America’s lobbying abroad, and following a wonder drug’s money trail

By Steven Brill
February 26, 2013

1. Find the story here:

Let’s begin this column with a quiz, one designed to test your story-generating talents. If the answer comes to you within 10 seconds, you, too, could be an editor or TV news producer. If you are an editor or producer and don’t see it instantly, you need better radar.

First, read the opening two sentences from a story that appeared in the Financial Times a few weeks ago:

Europe’s  most senior justice official is adamant she will fight US attempts to water down a proposed EU data protection and privacy law that would force global technology companies to obey European standards across the world. Viviane Reding, EU commissioner for justice, said that the EU was determined to respond decisively to any attempts by US lobbyists – many working for large tech groups such as Google and Facebook – to curb the EU data protection law.

What’s the story that screams out to be written or televised based on these two sentences? Hint: It’s all about how Washington has been brought to its knees by special interests.

The answer: Let’s compare lobbying practices and regulations in the United States to those in other venues, including the European Union and its constituent countries. This story – with its reference to the EU commissioner vowing to fight “attempts by U.S. lobbyists,” which are the words that rang the idea bell in my head ‑ presents the perfect backdrop for reporting I’ve wanted to see for years comparing how lobbying is done, if at all, in other developed democracies to the way lobbyists and big money have come to dominate the agenda in Washington.

The rest of the Financial Times story explains that American lobbyists for tech companies seem to have persuaded the U.S. government to push back against the EU’s plans to promulgate privacy protections for consumers that would impair the ability of companies such as Facebook and Google to collect data from users in ways that will continue to boost their advertising revenue. In other words, the companies’ lobbyists in Washington have recruited our government to become their lobbyists at the EU.

One implication of that is that Google and Facebook, juggernauts though they are, can’t deploy their own lobbyists in Belgium the way they can in Washington. Is that true? What are the regulations or traditions that limit the effectiveness of lobbyists in venues like the EU?

Following the battles over other big issues that cross national borders could add texture to the story. How, for example, have Goldman Sachs or JP Morgan Chase tried to influence banking regulations around the world, including the crucial Basel rules on capital and liquidity?

These questions could lead to a tour of various world capitals describing how the influence industry works, or doesn’t work, in each place. Are the results always better? I bet not everywhere. True, America’s open system of influence peddling ‑ in which lobbyists have to register and report their fees ‑ is the embodiment of Michael Kinsley’s famous observation that the real scandal in Washington “isn’t what’s illegal but what’s legal.” Yet a balanced approach to this story might find not only examples of governments with a far cleaner process more grounded in the public interest, but also places where simple under-the-table bribes make Washington’s K Street culture look tame.

2. Following a wonder drug’s bottom line:

This story in Saturday’s New York Times  about the Food and Drug Administration approving a promising new breast cancer drug suggests a reporting project that could produce a dramatic tale of scientific discovery along with an important look at the economics of the pharmaceutical industry. It could also open a window on the health and public policy issues associated with how we regulate drugs and drug prices and how we allocate healthcare resources in the United States.

According to the Times:

The drug, which will be called Kadcyla but was known as T-DM1 during its development, extended the median survival of women with advanced breast cancer by nearly half a year in a clinical trial.

Genentech, which developed the drug, said it would cost about $9,800 a month, or $94,000 for a typical course of treatment. That is about twice the price of Herceptin itself, which is also made by Genentech, but it is similar to the price of some other new cancer drugs.

Many tough questions flow from just those two paragraphs.

This seems to mean that patients will get to live “nearly half a year” extra if they or their insurance company (or Medicare if the patient is 65 or older) pays $47,000 – the difference between the cost of the new drug and the one a breast cancer victim would otherwise take.

Most state laws require insurance companies to pay for any approved cancer drug at whatever the drug company sets as its average sales price, plus a 6 percent profit for the hospital or doctor that dispenses it. Federal law requires Medicare to do the same. So how much will the potential widespread adoption of this treatment add to the national medical bill?

Of course, the benefits are clear: an extended life and, apparently, more mild side effects than the alternative treatments. But a reporter unafraid to step onto this minefield would also ask experts to talk about whether anyone should be making the kind of cost-benefit analysis that would consider whether that money could be spent more effectively on other healthcare needs. But even before getting to those delicate issues about the value of life, there’s the question of how the drug company arrived at that $94,000 treatment price? Why does it have to be that much?

Which leads to the question of how much the approval of the new drug at $94,000 per treatment in the U.S. will add to the profits of Roche, the $45 billion global drug company that distributes it – and if that’s a fair result compared to the pricing regulations in effect in other countries that would limit those profits.

The Times story reports that Genentech, the California-based biotechnology pioneer that is now a subsidiary of Roche, “developed the drug.” However, according to the Times, “The linker and toxin used in Kadcyla were developed by ImmunoGen, based in Waltham, Mass., which will receive royalties on sales of the drug. This is the first approved product for ImmunoGen, which has been working on antibody-drug conjugates for three decades.”

