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Title: The financialization of a cure : a political economy of biomedical innovation, pricing, and public health
Author: Roy, Victor
ISNI:       0000 0004 6424 0847
Awarding Body: University of Cambridge
Current Institution: University of Cambridge
Date of Award: 2017
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Sofosbuvir-based medicines, approved in late 2013, offer a long-sought after cure for patients with hepatitis C, a virus that disproportionately affects marginalized populations around the world. But the prices set by its manufacturer at approximately $90,000 for a three- month regimen intensified a global debate about the pricing of breakthrough medicines. The dominant economic explanations for pricing have centered on ‘risk’, with prices representing the costly and failure-ridden process of drug development, and ‘value’, with higher prices said to reflect improvements in patient health as well as savings from averted downstream medical expenses. These economic explanations are limited, however, by their focus on prices at the point of exchange between drug manufacturers and public health systems. Instead, I took a historical view, using the case of sofosbuvir to trace the political- economic dynamics and organizational relations of power across the innovation process – from early stage science to deployment. Data from documentary sources, semi-structured interviews, databases, and observations at meetings allowed me to build an account of the sofosbuvir case. Combining this data with sociological and political economy literatures on the roles of an entrepreneurial state, the rise of financial capital, and the pricing and valuation strategies used by businesses, I argue that sofosbuvir’s prices did not represent the tangible costs of innovation or the health value for patients. Rather, the prices were a product of financialization: a pattern of accumulation in which growth was pursued through the capitalization and control of intangible hepatitis C assets in financial markets. As part of this pattern, I map the mobilization of speculative capitals behind Pharmasset, a small biotechnology company that emerged from public investments to develop the compound sofosbuvir, as well as the extractive logics driving the shareholders of Gilead Sciences, a large publicly traded pharmaceutical company that ultimately acquired Pharmasset and then set the prices for the therapy. I demonstrate that though an entrepreneurial state shaped the direction of the innovation process towards a curative therapy, the processes of financialization disconnected the distribution of risks and rewards, undermined the sustainability of future innovation, and diminished patient and public health outcomes. I conclude by responding to dominant economic answers on drug pricing in light of the evidence on financialization.
Supervisor: King, Lawrence Sponsor: Gates Cambridge Trust
Qualification Name: Thesis (Ph.D.) Qualification Level: Doctoral
Keywords: sociology of innovation ; political economy of pubilc health ; financialization ; drug pricing