Cancer cure in private hands

November 13, 1996

By Jennifer Thompson

At the beginning of October, the former publicly owned Commonwealth Serum Laboratories, now CSL Limited, announced a breakthrough discovery — a therapeutic vaccine against a bacterium which causes peptic ulcers and sometimes stomach cancer. CSL Ltd's managing director predicted the vaccine could be a large revenue earner.

The 1995 privatisation of CSL by the federal Labor government was a scandal on its own, as the Australian Institute's Clive Hamilton and John Quiggan revealed at the time in their discussion paper The Privatisation of CSL. They documented how CSL — Australia's principal supplier of vaccines and antivenenes since 1916 and sole manufacturer of blood products — had been sold for $299 million only a year after installing a state-of-the-art blood plasma fractionation facility for $209 million plus $42 million commissioning costs.

To help the sale along, the government entered a new 10-year contract to buy blood products for an annual fee more than twice that of previous years. Additionally, the new owners were indemnified against AIDS-related and other claims from past blood products.

According to Quiggan and Hamilton, CSL had been one of the financially strongest performing public companies while maintaining low-cost blood products and a community service obligation. Its natural monopoly — there were no other operators because of the nature of the blood products market — was handed to a private operator.

At the time of the vaccine's discovery, CSL and its public sector research partner, the University of NSW, had worked together on cracking the offending bacterium, Heliobacter pylori (H. pylori), for four years. Now CSL and the giant Swiss pharmaceutical company Astra AB, which is working with CSL on developing the vaccine, stand to gain immensely from the discovery.

According to Adrian Lee, a UNSW microbiology professor involved, on average 25% of the population carries the bacteria, 10% develop peptic ulcers as a result, and 1% then develop gastric cancer. "In world terms, gastric cancer caused by H. pylori is probably the second largest cancer in the world, so we are literally talking about millions of people", he said.

CSL, which will retain the manufacturing rights, has therefore, thanks to the Labor Party, received an even bigger prize than was first understood. The immense "market" for relief and prevention of peptic ulcers and stomach cancer now rests in the hands of a company that is now motivated primarily by profit.

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