How the Senate Paved the Way for Coronavirus Profiteering, and How Congress Could Undo It

By Ryan Grim and Aida Chavez, The Intercept

03 March 20

efore a vaccine to combat the coronavirus pandemic is within view, the Trump administration has already walked back its initial refusal to promise that any remedy would be affordable to the general public. “We can’t control that price because we need the private sector to invest,” Alex Azar, Health and Human Services secretary and a former drug industry executive, told Congress.

After extraordinary blowback, the administration insisted that in the end, any treatment would indeed be affordable. President Donald Trump on Monday morning tweeted that he would be meeting with “the major pharmaceutical companies today at the White House about progress on a vaccine and cure. Progress being made!” The federal government, though, under the Clinton administration, traded away one of the key tools it could use to make good on the promise of affordability.

Gilead Sciences, a drugmaker known for price gouging, has been working with Chinese health authorities to see if the experimental drug remdesivir can treat coronavirus symptoms. World Health Organization officials say it’s the “only one drug right now that we think may have real efficacy.” But remdesivir, which was previously tested to treat Ebola virus, was developed through research conducted at the University of Alabama at Birmingham with funding from the federal government.

That’s how much of the pharmaceutical industry’s research and development is funded. The public puts in the money, and private companies keep whatever profits they can command. But it wasn’t always that way. Before 1995, drug companies were required to sell drugs funded with public money at a reasonable price. Under the Clinton administration, that changed.

In the 1994 midterms, the Republican Revolution, built largely around a reaction to Bill Clinton’s attempt to reform the health care system, swept Democrats out of Congress. On its heels, in April 1995, the Clinton administration capitulated to pharmaceutical industry pressure and rescinded the longstanding “reasonable pricing” rule.

“An extensive review of this matter over the past year indicated that the pricing clause has driven industry away from potentially beneficial scientific collaborations with [Public Health Service] scientists without providing an offsetting benefit to the public,” the National Institutes of Health said in a 1995 statement announcing the change. “Eliminating the clause will promote research that can enhance the health of the American people.”

The move was controversial, and a House member from Vermont, independent Bernie Sanders, offered an amendment to reinstate the rule. It failed on a largely party-line vote, 242-180.

Then in 2000, Sanders authored and passed a bipartisan amendment in the House to reimpose the “reasonable pricing” rule. In the Senate, a similar measure was pushed by the late Paul Wellstone of Minnesota.

“Many in Congress find it hard to argue with Sanders’ line that ‘Americans must pay twice for life-saving drugs, first as taxpayers to develop the drug and then as consumers to pad pharmaceutical profits,’” Nature wrote at the time.

Then-Sen. Joe Biden of Delaware voted to table Wellstone’s amendment, and it was defeated 56-39.

“Our amendment requires that the NIH abide by current law and ensure that a company that receives federally owned research or a federally owned drug provide that product to the American public on reasonable terms,” Sanders said in a floor speech. “This is not a new issue. During the Bush administration, the NIH insisted that co-operative research agreements contain, quote, a reasonable pricing clause that would protect consumers from exorbitant prices of products developed from federally funded research.”

A related effort from Sen. Ron Wyden, D-Ore., made it into the final Senate bill, watered down to say that the director of the NIH should offer “a proposal to require a reasonable rate of return on both intramural and extramural research by March 31st, 2001.”

The two measures were hashed out in a conference committee, and Sanders’s tougher House language was stripped out. The conference report included this language: “The conferees have been made aware of the public interest in securing an appropriate return on the NIH investment in basic research. The conferees are also aware of the mounting concern over the cost to patients of therapeutic drugs. By July 2001, based on a list of such therapeutic drugs which are FDA approved, have reached $500,000,000 per year in sales in the United States, and have received NIH funding, NIH will prepare a plan to ensure that taxpayers’ interests are protected.”

That plan has never been implemented, while the federal government has continued to fund research that leads to private gain. The Antiviral Drug Discovery and Development Center at the University of Alabama in 2019 received a five-year, $37.5 million grant from the National Institute of Allergy and Infectious Diseases — one of the 27 institutes that make up the NIH.

Democratic presidential candidates have pledged to use authority they say is inherent in a federal law already on the books, known as Bayh-Dole, to force reasonable prices, and have pledged to go even further with new legislation. But the public might not need to wait for Election Day. With Congress set to contemplate a round of funding to mitigate the pandemic, the Sanders-Wellstone amendment could make a comeback.