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Correspondence to: H L Li henry.li@ucl.ac.uk, A Darzi a.darzi@imperial.ac.uk
Yes—Mariana Mazzucato, Henry Lishi Li
Do we support state ownership of the whole pharmaceutical industry? No. But do we think that the state should play a greater role in the sector? Absolutely.
The public sector is a cornerstone of the pharmaceutical industry, often taking on the highest risk in the early stage of innovation.1 It is also key to creating clusters that connect different actors in research and development (R&D), manufacturing, and health system demand, thus shaping the pharmaceutical market across its entire value chain.
Short termism and misalignment of the existing market
While the private sector is also crucial in bringing cutting edge medicines to the market, its entrenched short termism and misalignment with public interest are equally striking.2 Firstly, companies prioritise “blockbusters” at the expense of commercially unappealing medicines that are hugely important to public health.3 Secondly, the pricing of these medicines does not take into account the contribution by other actors, including public institutions.4 Thirdly, patents are often abused, being too upstream, wide, and strong,5 and high prices can persist even as generic competition kicks in, as a result of occasional cases of inefficient competition.6 Fourthly, high prices are driven by and in turn fuel the over-financialisation of parts of the industry, where share buybacks are outpacing R&D.7 These prices also lead to a drive to cut costs by outsourcing manufacturing capabilities overseas, at the expense of local capacity.8
The state should therefore govern the drug innovation process more like a market shaper: steering innovation, getting fair prices, ensuring that patents and competition work as intended, setting conditions for reinvestment, and safeguarding medicine supply. In other words, this is not about bashing big pharma—of course, it plays an important role—but about finding a way to govern a system that is not working for members of the public, who have invested in some of the riskiest stages of drug development.
In this context, where conventional policy instruments cannot effect the needed change in the pharmaceutical sector (especially where it fails), there is a strong case for a public option in pharmaceuticals: government provided, quality assured medicines that are universally available at a reasonable and fixed price,...