By: Leo Pykalo
Bringing pharmaceutical product to market requires many lengthy and costly steps. As in all business ventures, all loses have to be recovered by correctly pricing the product. In the pharmaceutical industry this is called Research and Development (R&D) Cost Recovery. Since 1970, fewer, large-cap companies represent the pharmaceutical industry worldwide. It is acknowledged that only large-cap companies can actually afford the high cost of R&D; today, bringing a new drug to market cost approximately $800 million U.S. (3,1). The companies of such size have their interests successfully lobbied in Congress or the Parliament of any developed country. As all innovators, they need to protect their intellectual properties. While within developed countries, the process is under control and manageable but globally it is a different situation.
Until 1995, some countries, India for example, did not grant patent protection companies, while others had “compulsory licensing,” where patented technologies could be used without patent holder approval (2). Because of this situation, numerous attempts have been made to set regulations and standards for intellectual property protection. The Doha Declaration on the TRIPS Agreement and Public Health states: in sake of public health, nations are entitled to use the exceptions of TRIPS in case of crisis (2). Almost all agreements tried to figure out how to make countries comply with the regulations and simultaneously keep the prices in developing countries affordable. In reverse, it can bring new problems. First, countries complying with new regulations have to insure that R&D costs will be covered, which is possible by imposing that cost on consumers in developing countries. Second, if pharmaceutical companies agree to make prices lower for the developing countries, than the R&D cost is going to be covered in expanse of developed countries patients. Finally, the differential pricing can create a situation where a company could attempt to bring low-prices drugs to developed market. As we witness today, the Canadian pharmaceutical products are in high demand in the U.S. because of the relatively lower prices and easy accessibility (4). We should ask ourselves about other drugs that can, one day, be available in our country. Are they safe? Most likely, they are not (5,6,7). From my point of view, while pharmaceutical companies have their interests protected, the average consumer is exposed to more harm, both financially and physically.
1. Boldvin & Levine: Against Intellectual Monopoly.
2. Barton, JH. (2004) TRIPS and The Global Pharmaceutical Market. Health Affirs 23(3): 146-154.
3. Davidson & Greblov (2005) The Pharmaceutical Industry in the Global Economy.
4. Canada’s Pharmaceutical Industry Profile. http://www.ic.gc.ca/eic/site/lsg-pdsv.nsf/eng/h_hn00021.html
5. “FDA Scrutiny Scant in India, China as Drugs Pour into the U.S.” Marc Kaufman. The Washington Post (June 17, 2007). http://www.washingtonpost.com/wp-dyn/content/article/2007/06/16/AR2007061601295.html
6. Generic Drugs From India and China May Not Be Safe. http://www.peoplespharmacy.com/2007/06/26/generic-drugs-f/
7. China selling “Made in India” drugs.