Interviewed on February 27, 2023 by Larry Au for the Spring 2023 SKAT Newsletter

Victor Roy, MD, PhD, is a family physician and sociologist, and currently a Postdoctoral Fellow at Yale University’s National Clinician Scholars Program. His work touches on the political economy of health technologies and health equity. His recent book, Capitalizing a Cure: How Finance Controls the Price and Value of Medicine (University of California Press, 2023) is available open access.

Q: I wanted to start by talking about how you came to be interested in studying drug pricing. So, in addition to being a sociologist, you also have a MD and you’re a practicing family physician. Could tell us a little bit about how this career trajectory has shaped your approach to the topic?

A: As a physician, I see every day what we call the social and structural determinants of health. I see how these determinants show up in the lives of my patients. Along with the journey of studying medicine, I’m deeply committed to studying and acting on these structural drivers of health. A lot of MDs go to public health school or they’ll get a MBA to try and learn about these systems. I took a different route. For MD/PhDs, you do first two years of clinical book learning, then you work in the lab. And when you finish your PhD you come back and get your clinical training on the wards. You then combine, further residency training and try at the end of that to start a lab or do a postdoc. I did my PhD, but the “lab” was the social world. Sociology gave me a set of tools to think with in terms of both the social systems at play, the discourses that actually shape a lot of public health and medical policy making, as well as the political economy around a lot of the issues that we face. In the case of hepatitis C, we see an example of how the political economy and discourses surrounding drug pricing really limited access to care for patients that were already structurally marginalized: people who have histories of addiction, injecting drug use. Unpacking this challenge required a combination of my doctor’s understanding of the stakes for patients with a sociological analysis of the forces shaping the challenge of accessing new treatments. 

Q: What was the process of research for this book like? I saw in the Appendix that you marshal a wide range of sources: archival and documentary sources, earnings call transcripts, observations of policy meetings, and interviews with key stakeholders. What was it like to navigate this space, and to secure interviews with corporate executives who may be skeptical of sociologists?

A: Firstly, I relied on a lot of documentary analysis, looking at media articles, medical journals, review articles, and publications around the science to build a historical timeline of what happened around Hepatitis C drug development and pricing. Through this, I also identified and mapped out the key actors, who I engaged further in terms of either securing an interview or actually getting documents that were related to that organization. Finance wasn’t necessarily the angle that I took at the beginning. It emerged as a focus because I recognized that a lot of these financial dynamics were driving the whole conversation in a way that wasn’t made explicit. 

One of the key sources then became the earnings calls transcripts, which allowed me to understand both the pharmaceutical corporate executives and the Wall Street financiers, and how that then ends up influencing and shaping public health policy. These earning calls transcripts became an important data source that I relied on heavily and coded systematically. The other source for this project became the U.S. Senate Investigation. It’s perhaps not often that sociologists dig deep into Senate Finance Committee’s documents. But in this case, the internal corporate documents provided in the report were shared as part of the investigation, and these documents became really useful in terms of triangulating what was actually going on in this case. 

On interviewing the pharmaceutical executives, at the time, my approach was just really trying to understand what the innovation process looked like. People were so proud about this innovation. If you just approached with real, earnest curiosity about “How did this innovation process take place? Can you share a little bit about your role in it?” People were willing to share their piece of what they were involved with. Ultimately, I didn’t choose to actually use the quotes of the corporate executives or even other insiders, mostly because I actually found that what was publicly available was already so compelling. This also tells us something about how naturalized the system is, when the folks within firms are talking so openly – especially to the business and Wall Street community. The interviews were still useful in terms of triangulating and making sure I had the historical timeline and the steps in the right order, and to know what the key influences were from their perspective. But it was really helpful just to have so much of what was said out in public.

Q: You build on Marianna Mazzucato’s discussion of the “entrepreneurial state” in highlighting the pivotal role that public funding played in the early stages of sofosbuvir’s development. Yet, in public accounts of pharmaceutical innovation, the role of the state in financing these technologies is often omitted. Why do you think that this is the case?

A: Much of the entire framing around the state and innovation is about essentially fixing market failures. In this case, in the innovation system around biomedical research and development, the state’s role is centered on fixing the market failure: that basic science doesn’t get funded because there’s no commercial potential from it. That’s a public good that the state provides. In a way, it can almost be written off and taken for granted—we can say, that’s just the role of the state, and the private sector takes on all the risk and does all the work that makes science into useful products for society.

