Pharmaceutical Corporations and Medical Research

Priorities of the Pharmaceutical Industry

Historically, the desire to protect colonial interests and needs, such as the health of settlers and soldiers, typically drove medical research of tropical diseases.

Modern science has been able to research and develop cures for most illnesses and diseases, yet, politics and corporate greed affect who can benefit from this, resulting in what a French newspaper, Le Monde, describes as an apartheid of pharmacology.

In addition, as observed by the British newspaper, the Guardian, more emphasis is placed on profitable research and cures for problems such as impotence and diseases of affluence and longevity, while many tropical diseases are given far less attention:

Additionally, corporate priorities of profits can imply that the most appropriate treatments won’t always apply (especially when they are cheap).

J.W. Smith’s concerns do not seem too far-fetched given just a few examples:

In May 2001 the Guardian newspaper reported that a pharmaceutical company, Aventis, used to produce the only safe medicine for the late, fatal, stage of sleeping sickness. However, they stopped making it in 1995 because they couldn’t make any profit from it.

In 2000, Bristol Myers Squibb, used the drug for profitable purposes in the West—as an ingredient in hair-removing cream, under license from Aventis. That, together with the public outcries about the shortage of medicines in Africa at that time, and over the court case brought by 39 pharmaceutical companies against the South African government over access to cheap drugs, Aventis agreed to donate the drug to the World Health Organization and help fund research and treatment programs.

While that was definitely welcome, it was criticized that it had to come after public outcries, given that sleeping sickness affects 500,000 people in 36 African countries, and 60m are at risk of its spread.

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But why should the Pharmaceutical Industry care about the problems of Developing Countries?

Some may argue that criticizing pharmaceutical companies for not spending as much on diseases of the poor is unfair, and that instead it should be up to those nations affected by such problems to invest in appropriate research, that the private corporations cannot be expected to solve all of the world’s problems and that they would also go broke from such activities. Furthermore, they provide jobs which helps create wealth. However, a number of issues, rarely discussed in the mainstream, makes this picture more complicated:

The western nations that the pharmaceutical corporations are typically based in have, through colonialism and post-war global economics, fostered an environment that has led to further poverty and dependency of the poorer nations on the first world countries. Post-War policies from the IMF and World Bank have forced most developing countries to cut back on such social expenditure as health and education, in the first place. Many countries have faced downward spirals due to such policies.

Furthermore, pharmaceutical companies often tout their strengths of having vast capital resources to do research, bringing benefits to humanity the world over. Unfortunately though, the quest for ever more profits are a hindering factor to what they will research. Tropical disease cures are not profitable for them because most people with such diseases are too poor to afford cures.

Of course, as well as addressing unfair practices by large pharmaceutical companies, poverty should be addressed too. Poverty is often a root cause, so tackling poverty (which may also be a major preventative measure, requiring less drugs in the first place) is ideal. But these are not necessarily separate; they are intertwined in a complex web. For example, poverty is also related to the way international trade rules and institutions are influenced by power politics:

Pharmaceutical companies also make enormous profits that would probably not affect the ability to do some research and production of other more urgent medical problems.

And when nations and companies actually do try to develop cures and possibilities, these same pharmaceutical companies will often complain about unfair trade practices! This can be seen in sharp detail in the AIDS crisis, where such companies lobbied the US government to threaten sanctions on South Africa just for trying to do something that the pharmaceutical companies would not do—help its people.

Pharmaceutical companies often claim they need intellectual property enforcement to help recoup their investments. Many have argued that pharmaceutical companies owe a lot to the public education sector for providing the scientific basis. Pharmaceutical companies do note that their taxes on profits are ploughed back into the government, and contributes to the GDP so that it is a reinforcing circle. Noam Chomsky adds that there is a LOT of base science that such companies have benefited from:

Furthermore:

And commenting on the U.S. for example:

And for the developing world:

It could be argued that those corporations don’t need to spend much money on these things as before, because they have already spent that in the past, sufficiently, and have produced the medicines needed. Instead, it is a failure by governments to ensure that those in need get access to existing medicines.

