by Robert Weissman
Published at Bangkok Post
In the shadow of a major International Conference on Compulsory Licensing: Innovation and Access for All, the brand-name pharmaceutical industry through its Pharmaceutical Research and Manufacturers Association of Thailand (PReMA) is touting the vital role that brand-name companies play in introducing new, innovative drugs to the market. The not-so-subtle subtext is that Thailand’s recent compulsory licences threaten the innovation process.
The simple and direct response to this allegation is that the Thai compulsory licences have preserved the brand-name companies’ effective market in Thailand.
The licences do not apply to the private sector, which provides care to the upper-income Thais and medical tourists who can afford expensive brand-name drug prices.
The licences enable generic competition only in the public sector, where the lower prices are enabling the Thai public health sector to expand use of important medicines dramatically, and in one case to provide treatment with a drug that was too expensive for the Thai public system to provide to patients at all.
But the broader claims made by PReMA deserve greater scrutiny.
The world desperately needs new healthcare innovations, and brand-name companies make some contribution. But it is nowhere near as significant as the brand-name companies claim. It turns out the patent system is quite inefficient at spurring important health research, and that the brand-name companies are quite inefficient at conducting research and development (R&D).
It is now familiar that the patent system fails to generate R&D for ”neglected diseases” _ diseases that primarily affect developing countries and for which little or no treatments exist.
The patent-based research system yields the exact results one would expect: corporations invest very little to treat such diseases. This is not because the companies, or their executives, are good or bad. It is because the buying power of developing countries is too small to incentivise such research.
But the innovation failures of brand-name Pharma _ widely recognised on Wall Street, which is downgrading the value of Pharma stocks precisely for this reason _ are far more profound than the neglected disease story.
First, Pharma does not spend very much of its revenue on R&D. Although manufacturing costs are very low, the industry spends only 17.5% of its revenues on research, according to its own data.
Other estimates suggest actual expenditures on research are considerably less. The research that is undertaken is yielding fewer innovative products. R&D pipelines are running dry _ the issue that troubles Wall Street.
The new products that Pharma does help bring to market are driven by marketing priorities rather than health needs. It is not only with regard to neglected diseases that the patent system fails to deliver needs-driven products.
Of the important new drugs that do make it to market, public research institutions play a key role.
The US National Institutes of Health has concluded that government investment has been crucial to most breakthrough drugs.
Of course, as vital as innovation is, it is only meaningful if the resulting products are accessible to people who need them.
Big Pharma is increasingly seeking to defend a single, very high global price for its drugs. That means these drugs will be unaffordable to the vast majority of people in Thailand _ or to the public health service _ and throughout the developing world.
The best solution to high prices is compulsory licensing, which immediately introduces generic competition, and can drive drug prices down close to what it costs to make them.
The brand-name price of Aids drugs before competition was more than 100 times more expensive than the lowest price generics now available. As a result of generic competition, tens of thousands of people with HIV/Aids in Thailand, and millions worldwide, have gained access to life-saving medicines.
Without price-lowering generic competition, almost none of these people would be on treatment _ meaning they would die from a treatable disease.
Similarly, brand-name prices on the heart disease drug Clopidogrel were 70 times higher than the generic versions now available under the recently issued Thai compulsory licence.
At the International Conference on Compulsory Licensing: Innovation and Access for All, public health experts and advocates around the world have celebrated Thailand for its leading role in issuing compulsory licences, and making vital medicines more affordable for people in Thailand and around the world.
It is not acceptable, nor sustainable, to maintain an R&D system that both does so poorly at generating products to meet priority health needs and that prices the important therapies it does develop out of reach of the vast majority of the world’s population.
It is important that middle-income countries make fair share contributions to R&D. But the world can and must find ways to support R&D that do not result in the rationing of life-saving medicines in developing countries, and denial of life-saving treatment to people simply because they are poor.
Discussions are now under way at the World Health Organisation to explore ways to advance both innovation and access objectives.
The crucial idea is that research and development should not be funded by high prices on drugs.
Robert Weissman is the director of Essential Action, a Washington, DC-based organisation that promotes access to medicines.