E-DRUG: Oxfam briefing paper - Investing for Life: Meeting poor people's needs through responsible business practices
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http://www.oxfam.org/en/policy/briefingpapers/bp109_investing_for_life_0
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Pharmaceutical industry is undermining its own future as millions of
poor people denied access to medicines.
The pharmaceutical industry is denying medicines to millions of poor
people and undermining its own future because companies are refusing to
change the way they do business in developing country markets, according
to a new report by international agency Oxfam.
The report "Investing for Life" looks at the world's top 12 pharmaceutical companies, including their drug pricing policies, their record in developing medicines relevant to poorer countries and their stance on protecting intellectual property rights.
Oxfam says the industry is failing to ensure universal access to
medicines because it refuses to put the issue at the heart of its
business model. As a result, it is failing to capture the full potential
of emerging markets touted as the "new frontier" for its business
success.
According to a major consultancy firm, a loss of faith in the industry
on the part of its investors has so far cost pharmaceutical's
shareholders $1 trillion dollars.
"The industry is burying its head in the sand. More than 85% of world
consumers are underserved or have no access to its medicines. The
industry must recognize that charging high prices, quashing generic
competition, developing medicines only for those rich enough to pay and
fighting for harsher patent laws is an ineffective business strategy for
new markets, as much as it is a moral outrage," said Jeremy Hobbs, Oxfam
International Executive Director.
"Investors are worried about the industry's performance. They know that
emerging markets are key for the industry's future growth but companies
have been responding to the challenge of breaking into emerging markets
in an ad-hoc and inconsistent way. This is bad for the industry and bad
for poor people who are still facing devastating diseases like malaria,
tuberculosis, asthma, cancer, and HIV/AIDS without affordable
medicines," Hobbs said.
The report reveals shortcomings where the industry:
* Has failed to implement a systematic and transparent
tiered-pricing policy, where prices for all essential medicines are set
according to people's ability to pay;
* Continues largely to neglect research and development into
diseases that predominantly affect poor people in developing countries;
* Continues to be inflexible in protecting intellectual property,
including challenging poor countries in court to stop them using legal
public health safeguards;
* Continues to rely too heavily on donations to get affordable
medicines to people, even though this is unsustainable and sometimes
counter-productive.
Oxfam notes that some companies are offering differentiated prices but
this is extremely limited and mainly for high-profile diseases such as
HIV and AIDS. However, these offers are not systematic worldwide and are
often still priced well above the means of people living in developing
countries. Oxfam says that drug companies often adapt pricing in
developing countries solely as a reflection of the publicity that
surrounds the disease or the country.
For instance, Abbott Laboratories was selling Kaletra - a second line
anti-retroviral medicine - at $2,200 per patient per year in low
middle-income countries like Guatemala, where a person's average wage is
$2,400 a year. Only until Thailand, in response to the needs of poor HIV
patients, issued a compulsory license to reduce the price of Kaletra to
$1,000, did Abbott reduce the price of Kaletra worldwide to $1,000 per
patient per year. Also in Thailand, French giant Sanofi-Aventis offered
its cardiovascular disease medicine Plavix at a price that was 60 times
more expensive than Emcure, the Indian generic version. In March 2007,
it responded to Thailand's use of compulsory licensing by offering a 70%
cut.
Oxfam's report says that companies are still not investing enough into
researching and developing medicines for diseases that predominantly
affect poor people in developing countries. Between 1999 and 2004, there
were only three new innovative drugs targeted at diseases affecting the
developing world out of 163 medicines brought to the market.
"Even people suffering from tuberculosis - which kills nearly two
million people a year - need six months of treatment and the most recent
medicine is 30 years old," said Helena Vines-Fiestas, author of the
report.
On the industry's approach to intellectual property rights,
Vines-Fiestas continued: "High levels of intellectual property
protection have not resulted in new cures for diseases that affect poor
people." Despite this, the report notes that the industry continues to
insist that the global intellectual property regime does not prevent
poor people from accessing affordable medicines. Oxfam says not only is
the industry's view narrow-minded and wrong, but that the evidence is
overwhelming that generic competition is the most effective and proven
method to reduce drug prices.
In recent years companies have mounted legal challenges or exerted
direct pressure to protect their patents against the legitimate use of
safeguards in Thailand, Brazil and India. "These challenges are made at
the direct expense of poor people," Oxfam said.
Pfizer even challenged the Philippines government over their use of
public health safeguards in relation to the drug Norvasc.
"The industry is failing to make the systematic changes needed to serve
developing country markets and meet its responsibility to make medicines
universally available. Public pressure will intensify if companies
continue to offer only patchy concessions, for example around high
profile diseases such as HIV/AIDS and malaria," said Vines-Fiestas.
The report concludes by arguing that companies will need to revamp their
approaches on pricing structures, R&D investment and patent policies in
order to serve these markets and make its medicines more accessible to
poor people. Companies should adapt to the realities of developing
country markets because up to 80 per cent of people in developing
countries are vulnerable to falling or staying below the poverty line if
they have to bear the cost of expensive medicines, particularly where
treatment is long-term.
"The industry is operating in a short-sighted way because it could gain
enormous benefits from emerging markets, including lower research and
development costs and cheaper manufacturing. Yet instead it continues to
blindly use its same strategies in poor countries. Even today, the
richest 15% of the world consumes over 90% of its pharmaceuticals. At
this rate, both the industry and millions of sick patients are losing
out," concluded Jeremy Hobbs.