That makes me want to know more not just about ImmunoGen but also about the scientists there who actually invented the treatment. Was the same person or team really working away at this for “three decades”? Let’s meet them and describe their struggle to create this treatment.

Then let’s go back to the money story. Did the ability of Genentech and Roche to manufacture, market and distribute the drug around the world make it irresistible for ImmunoGen to sell off the rights to its invention in return for royalties? How much might the royalties turn out to be? Is this an Instagram-like payday for the folks in that Waltham lab?

And what did ImmunoGen and Genetech have to invest in research and development before they hit paydirt? What were the costs and processes involved in gaining FDA approval?

In short, I’d really love to see a narrative – with all the people, as well as all the numbers – telling us the story of the new wonder drug and how it brings to life all the issues involved in modern healthcare.

PHOTO: An illustration picture shows a Google logo with two one Euro coins, taken in Munich January 15, 2013. REUTERS/Michael Dalder
4 comments

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Interesting story. Very interesting.

But the author should remember that readers, too, have busy lives.

It would have been a very powerful article, and much more valuable to the reader, if the author had gone ahead and come to a few concrete conclusions.

The author is too bashful, too coy.

Posted by AdamSmith | Report as abusive

My name is Krysta Pellegrino, I work at Genentech. I saw your opinion piece in Reuters about the approval of our medicine Kadcyla (T-DM1), and wanted to answer a few of the questions you asked.

Kadcyla was developed here at Genentech, and the science behind it (targeting the HER2 pathway, linking antibodies to toxins) does actually span several decades. The research team for Kadcyla, led by Genentech staff scientist Mark Sliwkowski, also worked on the original research on the HER2 pathway in the 90′s, resulting in the development and approval of Herceptin in 1998. (The antibody component of Kadcyla is Herceptin.) It’s Dr Sliwkowski’s continued research on the HER2 pathway since the 90′s that has led to the development of three targeted medicines for HER2-positive, metastatic breast cancer, including Kadcyla.

Genentech does license technology for the linker component of Kadcyla from Immunogen. However, Genentech is solely responsible for the development program (developing, conducting, and financially supporting all clinical trials), as well as all interactions with the FDA, and manufacturing and commercialization. Some of the research for Kadcyla was actually conducted before we had a partnership with Immunogen – there were previous “versions” of Kadcyla using different linker technology that failed in earlier testing.

Here is a link to a very in-depth article by Luke Timmerman of Xconomy that captures a lot of this, and is a good summary of the research done by Mark Sliwkowski on Kadcyla. It’s a few years old and more has happened since then, but it does address many of your questions. Hope this helps:
http://www.xconomy.com/san-francisco/201 0/06/14/genentechs-souped-up-herceptin-t he-odyssey-toward-a-more-powerful-breast -cancer-drug/

Posted by jledbet | Report as abusive

I would love to know what legal restrictions are placed on lobbyists in European nations. We have a severe problem in the United States with special interest lobbyists in the United States. If you think the oil and gas and defense industry lobbyists are bad, take a look at the article in the current issue of TIME magazine by the author (Steven Brill) of this article. He points out that the medical industry in the U.S. spends 3x more than either the infamous defense industry lobby or the infamous oil and gas lobby.

Posted by QuietThinker | Report as abusive

»1. What’s the story that screams out to be written or televised based on these two sentences? Hint: It’s all about how Washington has been brought to its knees by special interests.” I respectfully disagree.

The virtual takeover of the elected “representatives” of “we, the people” by “special interests” is well known if not well documented or even acknowledged. There probably is a “story” THERE.

What “gets my dander up” is that “old Europe” would presume to “tell” America, without which there would BE no “internet”, what rules an unelected “EU” would impose thereon. In my humble opinion the single appropriate answer to such nonsense is to tell them emphatically to “POUND SAND”!

“2. …a reporter unafraid to step onto this minefield would also ask…whether…[reasonable]…cost-benefit analysis…[might suggest such]…money could be spent more effectively on other healthcare needs.” Indeed. The “answer” to the original question should be to establish the incentives NECESSARY to assure that a cost-effective level of research is both predictable and sustained.

It seems patently obvious that Americans are getting the “short end of the stick” today. They underwrite the great majority (dollarwise) of advanced medical research (one way or another) which the rest of the world then enjoys much more cheaply.

Perhaps (shudder) the federal government should be competent enough (it isn’t presently) to prioritize and fund such research in conjunction with other nation-states, perhaps on a “sliding scale” according to ability to pay. That would, in all probablity, end up with today’s “Big Pharma” being reduced to manufactures of essentially generic drugs that need not be advertised or compete with each other and production would probably me mostly in India.

Oh, I forgot. It already is.

Posted by OneOfTheSheep | Report as abusive