Key to drug profits : Merck has turned its wonder drug for cancer – Keytruda into a blockbuster – and priced out patients worldwide, shows report

Blitz Bureau

NEW DELHI: Pharmaceutical companies across the world spend billions of dollars in research every year trying to fathom the mysteries behind different types of malaise. Five years back when humanity was on the brink of unprecedented threat from a new virus, it was these pharma companies which created a vaccine to fight the Covid virus. Humanity survived.

Would that be termed a victory for pharma companies? Yes. Would anyone grudge the profits they made in the process? Probably not. Because of the suddenness and the unparalleled scale of the threat.

The Cancer Calculus, a yearlong investigation by ICIJ and 47 media partners in 37 countries, is based on hundreds of interviews with oncologists, cancer patients and their families, patent experts, regulators, pharmaceutical industry insiders and others, as well as exclusive pricing data and patent analyses and thousands of pages of company presentations, patent board documents, lawsuits and corporate and regulatory records.

Yet, when drug companies start prioritising profits before saving lives, it becomes a contentious issue for all.
Recently, an year-long investigation by the International Consortium of Investigative Journalists (ICIJ) has brought to light how one of the world’s largest drug makers, Merck, deployed tactics to both inflate the volume of prescriptions and keep the price high through lobbying and by seeking to delay cheaper versions of the drug from reaching hundreds of thousands of cancer patients in the coming years.

The drug in question is Keytruda and it is used to treat cancer. This rapidly spreading disease all over the world is neither caused by a bacteria nor a virus and is the result of the body’s own immune response system which gets triggered by unusual and rogue multiplication of cells.

There is no known cure for cancer so far but Keytruda is proving to be exceptionally effective in recent trials. The only problem is its steep cost. Governments around the world are spending growing amounts on Keytruda, with steep prices straining government budgets, even in wealthy countries.

List prices of Keytruda range from about $80,000 for a year’s treatment in Germany to $208,000 in the US, $93,000 in Lebanon to about $130,000 in Colombia, $65,000 in South Africa to $116,000 in Croatia.

Cancer is a growing public health threat, responsible for nearly 1 in 6 deaths worldwide. Projections show cancer rates rising particularly in lower-income countries where Keytruda remains largely unaffordable. The death toll is forecast to surge by 75 per cent to 18.6 million in 2050, with the cost of some new therapies already exceeding $1 million per patient.

Living with or beyond a cancer diagnosis brings about profound costs — physical, emotional and financial. Some patients are so desperate for Keytruda that they turn to the black market to get the drug for less money, though they don’t know if it’s the drug or a counterfeit version.

Other patients seeking Keytruda face harrowing bureaucratic obstacles and end up suing their governments for access to the drug; not all of them survive long enough to learn the court’s ruling.

Reporting by ICIJ’s media partners across five continents paints a picture of deep and dangerous inequity:
In India, families seeking Keytruda rely on a frayed safety net — poor insurance coverage, Merck’s patient assistance programme and out-of-pocket funds. In Brazil, the world’s seventh most populous country, most cancer patients can’t afford Keytruda, and thousands turn to the courts to get it.

In South Africa, where the vast majority of citizens are not able to afford private health care and the typical monthly income for a household is under $500, a single dose of Keytruda costs roughly 10 times as much: $4,904.

In the United Kingdom, research shows that Keytruda tops the list of drugs for which the cash-strapped National Health Service (NHS) overpays. For some lung cancer patients, the NHS has been paying five times as much for Keytruda than it should, according to cost-effectiveness data from the University of York shared with the Bureau of Investigative Journalism, ICIJ’s UK partner.

And in Guatemala, one doctor dealing with limited access had to choose two among his many patients to receive the drug.

The Cancer Calculus, a yearlong investigation by ICIJ and 47 media partners in 37 countries, is based on hundreds of interviews with oncologists, cancer patients and their families, patent experts, regulators, pharmaceutical industry insiders and others, as well as exclusive pricing data and patent analyses and thousands of pages of company presentations, patent board documents, lawsuits and corporate and regulatory records.

ICIJ’s media partners also unearthed public health records, meeting minutes, pricing and reimbursement data, and other documents through 1,018 public records requests in 27 countries.

The investigation explores how Merck, known as MSD outside the US and Canada, employed aggressive but legal tactics to increase its Keytruda revenues and make the drug one of the bestselling ever — at the expense of some patients.

The project’s findings

Merck and other cancer research businesses exploited the patent system to build a fortress around Keytruda of at least 1,212 patent applications in 53 countries, regions and territories. This stream of follow-on patents could help Merck stifle competition and maintain high prices — and billions of dollars in revenue — for 14 years after its original patents expire in 2028.

Merck has promoted a higher dosage of Keytruda than is necessary, some leading cancer researchers say. And that dosage could cost the world an estimated $5 billion just for lung cancer patients by 2040, according to researchers at the World Health Organisation (WHO).

The drug giant has taken advantage of industry regulatory shortcuts, helped orchestrate a costly global lobbying campaign and operated with a gross lack of transparency in pricing. It has distributed tens of millions of dollars in the US in consulting fees, travel costs and other Keytruda-related payments to doctors and health-care professionals.

All of these strategies produce revenue for Merck, with about 60 per cent of its Keytruda sales in the US.