There may be some truth to this. As discussed in this site’s section on health care around the world, poor countries lack resources and sufficient health infrastructure. Even if some medicines are available, they may not be able to get it to the needy.

However, there are also cases where even in poor countries, much-needed vaccines have been widely distributed, suggesting that mobilization of resources is possible.

The other problem is that this is not enough of an excuse to reduce R&D in this area; new medicines are also needed — for example, to overcome bacterial resistance to existing drugs. This is a significant and growing problem for Malaria and TB, in particular.

In addition, new drugs are needed to help make it easier for poorer people to complete a course. It is harder for poorer people to finish a course that takes a long time — people either do not understand that they need to complete the course even when symptoms begin to improve, or they may horde part of the course for future use or for other family members’ use, because the costs may be prohibitive, or it is difficult to turn up for supervised treatment frequently over a long period, etc (which increases the risk of bacterial resistance to some drugs).

Furthermore, it is not just a government failure to get existing medicines to those who need it, but a more global failure that pharmaceutical companies are a key part of: an intellectual property rights regime that actually makes it harder for poor countries to use cheaper (and affordable) generic versions, or that makes the cost of those existing drugs higher than it could otherwise be in an Intellectual Property Rights (IPR) regime that was more forgiving. Many pharmaceutical companies, for example, are at the forefront of opposing governments attempt to make medicines cheaper, widely available, or generic.

In addition, first world diseases are increasingly a problem in the developing world. It can therefore be argued that R&D in this areas is also more important for the developing world than R&D in infectious diseases.

The problem is that for developing countries, research into these first world problems may seem beneficial, but the benefit can only be reaped by the developing world if it is in the context of good IPR programs that make the medication available and affordable to those who need it.

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Hiding behind patents to prevent legitimate — and cheaper — generic use

Patents are supposed to encourage innovation by providing incentives for private companies to further investment and research. But for areas such as health, patents can also restrict access to medicines for those who cannot afford them.

In addition, large corporations from developed countries are patenting so many resources from developing countries that it makes it difficult for those nations to be able to produce medicines for themselves.

The World Trade Organization’s TRIPS agreement (Trade-Related Aspects of Intellectual Property Rights) makes it difficult for other countries to produce medicines if the product is already patented.

However, there are some provisions in the TRIPS agreement to allow generics, but that is only when there is an emergency and the products are not used for commercial use (and even this clause is under attack from the US and pharmaceutical companies.)

Furthermore, as detailed further in this site’s global health overview section, poorer countries that do have industrial capacity to produce generic alternatives are facing pressure not to sell them to other poor countries who do not have such capacity.

As Noam Chomsky points out, The World Trade Organization regime insists instead on product patents, so you can’t figure out a smarter process. Notice that impedes growth, and development and is intended to. It’s intended to cut back innovation, growth, and development and to maintain extremely high profits.

It is also an example of inequality being structured into law, also summarized here:

There is room, thanks to efforts by developing countries and others, in the WTO rules for some ability for governments to incorporate provisions in national patent laws to ensure and increase access to essential drugs, using mechanisms such as compulsory licensing and parallel imports.

WTO patent rules allow 20 years of exclusive rights to make the drugs. Hence, the price is set by the company, leaving governments and patients little room to negotiate, unless a government threatens to overturn the patent with a compulsory license.

Such a mechanism authorizes a producer other than the patent holder to produce a generic version of the product though the patent-holder does get some royalty to recognize their contribution.

Parallel importing allows a nation to effectively shop around for the best price of the same drug which may be sold in many countries at different prices.

These are potentially very effective tools to get the price down. But there has been constant threat by the large pharmaceutical industries in the U.S. and Europe for example, that feel threatened by these mechanisms. They have pressured developing nations and international agreements in various ways to minimize the impact these would have on them.

Pharmaceutical groups have lobbied the U.S. government, to exert pressure on other countries about this — such as to threaten sanctions on South Africa for trying to develop cheaper and generic drugs, as mentioned earlier. (See for example, an article about the relationship between globalization and equitable access to essential drugs, from the Third World Network for more on this).

