I read a sligtly interessting article in Dagbladet today. I'm still haven't found the original source, but the the main points can also be found in this article in English, for our non-Norwegian readers (you know who you are).
Basically it is the dilemma that development countries don't have access to (the newest/ best) medicin due to high cost, while they at the same time has the most severe health problems. Professors Pogge and Hollis suggest to launch an insitution (Incentives for Global Health) that for a periode payes the pharmacuatical company a fixed prize for new drugs calculated after the impact the drug has on international health. In return, the pharmacautical company will wave their right to sell the drug at marked price and sell at cost price. The patent protection should be the same as before.
So, I was just curious: What do the readers of this blog think of this plan?
(Yeah, Wilhelm, I know that Pogge and Hollis have their PhDs in philosophy and economy, but let us see past that for now).
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Considering that the cost of development varies wildly between medicines, and the fact that this does not take into account the cost of partial development of the vast majority of drugs which do not make it past whichever stage, I'm thinking this is just another way of shafting pharmaceutical companies.
If the idea is for governments to shell out money so as to make it possible for the pharma companies to lower their prices, then at least make it possible to continue R&D instead of just reverse-engineering other formulations.
As it stands right now, it looks like a good plan, but with the added twist of leaving the pharma companies with the bill.
It is clearly not about shafting pharma, since it is an optional system. If the drug cos don't like the price, they don't have to enter the system...
...some choice, if smaller pharma companies can't afford to sell at perceived cost.
If your company was forced to operate at a loss in order not to look like Satan's lawyer - would you try to explain that unlike the major players you can't afford a perceived cost, and then suffering the PR consequences?
I'm not at all saying that pharma companies are these noble institutions of concentrated goodness, but rather that this could be an excellent scheme to project government guilt for screwing over third world countries onto "big business". That kinda' always plays well.
Never mind that a lot of the reason why these countries can't afford the drugs in the first place comes directly from western countries a) totally shafting them on the price of goods and b) subsequently loaning the third world countries money to pay off the debt they might not have had if they had gotten a fair price for their products to begin with.
Well, Wilhelm has a good point on why development countries can't afford medicin: The western worlds history of exploiting the development countries resources.
I see two major practical flaws with this system:
1. Funding
The system is based on the fact that several nations contributes to the Incentives for Global Health (IGH). Check the track record the international community have for promising financial aid to development countries, and delaying the payments. This severly damage the credibility of this project.
2. Predictability
Drug development takes several years. The pharmacuatical companies need predictability in IGHs policy to ensure payment. Since selling at cost means that the only source of incomeis the payment from IGH, pharma companies needs reliable calculations to see if they can recoup their big spendings in the development phase. Factors like who decides the impact factor on global health and how this affects the payment needs to be set, and not affected by different politics in IGH and their member countries. As I see it, there is a danger that a goverment with a thight budget will cut in IGH fundings, since it doesn't affect their citizens (=voters).
Apart from these flaws, if IGH is set out, there are two problems. Like Wilhelm says, small companies might the forced to participate due to bad PR. Also, due to PR/financial reasons, big pharma may contribute with a less then stellar drug, just so they show some social conscience to the media.
But isn't this a simpler solution: Instead of organizing a instition like IGH with all the administration etc, where you pay a fixed fee to pharma so they can sell at cost price to development countries, why not just commit to buying drugs at marked price? For instant through the UN. I could be that the riches countries commits x units of a drug per year for the next 10 years. Or they can commit to fund x billion the next 10 years earmarked for a country or region to buy drugs of their choise from.
Basically, make the development countries a more attractive and predicable marked for the big pharmas, and bypassing all the administration and patent problems the IGH might represent.
Check the track record the international community have for promising financial aid to development countries, and delaying the payments. This severly damage the credibility of this project.
Plus from the piece, the "how" of the determining of a "reasonable price" was vague to non-existent. Unless the companies are being compensated to the tune of what that drug actually costs, this is just another case of whining and saying "This here sucks; someone else should do something about it".
And might I add; a policy like this would really give pharma an excuse to spew out drugs like Viagra, which sell like crazy but are of less intrinsic value than, say, improved chemotherapeutics. With a policy like this in place, pharma would actually be justified in spending a much larger fraction of their R&D on viagra-like drugs just to recoup the costs from the IGH fiesta.
