The pharmaceutical industry gets a bad reputation, as the nature of its business and investment choices can mean the difference between life and death for many people. Especially of late, it’s made headlines following a reluctance to research cures for Ebola – the highly infectious virus ravaging parts of Africa, and killing hundreds of people – as the profits are simply not there. But is it fair to expect a private enterprise to fund costly research. The New Economy speaks to Dr John Ashton, President of the UK Faculty of Public Health, to find out.

The New Economy: John, in brief, financially speaking, what goes into bringing a drug to market?

John Ashton: Well, there’s huge investment, obviously, and very strong partnerships with universities. But there are fabulous profits that have been made by the pharmaceutical industry since the Second World War, and their business model is one of generating huge returns for shareholders.

We’ve got ourselves in a position where the money for that basically comes from the public sector, in countries that have health services. It is public money. And I think we need a different financial model that regards the pharmaceutical industry more like we regard the utilities: as an essential service. And where the returns on capital should be more in keeping with that, of less than 10 percent.

The New Economy: It does seem to me that people tend to forget that the pharmaceutical industry is a business, not a charity. So how much do you think ethics should sway their business model?

John Ashton: Well I would come at this slightly differently, you know. I would say, what we need is capitalism that serves the purpose of the population as a whole, and not just the shareholders of the company.

We need a framework now for capitalism which recognises its social obligations. And that includes these diseases – orphan conditions, they’re called – where the numbers aren’t huge, or they’re not populations that have got big budgets to spend on treatments.

The New Economy: I have read that you talk about the ‘moral bankruptcy’ of the pharmaceutical industry to invest in research; but surely if a company only gets profits from researching more common and developed diseases, then – without meaning to sound cold-hearted – what’s the incentive to research cures for things such as Ebola, which largely affects the poorer developing world. Surely this is more the government’s responsibility to fund?

John Ashton: Well I think there’s a discussion there to be had about the partnerships that may be needed between governments and the pharmaceutical industry for some of these areas of work.

The European Union does have a competence for supporting the area of rare conditions. And in theory, the European Union could come to some kind of strategic partnership with one or more pharmaceutical companies over this. I don’t know whether there’s anything gone on in that area.

But you know, this also introduces a whole issue about values. And hear you’ve got a situation where it’s poor west Africans who’ve been dying, and it’s taken a couple of missionaries from America to get infected for the pharmaceutical industry to show interest.

The New Economy: Why focus on Ebola when we’re told that antibiotic resistance is a global health emergency? Surely pharmaceuticals need to be encouraged to preferentially invest in research and development where there can be a bigger societal benefit? And incidentally, potentially larger rewards?

John Ashton: We need viral research, we need vaccine research, and we need a big push on new antibiotics – because of the problems with antibiotic resistance.
But the big issue with antibiotic resistance, is their use in agriculture as growth promoters in animals: where farmers are feeding antibiotics by the bucketful to their animals!

The New Economy: Well David Cameron has floated the idea of ‘social impact bonds’ to raise money for R&D for things like dementia; do you think this could be the way forward?

John Ashton: It’s an interesting concept. But I think it can be a distraction away from the responsibilities of governments to be involved themselves.

I mean, I’d return to the point that the pharmaceutical industry’s money is mostly coming through national health services. And so the government has a legitimate say – or should have a legitimate say – on what the pharmaceutical industry is doing.

The New Economy: Well looking at patents now; how significant are these for the pharmaceutical industry?

John Ashton: Well they’re obviously important, but one of the things you have to bear in mind with the pharmaceutical industry is that it spends a lot of time producing what it calls ‘me too’ drugs – which are very similar to existing drugs – so that they can have them on patent again for the next 15 years, and charge a premium price for them!

So the research capacity of the pharmaceutical industry is diverted into playing games with producing new drugs that are very similar to old drugs, when they could be producing drugs for new conditions that we’ve been talking about: rarer conditions.

We need viral research, we need vaccine research, and we need a big push on new antibiotics

The New Economy: Well in my understanding, pharmaceutical companies invest a lot into the research of a drug that may never actually make it to market, and then if it does there is a small window when it’s under patent and can’t be copied. So from their perspective, it does seem like a gamble financially, and that the odds are almost stacked against them. So, what are pharmaceutical companies’ parameters for investing in different projects?

John Ashton: I would refer you back to the profit margins that the pharmaceutical industry has made since the war.

If you’d been investing relatively modest amounts of your monthly pay in pharmaceutical shares since the end of the Second World War, you’d probably be a millionaire plus by now. The returns to investors have been massive over a 50-, 60-year period.

The New Economy: So what do you think the solution is then, to what drugs should and shouldn’t be researched? Do you think maybe an independent regulatory body should choose what drugs are invested in?

John Ashton: No, I think we need a fresh look at the arrangements that the pharmaceutical industry has with national health services, and with the international agencies like the World Health Organisation, so that there can be a prioritisation and a social contract between governments and international agencies, and the pharmaceutical industry. So that they are producing a balanced output, rather than focusing solely on the things that are going to line the pockets of their shareholders.

The New Economy: Well finally there is also a call for greater transparency in drug trials, for example. But this industry really relies heavily on trade secrets. So could all this pressure on the pharmaceutical industry damage us in the long run? As with all this red tape, eventually perhaps they’ll no longer be able to operate, and there will be no new drugs?

John Ashton: Well I think that’s scaremongering. The problem with a lot of the trials is that the pharmaceutical industry doesn’t publish negative findings of side effects and suchlike. And the ethics of a lot of what the pharmaceutical industry is undertaking is very questionable. And we need a lot more transparency about what they’re doing in many ways: financial, as well as in research.

The New Economy: John, thank you.

John Ashton: Thank you very much.