(Some governments also levy various import taxes on such products, and the cost of transporting them etc may add to the cost of that medicine, but the point is that the price is high to start with.)

Some of the larger developing countries, such as Thailand, India, Brazil, Egypt and others, have tried to do something about the dual problems of high pricing and corporate/Western pressure:

• Some, like Brazil, have tried to develop cheaper, more generic drugs
• Others, such as South Africa, who may have tried this before, have also tried to purchase cheaper generic drugs or import them from where it is sold the cheapest. This works out well between developing countries.

These attempts are important because they recognize the need to reduce dependency upon large multinational corporations which charge high prices. It also shows a sign that these governments are attempting to meet their obligations to their own people.

In a radio interview, Brazilian Ambassador to the WTO, Celso Amorim, points out that the United States provides vast amounts of aid and subsidies to its pharmaceutical corporations to research drugs and so forth, and yet when other developing countries try this, the US complains via the WTO about it.

In fact, the pharmaceutical corporations and the United States challenged Brazil, South Africa and other’s attempts by claiming that they were breaching the above-mentioned TRIPS. The fear has been that if a few developing countries succeed in this sort of independent path, then other developing countries will follow suit, and this will threaten their markets.

India’s successful pharmaceutical industry, built on its patent laws that allow the development of very cheap generic drugs has been under threat from WTO property rights rules on patent protection, and pressure from the large pharmaceutical companies.

The additional fear is also based on how if companies from developing countries are able to make inroads on profits on products that are not actually sold much by the large multinational pharmaceuticals, then for other products that generate more sales and profits, companies from developing countries could pose a real threat to their bottom line.

Furthermore, if other companies are able to offer similar drugs for much lower prices, it indicates potentially how much the public of the industrialized world are being over-charged.

A huge public outcry forced 39 pharmaceuticals to drop their case in April 2001 against South Africa. The publicity that had been generated by this had potentially wider implications to the whole TRIPS regime:

Additionally, in June 2001 the United States dropped its WTO complaint against Brazil for the production of generic AIDS medications. However, it was at a potentially enormous cost to Brazil and other developing countries; While following even some unfair rules in the WTO TRIPS agreement, the U.S. agreed to drop its case as long as Brazil tells U.S. State Department 10 days in advance of any generic drugs being developed, allowing the U.S. in effect to monitor Brazil’s public health policies in these areas. Also, other countries might think twice about doing what Brazil and some others have tried—legally—to do here, as the fear of U.S. pressure might be persuasive enough.

Just a couple of months later, Brazil made a bold, but important move to produce AIDS drugs themselves, but at the same time, breaking the patent rights of Swiss pharmaceutical company, Roche. The Brazilian currency, the real, had become weaker with its devaluation, therefore making the costs of imports even more expensive.

Furthermore, a subsequent global AIDS fund set up by the U.N. also led to warnings of concern at things like patents, pricing and so on, which is captured well by Philippe Riviére, who is worth quoting at length:

And, as the following quote suggests, large Pharmaceutical companies’ claims on dents to profits and so on, seem hollow:

In the same article as quoted just above, the point is also made that while profits aren’t important to CIPLA, they still needs to make a profit, however tiny, to demonstrate that the pharmaceutical companies can lower their prices dramatically and still turn a profit on AIDS drugs in developing nations like South Africa. However, if compulsory licenses are not allowed, then it won’t be possible. Pharmaceutical companies are against these licenses, because large profits are important to them.

The Doha WTO round in November 2001, while controversial in some aspects, included some provisions to make access to affordable medicines easier. However, just over a year after that, even this might be reversed:

