Philip Ngunjiri
The East African (Nairobi)
10 December
2007
THE PHARMACEUTICAL industry is denying medicines to millions of poor people and thus undermining its own future, a new report says.
The report, Investing for Life, by international agency Oxfam looks at the world's top 12 pharmaceutical companies, including their drug pricing policies, their record in developing medicines relevant to poorer countries and their position on protecting intellectual property rights.
The industry is failing to ensure universal access to medicines because it refuses to put the issue at the heart of its business model. As a result, it is failing to capture the full potential of emerging markets touted as the "new frontier" for its business success, says the report.
According to a major pharmaceutical firm, loss of faith in the industry on the part of its investors has so far cost shareholders of pharmaceutical companies $1 trillion.
"The industry is burying its head in the sand. More than 85 per cent of global consumers are underserved or have no access to its medicines. The industry must recognise that charging high prices, quashing generic competition, developing medicines only for those rich enough to pay and fighting for harsher patent laws is an ineffective business strategy for new markets, as much as it is a moral outrage," said Jeremy Hobbs, Oxfam International executive director.
"Investors are worried about the industry's performance. They know that emerging markets are key to the industry's future growth but companies have been responding to the challenge of breaking into emerging markets in an ad-hoc and inconsistent way. This is bad for the industry and bad for poor people who are still facing devastating diseases like malaria, tuberculosis, asthma, cancer, and HIV and Aids without affordable medicines," Mr Hobbs said.
THE REPORT REVEALS SHORTcomings where the industry has failed to implement a systematic and transparent tiered-pricing policy, where prices for all essential medicines are set according to people's ability to pay and continues largely to neglect research and development into diseases that predominantly affect poor people in developing countries.
Other faults cited are the industry's inflexibility in protecting intellectual property, including challenging poor countries in court to stop them using legal public health safeguards and the continuous reliance on donations to get affordable medicines to people, even though this is unsustainable and sometimes counter-productive.
Oxfam notes that some companies are offering differentiated prices but this is extremely limited and mainly for high-profile diseases such as HIV and Aids.
However, these offers are not systematic worldwide and are often still priced well above the means of people living in developing countries. Oxfam says that drug companies often adapt pricing in developing countries solely as a reflection of the publicity that surrounds the disease or the country.
For instance, Abbott Laboratories was selling Kaletra - a second line anti-retroviral medicine - at $2,200 per patient per year in low middle-income countries like Guatemala, where a person's average wage is $2,400 a year. Only until Thailand, in response to the needs of poor HIV patients, issued a compulsory license to reduce the price of Kaletra to $1,000 did Abbott reduce the price of Kaletra worldwide to $1,000 per patient per year.
Also in Thailand, French giant Sanofi-Aventis offered its cardiovascular disease medicine Plavix at a price that was 60 times more expensive than Emcure, the Indian generic version. In March 2007, it responded to Thailand's use of compulsory licensing by offering a 70 per cent reduction.
Further, the report says companies are still not investing enough in researching and developing medicines for diseases that predominantly affect poor people in developing countries. Between 1999 and 2004, there were only three new innovative drugs targeted at diseases affecting the developing world out of 163 medicines brought to the market.
"Even people suffering from tuberculosis - which kills nearly two million people a year - need six months of treatment and the most recent medicine is 30 years old," said Helena Vines-Fiestas, the author of the report.
On the industry's approach to intellectual property rights, Vines-Fiestas continued: "High levels of intellectual property protection have not resulted in new cures for diseases that affect poor people."
DESPITE THIS, THE REPORT notes that the industry continues to insist that the global intellectual property regime does not prevent poor people from accessing affordable medicines. Oxfam says not only is the industry's view narrow-minded and wrong, but that the evidence is overwhelming that generic competition is the most effective and proven method to reduce drug prices.
In recent years, companies have mounted legal challenges or exerted direct pressure to protect their patents against the legitimate use of safeguards in Thailand, Brazil and India.
"These challenges are made at the direct expense of poor people," Oxfam said.