Medicines for the World: A Way Forward
March 26, 2004
The current system of drug development and marketing has consistently failed poor countries, and also failed middle-income countries, where the great majority of people cannot obtain antiretrovirals1 and will be unable to afford new cancer and other treatments as well. And now the system is failing rich countries also, as fewer innovative drugs are developed despite huge price increases that supposedly fund research.2
The current model of funding drug development by sales to individuals requires customers who can pay -- either directly or through insurance or government. But in poor and middle-income countries most people cannot pay for expensive medicines in any of these ways.
Another business model (which already occurs with generic manufacturers and could apply to research-based products as well) is for companies to make large sales to nations or groups of nations, and be responsible only for drug production and any contracted support -- not for registration in each country, distribution, or marketing, which would be handled by public institutions more familiar with local conditions. This system would greatly reduce the company's expenses (especially since all the marketing needed to persuade people to use the treatment goes away). And it would increase the value of the company's product as well, since medicines could be available to all, not just those with access to cash to pay for them.
With such a business model, private companies could legitimately profit from developing treatments for disease of poor regions. Sales would be very large, so a modest percentage of profit on each would add up to enough money to motivate corporations. Companies could focus on developing drugs and leave distribution to others. And finding the money to pay for treatment in poor areas would be clearly recognized as a public responsibility. (For the poorest countries, much of the money will have to come from donor agencies or international institutions, no matter what business model is used.)
How, then, would poor-country prices of research-based, proprietary drugs be determined?
We need to recognize that drug-by-drug, country-by-country negotiation does not work. It is not a proper negotiation when one party faces the life of death of thousands of its citizens, while the other may not even care about the money but cares very much that no precedents be set -- and has the U.S. government with its whole system of collective punishments to back it up.
Instead we need international consensus to bring governments, companies, and other parties to the table to negotiate guidelines on what poor countries should contribute to research and development cost, and how the rest of the money should be raised. How would this consensus be shaped?
For new drugs, everyone would know that if prices were too low, there would be no money or incentive for further innovation. Governments would normally try to make prices low, while companies would try to make them high, resulting in a rough balance. Grateful patients and their families might well speak out and lobby for higher prices for an important drug -- the money would usually not come from their pockets, and would encourage more research and development for the disease.
This system could be voluntary for both countries and companies. But over time, public consensus and institutional pressures would help protect against the unregulated price inflation we have now, and also against prices too low to fund development. It would also protect against the evils of the present system: vastly underfunded development of treatment for diseases affecting poor regions -- and for patented medicines already approved, poor or middle-income countries forced to negotiate drug by drug for perhaps 10% of their population, with the other 90% denied treatment even when that results in their death.
We have proposed instead a public-private hybrid that provides incentives for pharmaceutical companies to deliver value by inventing, testing, or manufacturing new treatments -- instead of manipulating customers, governments, and markets. Meanwhile governments or nonprofits can handle country-by-country registration, distribution, and public education, relieving the companies of these expenses.
In this system public and private spheres each do what they can do best. Private companies still decide where to invest in applied research. But the value of successful treatment for the poor is determined through public agreements among the parties involved -- not through your-money-or-your-life sales that usually cannot take place at all in poor countries, as is the case today.
Someone with a good idea for treating diseases of poor countries will be able to turn it into a profitable business venture -- because there will be a very large and efficient market -- plus good information on what the world can pay, allowing businesses to develop treatments for general use, not just for elites.
Such a system will not be created by decree, but can evolve through years of consensus building and practical experience.
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This article was provided by AIDS Treatment News. It is a part of the publication AIDS Treatment News.