That’s part of the prevailing discourse that has gotten so drummed into the minds of the public and the policymakers that we actually fail to conceptualize the fact that a lot of what the state does, first of all, isn’t just basic science. The basic science, even when it is termed in that way, often times are actually technologies that even if they’re early or upstream in the process, create whole spaces for the next generation of innovation to happen around technology. And then you actually look at the vehicles of state investment: they actually go further downstream. The U.S. government is actually involved in helping finance directly—in many situations—what are essentially start-ups. Additionally, this also provides a market signal to venture capitalists to say that these are the startups that already have our stamp of approval. Not only did they get the public funding for the basic sciences and earlier stage sciences, but now the start-ups are getting the direct funding. 

In the Covid-19 example, of course, the government took on even greater risk, and went all the way downstream into helping companies perform clinical trials and manufacture the actual vaccines. A lot of what needs to be re-framed, then, is a certain way of conceptualizing the state that is easier to write off as: this is what a non-market actor is supposed to do, here’s what the market is supposed to do, and we need to make sure that the state doesn’t intervene anywhere in this market. 

Q: You also engage with the literature on financialization, and new work on assetization, in discussing how “the speculative and extractive logics of financialized drug development shape drug pricing and public health policy” (p. 75). You locate these shifts in drug pricing towards financialization within larger structural changes to U.S. economy, such as deregulation and the rise of shareholder value. How, in your view, does financialization run counter to the logics and the values that we hold dear in public health, medicine, and science?

A: I unpack financialization through a couple of different mechanisms. These mechanisms operate around maximizing shareholder value and the ways in which the political economy of MSV has fragmented investment in biomedical research and development across a bunch of different financial actors. No longer do we have one firm saying, “I’m going to bring a product from beginning to end and I’m going to take on all the risk”. This is more about how multiple financial actors are involved, with each taking on one slice of a process and trying to maximize their return on that part of the process. What really matters here is not just profits, but growth in profits. When you take biomedical research and development for new treatments – which can take years, and often over a decade –  but then you overlay that into a financial system that says, “we need to create growth annually” and “we’re going to compare your earnings from this quarter to the same quarter last year”…this dynamic creates all sorts of changes in the structural organization of the whole system. 

For example, in the Hepatitis C case, Gilead is a company that is doing really well in terms of profitability in 2011 with the HIV/AIDS treatments making billions of dollars. But because the growth is not increasing at a particular rate, they’re then incentivized structurally—or expected by Wall Street—to spend the money that they have to buy Pharmasset, which is a company that essentially is the product of public investment, for $11 billion. And so, that logic around constant growth and then channeling that growth toward shareholders becomes an engine for the inequality that we see in terms of access to treatment. I argue that this runs counter to a more embedded way of understanding value at the health systems and at the physician-patient level. The calculations on pricing and value today drop this view of value from view – and doctors and patients are left in the wake of all of that and have to navigate the fallout.

Q: In the later chapters, you invoke the idea of “countervailing power” and the Polanyian insight on the “counter-movements” to show how the hegemonic position of pharmaceutical companies may be challenged as the excesses of financialization comes to the fore. Moving forward, where do you see as the role of patient advocacy and health activism in altering the chokehold that finance has over drug pricing? 

A: I see this working out in at least two different directions. One direction is going to be around activism and organizing around actual public production, and what I call “public options” in the book. These are different ways in which the state itself can really take on those last stages of the innovation process to make sure that what is developed with a lot of state funding ultimately then is able to be put in the service of public health. The regional production hubs around mRNA technologies in Brazil and South Africa is an example of this. In the U.S., we’re seeing in California a movement around using public production to make insulin, in response to high prices for insulin. So those examples are one direction where activism is going to be really important, and it has already created certain openings for more structural change.

The other big area is going to be looking at the ways that the existing system operates and looking for the big cracks that can be changed and transformed. You have some important activism around intellectual property, with groups like I-MAK, the Initiative for Medicines, Access & Knowledge, that are doing really important work with the standards that we use to grant firms intellectual property around medicines. They’re really working on trying to raise those standards and that’s one important route. For example, looking at the existing system that you would be able to basically de-financialize the system by changing the standards around what types of knowledge can be turned into a financial asset. It has to meet a certain threshold before is able to be granted intellectual property protections. There are other parts of the existing system with drug prices. One area is demanding that the government do a better job of negotiating over drug pricing. That’s something that’s new and that’s happening in the U.S. for the first time in the coming years. Recent new legislation now makes it possible for the U.S. government to look at a small subset of treatments, but that there will be important organizing to study how that happens and whether more treatments the government could really take on the public interest in negotiating access and pricing. These are just a couple of examples: transformative directions around public production, and looking at the existing systems around direct pricing and things like intellectual property and organizing around that. 

Q: Relatedly, do you have any opinions on ARPA-H (Advanced Research Projects Agency for Health), and how current reforms around it are trying to move the United States towards investing more in the applications and downstream innovations, and taking a more active role managing these innovations?

