In Chapter 1, we flip the script on the usual conversation about drug pricing. Instead of focusing solely on the high cost of drugs that we hear so often about in the news, we emphasize the dramatic impact and life-saving benefits of new medications.
We showcase three specific examples:
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AZT: The first drug approved to treat HIV/AIDS, significantly extending lifespans for patients.
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Statins: Drugs that dramatically reduce the risk of heart attack and have saved countless lives.
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DAAs: Direct-acting antivirals that offer a cure for Hepatitis C, a previously chronic and potentially deadly disease.
These advancements highlight the tremendous value that new drugs bring to society. We acknowledge and understand the public’s frustration with drug prices, particularly the seemingly exorbitant costs for some medications. We reframe conversation through the lens of a “Mortgage vs. Rent” Model:
What society spends on branded drugs before they go off-patent is a finite “mortgage” that rewards and incentivizes the development of medicines that, once they go generic, remain an inexpensive public good that continues to keep people healthier. This spares society the never-ending “rent” expense of hospitals and nursing homes, which never “go generic” and get cheaper.
The mortgage model represents a cornerstone of what we call the Biotech Social Contract, which is an implicit agreement between the biotechnology industry and society. In this agreement, drug makers tacitly commit to making medicines that will go generic without undue delay and, in exchange, society will make all medicines accessible to patients who need them through proper insurance, which means that a patient’s costs have to be low enough that they can afford the medicine.
Some drugs can’t go generic, and some companies engage in patent gaming that prevents their medicines from going generic. Both of these situations violate the intent of the patent-system and saddle society with higher costs than it expects after the intended mortgage period, which goes against the biotech social contract.
We conclude by emphasizing the importance of recognizing the incredible benefits of new drugs while acknowledging the need for a fair and sustainable system for drug pricing.