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Is it time to nationalise the pharmaceutical industry?

BMJ 2020; 368 doi: (Published 04 March 2020) Cite this as: BMJ 2020;368:m769
  1. Mariana Mazzucato, founding director and professor in the economics of innovation and public value1,
  2. Henry Lishi Li, research fellow in health innovation and policy engagement1,
  3. Ara Darzi, co-director2
  1. 1UCL Institute for Innovation and Public Purpose, London
  2. 2Institute of Global Health Innovation, Imperial College London
  1. Correspondence to: H L Li{at}, A Darzi a.darzi{at}

Drug companies fail to take account of the public interest and relentlessly focus on short term returns, say Mariana Mazzucato and Henry Lishi Li. But Ara Darzi argues that the profits drug companies make are vital for developing new medicines

Yes—Mariana Mazzucato, Henry Lishi Li

Do we support state ownership of the whole pharmaceutical industry? No. But do we think that the state should play a greater role in the sector? Absolutely.

The public sector is a cornerstone of the pharmaceutical industry, often taking on the highest risk in the early stage of innovation.1 It is also key to creating clusters that connect different actors in research and development (R&D), manufacturing, and health system demand, thus shaping the pharmaceutical market across its entire value chain.

Short termism and misalignment of the existing market

While the private sector is also crucial in bringing cutting edge medicines to the market, its entrenched short termism and misalignment with public interest are equally striking.2 Firstly, companies prioritise “blockbusters” at the expense of commercially unappealing medicines that are hugely important to public health.3 Secondly, the pricing of these medicines does not take into account the contribution by other actors, including public institutions.4 Thirdly, patents are often abused, being too upstream, wide, and strong,5 and high prices can persist even as generic competition kicks in, as a result of occasional cases of inefficient competition.6 Fourthly, high prices are driven by and in turn fuel the over-financialisation of parts of the industry, where share buybacks are outpacing R&D.7 These prices also lead to a drive to cut costs by outsourcing manufacturing capabilities overseas, at the expense of local capacity.8

The state should therefore govern the drug innovation process more like a market shaper: steering innovation, getting fair prices, ensuring that patents and competition work as intended, setting conditions for reinvestment, and …

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