Friday, September 4, 2009

But why should the Pharmaceutical Industry care about the problems of Developing Countries?

Some may argue that criticizing pharmaceutical companies for not spending as much on diseases of the poor is unfair, and that instead it should be up to those nations affected by such problems to invest in appropriate research, that the private corporations cannot be expected to solve all of the world’s problems and that they would also go broke from such activities. Furthermore, they provide jobs which helps create wealth. However, a number of issues, rarely discussed in the mainstream, makes this picture more complicated: The western nations that the pharmaceutical corporations are typically based in have, through colonialism and post-war global economics, fostered an environment that has led to further poverty and dependency of the poorer nations on the first world countries. Post-War policies from the IMF and World Bank have forced most developing countries to cut back on such social expenditure as health and education, in the first place. Many countries have faced downward spirals due to such policies. Furthermore, pharmaceutical companies often tout their strengths of having vast capital resources to do research, bringing benefits to humanity the world over. Unfortunately though, the quest for ever more profits are a hindering factor to what they will research. Tropical disease cures are not profitable for them because most people with such diseases are too poor to afford cures. Of course, as well as addressing the excessive quest for profits, poverty should be addressed too. Yet, poverty is also impacted severely when international trade rules and institutions are influenced by power politics as they so often are: There was a time not long ago when the corporate giants that PhRMA represents were merely the size of nations. Now, after a frenzied two-year period of pharmaceutical mega-mergers, they are behemoths which outweigh entire continents. The combined worth of the world’s top five drug companies is twice the combined GDP of all sub-Saharan Africa and their influence on the rules of world trade is many times stronger because they can bring their wealth to bear directly on the levers of western power. — Julian Borger, Industry that stalks the US corridors of power, the Guardian, February 13 2001. Pharmaceutical companies also make enormous profits that would probably not affect the ability to do some research and production of other more urgent medical problems. “A corporation with stockholders can’t stoke up a laboratory that will focus on Third World diseases, because it will go broke,” says Roy Vagelos, the former head of Merck. “That’s a social problem, and industry shouldn’t be expected to solve it.” Drug companies, however, are hardly struggling to beat back the wolves of bankruptcy. The pharmaceutical sector racks up the largest legal profits of any industry, and it is expected to grow by an average of 16 to 18 percent over the next four years, about three times more than the average for the Fortune 500 … Profits are especially high in the United States, which alone among First World nations does not control drug prices. As a result, prices here are about twice as high as they are in the European Union and nearly four times higher than in Japan. “It’s obvious that some of the industry’s surplus profits could be going into research for tropical diseases,” says a retired drug company executive, who wishes to remain anonymous. “Instead, it’s going to stockholders.” Also to promotion: In 1998, the industry unbuckled $10.8 billion on advertising. And to politics: In 1997, American drug companies spent $74.8 million to lobby the federal government, more than any other industry; last year [1998] they spent nearly $12 million on campaign contributions. — Ken Silverstein, Millions for Viagra. Pennies for Diseases of the Poor, the Nation, July 19, 1999 And when nations and companies actually do try to develop cures and possibilities, these same pharmaceutical companies will often complain about unfair trade practices! This can be seen in sharp detail in the AIDS crisis, where such companies lobbied the US government to threaten sanctions on South Africa just for trying to do something that the pharmaceutical companies would not do—help its people. Pharmaceutical companies often claim they need intellectual property enforcement to help recoup their investments. Many have argued that pharmaceutical companies owe a lot to the public education sector for providing the scientific basis. Pharmaceutical companies do note that their taxes on profits are ploughed back into the government, and contributes to the GDP so that it is a reinforcing circle. Noam Chomsky adds that there is a LOT of base science that such companies have benefitted from: Well, the pharmaceutical corporations and others claim they need this [protection via patents and intellectual property rights] so they can recoup the costs of research and development. But have a close look. A very substantial part of the research and development is paid for by the public anyway. In a narrow sense, it’s on the order of 40-50%. But that’s an underestimate, because it doesn’t count the basic biology and the basic science, which is all publicly funded. So if you get a realistic amount, it’s a very high percentage that’s publicly paid anyway. Well, suppose that went to 100%. Then all the motivation for monopolistic pricing would be gone, and there’d be a huge welfare benefit to it. There’s no justifiable economic motive for not doing this. There’s some economic motive, profit, but it is an effort to impede growth and development. — Noam Chomsky, Unsustainable Non Development, May 30, 2000 Furthermore: More fundamentally, [Jamie] Love denies that the pharmaceuticals even own the rights to the drugs in the first place. He points out that many of the anti-retroviral drugs used to treat HIV and AIDS today stem from the government-funded cancer drug research of the 1980s. The rights to government-created innovations were sold to pharmaceutical companies at low prices (not at the astronomical rates demanded in recent airwave spectrum auctions, for example), guaranteeing companies like Bristol-Myers Squibb huge returns on investment. Given the public investment in these drugs, Love doesn’t believe drug companies have the moral authority to determine who can