• All the other 140 countries of the WTO unsuccessfully opposed United States desire to block access for poor countries.
• This was due to pressure from the pharmaceutical industry. The Guardian newspaper reports, for example, (December 21, 2002) that Dick Cheney, the US vice-president, … blocked a global deal to provide cheap drugs to poor countries, following intense lobbying of the White House by America’s pharmaceutical giants.
• Since the Doha Agreement, America’s drug industry has fought tooth and nail to impose the narrowest possible interpretation of the Doha declaration, and wants to restrict the deal to drugs to combat HIV/Aids, malaria, TB and a shortlist of other diseases unique to Africa rather than all developing countries, as originally agreed. (The U.S. was part of that agreement process as well.)
• The repeated concern has been that copy-cat drugs will under price and override patents, and research will dry up.
  • Yet, as the article continues, cut-price drugs will only be sold in countries which cannot afford to buy them at first-world prices.
  • In addition, Aside from HIV/Aids, drug companies do almost no research into the diseases on the US shortlist. It excludes diseases like cancer, asthma and pneumonia which are killers in the developing as well as the developed world.
  • In other words, dents on profits wouldn’t be as big as feared.

The above adds further consideration on the actions of pharmaceutical companies in response to growing criticism of the way they are pricing drugs, the way they are researching and so on;

• That is, in response to the criticism while it is good they have reduced prices, the dependency on them that still exists is still a problem.
• When fluctuations in currencies can be sharp, especially for poor countries, the effects can be enormous, as mentioned above with Brazil’s currency devaluation. This has a dramatic impact on the affordability of external medicines from the expensive multinational pharmaceuticals.
• Currently, it seems as though pharmaceutical companies are hiding behind their patents, power and influence to accumulate profit and maintain their position, claiming they are the only ones that can help, with their approach. Real technology transfer and sharing with others around the world does not appear part of the debate. Only when it is profitable or not harmful to them too much, will they help it seems.
• After all, the public shared their wealth in the form of huge government funds, public research and subsidies etc. to help pharmaceutical companies. It is only fair they share back!

Further denting the credibility of the U.S. in this area has been that President Bush has picked a former top executive of a major U.S. pharmaceutical company to head the U.S.’s global AIDS initiative, leading to further accusations of a commercial agenda, and lack of real experience in the issues that matter. (As well as the previous link, see for example, similar criticisms from Health GAP and Global Treatment Access Campaign, two organizations campaigning for global access to affordable medicines.)

Despite the apparent success at Doha, the US has sought to undermine the agreement made there. Oxfam, a prominent NGO, has been highly critical of the practices of big pharmaceutical companies, arguing that, The U.S. Trade Representative is pursuing standards of patent protection which go far beyond WTO patent rules, and it is doing so regardless of the devastating impact that this could have on … developing countries. Oxfam also believes the US is pursuing this pro-patent agenda on behalf of its powerful pharmaceutical lobby, PhRMA. The industry has an interest in strong patent protections, which limit generic competition and therefore protect its market share and profits. In addition,

The Third World Network reported on a global AIDS conference in Bangkok, July, 2004 and also commented on the negative impacts of the growing number of bilateral agreements signed with the US that Oxfam alluded to as well. These agreements are creating new barriers to access to medicines, as they forbid the developing countries from policies (which the WTO allows) that promote generic medicines. To add to the sour French-US political relations, There was a diplomatic uproar when the French President Jacques Chirac accused the US of blackmailing developing countries to give up measures to obtain life-saving drugs through these bilateral trade deals.

It is not so much that these developing countries are necessarily adamantly against the WTO or even the large pharmaceuticals, but it is the unfair deal they are being given by the imposition of the current system that is causing the problems; while international legal frameworks for trade is welcome, it is an example where institutions like the WTO have been used by the more powerful countries and their corporations to further their own interests without much regards to others; Western leaders go on about how rules-based systems are essential, but they don’t discuss the pros and cons of the actual rules themselves. This is how inequality can become structured into law.

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Dumping old or unsuitable drugs onto poor countries as aid and charity

While pharmaceutical companies have no doubt created life-saving drugs that have saved millions of lives, they have also participated in practices around the world that have come under a growing amount of criticism. John Madeley is worth quoting at length:

Madeley goes on to provide an example (amongst many others) where US-based drug company Eli Lilly made the largest one-time pharmaceutical donation at that time, to provide an antibiotic to Rwanda during their refugee crisis in 1994. They donated enough for 1.3 million people. However, the World Health Organization didn’t list this drug on their list of essential drugs for treating refugees. He also pointed out that Médicins sans Frontiéres (Doctors without Borders) … said it would never prescribe such medicines in the camps.

