Pharma for the People

Ahead of the state election in October, Flood Media will be running a series of interviews with the Queensland Greens about the party’s plans to radically reshape the state’s economy. For our first instalment we speak to the Greens candidate for South Brisbane, Amy MacMahon, about the party’s proposal to create a publicly-owned pharmaceutical company.

Can you outline how pharmaceutical research and development currently works in Queensland?

At the moment, in Queensland and in most other parts of the world, research happens in universities and institutes. Generally, when they’ve found something they think is effective, there’s a process of patenting, or licensing, out to bigger companies or bigger institutions that can help fund clinical trials. This can take decades. Obviously it’s very detailed work to make sure you get this right. And then there’s a process of commercialisation. So these big companies are making decisions about what they’re going to be able to sell in the market, essentially. The big pharmaceutical company here in Australia, CSL, has this process of commercialisation, and all big companies will have this process as well. They’re translating research into what they call business operations, which is basically profitability.

One example is the HPV drug, which was initially developed at the University of Queensland. So research happened at the University of Queensland and CSL, this big company, were involved in that early research. They now license out the drug from UQ and then they license out to two other private companies who are making the drugs. And they’re collecting royalties from the overseas sales of these drugs. Some of that money goes back to the university, but a lot of it comes back to CSL, as the overarching private organisation that has the license over that drug. The vaccine medications market in general is highly concentrated. There are really high fixed costs, and the licensing process also means that these big companies can have a sort of monopoly on a particular drug for up to twenty years.

Could you outline the Queensland Greens’ proposal for a public pharmaceutical company, and how it would change this situation?

We’ve proposed the idea of having a public pharmaceutical company here in Queensland, rather than having to rely on big, private, for-profit organisations to do the clinical trials and then manufacturing. A public pharmaceutical company wouldn’t have the same motivations around profit. It could invest time into research and the manufacturing of cheap generic drugs that we could then sell to consumers, and also sell to hospitals.

This would be a huge cost saving for the state, which spends about a billion dollars each year on drugs and medical equipment from private companies. We’d be able to reduce those costs, because we’d be going straight to this public manufacturer and then selling to consumers as well, who’d also be able to access these cheap drugs.

The idea is that, at the moment, these big private pharmaceutical companies are making decisions about what kinds of drugs will make it to market, based on what is going to be profitable for them. So a lot of drugs end up being really expensive - but worse than that, a lot of drugs don’t even make it to market, because they’re not considered profitable. There’s a lot of drugs that are sitting out there, sort of in the research phase, that have never made it to being manufactured, and a lot of diseases that we know have gone neglected. We’d be able to fill that gap as well.

As you mentioned before, a lot of medical research already happens in public universities, and the federal Pharmaceutical Benefits Scheme means that many drugs are extremely cheap to purchase. Given all this, do we really need a public pharmaceutical company? 

Even with those things that you’ve mentioned, even with the Pharmaceutical Benefits Scheme, there’s still a bit of price-gouging that’s going on there. Hospitals at the moment are getting a better deal than consumers for drugs sold on the PBS, so we’d be able to provide cheaper drugs to consumers. Also, at the moment, the process by which drugs end up on the Pharmaceutical Benefits Scheme reflects vested interests. The pricing authority has representatives with direct vested financial interests in particular drug companies. So there’s likely an extra layer of price-gouging going on in terms of the drugs that make it to the Pharmaceutical Benefits Scheme.

But beyond that, this is about those drugs and vaccines that have previously not made it to market, haven’t made it to consumers or hospitals because they’re not considered profitable. A public company would be able to address that in a way that private companies can’t, because they’re driven by this profit motive. And we’d work closely with universities that are already doing this work, and collaborate with local companies that are doing this research right across Queensland, to build on that; to have an overarching body that will be able to drive this work in a way that we just can’t at the moment.

What about drugs for rare and obscure diseases? These are very expensive and only needed by a tiny percentage of the population - could or should a public pharmaceutical company realistically fulfil the role of manufacturing and distributing these drugs?

Yeah, absolutely. I think this is where a public pharmaceutical company is really desperately needed. As you’ve mentioned, drugs for rare diseases are really expensive to make, and that’s because these companies are making decisions based on what they’re going to make enough profit off. If you’ve got a rare disease that’s affecting a small group of the population, or particular groups of people in developing countries, where the companies know that they’re not going to be able to make a large amount of profit - these companies just aren’t going to follow through in doing that research, or getting it to clinical trial, or getting it out to consumers. So I think absolutely, this is where a public pharmaceutical company is really needed.

How will a public pharmaceutical company ensure that the drugs it produces are safe?

Well, at the moment in Australia we have some pretty good safeguards in place. We’d still have a rigorous process for going through clinical trials, to make sure that these drugs are safe. And we’d also be able to avoid some of the dodgier stuff that we know goes on in pharmaceutical companies. Because there’s this profit incentive, pharmaceutical companies can be pushing drugs that have particularly bad side-effects, and can be marketing those drugs directly to doctors and to consumers. A public pharmaceutical company obviously would have a requirement to be very open and transparent with the public about the kinds of drugs they’re producing, and the side-effects as well. This is essentially a company that’s in public hands.. So potentially this could be a safer model than the private pharmaceutical companies, who have an interest in maintaining commercial-in-confidence information at times, and also have an interest in pushing drugs that might have pretty extreme side-effects.

Which drugs or vaccines would a public pharmaceutical company prioritise, and would it really have the capacity to produce these at the scale that would be necessary?

Well, we could start with those drugs that aren’t under patent anymore. After twenty years, a patent expires and then companies are able to produce generic drugs. So you know when you go to the pharmacy, and they ask if you’re happy for the generic brand, that’s where you’ve got a drug that isn’t under patent anymore and you’d be able to produce that cheaply. And we could start with those drugs that are most commonly prescribed here in Australia. There’s a lot of drugs for cholesterol and heart disease, for blood pressure, antibiotics, that we could start producing affordably.

And then we could put time and energy into researching other things that we know private pharmaceutical companies won’t touch. We know over the past few years, for example, there’s been a number of vaccines for diseases within the coronavirus family that have been abandoned because private companies didn’t consider them profitable enough. So being able to focus on some of this stuff that we know will be coming down the track would also be a really good place to start.

Any final thoughts?

Just to underline why having a public pharmaceutical company is so important - there’s a quote from Nobel Laureate and immunologist Professor Peter Doherty, who says that the current approach we have to vaccine development is really deficient. He says, “There is just not enough profit margin in it for pharma companies … They live by profits and the rules of capitalism. And capitalism has no interest in human beings other than as consumers.”

We shouldn’t be leaving something as essential as pharmaceuticals up to private corporations. The CSL company that I mentioned earlier actually used to be a public company. It was started in the early twentieth century, and did a lot of amazing work. We were one of the first countries to develop a tetanus vaccine, one of the first countries to give out penicillin to civilians for free. And then this company was privatised by the federal Labor government in the 1990s, and is now one of the most profitable companies on the Australian stock exchange. They’re making huge amounts of money off healthcare, which we know should be an essential service available to everyone, for free. So I think this really underlines why a public pharmaceutical company is not only needed, but well within the realm of possibility.