That pharmaceutical giant Hoffman-La Roche would have trouble meeting the orders it received for its antiviral Tamiflu was well known and not a surprise. Roche's manufacturing method is said to be laborious, dangerous in spots and have a long production cycle (NB: shorter and cheaper methods have since been discovered but it isn't clear anyone is using them to make Tamiflu at this point; see our post here). So it has surprised and upset many to see the drugmaker marketing Tamiflu to businesses, essentially inviting them to move to the head of the line.
With only a fraction of the doses needed for a U.S. government stockpile on hand, the prospect that private companies could jump the queue to build their own reserves of Tamiflu has upset some American disaster planners who believe the public interest should come first."I think it is socially irresponsible. Frankly, I think it is unconscionable,'' said Dr. Brian Johnston, a Los Angeles emergency room physician and a trustee of the California Medical Association who works on disaster preparedness.
Included in Roche's plan for businesses are suggestions for distributing packs of the pills to employees for storage at home, despite explicit state and federal policies discouraging personal stockpiling of the drug. (San Francisco Chronicle)
Roche claims it's not a problem because they have ramped up production sufficiently to meet demand. But there is suspicion that the reason for giving precedence to businesses is simpler: they pay "full price" ($61 a pack) while wealthy governments get the drug at a discount ($19 a pack). Since the research and development costs of this drug have long since been paid off, "full price" means price gouging and "discount" means healthy profit, but never mind. 1984 passed a long time ago and compared to some stuff this is just normal doublespeak.
The US plans to have enough Tamiflu in its Strategic National Stockpile (SNS) for 25% of the population by 2008. That's 81 million courses of treatment. Currently the SNS has only 6.1 million packs, expected to be 21 million by December of this year. If there is so much supply, why the slow pace? According to US government sources the orders were placed according to information provided by Roche as to how fast they could be filled. If they can be filled faster, the US government "may ask" for a speeded up delivery schedule. Of course this new consideration is in response to a reporter's questions. it is more than plausible that without the press notice officials would just let it go on the old schedule, and they may still do so. Competence hasn't been their strong suit.
As many have pointed out, using the market to allocate Tamilfu, which is what this is, is just another way of rationing but using the principle that companies that can afford it will get it first. Then the rationing within the company will be at the discretion of company managers. Roche has provided them an online decision making toolkit to help them in this tricky area:
The Roche plan urges companies to decide whether their goal is "business continuity, employee protection, (or) both.'' If continuity is the sole objective, the guide suggests identifying key products and employees deemed "essential.'' If employee protection is also a goal, the company advises businesses to first decide who should get the drug. The choices, according to Roche, might include senior managers, employees who interact with the public, headquarters staff, a percentage of all employees, all employees, key contractors, family members of employees, or members of the surrounding communities.
Roche is also suggesting that companies may give employees packs to store at home. This has the advantage of predistribution but also invites improper or panic use which would, at best, waste a scarce resource and at worst contribute to the emergence of antiviral resistance. The currently recommended dosages are only enough for five days at 150 mg/day and there is also considerable speculation this is too low. Like everything else this is a balancing act in that it has the potential to get antivirals to more people more quickly but at the cost of social inequities and risk of adverse effects. On balance, it seems like a bad idea to us.
But then we also think $61 for ten pills is a bit excessive, so what do we know? They might not work anyway.
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Revere, you might want to check out this interesting connection - full story at http://money.cnn.com/2005/10/31/news/newsmakers/fortune_rumsfeld/
Rumsfeld's growing stake in Tamiflu
Defense Secretary, ex-chairman of flu treatment rights holder, sees portfolio value growing.
October 31, 2005: 10:55 AM EST
By Nelson D. Schwartz, Fortune senior writer
NEW YORK (Fortune) - The prospect of a bird flu outbreak may be panicking people around the globe, but it's proving to be very good news for Defense Secretary Donald Rumsfeld and other politically connected investors in Gilead Sciences, the California biotech company that owns the rights to Tamiflu, the influenza remedy that's now the most-sought after drug in the world.
Rumsfeld served as Gilead (Research)'s chairman from 1997 until he joined the Bush administration in 2001, and he still holds a Gilead stake valued at between $5 million and $25 million, according to federal financial disclosures filed by Rumsfeld.
Revere: is there a typo in the following line? Should it be 6.1 million? 16 million? Am is simply mis-reading it?
