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© Karl Simpson
Pharmaceuticals for the developing world - some sense?
At a time when pharmaceutical companies are spending more than ever before on research and development, the highly respected UK-based charity Oxfam has taken up arms against the industry.
The nature of the attack is straightforward. Industry is abusing its monopoly position on patent-protected drugs to generate unfair profits and prevent the world's poorest citizens from having access to reasonably priced medications.
Is this attack justified? It is certainly disturbing, for Oxfam has not previously been noted for its unreasonableness.
The reality is that both industry and the charities sector are feeling increasing exasperation, which probably has more to do with inadequate policing of international trade accords than with "heartless capitalists" or "unrealistic do-gooders". Industry has no fundamental problem supplying drugs on a cost plus basis. The practice has been well established with the World Health Organization. Equally, industry has made many philanthropic contributions of drugs and vaccines in times of crisis.
HIV is the issue today
Turning again to the fundamentals. The products targeted by Oxfam's protests are patent-protected drugs. Generally speaking such drugs have been available for no more than 10 years. The practical value of patent lifetimes of about 20 years is reduced by half once testing, clinical trials and approval procedures are completed. In the group of such patent-protected drugs it is primarily HIV therapies which are singled out for attention.
HIV is a global menace which is ripping the heart out of any chance for sub-Saharan Africa to develop any semblance of international economic competitiveness. Even South Africa is struggling to cope with a challenge which may implicate 10% of its population.
HIV is a special case which must be tackled in a manner which recognises the fast response of the pharmaceutical industry, while offering reasonably priced treatment and protection to the nearly 100 million infected individuals and the billions at risk.
Social security and health insurance - a developed world luxury?
For the public sector in the developed world, the presence of a highly developed and rapidly responding pharmaceutical industry has led to a careless attitude in this era of globalisation. The goose (pharmaceutical industry) that lays golden eggs (drugs) needs to be protected from the wolf (threat of grey imports, illegal manufacture). Because citizens of the developed world pay significant sums for social security or health insurance they can afford to meet the challenge of paying for expensive, patent-protected drugs. However, sweeping generalisations do not help us.
There is nothing wrong with legally manufactured generic drugs. That is, once a patent has expired, any company that can manufacture to accepted standards (EMEA, FDA approval etc.) can sell its products in markets where the due approval process has been negotiated. Most of the big pharmaceutical companies are themselves producers of generic medicines. Generic medicines are sold cheaply.
Oxfam's policy adviser, Sophia Tickell and her senior colleagues must address the issues more fairly. and ...
Industry must be more transparent in its response.
Industry responds to challenges of excessive pricing by noting that the 10 year (in real terms) monopoly on a patent medicine is necessary to recuperate R&D costs associated with all the blind alleys that contributed to the development of the safe and innovative product on the market. If this is indeed the case, it should not prove an embarrassment to produce audited figures which substantiate this argument. If such figures cannot be produced, there is a case to answer for unfair pricing - and not just in developing economies. Marketing is a necessary part of product development costs and some critics have unfairly singled out industry's expense in marketing and sales for special attention. Not only does industry not get help or subventions from government, but also there are competitors out there who have products which do a similar job.
Sir Richard Sykes of GlaxoSmithKline, in speaking to the BBC has, I believe, contributed to confusion, rather than protecting the position of his company. By attacking "pirates" and generics he was ignoring legitimate grievances and attacking the legitimate generics industry.
He cited the example of India, where an absence of patent protection means that local companies can legally manufacture and distribute copies of drugs protected elsewhere by patents. However, Indian companies cannot legally export such drugs to markets where international patent laws are respected. India manufactures anti-HIV drugs, but this does not appear to result in poor people receiving treatment.
The reality is that for the world's poorest people, living in subsistence and barter-based economies, anything that has to paid with money is expensive - prohibitively expensive. India's generics companies target primarily the urban working class and middle class, those who receive a salary for work done.
Oxfam is right to say that generic products are a boon to developing nations. Oxfam is wrong to promote the illegal copying of patent-protected drugs. Will Oxfam next say that it is right for developing nations to pirate music? Where does piracy stop? Can I sell music in India under the Oxfam label?
Work together to solve a shared problem
As I said at the beginning, Oxfam and industry, together with other agencies, must address the issue - which is not about illegal generic copies. Public sector authorities are failing to respond to global challenges while crowing about the importance of economic globalisation.
This should be done at the lowest possible cost to the poor - who as it is rightly pointed out, are having to decide between competing essentials, food, medicines, housing or education. If we are serious about globalisation those in most need should have cheap (in local terms) or free access to essential medicines.
HIV/AIDS is a terrible challenge because effective treatment exists, but even in generic form it is frighteningly expensive on an annual basis. Who can afford $1000 per annum for therapy (or $15,000 if not generic)?
I believe that international agencies and industry share some measure of blame for failing to promote the development of effective vaccines. Far more is spent on developing profitable HIV treatments (generic and patent-protected) than on HIV vaccines (vaccines are perceived to be low-profit medicines).
Let us not confuse the issues
Good generic analogues for diarrhoea drugs exist now and it is wrong to suggest that pharmaceutical industries are preventing access to such therapies. There is no legal reason for generics companies in America, Europe, Africa or Asia not to supply cheap and effective diarrhoea drugs that are patent expired.
Any new vaccine or treatment for HIV, tuberculosis or malaria is probably going to be patented. The world desperately needs these NEW (and therefore patented) medicines. The high cost of development must be borne by industry, as the not for profit sector does not seem to be making real progress in finding solutions.
The issue is: how can those doing the work earn a fair reward while at the same time assuring access for those who cannot afford to pay for even the basic cost of production?
An enlightened pharmaceutical industry has traditionally used relatively high prices (cost plus operating profit) in the developed world to sustain low prices (at cost manufacturing) in the developing world. There has been a degree of complicity from developed world regulatory authorities for the pricing of approved drugs in many countries is regulated by government agencies.
Those developed world governments, that insist on downward pricing pressure for HIV and other patented therapies in their markets, are compromising the ability of drug companies to reduce prices in the developing world.
There are no easy answers, but naive position taking by industry or charities does not help us to make real progress. We all know what is needed.
A time for enlightened dialogue.