Pharmaceuticals and HIV/AIDS
- 1. Pharmaceutical Companies and HIV/AIDSAnna Guyton2007
- 2. What about generic drugs? TRIPs Trade Related Aspects of Intellectual PropertyUruguay Round of trade negotiations (1994)A single standard for intellectual property law on the worldraise the price of drugs to levels that were unaffordable in much of the worldBig drug companies want TRIPs to make it more difficult for generics to be producedProfits = keeping as many generic drugs as possible off the market as long as possible
- 3. Why keep generics off the market?Higher prices = more research? Not reallyMore $ spent on advertising than on researchMore research on lifestyle drugs than for diseaseLittle research done on disease affecting LDCsBasic research funded by governmentCompanies make huge profit!
- 4. Why keep generics off the market? Allowing trade in generic drugs means low drug prices elsewhere will spoil domestic marketAlready huge disparities (Europe); problem limitedPharmaceuticals industry very regulatedMost of the cost paid by insurance companies and governmentsDifficult to get drugs outside domestic economy
- 5. Counterargument Providing LDCs with lifesaving drugs will:Have a negligible effect on drug companies investments in the diseases that affect LDCsHave a negligible effect on drug companies revenue (little revenue to begin withunder 2%)Save livesIncrease productivity and economic efficiency in LDCs
- 6. Knowledge and InnovationKnowledge is a public goodRestricting knowledge = inefficiency and a lower pace of innovationRestricting knowledge in the case of AIDS medications = deathThe marvels of modern medicine are truly astonishing; but the gap between the successes of the sciences in finding cures and the failures of the social sciences in finding ways of ensuring that the benefits of that knowledge are made available to all is equally astonishing. Joseph Stiglitz
- 7. Solution #1Advanced industrial countries provide drugs or at least subsidize themCriticism: free-riding on industrial countriesResponse: yes, and they shouldNo additional cost for developed countries (knowledge is a public good)Benefits to developing countries enormous
- 8. Solution #2Compulsory licensing (when there is an urgent need to broaden access to technology or medicines)Right recognized globally2001 Anthrax scare and CiproFirms can produce a drug and sell it at just above costEfficiency = lots of money saved
- 9. Solution #3A market-based incentive: a guarantee fundDeveloped world governments make a purchase guaranteeCriticism: still monopoly problem and creates a winner-takes-all system
- 10. Solution #4 Innovation fund (prize system)Really important discoveries get really big rewardsAllows for generic productionBenefits developing countries (low-cost drugs)Benefits developed countries (improved knowledge)Bonus: developed-country governments able to aid the developing world without worrying whether the money will be well spent.
Editor's Notes
- #4: lifestyle drugs (e.g., drugs for hair growth or male impotence)
- #6: African sales represent under 2 percent of the totalbecause the people are simply too poor to buy expensive drugs; and they spend little on the diseases that most affect developing countries.
- #9: 2001 anthrax scare, the U.S. government threatened to force the drug company Bayer to allow others to produce Cipro, the antibiotic most effective against anthrax at that time.For instance, Brazils state-run drug company, Farmanguinhos, estimates that in can produce the AIDS medicine Kaletra for a fraction of what Abbott charges in the United States. With more than 600,000 HIV-positive patients in the country, at one time, it was estimated that a generic Kaletra would save Brazil some $55 million off even the highly discounted price at which Abbott was then selling the drug to Brazil.
- #11: The prize fund concept has been championed by James Love and the Consumer Project on Technology. Congressman Bernard Sanders introduced HR 417, the Medical Innovation Prize Act of 2005, to implement the idea.)