Private Profits From Publicly Funded Drug Research

There is a new form of funding for the development of pharmaceuticals that is supported by tax free donations but ultimately results in private profit-making.  For example, the Cystic Fibrosis Foundation accepts donations to fund research on drugs to treat or even cure cystic fibrosis.  It then invests in a private pharmaceutical company–Vertex Pharmaceuticals–that develops the drugs.

The drug company developed Kalydeco but the Cystic Fibrosis Foundation didn’t try to control the end price.  As a result, it costs $300,000 a year.  The drug company makes enormous profits because this is a rare disease and most patients are already on Medicaid so some payment is guaranteed.

It is ironic that tax-free donations have supported a tremendously expensive drug which guarantees huge profits for the private company that has taken over the production of the drug.  Wouldn’t it make more sense if those donations supported a drug which was distributed at cost to the victims of this life-shortening genetic disease? The government is supporting this process by making the donations tax-free and then paying for the drug to be given to patients, who are mostly destitute because of the cost of treatment (aside from the new drug, the cost of hospitalization, doctor visits, and all the other drugs and medical devices is enormous.)
Clearly, the people who pay taxes are not getting their money’s worth when they have to pay for the huge profits generated by shrewd investors in a drug created with donated money.

One more point: Kalydeco, at 300K/yr, is not a cure, only a maintenance drug. So it extends the patient’s life and has to be taken for the rest of her/his life. Do you see the potential future profits in that situation?