An ICIJ analysis shows that Merck has generated about $163 billion in Keytruda sales since 2014, reaching more than 3 million people. The company funnelled nearly $75 billion in dividends to shareholders and $43 billion into share buybacks while reducing its US taxes by recording profits in lower-tax jurisdictions.

In its reporting, the ICIJ team found that Merck’s conduct was typical of the pharmaceutical industry — and that the company was not an outlier in terms of its overall business practices. But the incredible growth of and interest in Keytruda could be further pushing what is acceptable by industry standards.

Peter Maybarduk, director of the access to medicines group at Public Citizen, a non-profit consumer advocacy organisation based in Washington, DC, said the pharmaceutical industry has created a system of global rules to protect drug makers and ensure wealthy governments protect them.

“There is a whole architecture underpinning Keytruda and every patented drug where the US government and Europe go to bat for the industry and its rules,” he said.

That system is marked by big questions about how the practices of Merck and the other big pharma companies affect the future of our collective wellness. How that plays out is often the story of putting profits over patients. For the world’s haves and have-nots, it can also be the story of who lives and who dies.

Miracle beginnings of CEO

Rob Davis, 59, the Chief Executive Officer of Merck, grew up in Franklin, Ind., a farming town 20 miles south of Indianapolis, in the shadow of Eli Lilly, one of the world’s largest drug companies. He would work at Lilly for 14 years while studying for his business and law degrees.

When his father, Morris, an auditor, was fighting cancer, Davis went for a job interview with Merck’s then-CEO Ken Frazier. At the end of their meeting, Frazier directed Davis toward an image by the door. He wanted to show him a PowerPoint slide taped to the wall, Davis said in a 2024 interview at Northwestern University’s law school. It displayed different tumour types and their responses to Keytruda.

“This is why you need to come to Merck,” Frazier told him. “Because we’re going to make a real difference.” Davis joined Merck as chief financial officer in the spring of 2014, a few months before his father died of lung cancer at age 82. “I wonder what would have happened if that drug would have been available 10 years ago when my father was going through his battle,” he said in the interview.

As Davis settled into the new job, Merck was getting ready to launch Keytruda to treat melanoma, the deadliest form of skin cancer. Projected US sticker price: about $12,500 a month, or $150,000 a year.

When it emerged, it revolutionised cancer treatment. In a class of immunotherapy drugs called immune checkpoint inhibitors, Keytruda shifted the focus from directly attacking tumours to empowering the immune system to fight them.

Now approved in the US to treat 19 types of tumours, including of the skin, lung, breast and colon, it has become a lifeline for millions, turning previously terminal forms of advanced cancer into manageable diseases and increasing survival rates for others with cancers that are hard to treat — sometimes for months, sometimes for years.

What is Keytruda?

Keytruda, known generically as pembrolizumab, is a type of immunotherapy that restores the body’s ability to fight cancer cells. Unlike chemotherapy, which targets rapidly dividing cancer cells, Keytruda disrupts a process that allows some cancers to circumvent the immune system.

A new analysis by Public Eye, a Swiss-based non-profit advocating for corporate accountability, estimates Keytruda’s R&D costs at $1.9 billion — 1 per cent of the drug’s global revenue since its launch in 2014.

Adding the cost of failed clinical trials, the R&D estimate is $4.8 billion, or 3 per cent of the drug’s revenue. Patrick Durisch, Public Eye’s pharma specialist, said he based his numbers on a review of Keytruda clinical trials and their average costs, which are the largest share of R&D expenses.

Rob Davis’ figures are “absolutely unverifiable,” Durisch told ICIJ. “Merck could throw any figure they want — as high as possible to justify the exorbitant price tag.”

“The share of R&D costs in relation to the price of a vial is very tiny and they have long been recouped,” he added. “The price is thus excessively high, not to cover the R&D costs or hedge risks but to make maximum profits.”

Nathan Cherny, an oncologist and director of cancer pain and palliative medicine at Shaare Zedek Medical Center in Israel, said a “perfect storm” led to the high cost of Keytruda.

It began in 2003 when the US Congress passed a “non-interference” clause as part of the Medicare law, requiring the government to go along with manufacturers’ list prices for new drugs without any price negotiations.

Although the clause barred the federal government from negotiating prices, its supporters framed it as a reinforcement — not a suspension — of market forces by shifting negotiating power to private plans rather than the government.

“It was a suspension of market forces,” Cherny told ICIJ. And its impact was felt worldwide.

The Carter effect

The Keytruda promotion campaign was in its second year when an extraordinary development led to a public relations bonanza. In 2015, Jimmy Carter’s doctors used Keytruda successfully to treat the former US president’s lethal skin cancer, which had spread to his liver and brain when he was 91. Patients clamoured for “the president’s drug.” And Carter lived to 100.

For Keytruda’s business plan, Merck relied on strategies straight out of a pharma playbook that took hold in the United States and spread internationally. It used taxpayer-funded research, confidential pricing strategies and regulatory shortcuts, which allowed Merck to gain earlier market entry and sell Keytruda at high prices — even before full clinical evidence was available.

Merck defended such practices. “We are explicit that any collaboration or funding involving patient organisations is entirely independent of health technology appraisals and could not be construed as an inducement to prescribe, recommend, or appraise a medicine,” the company said in a statement to ICIJ.