E-drug: Investors pressure drug firms on pricing
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[Copied as fair use. HH]
Multinationals urged to allow developing countries to sidestep
patents on life-saving treatments
Sarah Boseley, The Guardian, Tuesday 25 March 2003
Drug companies were given a stark warning yesterday that blocking
access to life-saving drugs at affordable prices by poor countries
could undermine public confidence in them and damage the value of
their shares in the long term.
The unprecedented pressure on the multinationals comes from
major City institutions with investments of more than GBP 600bn
and backed by well-known names such as Jupiter, Schroders and
Legal and General Investment Management. Investors are worried
about the impact on public opinion of the perceived intransigence of
the drug companies which have been blocking the Doha trade deal, which
could allow poor countries to bypass patents on expensive new
medicines and make or buy cheap copycat generic versions.
Yesterday ISIS Asset Management and the Universities
Superannuation Scheme (USS) published an investor statement
urging the drug companies and governments to improve access to
medicines for the poor. They have drawn up a framework of good
practice to judge the pharmaceutical companies' commitment to
public health in the developing world. They say setting different
prices for rich and poor countries is an example of good practice. So
is "sensitivity to local circumstances" when it comes to enforcing
patents or giving licences to local generic manufacturers. Even more
radical is the suggestion that companies will be commended for "using
influence with governments to address the public health crisis in
emerging markets". This influence will include urging governments in
Europe or the US to put money into the Global Health Fund, which gives
grants to developing countries to buy the cheapest available medicines
for Aids, TB and malaria. It will also include supporting
interpretations of trade agreements on patent issues which would help
the development of emerging markets in poorer countries.
Olivia Lankester, senior analyst at ISIS, said: "Our main concern is
that continuing high-level criticism of the sector will, over time,
damage its ability to operate." She acknowledged that companies had
been scapegoated to some extent, but added that the controversy could
undermine their legitimate arguments for strong patent protection
which enables them to recoup the millions of pounds they spend on the
research and development of new drugs in the rich northern countries.
The climate has changed, but the industry has not. The City
institutions point to recent pronouncements like that of David
Kessler, dean of Yale school of medicine who worked at the food
and drug administration under Bill Clinton and who in February said
that drug companies must relax their patents in South Africa and
elsewhere to make their drugs more affordable. "I don't expect
pharmaceutical executives will do this out of the goodness of their
hearts," he said. "Perhaps they will do it out of self-interest. The
companies have much to lose as the international community grows
restless. "At stake is the very patent protection system that allows
them to control drug prices. They want to keep the power of pricing
their products but they must bend for a true international crisis."
Raj Thamotheram of USS said: "I think many political commentators who
are quite balanced and pragmatic are seeing this knock-on effect on
the sector's ability to price as it did in the past."
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