Many of the pills were past their expiry date, which added additional resource burdens to a country already suffering from the aftermath of a civil conflict. Madeley also shows some additional reasons to this apparent generosity that:

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Power and influence in drug testing

On April 27, 2003, Britain’s Channel 4 aired a documentary titled Dying for Drugs, raising many of the hard issues discussed here, that drugs bring billions to those companies, and hopes to people. Yet, how far would drugs companies go to get their drugs approved and the prices they want? As the documentary said in their introduction, the implications are alarming and if their power remains unchecked, many more people will soon will be dying for drugs.

In Africa the documentary showed how one of the world’s biggest drug companies experimented on children without their parents’ knowledge or consent. In Canada it revealed how a drug company attempted to silence a leading academic who had doubts about their drug. In South Korea it followed the attempts of desperately ill patients to make a leading drug company sell them the drugs they need to save their lives at an affordable price. And in Honduras they showed the brutal consequences of drug companies’ pricing policies. This documentary therefore covered four basic areas:

1. Testing on humans without permission
2. Voluntary human trials but where doctors are pressured not to reveal problems
3. Successful human trials, but drugs priced beyond the reach of many patients
4. Prices that kill, and resorting to breaking the law to save lives by smuggling medicines from other countries.

The documentary thus hinted at the use of political and economic power and how it has a direct bearing on people’s lives with little accountability.

The documentary’s transcript or video is not available on line, but accompanying material can be seen at Channel 4’s web site.

Perhaps almost predictably, Pfizer issued a statement soon after the documentary aired saying that the documentary was biased and that it was intending to sue. Jeremy Brecher, in a foreword to the book Panic Rules: Everything you want to know about the Global Economy, by Robin Hahnel (South End Press, 1999) pointed out that Oxfam International Estimates that, in the Philippines alone, IMF-imposed cuts in preventative medicine will result in 29,000 deaths from malaria and an increase of 90,000 in the number of untreated tuberculosis cases. Tribunals investigating crimes against humanity take note! Yet, this would be unlikely to happen, unless it was clearly war and physical brutality that caused mass deaths. Economic and political causes of death, especially when coming from the dominant ideology are not registered in mainstream discourse as mass deaths.

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Pricing

Another concerning trend is the extortionately high prices for prescription drugs that people have to pay in the United States, home of most of the pharmaceutical companies. Just across the border in Canada, people can pay up to 80 percent less for prescription drugs. In some European countries, people can pay even less. As a result, Vermont Congressman Sanders organized bus trips for people to buy drugs across the border. The pharmaceutical companies’ reaction? They claimed that in Canada this reeked of government interference. For whom? It is perhaps interference on corporate profits. What if the word used instead is something like government support for its people?

If in the wealthiest nation on earth there are pricing issues and corporations are able to push forth policies that will benefit them, imagine the impact on poorer countries, where most would not be even able to afford drugs for easily curable problems.

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Its all in the genes, stupid!

The excitement at the possibility to tackle many diseases, and even the prevention of certain diseases through the correction of genetic disorders, by gene therapy has resulted in a lot of investment into genetics and biotechnology.

However, there is concern that this could lead to ignoring root causes of problems and just dealing with symptoms, allowing root causes of problems to continue.

And there is a lot of money in it as well, while public sector research is mixed with private research (which can also be seen as a type of subsidy for private companies with public research, if private companies manage to control the future direction as they do today with many other aspects of medicinal research and development).

