Amid Labour’s jubilation over the Supreme Court decision yesterday it would have been easy to miss Jeremy Corbyn’s latest attack on the market economy. But it shouldn’t go unremarked because what Corbyn proposed would seriously damage the pharmaceuticals industry – either meaning that taxpayers would have to bear the enormous costs of developing drugs, or would mean fewer drugs being developed at all.
Corbyn cited the case of nine year old cystic fibrosis sufferer Luis Walker, who is being denied the medicine, Orkambi, because the drugs manufacturer is refusing to sell it to the NHS at an affordable cost. Labour, he said, would end the outrage of drugs companies which put 'profits for shareholders before people’s lives' through a policy called ‘Medicines for the Many’, under which drugs companies would be forced to sell drugs at lower prices. He also proposed to set up a publicly-owned drugs company to manufacture generic drugs for the NHS.
The latter is not such a bad proposal, for drugs which are out of patent. There have been several cases where what one might call shark companies have jacked up the price of medicines which are out of patent – when that price ought to be falling. They get away with it because although anyone can manufacture an out-of-patent medicine, some medicines have too little demand to attract more than one manufacturer. It makes sense in these cases for the NHS to commission its own supply.
What Corbyn is proposing for medicines which are still in patent is quite a different matter. What he is threatening to do is to undermine the market for developing new medicines. Corbyn might call it ‘Medicines for the Many’ but in practice it would mean not many medicines at all.
Orkambi is not cheap – the cost, per patient, to the NHS is £104,000 a year. But then developing a new drug costs a fortune. Vertex Pharmaceuticals, the US company which developed Orkambi, has spent $7 billion developing its cystic fibrosis medicines. Of this, around $200 million came from cystic fibrosis charities, but the rest is private finance. Why would investors want to put up this sort of money knowing that Corbyn was going to seize the company’s intellectual property and force it to sell drugs at a cost which did not cover development costs? The problem is that in the case of a specialist drug like Orkambi the market is tiny – according to cystic fibrosis charities there are only 4,000 patients in Britain who could benefit from the drug. That is why the cost-per-patient has to be so high.
If Corbyn had his way, the NHS would in the short term enjoy cheaper access to a number of existing drugs. But in the longer term specialist drugs simply wouldn’t get developed at all. Corbyn would have destroyed the market.
By the way, Orkambi is available through the NHS to a small number of patients on compassionate grounds, and through limited clinical trials. But it ought to be added that it is not on cost alone that NICE – which assesses drugs for cost-effectiveness on behalf of the NHS – has stopped short of recommending Orkambi. There is also a lack of data on its long-term effects. The case, in other words, is a lot more complex than the picture of corporate greed which Corbyn would love to present.