Novartis

Sarah Barney: Are U.S. drug companies staying in Russia so greedy they’re complicit with Putin’s mass murder?

Maternity hospital in Mariupol, Ukraine, destroyed by Russian invaders on March 9.

From Kaiser Health News

U.S. drug companies that keep doing business in Russia are “being misguided at best, cynical in the medium case, and outright deplorably misleading and deceptive.’’ 

Jeffrey Sonnenfeld, a professor at the Yale School of Management

Even as the war in Ukraine has prompted an exodus of international companies — from fast-food chains and oil producers to luxury retailers — from Russia, U.S. and global drug companies said they would continue manufacturing and selling their products there.

Airlines, automakers, banks, and technology giants — at least 320 companies by one count — are among the businesses curtailing operations or making high-profile exits from Russia as its invasion of Ukraine intensifies. McDonald’s, Starbucks and Coca-Cola announced a pause in sales this week.

But drugmakers, medical device manufacturers, and health care companies, which are exempted from U.S. and European sanctions, said Russians need access to medicines and medical equipment and contend that international humanitarian law requires they keep supply chains open.

“As a health care company, we have an important purpose, which is why at this time we continue to serve people in all countries in which we operate who depend on us for essential products, some life-sustaining,” said Scott Stoffel, divisional vice president for Illinois-based Abbott Laboratories, which manufactures and sells medicines in Russia for oncology, women’s health, pancreatic insufficiency, and liver health.

Johnson & Johnson — which has corporate offices in Moscow, Novosibirsk, St. Petersburg, and Yekaterinburg — said in a statement, “We remain committed to providing essential health products to those in need in Ukraine, Russia, and the region, in compliance with current sanctions and while adapting to the rapidly changing situation on the ground.”

The reluctance of drugmakers to pause operations in Russia is being met with a growing chorus of criticism.

Pharmaceutical companies that say they must continue to manufacture drugs in Russia for humanitarian reasons are “being misguided at best, cynical in the medium case, and outright deplorably misleading and deceptive,” said Jeffrey Sonnenfeld, a professor at the Yale School of Management who is tracking which companies have curtailed operations in Russia. He noted that banks and technology companies also provide essential services.

“Russians are put in a tragic position of unearned suffering. If we continue to make life palatable for them, then we are continuing to support the regime,” Sonnenfeld said. “These drug companies will be seen as complicit with the most vicious operation on the planet. Instead of protecting life, they are going to be seen as destroying life. The goal here is to show that Putin is not in control of all sectors of the economy.”

U.S. pharmaceutical and medical companies have operated in Russia for decades, and many ramped up operations after Russia invaded and annexed Crimea in 2014, navigating the fraught relationship between the U.S. and Russia amid sanctions. In 2010, Vladimir Putin, then Russian prime minister, announced an ambitious national plan for the Russian pharmaceutical industry that would be a pillar in his efforts to reestablish his country as an influential superpower and wean the country off Western pharmaceutical imports. Under the plan, called “Pharma-2020” and “Pharma-2030,” the government required Western pharmaceutical companies eager to sell to Russia’s growing middle class to locate production inside the country.

Pfizer, Johnson & Johnson, Novartis, and Abbott are among the drugmakers that manufacture pharmaceutical drugs at facilities in St. Petersburg and elsewhere in the country and typically sell those drugs as branded generics or under Russian brands.

Pfizer’s CEO, Albert Bourla, said on CBS that the giant drugmaker is not going to make further investments in Russia, but that it will not cut ties with Russia, as multinational companies in other industries are doing.

Pharmaceutical manufacturing plants in Kaluga, a major manufacturing center for Volkswagen and Volvo southwest of Moscow, have been funded through a partnership between Rusnano, a state-owned venture that promotes the development of high-tech enterprises, and U.S. venture capital firms.

Russia also has sought to position itself as an attractive research market, offering an inexpensive and lax regulatory environment for clinical drug trials. Last year, Pfizer conducted in Russia clinical trials of Paxlovid, its experimental antiviral pill to treat covid-19. Before the invasion began in late February, 3,072 trials were underway in Russia and 503 were underway in Ukraine, according to BioWorld, a reporting hub focused on drug development that features data from Cortellis.

AstraZeneca is the top sponsor of clinical trials in Russia, with 49 trials, followed by a subsidiary of Merck, with 48 trials.

So far, drugmakers’ response to the Ukraine invasion has largely centered on public pledges to donate essential medicines and vaccines to Ukrainian patients and refugees. They’ve also made general comments about the need to keep open the supply of medicines flowing within Russia.

Abbott has pledged $2 million to support humanitarian efforts in Ukraine, and Pfizer, based in New York, said it has supplied $1 million in humanitarian grants. Swiss drug maker Novartis said it was expanding humanitarian efforts in Ukraine and working to “ensure the continued supply of our medicines in Ukraine.”

But no major pharmaceutical or medical device maker has announced plans to shutter manufacturing plants or halt sales inside Russia.