What happens with ARPA-H is going to be really interesting because, ultimately, it can go in two directions. One direction would be that it becomes just another public subsidy to the private sector where the state takes technologies really far in the process through state investment. But then it basically becomes something that is capitalized on by private actors. In many ways, that’s what the prevailing policy thinking is and there’s the belief that that how it should be. But again, it goes back to that earlier point I was making about the role of the public sector. Is just to de-risk private actor? The challenge here is that the actual purpose with which these investments are being made then don’t get seen through. We have this problem of breakthrough but not follow-through because that’s not what financial actors and private actors are really trying to accomplish by themselves. That the big area here to watch.

The other direction is, does ARPA-H actually think about its social contract with the private sector? To use the ecological metaphor, there can be symbiotic relationships between the public and the private, when there are conditions set on its public funding. If certain technologies emerge out of ARPA-H’s investment, we should ask: What are the conditions around access and pricing and affordability around intellectual property, and around reinvestment in innovation? Is the government going take a stake in the firms that it makes huge investments in? Are recipient companies going be also allowed to buy back their shares with public funding? These are all conditions that the government could consider in its contracts, that would allow for a different type of innovation system to emerge.

Q: Your focus in this book is primarily on the United States, as it plays an outsized role in pharmaceutical innovation. Yet, you also note how actions taken in Egypt (where Gilead agreed to sell sofosbuvir at $10 a pill), in India (where Gilead licensed sofosbuvir with generic manufacturers), etc. play a crucial role in shaping the pricing strategies of pharmaceutical companies like Gilead. What can global health policymakers do to advance equity globally? How can countries work together to secure access to essential medicines?

A: This is going to be, especially with the emergence of gene therapies and breakthroughs with new genomic technologies, a huge and ongoing frontier for activism and organizing. Just in the New York Times a few weeks ago, there was an important piece about Novartis selling treatments for spinal muscular atrophy (S.M.A.)—an infant condition—in Brazil for $1 million dollars for each treatment. And what is really striking about that example is that actually the private sector can use the fact that Brazil’s has a human right to health in its constitution to actually mobilize patients and the judiciary to hold the government accountable to that human right to help. And Brazil’s government is actually allotting a significant amount of funding to this treatment. That’s actually one way that activism and organizing could go: where drug companies are able to say, “well look, you need to provide access to this treatment and so you should pay up”. But, of course, that has huge consequences on public budgets for other areas of health. We need a more structural version of organizing, which has to learn some of the lessons around HIV/AIDS access to medicines movements from the 1990s and the 2000s, and translate these lessons to different areas around really high price treatments that are going to be in the hundreds of thousands, or maybe even in the millions of dollars. In these cases, what’s going be important goes back to my earlier answer. The key frontiers are ultimately intellectual property in a lot of these cases. We will need to se where governments or activists can really place pressure—either through the court system, or through other types of public venues. And so again, I-MAK has been really at the forefront of a lot of this work. 

The mRNA hubs are a really important example of regional and global production. Moderna didn’t share the mRNA technology with technology transfer for the production of vaccines. But these actors in South Africa and Brazil as part of the World Health Organization mRNA hubs are actually trying to build these platform technologies themselves. If they can build platform technologies that can then be used to produce a bunch of different treatments, then that will be a huge breakthrough. Of course, Moderna wants to guard this platform. That’s the key difference. Whereas the drug companies ultimately created licensing agreements in the 1990s and the 2000s over specific drugs. This new era will be centered on how do companies pursue forms of intellectual property protections around specific platforms that could make lots of different breakthrough treatments because of genomic technologies. Organizing around the platform technologies might look a little bit different. The mRNA platforms are one early example of how this might play out. 

Q: What are you working on next? Anything that you can preview for the SKAT audience?

A: I am working on two things. One is smaller in scope, and it was recently published in BMJ, titled “Financing Covid-19 mRNA vaccines”. I connect dynamics around financialization to the Covid-19 vaccine case in a more explicit way by connecting how public played a pivotal role in the development of Covid-19 vaccines. This feeds into part of my work that connecting what’s happening around the financialization of pharmaceutical innovation to more cases. Hepatitis C is one important case, but it’s really happening with lots of different types of treatments as a systems-wide phenomenon. Part of the work is actually just understanding, linking, and unveiling how these dynamics are playing out in a lot of different areas. 

And another one is understanding how political economies of finance and value are operating elsewhere in health and health care. In our discussions and health policy debates, I’m trying to trace and understand how some of the political economy of health care financing ends up producing certain logics of value, and stabilizes certain political economies and relations of power. In the U.S., we’re seeing the intensifying financialization of healthcare, with a lot of private equity involvement. That’s an area that I’m also interested in investigating and helping to unpack some of those dynamics that I look at in the pharmaceutical sector.