Why are pharmaceuticals companies so
often the object of criticism? After
all, they are in the business of
discovering the medicines that help
save and improve the lives of millions.
They employ some of the most gifted
scientists on earth, who strain at the
very limits of existing human knowledge
to discover the medical treatments of
tomorrow.
15 , a campaign launched this
week by Oxfam, the UK aid agency,
which accuses drug companies of
using patent rights to deny millions of
people life-saving medicines - par-
ticularly to treat Aids - has struck a
chord. It has unleashed a fury of
media coverage in which pharma-
ceuticals companies are branded as
grasping and ruthless - even evil.
Paul Herrling, the quiet and
thoughtful head of research at
Novartis, a giant Swiss pharma-
ceuticals company, concedes that his
industry 16 . "It's absolutely true
that the pharma industry, like any
other human undertaking, has
excesses and does things that you or I
would not condone," he says, pushing
his bicycle through the research
campus he runs in Basle. "But the
biggest motivation when you talk to
our scientists is that they can use their
science to save lives."
Mr Herrling believes the
pharmaceuticals industry has a
fundamental contract with society -
to deliver new medicines. "We are the
only element of society that can
efficiently contribute new pharma-
cological therapies to society.
Nobody else can do it." But the 17
to which he alludes lies at the heart of
public disquiet about the industry. For
while the public, through its re-
presentatives in government, has
implicitly signed up, many elements
of the agreement make it feel
uncomfortable.
At the heart of public disquiet is
the industry's monopoly status - the
foundation of its fabulous wealth. The
top 10 pharmaceuticals groups have
a combined valuation of $1,200bn
and sales of $150bn a year. The
contract with society is as follows.
Drug companies are encouraged to
spend huge amounts of money on
discovering new medicines. 18 ,
|
they are awarded a monopoly, known
as a patent. While the patent lasts, for
an average of about 10 years after a
medicine is launched, no other
company can produce cheap copies of
the same drug.
The disadvantage of the arrange-
ment is that the price of patented
medicines bears no relation to the
cost of manufacturing them. Drug
companies claim that they operate in
a competitive environment. But when
a medicine finally goes off patent,
generic manufacturers can charge a
tenth of the price and still turn a
4
handy profit.
Furthermore, the industry's claim
that it needs "super-profits" to
undertake risky research investments
is 19 by the huge amounts it
lavishes on marketing. Glaxo-
SmithKline boasts that it spends
$500,000 an hour on research and
development. But it invests nearly
twice as much in sales and marketing.
It employs 10,000 scientists - and
40,000 salesmen.
None of this sits well with the
image conjured up in Oxfam's report
of patients in the developing world
dying for want of medicines. By
defending its 20 in poor countries,
it says, the industry puts the price of
vital drugs beyond millions of poor
people. Through its vast lobbying
power, Oxfam accuses it of exploiting
World Trade Organisation rules to
"conduct an undeclared drugs war
against the world's poorest
countries".
The charity says patented
medicines cost far more in countries
that 21 international patent norms
than in those that allow generic
manufacturers to flourish.
"We know that making life-saving
drugs more affordable isn't the whole
answer," says Justin Forsyth,
Oxfam's director of policy. Mr
Forsyth concedes the industry's point
that poverty and lack of healthcare
infrastructure are even more to blame,
as evidenced by a continuing lack of
access in those countries to drugs that
have long since lost patent protection.
"However, the balance has skewed
too far towards corporate wealth
rather than public health," he says.
Some in the industry are genuinely
bemused at such accusations. One
|
executive from Merck, a respected
US company remarked recently that
food companies were not held
responsible for world famine, nor
water utilities for the absence of
drinking water in poor countries.
"Why is it the 22 of the
pharmaceuticals industry to fund
treatment of Aids in Africa? Since
when?" echoes Joe Zammit-Lucia of
Cambridge Pharma Consultancy.
The problem for the industry is
that not even Oxfam is asking it to
fund such an endeavour. Pharma-
ceuticals companies are being
challenged to do something far more
risky: to renounce their patent rights
in certain markets. That is a
frightening prospect for an industry
for which patents are its very
lifeblood. If it budges, even 23 , it
fears its prices will be undermined in
the west.
The industry's traditional line of
thinking has been that abuse of
patents, wherever it occurs, is theft.
"Companies that make generic copies
are like pirates on the high seas," Sir
Richard Sykes, non-executive
chairman of GSK, told the BBC last
week.
But that hardline view may be
giving way to a more pragmatic
approach. This week, Glaxo-
SmithKline told concerned investors
that it was 24 its policies on
pricing and patent enforcement. Even
before the Oxfam campaign broke,
Jean-Pierre Garnier made it clear to
colleagues that the access issue was
high on his agenda. He was not
happy, he said, being head of a
company that sold 80 per cent of its
medicines to only 20 per cent of the
world's population.
At Novartis, Dr Herrling believes
the industry should help repair its
image by devoting a specified
percentage of profits towards research
into non-commercial diseases, such as
malaria and dengue fever. If the
industry continues to arouse public
scorn, he says, it runs the risk of no
longer being able to attract the finest
scientific talent. "That would have
disastrous consequences for society."
David Pilling in the 'Financial
Times'
|
