Cheaper drugs are as important as improved health infrastructure – The New Times (Kigali) op-ed

The New Times (Kigali)
May 6, 2008

Cheaper drugs are as important as improved health infrastructure
Robert Weissman

Thompson Ayodele is of course right to emphasize in his recent opinion piece (“Africa’s Failing Infrastructure Renders Compulsory Licensing Pointless,” April 28) the urgent necessity of improving Africa’s healthcare infrastructure.

Unfortunately, invoking the infrastructure issue is for Mr. Ayodele a technique to disparage current debates at the World Health Organization (WHO) over the means to improve pharmaceutical research and development (R&D) and to lower drug prices.

Mr. Ayodele is completely mistaken in suggesting that the need to strengthen health systems is a reason not to pay attention to the price of drugs. There is no trade off between the two.

Poor people in Africa need more investment in healthcare and better functioning health systems. But they also need access to life-saving medicines, and new R&D directed to the priority health needs of the continent.

The WHO discussions aim to identify means to advance both innovation and access to the fruits of innovation. The idea is to create incentives for the development of new medicines to meet priority health needs in developing countries, and to make those products available on an affordable basis.

Mr. Ayodele may have an ideological commitment to the patent monopoly system for R&D, but there is no serious argument that it is failing developing countries – especially the world’s poorest countries.

Big Pharma charges far more for its patent monopoly-protected medicines than patients or governments in Africa can afford. At thousands of dollars a year per person – and sometimes more than $100,000 per year – drug prices are gouging consumers in rich countries.

These prices are completely out of reach for all but the elite in developing nations. Generic competition is the key mechanism to lowering prices and making drugs affordable in Africa and other developing countries.

The case of HIV/AIDS drugs is illustrative. Ten years ago, before generic competition, brand-name companies charged roughly the same price for lifesaving HIV/AIDS drugs in Africa as they did in rich countries – $10,000 a year per person, or more. An HIV diagnosis was a death sentence.

Today, the price is as low as $100 per person – a price decline that leveraged a huge increase in donor money that otherwise would not have been made available. The severe problems with healthcare infrastructure notwithstanding, two million people living with HIV/AIDS in Africa are today receiving treatment.

Much more needs to be done – and improving infrastructure is a top priority. Only about 30 percent of those in need are receiving treatment. But without the price reductions brought about by generic competition, almost all of the 2 million people in Africa now receiving treatment would be dead or would die soon.

Rather than criticizing countries like Thailand that are issuing lawful compulsory licenses – government authorizations of generic competition for products that remain on patent – Mr. Ayodele should be pointing to them as an example to be followed.

They are, after all, promoting market competition and lowering price. In Thailand’s case, it is acquiring generic versions of a heart disease drug for 1/70th the price charged by the brand-name company.

Lower prices from compulsory licenses have enabled Thailand to triple the number of people receiving important medical treatments. But African and other developing countries need more than cheaper drugs.

They need medical R&D for priority health problems that brand-name drug companies have no incentive to address.
Patents are not worth much if they offer monopolies on sales to a population that – no matter how large – has little buying power.

Developing countries comprise 80 percent of the world’s population but amount to only 13 percent of the global market for medical products. (Africa represents less than 2 percent of the global pharmaceutical market.)

As a result, there is little corporate sector R&D devoted to the needs of developing countries. A review by Doctors Without Borders found that of 1,556 new drugs placed on the market between 1975 and 2004, only 21 were for “neglected diseases” – diseases endemic to developing countries.

At the World Health Organization negotiations, debate is underway about different arrangements to spur private sector R&D – ideas that would pay drug companies, but not lead to high drug prices. One exciting idea revolves around prize funds, with drug innovators paid large cash awards, but all drugs being made available, immediately, as low-priced generics.

Ideologues and those who would prioritize the narrow commercial interests of Big Pharma over public health objectives have reason to reflexively defend a patent monopoly-based R&D system that is not working for the developing world.

For everyone else, the rising interest in new institutional arrangements to promote the complementary public health objectives of innovation and access is something to embrace.

Robert Weissman is director of Essential Action, a public health advocacy and corporate accountability group based in Washington, DC.

This op-ed responds to a previously published op-ed by Thompson Ayodele. Here is the text of that piece:

The New Times
April 28, 2008

Africa’s failing infrastructure renders compulsory licensing pointless
Thompson Ayodele

Switzerland is about to become ground zero for the future of health policy in Africa. Next week, the World Health Organization’s (WHO) Intergovernmental Working Group will convene in Geneva to discuss public health, medical innovation, and intellectual property.