or can’t access them. And the fact that thousands of people in Africa continue to die because they can’t afford the drugs adds urgency to his argument. — Daryl Lindsey, The AIDS-drug warrior: Jamie Love, magazine, June 1, 2001 And commenting on the U.S. for example: private, for-profit labs are portrayed as responsible for the critical breakthroughs that improve the quality of life. The truth is mostly the reverse. Data submitted to the Joint Economic Committee of Congress by the National Bureau of Economic Research reveals that public research, not private, led to 15 of the 21 most therapeutically valuable drugs introduced between 1965 and 1992, and other studies done in the 1990s suggest that only a minority of important drug discoveries in recent years—estimates range from 17% to 40%—were the result of commercial research. Those new cures were instead the product of the federal National Institutes of Health (NIH), either the “intramural” (or in-house) research performed by NIH scientists, which accounts for 10% of the agency’s $20 billion annual budget, or the “extramural” research contracted out through NIH grants to universities, medical and pharmacy schools, nonprofit foundations, and private laboratories, which accounts for most of the rest. — Wayne M. O’Leary, The Real Drug Lords,, August 13, 2002 And for the developing world: Of diseases in the Third World, AIDS is getting the most attention and focus. Not coincidentally, it is also one of the few diseases that remain a threat to First World countries. — Pharmaceutical companies but profits before needs, Censored 2000, P. 32 Patents are also affecting poor countries: Large corporations from developed countries are patenting so many resources from developing countries that it makes it difficult for those nations to be able to produce medicines for themselves. The World Trade Organization’s TRIPS agreement (Trade-Related Aspects of Intellectual Property Rights) makes it difficult for other countries to produce medicines if the product is already patented. There are some provisions in the TRIPS agreement, but that is only when there is an emergency and the products are not used for commercial use (and even this clause is under attack from the US and pharmaceutical companies.) Furthermore, as detailed further in this site’s global health overview section, poorer countries that do have industrial capacity to produce generic alternatives are facing pressure not to sell them to other poor countries who do not have such capacity. Former World Bank Chief Economist and Nobel Prize winner for economics, Joseph Stiglitz explained in an editorial in the prestigious British Medical Journal that Intellectual property differs from other property—restricting its use is inefficient as it costs nothing for another person to use it.… Using knowledge to help someone does not prevent that knowledge from helping others. Intellectual property rights, however, enable one person or company to have exclusive control of the use of a particular piece of knowledge, thereby creating monopoly power. Monopolies distort the economy. Restricting the use of medical knowledge not only affects economic efficiency, but also life itself. We tolerate such restrictions in the belief that they might spur innovation, balancing costs against benefits. But the costs of restrictions can outweigh the benefits. It is hard to see how the patent issued by the US government for the healing properties of turmeric, which had been known for hundreds of years, stimulated research. Had the patent been enforced in India, poor people who wanted to use this compound would have had to pay royalties to the United States. … The establishment of the World Trade Organization … imposed US style intellectual property rights around the world. These rights were intended to reduce access to generic medicines and they succeeded. As generic medicines cost a fraction of their brand name counterparts, billions could no longer afford the drugs they needed. … Developing countries paid a high price for this agreement. But what have they received in return? Drug companies spend more on advertising and marketing than on research, more on research on lifestyle drugs than on life saving drugs, and almost nothing on diseases that affect developing countries only. This is not surprising. Poor people cannot afford drugs, and drug companies make investments that yield the highest returns. — Joseph Stiglitz, Scrooge and intellectual property rights, British Medical Journal, December 23, 2006, Volume 333, pp. 1279-1280 As Noam Chomsky points out, “The World Trade Organization regime insists instead on product patents, so you can’t figure out a smarter process. Notice that impedes growth, and development and is intended to. It’s intended to cut back innovation, growth, and development and to maintain extremely high profits.” It is also an example of inequality being structured into law, also summarized here: [I]nternational intellectual property laws, which protect the patents and the bottom lines of pharmaceutical companies … encourage them to continue investing the millions in research required to develop new medicines. Western countries, led by the United States, have fought strenuously on the international front to protect those patents—in effect, placing a greater value on intellectual property, in the name of spurring innovation and saving more lives in the future, than on saving lives currently at risk. — Daryl Lindsey, The AIDS-drug warrior: Jamie Love, magazine, June 1, 2001 Finally, some drugs are not just commodities, which a limited economics-only perspective might suggest. These commodities affect people’s lives. The dynamics involved are therefore more complex than profit only. As Dr. Drummond Rennie comments: Pharmaceuticals, they are a commodity. But they are not just a commodity. There is an ethical side to this because they’re a commodity that you may be forced to take to save your life. And that gives them altogether a deeper significance. But they [big pharmaceutical companies] have to realize that they’re not just pushing pills, they’re pushing life or death. And I believe that they don’t always remember that. Indeed, I believe that they often forget it completely. — Dr. Drummond Rennie, Journal of the American Medical Association, transcribed from Dying for Drugs, Channel 4, April 27, 2003 Source :

No comments:

Post a Comment