"Currently the SNS has only 61. million packs, expected to be 21 million by December of this year."
Saddle: Yes, it's a typo. Should be 6.1 million. My apologies. Will correct.
Don't forget that the federal government expects the states to buy 31 million of the 81 million treatment courses for the Strategic National Stockpile (with a 25% subsidy). Many states cannot afford it, and many more are reluctant to take on the risk of spending the money in the face of great uncertainty.
I think you are right about the money aspect, however another thought occurs to me. Perhaps this is a way to get the drugs to those who we most need kept alive. We are all born equal, but some make themselves less equal than others. TPTB cannot say 'because you have claimed benefit all your life, are a convicted criminal and haven't contributed anything to society except misery and numerous useless eater replicas of yourself, we won't give you tamiflu'. Much more stealthy to say 'sorry, the tamiflu was bought up by companies who provide your food, water and electricity'. Unfortunately it is also a PC way of denying other groups such as the elderly or disabled.
This reasoning isn't enough in itself, it misses out small business owners and farmers, for example, but I wouldn't be surprised if it was a backdoor method of targeting resources at more of those who have the skills and courage to keep things going and rebuild. Rummy et al. may not care about anyone but themselves, but they need to keep the worker ants alive for their own selfish reasons.
Such a bad idea. Let's leave the morality to one side and look at the mere economics of it.
Suppose that there's an epidemic and that Tamiflu is prophylactic or a treatment for it. The value of a course of Tamiflu will be (say) $X, with "X" being a high number. If you have a large stockpile of the drug then you can ship it to where it is most useful, and capture that value. So the best strategy for a large pharmaceutical firm or a government is to prepare a stockpile. If there's an epidemic, every course in that stockpile will be used efficiently.
In contrast, an individual doesn't know whether he's likely to be infected, so the Tamiflu isn't as valuable to him: he might buy it and never use it. This means that a course of Tamiflu should be worth less to the individual - say a third of $X. Many individuals will buy the drug "just in case", so the drug company will get higher sales but at a lower price. In fact we see the exact opposite - individuals are paying around three times as much as the government does for a course of Tamiflu.
This seems to be economically unreasonable. Why are individuals prepared to pay so much? The best answer seems to be that they don't trust the government or pharmaceutical suppliers to be able to supply the drug. One of the reasons for this is that they know too many individuals are buying up supplies of the drug and therefore the government is having difficulty building up its stockpiles. The drug company has a perverse incentive to damage public health by restricting public supply of Tamiflu and making private sales instead.
There's an easy solution for this: compulsory licensing. Let other firms satisfy the excess demand by competing in the production and supply of the drug. This will reduce windfall profits that may arise from market manipulation. With an increased supply there will be less panic buying and a greater recognition of the fact that a broad approach to public health will be far better for any given individual that a private supply of Tamiflu.
While we all engage in a little enjoyable Big Pharma bashing, we stand in danger of missing an important point.
Roche may well have just saved us from the worst of the Pandemic.
Most of us who frequent the numerous Pandemic sites, are well aware that it is not the Pandemic in itself which poses the greatest risk to our lives, it is the deadly combination of JIT and interconnectedness which threatens to be collapsed by a bad Pandemic. If A depends on B, B on C, C on D and D on A, then when this loop breaks, it is not possible to restart it without rebuilding the whole loop in one go, and this is only a tiny loop of four operations. We have all tried to ready our companies, families and friends to prepared for the impact of the Pandemic - in large part this has been to zero effect. No one has listened to the idiot scraping on about 'The End of the WOrld'.
Now Roche have invested money in promotional material that has taken the message to the hearts of companies. A big profit making organisation is now saying 'Prepare to defend your Co. from the End of the World'and here is how to do it !!
----AND THEY ARE LISTENING ---
----AND THEY ARE PREPARING ---
----AND THEY ARE THINKING ---
Roche seeking to further maximise their profits may well have been the Tipping Point in our chance to survive the collapse threatened by a bad Pandemic.
Derek: Yes, it could work the way you say. That is the optimistic view. Or it could badly distort things. If you believe the market always makes the right choice then your argument makes sense. If you think the market is not the best way to make rationing decisions that's another thing. It is not all black and white, of course. Roche's marketing policy will likely have both good and bad effects. The whole point of public policy, however, is that it is public and not private. This is policy decided upon by Roche. Their only authority for deciding it is that they can.