In an open letter, hundreds of leaders of mainly smaller biotechnology companies have called on industry members to cease business activities in Russia, including “investment in Russian companies and new investment within the borders of Russia,” and to halt trade and collaboration with Russian companies, except for supplying food and medicines. How many of the signatories have business operations in Russia was unclear.

Ulrich Neumann, director for market access at Janssen, a Johnson & Johnson company, was among those who signed the letter, but whether he was speaking for the company was unclear. In its own statement posted on social media, the company said it’s “committed to providing access to our essential medical products in the countries where we operate, in compliance with current international sanctions.”

GlaxoSmithKline, headquartered in the United Kingdom, said in a statement that it’s stopping all advertising in Russia and will not enter into contracts that “directly support the Russian administration or military.” But the company said that as a “supplier of needed medicines, vaccines and everyday health products, we have a responsibility to do all we can to make them available. For this reason, we will continue to supply our products to the people of Russia, while we can.”

Nell Minow, vice chair of ValueEdge Advisors, an investment consulting firm, noted that drug companies have been treated differently than other industries during previous global conflicts. For example, some corporate ethicists advised against pharmaceutical companies’ total divestment from South Africa’s apartheid regime to ensure essential medicines flowed to the country.

“There is a difference between a hamburger and a pill,” Minow said. Companies should strongly condemn Russia’s actions, she said, but unless the U.S. enters directly into a war with Russia, companies that make essential medicines and health care products should continue to operate. Before U.S. involvement in World War II, she added, there were “some American companies that did business with Germany until the last minute.”

Sarah Varney is a Kaiser Health News reporter; KHN senior correspondent Arthur Allen contributed to this article.


Llewellyn King: The medical-research crisis

  The Bermuda Triangle is where aircraft, ships and people disappear. That is as may be.

Another less-mysterious triangle swallows good ideas and great science, and leaves people vulnerable. It is the triangle that is formed by the way we conduct medical research in the United States, the role of the pharmaceutical industry in that research and the public’s perception, driven by political ideology, of how it works.

The theory is that the private sector does research, and everything else, better than the government. But the truth is the basic research that has put the United States ahead of the rest of the world -- as a laboratory for world-changing science and medicine -- has been funded by the government.

It is the government that puts social need ahead of anticipated profit. It is the government that puts money into obscure but important research. And it is the government which will keep the United States in the forefront of discovery in science and medicine.

It is no good for politicians to rant about the importance of children taking more and harder math and science courses. Before they open their mouths, they should look at the indifferent way in which we treat mathematicians and scientists. We treat them as little better than day laborers, called on to do work ordered by government, then laid off as political chiefs change their minds.

A career in research, whether in physical sciences (such as astrophysics) or medical sciences (such as cell biology) is a life of insecurity. Had we put the dollars behind Ebola research years ago (the disease was first identified in 1976), we would not now be watching what may become a tsunami of death raging across Africa, and possibly the world. Shame.

Any gifted young person going into research nowadays needs career counseling. They will be expected to give their all, with poor pay and long hours, to serve mankind. Then the funding will be cut or the research grant will not be renewed, and they will be on the fast track from idealism to joblessness.

You may have heard of the celebrated virus hunter, W. Ian Lipkin, M.D., director of the Center for Infection and Immunity at Columbia University's Mailman School of Public Health, because he has been called on for expertise in Ebola. What you might not know is that Lipkin is so starved of funding that he has had to use crowd-funding to support his research on Myalgic Encephalomyelitis, the ghastly disease commonly known as Chronic Fatigue Syndrome (CFS).

Nothing is more damaging to research than funding instability. The universities and many research laboratories -- including those run by the government -- operate like concertinas. They expand and contract according the whim of Congress, not the needs of science, public health or American leadership.

Industry is not the answer to absent government. Pharmaceutical companies spend an astonishing amount -- up to $3 billion -- to bring a new drug to market. But traditionally agencies of government, particularly the National Institutes of Health, seed research where the social need is apparent or where the discoveries, like an Ebola treatment, are defensive. Big Pharma often comes in later, as the developer of a drug, not the discoverer. Discovery starts with lowly dedication.

Sometimes the cost and risk initially is just too high for private institutions to take a therapy from the laboratory to the doctor’s office. Most drugs, contrary to legend, begin in the research hospitals, the universities and in government laboratories long before drug companies develop manufacturing techniques and shoulder the giant cost of clinical trials.

Developing new drugs has become too expensive for the private sector, according to a recent article in Nature. The magazine says the drug pipeline for new antibiotics, so vital in fighting infectious disease, has collapsed as Big Pharma has withdrawn. The latest to leave is Novartis, which has ceased work on its tuberculosis drug and handed it over to a charity coalition.

Government funding for medical research is now at a critical stage. It has flat-lined since 2000, as medical costs have ballooned. Also, congressional sequestration has hit hard.

Stop-and-start funding breaks careers, destroys institutional knowledge and sets the world back on its scientific heels. That is to say nothing of the sick, like those with Ebola or CFS, who lie in their beds waiting for someone to do something.

<em> Llewellyn King is executive producer and host of <em>White House Chronicle</em>, on PBS. His e-mail is lking@kingpublishing.com.</em>