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Pills and Profits: How drug companies make a killing out of public research

In this joint report, STOPAIDS and Global Justice Now show how taxpayers are funding billions of pounds worth of research into life-changing drugs – only to be told they are too expensive when they need them.

High medicine prices are a serious challenge for the NHS and patients globally, with many new treatments priced so high that patients have been denied access to drugs that could save or extend their life.

The pharmaceutical industry has always claimed that high prices are down to high research and development costs. But the process for setting prices has been shrouded in secrecy. Our current model for researching and developing medicines is based on using patents as an incentive, which give companies exclusive rights to a new drug for 20 years or more. No other company can make or sell that drug during that patent period. Without competition, companies can demand whatever price they like.

However, the high prices of medicines do not reflect the public contributions to health research. The UK is the 2nd largest government funder of global health research and development (R&D), after the US. It is estimated that the public pays for two-thirds of all up front drug R&D costs. Yet, as highlighted by our new report Pills and Profits; how drug companies make a killing out of research, the NHS spent more than £1bn last year alone on medicines developed with significant reliance on UK public research funding.

The UK Government must act now. Here are 5 recommendations for the UK government to safeguard access to publicly funded medicines:

  • Attach public interest conditions to all UK health R&D grants so that medicines that benefit from public funds are affordable for patients and the NHS.
  • Introduce transparency: enforce standardised measures for reporting the costs of R&D, so that the UK government can determine a fair price for medicines.
  • Enable effective governance and accountability so that the government prioritises public health over commercial interests and citizens can hold the government to account for doing so.
  • Drive international progress on R&D by supporting the establishment of a global biomedical R&D convention and enabling the market entry of generic drugs
  • Invest in new approaches to R&D, such as the use of grants and prizes that fully cover the cost of R&D and do not allow for high prices as a mechanism to finance drug development.