PCP9 - Non-Profit Drug Research and Development at a Crossroads: The Case Study of Genethon

Abstract

In wealthy nations, non-profit drug R&D has been proposed to reduce the prices of innovative medicines. We sought to analyse Genethon, a French non-profit biotherapy R&D organisation focused on rare diseases. We discuss the ethical and economic issues concerning non-profit drug R&D companies, and the possible impact that their pricing strategy may have on the innovation efforts from for-profit companies targeting the same segment of the pharmaceutical market. Published and grey literature review. There are two possible approaches to pricing drugs developed by non-profit R&D programs: pricing that maximises profits and “affordable” pricing that reflects the cost of manufacturing and distribution, plus a margin that ensures sustainability. Genethon has opted for in-house production and distribution in order to maintain control over the supply of its products and sell them at a ‘fair and controlled price’. The firm has decided to occupy the whole chain of value creation, from discovery to large-scale manufacturing and sales. However, it lacks the experience in launching, selling, and distributing medicines, which may delay or jeopardize patient access to Genethon’s innovative therapies. Ethical issues include spending public funds on commercial sales activity and investing them into a sales venture that will bring a return on investment much below the potential return in the for-profit sector. Further, lower pricing constitutes a disincentive for the for-profit sector to develop further products in the same disease area and the risk of drying out the for-profit sector R&D is high. Since the antitrust law does not permit non-profits to impose prices on potential licensees, these companies face ethical challenges when making decisions on licensing and pricing their inventions. Licensing their products to for-profit companies will bring high royalties that could be reinvested into further R&D, but will also result in high drug prices.