The value of innovation

A few days ago, Merck &Co got the approval by EMEA (the European Medicines Agency) of Ervebo. Ervebo is the first vaccine to come to market against the Ebola virus. It is already been used experimentally with healthcare workers treating the virus in Africa, and as well, with people who have been in direct touch with infected people.

A second vaccine, this one from Johnson & Johnson, is also awaiting approval.

Also this week, Bardoxolone, a product in development by Reata, got positive results in a Phase III study (the final stage before submitting a product to regulatory agencies) to treat the Alport syndrome, a rare disease affecting 60,000 patients in the US, and about as many in Europe. Alport syndrome produces severe renal impairment, but also affects hearing and often times vision. Reata is a small biotech company, founded in 2002. Bardoxolone will be their first product to reach the market.

In the last few years there has been a major global controversy about the pricing of drugs. It is important to understand that prices are set to compensate for research cost and the risk of product failure (or as in the case of Reata, 17 years of continued investment with no sales).

After a few years these products go off patent, and hence come into the public domain. Intellectual property patents usually last longer: a book is under patent for 70 years. A pharmaceutical product in the European Union patent lasts only 10 years.

Does it pay off to grant patent exclusivity to Pharma Companies during 10 years in exchange for vaccines against devastating viruses like Ebola or to treat rare diseases like Alport syndrome? I’ll leave it to the individual judgment of readers.