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More information

• Democratizing Access to Essential Medicines from Foreign Policy in Focus, (August 1999) looks at Washington’s actions and makes the important point that compulsory licensing and parallel importing policies could help developing country governments make essential medicines more affordable to their citizens and yet the policies of Washington are almost the opposite.
• Millions for Viagra. Pennies for Diseases of the Poor, by Ken Silverstein, the Nation, July 19, 1999.
• Apartheid of Pharmacology, by Martine Bulard, Le Monde Diplomatique, January 2000.
• A Bitter Pill For The World’s Poor by Isabel Hilton, the Guardian, January 5, 2000.
• See the drugs section of the Guardian’s special report on AIDS for more articles.
• These statistics on issues around the pharmaceutical industry, from Public Campaign.
• From the Third World Network:
  • Health Policies section provides many articles.
  • From their section on Pharmaceuticals, Patents & Profits: South deprived of life-saving drugs.
    • TRIPS and pharmaceuticals: A case of corporate profits over public health (Cecilia Oh/TWN)
      With the obligations it imposes on member countries of the trade body to recognise and strengthen patent protection on pharmaceuticals, the World Trade Organisation’s Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) is denying patients in the developing world access to life-saving essential medicines. The countries of the South now find themselves ranged against Northern governments and powerful pharmaceutical lobbies in their fight, at the WTO and beyond, to ensure public health takes precedence over corporate profits.
    • Geneva 2000: The battle of patents vs affordable medicines (Cecilia Oh/TWN)
      One key issue at the 26 June-1 July Special Session of the UN General Assembly (UNGASS) on Social Development was the right of people to essential medicines at affordable prices, and how this right is being undermined by patents and the intellectual property rights regime established by the WTO’s TRIPS Agreement. Cecilia Oh reports on the debate on this issue at UNGASS and at an NGO event organised in the week of the Special Session.
    • Globalisation and equitable access to essential drugs (Ellen ’t Hoen)
      While there are a number of factors, such as high cost, insufficient production, and lack of research and development, which have contributed to denying equitable access to drugs to millions in the Third World, it is the international trade regulations arising from globalisation that may prove to be the biggest obstacle to such access. Ellen ’t Hoen considers these impediments to access and suggests some new global approaches to overcome them.
    • Open letter to the WTO member countries on TRIPS and access to health care technology
      On the eve of last year’s WTO Ministerial Conference in Seattle, Médicins Sans Frontiéres, Health Action International and Consumer Project on Technology issued the following open letter to members of the multilateral trade body urging the latter to consider initiating moves, both within and beyond the framework of the TRIPS Agreement, to promote equitable access to health care.
    • Patent rights vs patient rights
      Academics, social activists, public health advocates, government officials and politicians from Africa, Asia, South and North America, Australia and Europe met in Oslo on 22-24 May 2000 at a workshop entitled Patent Rights vs. Patient Rights to discuss access to essential drugs, including treatment for AIDS. They issued the following call for access to basic technologies and essential drugs.
    • Africa shuns US move allowing access to cheaper AIDS drugs (Gumisai Mutume)
      Developing countries are not exactly queuing up at the US Trade Department to take advantage of flexible patent regulations allowing them to access cheaper AIDS drugs. The reason may be due to mixed signals coming out of Washington, says Gumisai Mutume.
    • Killing Africa with kindness (R. Mokhiber & R. Weissman)
      Russell Mokhiber and Robert Weissman uncover the perils and pitfalls behind a US government move to provide loans to African countries for the purchase of AIDS drugs.
    • How WTO/TRIPS threatens the Indian pharmaceutical industry (R.Gerster)
      The Indian pharmaceutical industry is a success story providing employment for millions and ensuring that essential drugs at affordable prices are available to the vast population of this sub-continent. However, the new trade rules of the World Trade Organisation now pose a serious threat to the industry and to the millions who are dependent on it for their health and livelihood.
    • Keep taking our tablets (no one else’s) (Gregory Palast)
      The WTO’s response to Africa’s AIDS crisis is a chilling reminder of where power lies in the global economy.
• Campaign for Access to Essential Medicines from Médecins Sans Frontiéres (MSF), or Doctors Without Borders, as they are also known is a site with news information and publications on the issue of increasing access to essential medicines.
• The Global Treatment Access Campaign works for affordable AIDS drugs and essential medicines.
• Oxfam’s Cut The Cost campaign raises issues about expensive medicines that deny the poor a chance to live.
• Health Care and Intellectual Property part of the Consumer Project on Technology web site has a vast collection of articles on these issues.
• See the various related issues and articles on this web site’s navigation area.

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