Novartis Gears Up to Showcase US Health Care Shortcomings

Over the next couple of years, anyone who is interested in witnessing many of the things that are so wrong with the American health care system can watch them unfold live thanks to the second largest pharmaceutical behemoth in the world, Novartis.

Novartis is not only going to bite the hand that fed it, Novartis is going to eat that hand. Devour and cannibalize it. In the process, the company hopes to make many more billions of dollars.

The Hand That Fed It

Novartis is the maker of the phenomenally successful and ridiculously important drug for chronic myeloid leukemia, Gleevec. For several years following FDA approval of Gleevec in 2001, Novartis championed this wonderdrug. The company Chairman, Daniel Vasella, even wrote a book about it. Magic Cancer Bullet: How a Tiny Orange Pill is Rewriting Medical History alleges to tell the story of Gleevec, but it really tells the story of how small-minded corporate executives not only climb on a bandwagon they once rebuffed, but also how they claim credit for helping build the bandwagon, and then spread on the bullshit about why that bandwagon is so bloody expensive.

A Short and Widely-Known History

Back in 1960, when Novartis wasn't even a glimmer in anyone's eye, a University of Pennsylvania pathologist named Peter Nowell and a Fox Chase Cancer Center researcher named David Hungerford noticed an oddly-shaped chromosome in people with chronic myeloid leukemia. They called it the Philadelphia chromosome.

In 1973, a human genetics researcher at the University of Chicago Medical Center named Janet Rowley made the connection between that chromosome and the creation of an oncogene (cancer-causing gene) known as Bcr-Abl.

Finally in the late 1980s, Nobel laureate David Baltimore and UCLA professor Owen Witte isolated the Bcr-Abl tyrosine kinase—the specific enzyme created by that gene that actually causes the blood cells to become cancerous.

From here, the question was, how do we inhibit the action of the Bcr-Abl tyrosine kinase? Inhibiting its activity should, in theory, stop the progression of CML in its tracks.

In 1993, inspired by three decades' worth of work by these and other researchers whose work was largely funded by taxpayer dollars, big pharmaceutical companies such as Ciba-Geigy began looking for molecules that might inhibit this tyrosine kinase—so-called tyrosine kinase inhibitors. One, which they called STI571, appeared to work. A taxpayer-funded researcher named Brian Druker from the Oregon Health and Science University began doing in vitro trials, and they were a smashing success.

In 1996, Ciba-Geigy merged with Sandoz, and Novartis was born. In the aftermath of the merger, no one wanted to bother funding clinical trials for STI571 because the patient population—about 5,000 annual diagnoses of CML in the United States each year—was too small and there just wouldn't be any money in it.

Druker pressed Novartis to throw some money his way so that he could test the molecule in a Phase I trial. They balked. Finally, in 1998, they said fine, go ahead Brian, do your little project.

The results from Druker's Phase I trial were mind-blowing. Some 30 CML patients were recruited, and all of them, down to a man, had a major molecular response to the drug. Phase I trials don't normally work like that. They aren't even designed to work like that—they're designed to see if the stuff is safe for human consumption, and that's it. And yet here was a wonderdrug that was knocking it out of the park in Phase I.

Results of the Phase I trial were so explosive that early, online CML patient communities caught wind of it and began applying enormous pressure to Novartis, sending them a petition and bombarding them with calls and emails about boosting production of STI571. Meanwhile, Novartis worked with the FDA to speed the eventual approval of the molecule.

Between dosing patient one with STI571 in the Phase I trial and the granting of FDA market approval to the newly named Gleevec, a mere three years had passed. In FDA-land that's light speed.

But the idiots at Novartis still hadn't done the math. Gleevec wasn't a drug you could take once and be cured of the disease. CML was still a chronic disease, and patients would need to take Gleevec for the rest of their lives. The executives decided to charge what they felt the market could bear, which was similar to what patients were paying for CML treatment prior to Gleevec—about $30,000 per year. In 2001, Chairman Vasella et al, still having math problems, estimated they might see about $100 million in annual sales of Gleevec.

In two years' time, Gleevec was a certified blockbuster—meaning its annual sales revenue exceeded $1 billion. It has never looked back. In 2009, for instance, it generated $3.9 billion. In 2011, $4.7 billion.

Profit Monster

Novartis, as a company, has enjoyed revenues from Gleevec—a drug essentially 40 years in the making, and which Novartis only joined in the last few of those 40 years—that exceed $30 billion. That's not pure profit, but considering the paltry, almost invisible amount of money they contributed to the actual research and development of the drug, and the fact that the drug's efficacy has effectively allowed it to sell itself and save the company billions on marketing, you could almost believe that Novartis has seen a straight profit off of Gleevec that totals somewhere in the $25 billion range.

Gleevec is the hand that fed them, but now they want to kill it. They want Gleevec dead and buried. And once again, they will be having US taxpayers footing the bill for it.

Tomorrow, in the second part of this entry, we'll see why and how Novartis intends to accomplish this.