[Ip-health] Investors pressure drug firms on pricing

[Ellen 't Hoen]

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www.guardian.co.uk/aids


Multinationals urged to allow developing countries to sidestep patents on
life-saving treatments
Sarah Boseley, health editor
Tuesday March 25, 2003
The Guardian
Drug companies were given a stark warning yesterday that blocking access to
life-saving drugs at affordable prices by poor countries could undermine
public confidence in them and damage the value of their shares in the long
term.
The unprecedented pressure on the multinationals comes from major City
institutions with investments of more than =A3600bn and backed by well-know=
n
names such as Jupiter, Schroders and Legal and General Investment
Management.
Investors are worried about the impact on public opinion of the perceived
intransigence of the drug companies which have been blocking the Doha trade
deal, which could allow poor countries to bypass patents on expensive new
medicines and make or buy cheap copycat generic versions.
Yesterday ISIS Asset Management and the Universities Superannuation Scheme
(USS) published an investor statement urging the drug companies and
governments to improve access to medicines for the poor. They have drawn up
a framework of good practice to judge the pharmaceutical companies'
commitment to public health in the developing world.
They say setting different prices for rich and poor countries is an example
of good practice. So is "sensitivity to local circumstances" when it comes
to enforcing patents or giving licences to local generic manufacturers.
Even more radical is the suggestion that companies will be commended for
"using influence with governments to address the public health crisis in
emerging markets".
This influence will include urging governments in Europe or the US to put
money into the Global Health Fund, which gives grants to developing
countries to buy the cheapest available medicines for Aids, TB and malaria.
It will also include supporting interpretations of trade agreements on
patent issues which would help the development of emerging markets in poore=
r
countries.
Olivia Lankester, senior analyst at ISIS, said: "Our main concern is that
continuing high-level criticism of the sector will, over time, damage its
ability to operate."
She acknowledged that companies had been scapegoated to some extent, but
added that the controversy could undermine their legitimate arguments for
strong patent protection which enables them to recoup the millions of pound=
s
they spend on the research and development of new drugs in the rich norther=
n
countries.
The climate has changed, but the industry has not. The City institutions
point to recent pronouncements like that of David Kessler, dean of Yale
school of medicine who worked at the food and drug administration under Bil=
l
Clinton and who in February said that drug companies must relax their
patents in South Africa and elsewhere to make their drugs more affordable.
"I don't expect pharmaceutical executives will do this out of the goodness
of their hearts," he said.
"Perhaps they will do it out of self-interest. The companies have much to
lose as the international community grows restless.
"At stake is the very patent protection system that allows them to control
drug prices. They want to keep the power of pricing their products but they
must bend for a true international crisis."
Raj Thamotheram of USS said: "I think many political commentators who are
quite balanced and pragmatic are seeing this knock-on effect on the sector'=
s
ability to price as it did in the past."
Guardian Unlimited =A9 Guardian Newspapers Limited 2003





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