I'm really going overboard with this point, but from the sad fact that the "but a pill of drug X only costs 35 cents to produce" loser argument is still being perpetuated in public discussions regarding drugs to third world countries, it's obvious that this point cannot be overstated, so here it goes one more time:
The SECOND pill costs a dollar or less to produce. The FIRST pill might carry a cost of several billion. Add to this the fact that the company as such has to carry the financial burden of many drugs which did not pass through whichever clinical trial and have enough capital to invest in the next generation of drugs as well as completely new drugs, and one might see that selling at "production cost" is a vague expression at best.
Factors like who decides the impact factor on global health and how this affects the payment needs to be set, and not affected by different politics in IGH and their member countries.
Coming up with a quantitative measure of a drug's worth sounds like a thankles task indeed. Not to mention it's not necessarily quantifiable until a number of years since the drug was launched, by which time the company is bankrupt because some philosophy major figured it's worth to be twice the production cost of the third batch.
And what about rich governments earmarking significant sums of money for collaborative research efforts between universities/research institutes and pharma companies on new drugs?
The SECOND pill costs a dollar or less to produce. The FIRST pill might carry a cost of several billion.
So true.
And what about rich governments earmarking significant sums of money for collaborative research efforts between universities/research institutes and pharma companies on new drugs?
I'm all for that, since a large number of potentital candiates need to go into (pre)development for a single new drug to be released on the other end. This is were the Universities and research institutes have their strength (in pharmca). However, the development of a drug is such a risky, complex and expensive process, that the Universities don't have the competence (all regulation, patent laws, engineering, formulation etc in addition to the pure science bit) or funding to do the job. Maybe with the exception of the large, international Universities, but I don't think they want to take the risk or focus their resources on such a small area.
But, getting lead candidates is good, but it don't mean a thing unless the final drug is profitable. And in third world health issues, there are two ways of making the drugs profitable: The rich countries gives aid, either by buying drugs at market value and distributing them for free or by giving earmarked funds to buy pharmaca. The Health Impact Fund is basically a combination of the first. But a drug could also be made more profitable by increasing the wealth in the third world. Japan is rich and big enough to warrant drug development specifically aimed to that country alone, and I think China and maybe India will be an interessing marked for big pharma in the near future. Raising the wealth in parts of Africa and Asia might have the positive side effect that it makes those areas more attractive for the pharma industry. On the other hand, it seems that increased health is a necessity for increased wealth...
Coming up with a quantitative measure of a drug's worth sounds like a thankles task indeed. Not to mention it's not necessarily quantifiable until a number of years since the drug was launched, by which time the company is bankrupt because some philosophy major figured it's worth to be twice the production cost of the third batch.
Excatly my point, only said so much better. ;-)
I'm all for that, since a large number of potentital candiates need to go into (pre)development for a single new drug to be released on the other end. This is were the Universities and research institutes have their strength (in pharmca). However, the development of a drug is such a risky, complex and expensive process, that the Universities don't have the competence (all regulation, patent laws, engineering, formulation etc in addition to the pure science bit) or funding to do the job.
Don't I know it :-(
The SECOND pill costs a dollar or less to produce. The FIRST pill might carry a cost of several billion.
Then why don't they put that second pill into production? It would be much cheaper, now wouldn't it?
(Sorry, I tried to resist the urge, but this joke was too obvious)
Anyway, I do think we agree way too much on this subject (scary, innit?), so there's no need to continue patting each others back. Oh well.
Yeah - losers.....the thing that works is always the last thing they try too, I'm betting.
..and in the interest of lowering the circle-jerk quotient of this post/topic: F*ck you AND your theories, Anders! I vehemently disagree with everything you have to say on this topic. As a matter of fact, I find my IQ has dropped some 50 points from reading your post and subsequent comments. Hence, I'll get an illiterate person to log onto this blog with my username from his Mac and delete your post so as to hinder further contamination.
..and in the interest of lowering the circle-jerk quotient of this post/topic: F*ck you AND your theories, Anders! I vehemently disagree with everything you have to say on this topic. As a matter of fact, I find my IQ has dropped some 50 points from reading your post and subsequent comments. Hence, I'll get an illiterate person to log onto this blog with my username from his Mac and delete your post so as to hinder further contamination.
I haven't got anything to add to this subject, so I'm just agreeing with everything you said above. You nailed it again, why can't more people be like you?
...hey, wait a minute... >:(
8-D
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