Book review: Sick Money by Billy Kenber

“You don’t need to discover drugs to get rich off them any more,” Billy Kenber writes in the introduction of Sick Money: The Truth About The Global Pharmaceutical Industry.

Charting the evolution of the industry over half century, the book documents how structural changes in the marketplace have fuelled exponential increases in the cost of medicines while delivering disappointingly little in the way of clinically relevant innovation.

The good old days of pharma

As Kenber tells the story, up to the early 1980s, the industry was underpinned by an unspoken “social contract”. Society granted pharma companies the right to set prices for new drugs to recoup their R&D costs. In exchange, the small cabal of old white men with medical backgrounds who ran the industry upheld their side of the bargain.

They essentially acted like the gentlemen and good citizens they were, operating on the principle that if you brought a useful compound to market, the profits would look after themselves. Once the initial patents expired, medicines became widely available at low cost, benefiting humankind in perpetuity.

That social contract began to fray during the 1980s as the gospel of ‘shareholder value’ redefined the purpose of corporations and the expectations of their shareholders. In parallel, there was a culture shift within pharma companies themselves, as profit-focused MBAs gradually displaced scientists at the helm.

A financialised industry

Throw venture capitalists and hedge funds into the mix, add a U.S. healthcare system with completely misaligned cost incentives, and fast forward to the “financialised” industry of the 2020s.

By now, Kenber argues, the entire pharma business model has become reliant on the unsustainable assumption that every new drug will be priced significantly higher than its predecessor, and that society will foot the bill.

Meanwhile, R&D efforts have become narrowly focused on areas where the sky-high returns on investment demanded by shareholders can still be realised, notably on treatments for cancer and rare diseases.

If the narrative above sounds simplistic, Kenber’s book is anything but. It is exhaustively researched and enriched by over a hundred interviews, including with current and former pharma executives, and spans the United States, United Kingdom and Canada.

The depth of insight and analysis is breath-taking as the author covers everything from generics market failures to AIDS activism, patent thickets, biosimilar market entry barriers, insulin price rackets, and the nuances of health technology assessment, with a fascinating discussion of the sector’s concerns about declining returns on R&D investment thrown in for good measure. The referencing is impeccable throughout.

While Kenber also tells the stories of patients unable to access life-saving drugs, and of the occasional rogue industry player, he thankfully steers clear of excessive moralising. Instead, we are called to witness a Greek tragedy in which “financialised” companies and their executives are inexorably pushed into actions and outcomes that benefit shareholders at the expense of patients, taxpayers, and public health.

How can we fix the system?

How can we get the system back on track? Kenber’s prescriptions reflect the complexities of the science and the marketplace. He offers no magic bullets.

Instead, he proposes multiple, interlocking reforms including changes to patent law, the setup of public generics manufacturers, caps on price increases for drugs already on the market, investor activism, measures to recoup public R&D investments, head-to-head clinical trials, strong health technology assessment, and ‘Netflix’ payment models.

Intriguingly, he also suggests re-examining whether some public R&D investments are worth making in the first place.

Most new drugs either provide marginal benefits to a wide range of patients (cancer drugs) or provide significant benefits to only a tiny number of patients (many rare disease treatments). Considering the opportunity costs of such research, might this money not be invested better elsewhere, he asks?

A minor weakness of the book is that Kenber arguably dismisses two possible fixes to the system too quickly. The first fix, beloved by many advocacy groups, is coupling drug prices to companies’ R&D expenditures. While I’m personally also sceptical of that approach, for the same reasons that Kenber cites, many smart people think otherwise, and their arguments could have been given more consideration.

Kenber also dismisses a second, more radical, option out of hand: moving drug development from the private to the public sector. While his counterarguments are valid, a deeper dive would have been welcome here – if only because market forces seem spectacularly ill-equipped to operate in contexts where there the seller has a monopoly, and the potential purchasers will die unless they buy the product. Getting this kind of ‘marketplace’ to work effectively requires so much government intervention that by the end of the process, there is arguably next to no ‘market’ left anyway.

Read this book

In sum, this is one of the most impressive books that I have ever read, full stop.

My main criticism is that it is only 350 pages long; Kenber’s excellent writing could easily have carried me through a thousand more. Executive summary: Read this book.

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