteering, not least among them journalists at left outlets like the Intercept and leftist politicians like Bernie Sanders. But more importantly, it’s a victory for a besieged society.

To prevent needless mass suffering, a coronavirus treatment must not only be developed quickly, but it must also be universally and easily available — something that would have been impossible if a notoriously profit-hungry pharmaceutical giant had been granted an exclusive patent for the drug that allowed them to set prices and block competitors.

There are deeper lessons in this story we should heed. Contrary to free-market catechism, the pursuit of profit frequently runs contrary to the public’s well-being. This is especially true in an industry devoted to inventing and manufacturing health-giving and life-saving drugs.

One of the reasons we were so blindsided by the coronavirus epidemic is that the pharmaceutical industry sees insufficient financial inducement to develop new antivirals and antibiotics. And as this story makes evident, where incentives are artificially introduced they’re subject to abuse by corporations whose mission is not public health but private profit.

For the sake of humanity, we have to bring the pharmaceutical industry under public control. In the meantime, we should keep turning up the heat on the pharma profiteers endangering us all in the name of curing us.