Bitter pill? Economic
geography of the
pharmaceutical industry
GEOG 3331
10 Dec 2018
Martin shkreli
• CEO, Turing Pharmaceuticals
• Acquired Daraprim- used to treat
rare but serious parasitic infections
• “Price gouging scandal”: Overnight
$13.50  $750
Diagnosing Shkreli
• Exception: unchecked human greed
• Structural issue: Foundational change
in how pharma companies raise capital
• What happens when the logic and
practices of finance come to motivate
the pharmaceutical industry?
Logic and practices of
finance capital: recap
• Singularly privileges short-term
shareholder value
• Incentivizes speculation
• Mode of growth: extractive rather
than productive
• Share buybacks
Drug discovery
and development
• Fundamental temporal conflict
• Drug R&D is a lengthy, unruly
process; cannot guarantee quick
returns
• Finance capital: never sleeps, in a
maniacal rush versus “patient”
capital
FINANCE IN PHARMA
• Outsourcing different parts of the
R&D and manufacturing processes
to smaller companies to reduce
infrastructural and operating costs
• Growth through acquisitions
Money for
acquisitions?
• Approaching drug pricing with the intent of
maximizing revenues in the short-term
• Sell more and at high enough revenues to
generate cash
• Promissory function of drug pricing- promis of
future profits
• Borrow from VC/HF/IBs against valuation of
company (Share buybacksstock prices
increasemarket capital increases)
Mylan’s epipens
• Oversized marker that pops out a
short needle, which delivers
epinephrine in 3 seconds or less
• Epinephrine preferred substance to
halt and reverse a severe allergic
reaction- anaphylaxis
• Lock on large market with inelastic
demand; no competition
• Creating new markets: public
schools and airplanes
• Putting on a show for investor
audiences: EpiPen windfall enables
borrowing money to acquire MEDA
Summary
• When the logic and practices of finance
capital come to motivate the
pharmaceutical industry, it
exponentially exacerbates the
contradictions of health care
technologies being capitalist
commodities.
• Dirty money, “Drug Short”, S1E3,
Netflix
• But the political and ethical question
of access to drugs and other health
technologies is already woven into
viewing/running these as for-profit
businesses; predates financialization
of the pharmaceutical industry
Questioning drug
pricing
• Argument against drug price regulationfree market is the source of all innovation
• Pharma narrative (crude): Medicine is a
business. Its capitalism. And we have seen
remarkable advances in science under this
system. High drug prices are simply the
mode of recouping high expenditures on
R&D costs by pharma companies
Patent rights
• Similar justification for patents
• “Temporary” monopoly over
production and pricing as reward for
innovation and bearing risk
• Evergreening
Challenging the narrativewho innovates
• Majority of transformative drugs were
discovered/invented in research labs
and universities funded by tax payers;
or in collaboration with companies
• NIH is the biggest funder of
pharmaceutical innovation
• Socialization of risk; privatization of
profit
Challenging the narrativenature of scientific
knowledge production
• Very rarely a lone scientist or even company begins
with search for a drug
• Not linear
• Happens in fits and starts, often temporally and
spatially spread out
• Additive/incremental in nature
• Involves massive networks of human and nonhuman actors
• Many accidents
The case of
imatinib
• Brand name- Gleevec
• Popular narrative: Novartis patented
Gleevec  But did Novartis
“invent" it?
Coming into being
of imatinib
• Imatinib molecule that treats Chronic Myeloid
Leukemia- rare but vicious form of cancer
• Mid 1800s: All living organisms made up of cells;
observing and naming of leukemia (weisses blut);
cellular theory of human biology human
growth a function of increase in cell numbers
and/or increase in cell growth
• Early 1900s: Crystallization of understanding
leukemia as the malignant proliferation of
WBCs in the blood
• 1920s: Advances in Hematology; pernicious anemia
caused by lack of B12 and restoring it can restore
blood to normalcy blood an organ whose activity
could be turned on/off by molecular switches
• Also folic acid critical for forming DNA; DNA
critical for cell division (formerly though useless;
called “cell stuffing”); blood cells produced by high
rate of cell division; therefore lack of folic acid would
hamper production of new blood cells in the bone
marrow it would churn out half-matured cells,
clogging the bloodstream
• 1940s: Sidney Farber asks could a malignant bone
marrow be shut off by choking nutrient supply?
• First taste of success: Farber (pediatric pathologist) and
Subbarao (biochemist) stumbled upon an antivitamin
that could bind to an enzyme and switch it off,
producing temporary remission of leukemia
• 1860s-1950s: Understanding genes
Functionally- A gene is a unit of inheritance;
contains biological traits and info
Physically: Genes are carried on chromosomes
Chemically: Consist of DNA
Genes  Proteins, which carry out bulk of cellular
functions
DNARNAProteins
• 1950s-70s: Understanding kinases- A protein that tags
other proteins with a phosphate group, unleashing a
cascade of signals in cells that dictate cellular activity
• 1973: Janet Rowly discovers that all CML cells had an
aberration called the Philadelphia chromosome (BcrAbl)
• 1980s: Bcr-Abl isolated and injected into mice to
confirm that it causes CML
• Crystallized understanding that Bcr-Abl a kinase that
activated maniacal proliferation of blood cells
• 1970s: Lydon et al in Ciba-Geigy were searching for
molecules that could selectively switch off “bad”
kinases (like Bcr-Abl); after prolonged process of trial
and error and redesigning, came up with imatinib
• Brian Druker had been studying Bcr-Abl kinase
activity; heard of Lydon’s work; approached CG for
collaboration; denied; worked out later
• Druker conducted trials with imatinib on CML cells in
lab, on mice implanted with CML and human bone
marrow from CML patients
• Despite success, Novartis refused to conduct clinical
trials; prolonged lobbying by Druker, then given a
small batch of molecules to test on human patients
• IMATINIB PATENTED in early 90s
• Patent law simplistically surveys the
limits of an idea. But it is difficult to
locate and isolate credit, labor, or value
for creative endeavors in any individual
or even set of individuals. Knowledge,
creativity and innovation is usually
generated between various humans and
non humans, i.e. in and through the
infrastructure of their connection
(Kapczynski 2010)
Changing geographies of
clinical trials
• Our pill-taking life, “mediated by proton-pump
inhibitors, serotonin boosters and other drugs
that have become permanent additives to many
human bloodstreams” is sustained by a
complex but largely invisible system of drug
testing and drug development (Gormon 2004;
Petryna 2011)
• Rendered visible in times of crisis- deaths and
other “side effects”
Human subjects
for clinical trials
• A subject population available for
recruitment and monitoring
• Prisons and mental hospitals: readily
available for extended time periods;
controlled settings; uniform routine;
ethically justified as debt to society;
“easily” compensated
Clinical trials move out of
the US by the 70s- Push
factors
• Thalidomide scandal and Tuskegee syphilis study 
stricter regulations in general
• Attica prison riots; decline in use of prison populations
• Pill saturated bodies; too many drug-on-drug
interaction; difficult to track the intervention of a
single drug
Developing countriesPull factors
• Economic factors- access to healthcare
• Sick but pharmaceutically virgin bodies
(treatment naiveté)
• Ailing public systems healthcare; state
spending low or decreasing
• Large pool of trained medical and paramedical persons to act as investigators
• Pharma capital needs a
differentiated landscapepopulations, economies, laws, and
regulations- certain kinds of
difference can be leveraged to extract
value
• But it also needs certain kinds of
sameness: TRIPs
Thank you