Friday, November 04, 2005


I just read this very interesting article in The Guardian.
It essentially argues that because Generics companies are always threatening to break patents, Big Pharmaceutical companies haven't bothered to develop new drugs. It uses a quote from one of those bastions of intellectual property protection, Bill Gates.
"When you think about developing world health, the price of drugs is not the key issue. It's the drugs that aren't being invented, and part of the reason they aren't being invented is that [if] the pharmaceutical companies work in these areas, then they're expected to give the drugs away. So they never go into the area, and so what we have to do is create the right incentives for the pharmaceutical companies so there is willingness to do differential pricing. Where government money, philanthropic money comes in and takes some of the risk, then we get the breakthroughs."
The truth is that the Bill and Melinda Gates Foundation is possibly the best thing that has happened to third-world countries in a long time, because there is almost no development in the drugs that are killing people. Instead, pharmaceutical companies find themselves developing drugs that satisfy the sexual urges of old white men. Almost two-thirds of the global drugs market is in North America, in terms of value. Imagine that, 300 million people, five percent of the world population consumes two-thirds of the global volume in non-generic drugs (some $50-odd billion a year), add in Western Europe and Japan and the number crosses nearly 85-90%. Some 750-800 million people that is.
This is not software where five hundred geeky college students can work together to create a tremendous new piece of 'free' software. This is something that requires specialists with years of training working in specialised facilities developing new molecules. Now then these drugs have be tested for years, one in three drugs fails in testing, and after the Vioxx fiasco, there are those who believe that testing norms are too lax. Yet, almost no drugs are created to combat Malaria or for that matter, there has been little work on AIDS of late, because I'm sure Western companies are scared that a Cipla or Sun would want to break their patent in a jiffy, supposedly for the poor of South-Asia and Africa.That is what is happing with Roche and Tamiflu, the problem is that Tamiflu requires the 'Star Anise' flower, and that is rather expensive and rare, so the chest-beating might be just that, because Roche has been buying up almost the entire supply of the product (much to the chargin of Chinese chefs) to ensure that they can make enough of the drug in case of an outbreak.
But, its only one or two Indian generics companies (notably Ranbaxy and Dr Reddy's) that are doing any work with development, and strangely enough, many of the drugs they are developing are for Diabetics and Heart Diseases, two diseases that plague this country. As time moves forward I am sure that companies in India will grow to value the importance of intellectual property protection. Yet, Western pharmaceutical companies have to realise that stupid 'patent-extender' policies that they indulge in is not the way to go forward. I am sure that only when more drugs get developed will prices overall for patented drugs actually go down. Instead of threatening to break patents, governments should help in creating more bio-specialists who can develop more medicines. India produces thousands of Doctors but very few people capable of developing medicines - most of them like my cousin sis, run off to good ol' Amreeka because, heck, they do have better facilities. But, India can become a global leader in bio-development, if only our Government were to do a little bit - like setting up a nodal body or institute.
Anyway, I know this sounds very improper in sphere surrounded by socialists or rather anti-capitalists, who believe that everything is for the common good, but the Soviets never developed anything impressive drug-wise did they? Sadly enough, intellectual property protection is what will save the worlds poor not a lack of it!


thalassa_mikra said...

K, I wonder: even if the major drug companies are guaranteed their intellectual property rights in the third world markets, would they stil go ahead and research diseases that mostly affect poor countries?

This is more than intellectual property, it is also about returns on investment. The resources required to develop a new drug are so immense, developing one for diseases like malaria would never be justified by the returns.

However, when it comes to AIDS, that's where intellectual property questions become important, because the drugs do exist, they're merely not accessible to sub-Saharan Africa.

sudeep said...

Consider this issue from a different angle. Today, drugs are not priced on their manufacturing or RnD costs. They are priced at "what the market can bear".

What does this phrase actually translate to ? It translates to usurious prices in a market that has absolutely no price elasticity. You *need* that medicine no matter what.. It translates to people selling their homes so that they can get a few years supply of medicine that they need on a recurring basis.

I know that everything is governed by the iron laws of economics, but the medical field is fast deteriorating into a scenario where only the rich can afford to buy health care. And I am talking American rich, not Indian !