Pharma Wars: India vs. the West
Millions of people in the developing world
rely directly on cheap, generic pharmaceuticals as their only source of
affordable medicine. A majority of these generics are produced in India, often
referred to as the “pharmacy for the developing world” because of their unique
patent laws. However, recent market intervention from the United States and the
European Union threatens India’s ability to produce these drugs, and thus, the
availability of medicine in the developing world. Let’s take a look as to why these
drugs are overpriced, and what Western intervention on the pharmaceutical
market for developing countries means for the future of Big Pharma.
Why
are drugs so expensive?
Because of patents and cost of production. Or
at least that is what the drug companies say. For years, drug companies have
been using $1 billion as the industry standard for the cost of production of a
new medication. A recent Forbes study found that the actual cost of production
for every successful drug brought to the market is about $5 billion, because a
vast majority of drugs fail to make it past clinical trials and FDA approval.
Many CEOs of these pharmaceutical companies
use these numbers the justify why they need to set prices so high in order to
run a successful business. Novartis CEO Joseph Jimenez recently discussed how
the cost of production factors into pricing the medicine.
“Drug
pricing is a very complicated topic because we invest in high-risk activity.
This is a very high-risk activity when you’re discovering and developing new
drugs. When you look at the cost of development, it continues to go up and up.
So when we price a drug, we price it based on the value it will bring into that
marketplace, and also how its price compares to the other therapies currently
on the market,” Jimenez said in an interview with the Washington Post.
While it seems justifiable that firms have to
set prices high in order to cover the massive cost of drug production, the main
problem arises with the elimination of competition.
For a most patented drug, the expiration of
their patent which is usually 20 years after it is issued allows other drug
companies, especially companies specializing in generics - copies of brand name
drugs that have the exact same effect - in India, to begin production. This
influx in the amount of the drug available naturally drives down the price of
the drug, making it more readily available.
Pharmaceutical companies, however, engage in
the process of “evergreening” their patents, by which they modify an existing
drug just enough so as to not change its chemical interactions, but still
enough to extend a patent on it. This effectively establishes a monopoly of the
production of this drug and creates difficulties for foreign generics companies
in joining the market.
India’s
growing pharmaceutical power
The reason India has emerged as the leading
generic powerhouse for the developing world is that India’s patent law does not
recognize evergreening as a legitimate practice. Pharmaceutical companies,
however, argue that India’s total disregard for updates on existing drugs is
dangerous, because changes made to the drugs are necessary for proper
treatment.
Paul Herring, chair of the board of the
Novartis Institute for Tropical Diseases in Singapore, addressed the
difficulties in determining the patent extensions that are legitimate and those
that are simply evergreening attempts.
“I
agree that if it doesn’t provide the slightest advantage to patients, it does
not deserve protection. You can’t merely take a molecule and paint it a
different color. But anything you do to a molecule as small as it could be, if
it results in a clear medical advantage for patients, then it should be
protected,” Herring said in a study for the National Center of
Biotechnology Information.
India’s resilience to foreign pressure to
change their patents policies has caused United States and European based
pharmaceutical companies to pressure Free Trade Agreements like the
Trans-Pacific Partnership to impose regulations on India and to enact harsher
intellectual property regulations.
The implementation of such restrictions would
be devastating to relief organizations like Doctors Without Borders (MSF). MSF
relies on India generics for more than 80 percent of the medicine they use for
HIV treatment. The presence of generics has reduced the price of HIV treatment
from $10,000 to $100 in the past 10 years. Furthermore, they rely vastly on the
availability of these generics for treatments of other diseases and vaccines.
MSF encourages the Indian government to resist foreign pressure and calls for
other countries to fight patent evergreening.
With many pharmaceutical companies currently
in legal battles with the Indian High Court over patent legality, the balance
hangs in the air over the availability of affordable generics to developing
nations.
Experiencing the effects of these decisions
first-hand, MSF pharmacist Janice Lee described the situation if low-cost
generics became unavailable.
“Patients
would die! When you remember that there is already a funding crisis today that
threatens countries’ ability to put more patients on treatment, then having
medicines become more expensive in the future is a very frightening prospect,”
said Lee in an interview with MSF.
Comments
Post a Comment