[Ip-health] Marcus Low in Business Day: UN panel probes patents and new drugs

Thiru Balasubramaniam thiru at keionline.org
Tue Aug 23 03:04:29 PDT 2016


Opinion & Analysis

UN panel probes patents and new drugs

BY MARCUS LOW  AUGUST 23 2016, 05:59

IT IS often argued that weakening patent monopolies on pharmaceuticals will
lead to fewer new medicines being discovered. Whether this is indeed the
case, and to what extent, is one of the key questions that must be
addressed by a UN high-level panel convened to consider the "policy
incoherence between the justifiable rights of inventors, global human
rights law, trade rules and public health".

One of the difficulties faced by the panel, and by any policy maker, is the
lack of transparency in relation to drug development. Firms generally
disclose little detail about what they spend on research and development
(R&D) for new medicines.

In this information vacuum, widely varying estimates flourish: the Drugs
for Neglected Diseases Initiative (a nonprofit group) says based on its
experience, a new drug on average costs less than $200m to develop
(including cost of failures), and at the other end of the spectrum the
Tufts Centre for the Study of Drug Development claims $2.6bn.

In 2013, GlaxoSmithKline CE Sir Andrew Witty called the then prevalent $1bn
figure "one of the great myths of the industry".

These are large absolute numbers, but the multinational pharmaceutical
industry only deals in large numbers. The more informative statistic is the
percentage of revenue pharmaceutical companies spend on R&D (of which we
get a pretty good idea from the US Securities and Exchange Commission
filings). This usually falls between 8% and 18% of revenue, much less than
what is spent on marketing, and typically also less than profits. It seems
clear that only a small percentage of the high prices we pay for patented
medicines is invested in R&D.

Even the Financial Times has been critical, writing in an editorial last
year: "Pharmaceutical innovation has been one of the great successes of the
past century, improving the lives of people immeasurably round the globe.
But if the current dispensation is to continue, the industry must learn to
price with greater restraint."

The social contract underpinning the patent system allows companies to have
patent monopolies and make reasonable profits in exchange for the
development of new medicines. In other words, when we pay high prices for
medicines, we do so in the belief that there is a link between high prices
and R&D. But the available evidence suggests strongly that this link, and
the social contract that underpins it, have been severed.

We are working with incomplete information. In most cases, we do not have
access to how prices are set or how much a company has invested in the
development of a specific drug.

It is both reasonable and appropriate that as part of the deal when
granting pharmaceutical firms patent "rights", governments should demand
transparency on how these are exploited. If the industry refuses to share
more information on its R&D spending and price-setting, governments should
force it to.

There has been a substantial industry backlash against the UN panel in the
media. This is understandable. The panel threatens to bring transparency,
and transparency and accurate information will ultimately be the catalyst
to making reasonable changes in the public interest. Governments must stand
firm against industry pressure and its expression through entities like the
US trade representative.

While few will object to pharmaceutical companies making reasonable profits
and no one wishes to slow the discovery of new medicines, this does not
mean we have to be kept in the dark. The goose will keep insisting that it
is laying golden eggs and that any changes to its diet of caviar will be
fatal, but at some point, we have to stop taking its word for it and take a
look for ourselves.

If there are policy, regulatory or legal interventions that will increase
people’s access to medicines without threatening new discoveries, we must
consider it. Public interest demands it, and lives depend on it.

• Low is the former director of policy at the Treatment Action Campaign.
This is written in his personal capacity

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