Many participants are expected to express their support for efforts to undermine patent protections for drugs. In doing so, however, these attendees ignore the more fundamental problem facing poor African nations — dilapidated healthcare infrastructure.

The anti-patent crowd believes that patents keep prices high and drugs out of the reach of the poor. They blame pharmaceutical firms for the suffering of the impoverished and call on developing nations to employ patent-revoking compulsory licenses that encourage the production of unauthorized generics.

But even if medicine were available for free, as it often is in poor nations, dysfunctional institutions and personnel ensure that the needy can’t access it.

Despite unprecedented quantities of monetary aid to the ministries of health of many African countries, health systems on the continent have languished.

Between 1990 and 2005, Development Assistance for Health (DAH) increased from $2.5 billion to over $13 billion. Overall, about ten percent of Africa’s healthcare expenditure is financed by donor aid.

And yet over 50 percent of Africans lack access to essential medicines, according to the WHO. Around the world, more than 10 million children in developing countries die unnecessarily from diseases that are easily preventable and cheap to treat, like diarrhoea, measles, and malaria.

Furthermore, up to 80 percent of Africans have to pay for treatment straight from their own pockets. In short, public health systems are failing to deliver. Why? For starters, nearly all foreign aid must first pass through health ministries before reaching patients.

According to studies undertaken by the WHO and the Center for Global Development, donor nations rarely know what happens to their money after they hand it over to a recipient government.

As a result of these lax controls, money is routinely subverted by health officials for private gain. One problem is leakage of drugs from the supply chain. Publicly funded drugs can fetch a higher price if stolen and resold on the black market.

Recent surveys in Nigeria show that 28 public health centers received no drugs from the federal government over a two-year period.

Meanwhile, a 2001 study by the World Bank showed that fewer than half of government health facilities in the Nigerian states of Lagos and Kogi had received any drugs from the federal government.

Last year, Dora Akunyili, the director general of Nigeria’s National Agency for Food and Drug Administration and Control, disclosed that it was commonplace for donated drugs such as Vitamin A capsules, Mectizan and Coartem tablets, and oral rehydration salt to be pilfered and resold on the open market.

With incidents like these in mind, the Global Fund has considered suspending two grants to Nigeria totaling $80 million. The Fund has already terminated grants to Uganda and Chad because of bad management, a lack of transparency, and poor implementation of grant monies.

Theft is not the only problem. Countless other forms of corruption plague Nigeria’s health system, including mismanagement of funds at the local level; employee absenteeism; extortion of patients by staff members; and the abuse of procurement contracts for hospital supplies.

According to Human Rights Watch, “the government’s failure to tackle local-level corruption violates Nigeria’s obligation to provide basic health and education services to its citizens.”

Compulsory licenses will do nothing to solve these critical issues. And they’d unleash a whole host of new problems concerning access and safety.

Last year in Thailand, for example, the government used compulsory licenses to grant the state-run Government Pharmaceutical Organization (GPO) the right to manufacture generic versions of AIDS and heart-disease medications.

Many activists applauded the move, even as Thai leaders turned down the Global Fund’s offers of free medicine. Unfortunately, domestic production has proved too expensive, and access to needed medicines has decreased substantially for sick Thais.

Further, the GPO has a history of producing shoddy products, including a different anti-AIDS medication called GPO-Vir. This substandard antiretroviral actually accelerated the resistance of HIV to treatment, consigning scores of Thai patients to early death.

Yet Thailand’s patent theft continues. Last month, the nation announced that it would rescind the patents on four cancer drugs.

As long as healthcare delivery remains in the hands of dysfunctional governments, the health of the poor in developing nations will never improve.

Aid groups and policymakers must instead enlist the help and expertise of the private sector. The advantages of this are two-fold.

First, it would reduce corruption. Corruption certainly exists in the private sector as well, but private enterprises with ethical problems risk exclusion from the next round of programs and contracts.

Second, competition governs the private sector. Firms that fail or receive low marks from customers or aid organizations will lose out to competitors. Market participants are forced to improve productivity and patient care or face extinction.

In the public sector, by contrast, organizations or governments proven inefficient tend to get more money — even as they’ve demonstrated themselves incapable of doing the job.

According to the International Finance Corporation, 60 percent of the $16.7 billion spent on health in Africa in 2005 was privately financed, with half of that spent in the private sector. It is time to harness this vast sum so it can work for patients in an efficient and equitable way.

Rather than encourage the willful destruction of drug patents, conference attendees ought to call for measures that would actually improve the health of those in poor nations, like increased investment in infrastructure. To do otherwise would hurt those who most need help.

Thompson Ayodele is the Executive Director of Initiative for Public Policy Analysis, a Lagos-based think tank.

Contact: [email protected]