Stealing Drugs, Hurting Poor
By Doug Bandow
Among the most obvious benefits of modern technology is improved health care. Some of the greatest medical advances have been new pharmaceuticals.
But medicines don't magically appear. They will not be produced if prices don't reflect research costs. Unfortunately, some governments, such as in Thailand, don't care about what medicines patients will need tomorrow.
HIV/AIDS stopped being a death sentence only because of pharmaceuticals, beginning with AZT. But with the number of AIDS patients expected to hit almost ten million by 2010, the need for additional medicines will only grow.
Of course the poor should be treated. But policymakers must decide whether to enlist the drug makers as allies or treat them as enemies. Should governments steal from companies medications developed at great cost?
Last year America's drug and biotech firms devoted $55.2 billion to pharmaceutical development. Unfortunately, companies discover far more dry holes than blockbuster drugs, so the prices charged for the few successful medicines must cover the entire research and development bill.
The cost can be high for Third World nations, but pharmaceutical costs are not the primary barrier to AIDS treatment. Note Jeremiah Norris of the Hudson Institute and Philip Stevens of the International Policy Network, ``Even second-line drug prices are small change compared to the cost of the medical infrastructure required to administer these complicated medicines."
Moreover, governments routinely impose tariffs and taxes on life-saving pharmaceuticals and create burdensome regulatory barriers to their production and distribution.
Nevertheless, politicians rarely consider the impact of their policies on drug availability. Even middle-income countries are increasingly demanding price cuts and issuing compulsory licenses, effectively stealing patented products.
Most recently, Thailand refused to honor the patent for Kaletra, an AIDS drug marketed by Abbott, and Plavix, a blood-thinner co-marketed by Sanofi-Adventis and Bristol-Myers-Squibb. Last November Bangkok seized Merck's patent for Stocrin, another ARV. The military junta has threatened to break several more patents.
``We want lower prices," declared Mongkol Na Songkhla, Public Health Minister in Southeast Asia's second largest economy. But the issue is not inability to pay.
Observes Paul Howard of the Manhattan Institute, ``while the government cries penury, its defense budget has increased by over 30 percent." Moreover, Thailand has imposed a range of duties, tariffs, and taxes on medicines.
Unfortunately, other nations have engaged in the same practice, and not just for ARVs. Brazil, an even wealthier middle-income nation, has followed Thailand in seizing Abbott's Kaletra patent and Merck's Stocrin patent.
Again, the ability to afford drugs is not the issue: Brazil has spent lavishly on wasteful state enterprises, dabbled in nuclear weapons, and launched a space program.
In these and other cases, governments of prosperous states are seeking to win political points by demonizing the companies which produce the products which offer their peoples hope. The motto seems to be: why pay for what you can steal?
Yet patents are not the chief barrier to treatment of the poor. The vast majority of medicines on the World Health Organization's ``Essential Medicines" list have not been patented in any poor nation. Moreover, many companies discount or donate their drugs in poorer states.
Unfortunately, attacks on drug makers discourage the creation and distribution of new medicines. Although governments can steal drugs already on the market or in the pipeline, doing so will discourage companies from producing new medicines in the future.
No where would the human cost of discouraging R&D be greater than in treating AIDS. Some 80 anti-AIDS drugs are currently being developed, including almost 20 vaccines.
Attacking the research drug industry in industrialized states also will discourage development of a research industry in developing states. In contrast, stronger IP protection would spur additional investment, foreign and local, in local firms to research diseases that disproportionately afflict the local population. Such a transformation is evident in India.
There is a moral imperative to distribute life-saving products in impoverished states, but the duty of doing so falls on everyone _ including activists who raise money by attacking the drug makers.
In contrast, prosperous but stingy countries like Thailand and Brazil should be held accountable by private companies and the U.S. government for their misbehavior.
Protection of intellectual property is a vital economic and health issue. Pharmaceuticals save lives. Stealing patents is really stealing the health future of disadvantaged peoples around the world.
Doug Bandow is Vice President for Policy of Citizen Outreach and the Cobden Fellow in International Economics at the Institute for Policy Innovation.