Political war on drug firms is hazardous to the world's health

Drugmaker Merck just shared stunning data on molnupiravir, an oral antiviral it developed to combat COVID-19. In molnupiravir's phase three clinical trial, it cut COVID-19 patients' risk of being hospitalized or dying by 50%.

The company is now seeking emergency use authorization from the Food and Drug Administration.

The medicine could be a game-changer in humanity's fight against this virus. In the United States and other developed countries, many have regrettably decided against getting vaccinated, leaving them at elevated risk of severe illness. Though rare, serious breakthrough cases also are happening. And in the developing world, a variety of factors have led to a slow vaccine rollout.

Finally, there is always the concern of a mutation that evades our existing vaccines.

Simply put, vaccines alone aren't enough for our anti-COVID-19 arsenal. And we're now poised to have at least one safe, effective and convenient oral treatment. Roche and Pfizer are working on others that could soon be on the way.

Yet instead of praising this achievement, some activist groups are focusing on molnupiravir's price, which is expected to be $700 for a full five-day, 10-pill course of treatment. They claim that because the researchers who made the initial discovery benefited from federal grants, the government should be able to set the price of this therapy or nullify Merck's intellectual property rights.

The argument ignores the basic economics of how drugs are developed — and sets a dangerous precedent that could deter companies from making the future investments needed to bring these sorts of medicines to market.

To see how illogical Merck's critics are, consider molnupiravir's back story.

About a decade ago, Emory University scientists received $35 million in federal grants to perform early-stage research on antivirals, which ultimately led to their discovery of the molecule behind molnupiravir. When COVID-19 struck in early 2020, many of these scientists thought their molecule — which they originally envisioned as a flu treatment — had considerable potential.

Despite this scientific hunch, the only way to prove the success of the product was to run expensive clinical trials. The scientists turned back to the government for additional funding — but were denied. The Emory researchers also tried crowdfunding, but raised only a sliver of the money needed.

So instead, Emory researchers licensed the molecule to a small company named Ridgeback Biotherapeutics. After initial lab testing funded by Ridgeback showed promise, the biotech company partnered with Merck, which agreed to conduct clinical trials — and manufacture and distribute the therapy if it ultimately received FDA authorization.

Without these private sector investments, the federally funded research would continue to sit in a lab, full of promise but unable to help patients.

Instead of applauding these two companies and their cooperation, some have criticized them as profiteers. One Washington Post article characterizes Ridgeback as "flipping" a "taxpayer-funded coronavirus drug."

That's a ludicrous description.

Small biotech startups lack the resources and expertise to shepherd potential drugs through the complicated clinical trial and regulatory approval process. They're also not equipped to mass-manufacture drugs.

Merck and other large pharmaceutical companies, on the other hand, employ thousands of clinical researchers and entire factories of manufacturing experts. So it's only reasonable that Ridgeback partnered with a more experienced, better-funded company.

Such partnerships are an ordinary and essential part of an efficient drug development process. They should be celebrated, not castigated.

Without the possibility of licensing their promising experimental drugs to larger companies, biotech startups would struggle to raise funding. Investors would rightly conclude that these fledgling companies would struggle to overcome the enormous regulatory hurdles in their path, no matter how scientifically promising their experimental treatments are. A whole range of potential lifesaving medicines would never get funded.

Federal grants do help fund exploratory research at university labs. But turning early-stage research into safe, effective medicines is a profoundly risky endeavor. Most molecules patented by university labs never even make it to the first phase of clinical trials, where drugs are tested for safety on healthy human volunteers.

Of medicines that do enter clinical trials, fewer than 12% ultimately earn regulators' approval.

Yet, despite these long odds, biotech firms spend more than $100 billion a year on research and development. Since firms must expect that successful medicines will pay for all the failures, it's estimated to cost over $1 billion to bring a single new medicine to market.

Activists are right that molnupiravir offers a lesson about federal research funding — but they're learning the wrong one. This case demonstrates that federal officials are ill-equipped to judge which treatments will succeed and which will fail.

That's why we leave those decisions to highly trained and highly motivated experts in the private sector — firms that are willing and able to tolerate this enormous risk only because there's a chance of earning a massive return. Removing this possibility would make pharmaceutical innovation next to impossible.

Our drug development ecosystem enables university labs, small life science firms and large drug companies to collaborate — and bring lifesaving medicines like molnupiravir to patients. That's cause for celebration, not complaint.

Craig Garthwaite is the Herman R. Smith Research Professor in Hospital and Health Services, a professor of strategy and the director of the health care program at Northwestern University's Kellogg School of Management.