[Ip-health] Op-ed: Cheaper drugs as important as improved health infrastructure

[Sarah Rimmington]

Cheaper drugs are as important as improved health infrastructure
by Robert Weissman
The New Times (Kigali)
May 6, 2008

Thompson Ayodele is of course right to emphasize in his recent opinion
piece (=93Africa=92s Failing Infrastructure Renders Compulsory Licensing
Pointless,=94 April 28) the urgent necessity of improving Africa=92s
healthcare infrastructure.

Unfortunately, invoking the infrastructure issue is for Mr. Ayodele a
technique to disparage current debates at the World Health Organization
(WHO) over the means to improve pharmaceutical research and development
(R&D) and to lower drug prices.

Mr. Ayodele is completely mistaken in suggesting that the need to
strengthen health systems is a reason not to pay attention to the price
of drugs. There is no trade off between the two.

Poor people in Africa need more investment in healthcare and better
functioning health systems. But they also need access to life-saving
medicines, and new R&D directed to the priority health needs of the
continent.

The WHO discussions aim to identify means to advance both innovation and
access to the fruits of innovation. The idea is to create incentives for
the development of new medicines to meet priority health needs in
developing countries, and to make those products available on an
affordable basis.

Mr. Ayodele may have an ideological commitment to the patent monopoly
system for R&D, but there is no serious argument that it is failing
developing countries - especially the world=92s poorest countries.

Big Pharma charges far more for its patent monopoly-protected medicines
than patients or governments in Africa can afford. At thousands of
dollars a year per person - and sometimes more than $100,000 per year -
drug prices are gouging consumers in rich countries.

These prices are completely out of reach for all but the elite in
developing nations. Generic competition is the key mechanism to lowering
prices and making drugs affordable in Africa and other developing countries=
.

The case of HIV/AIDS drugs is illustrative. Ten years ago, before
generic competition, brand-name companies charged roughly the same price
for lifesaving HIV/AIDS drugs in Africa as they did in rich countries -
$10,000 a year per person, or more. An HIV diagnosis was a death sentence.

Today, the price is as low as $100 per person - a price decline that
leveraged a huge increase in donor money that otherwise would not have
been made available. The severe problems with healthcare infrastructure
notwithstanding, two million people living with HIV/AIDS in Africa are
today receiving treatment.

Much more needs to be done - and improving infrastructure is a top
priority. Only about 30 percent of those in need are receiving
treatment. But without the price reductions brought about by generic
competition, almost all of the 2 million people in Africa now receiving
treatment would be dead or would die soon.

Rather than criticizing countries like Thailand that are issuing lawful
compulsory licenses - government authorizations of generic competition
for products that remain on patent - Mr. Ayodele should be pointing to
them as an example to be followed.

They are, after all, promoting market competition and lowering price. In
Thailand=92s case, it is acquiring generic versions of a heart disease
drug for 1/70th the price charged by the brand-name company.

Lower prices from compulsory licenses have enabled Thailand to triple
the number of people receiving important medical treatments. But African
and other developing countries need more than cheaper drugs.

They need medical R&D for priority health problems that brand-name drug
companies have no incentive to address.

Patents are not worth much if they offer monopolies on sales to a
population that - no matter how large - has little buying power.

Developing countries comprise 80 percent of the world=92s population but
amount to only 13 percent of the global market for medical products.
(Africa represents less than 2 percent of the global pharmaceutical market.=
)

As a result, there is little corporate sector R&D devoted to the needs
of developing countries. A review by Doctors Without Borders found that
of 1,556 new drugs placed on the market between 1975 and 2004, only 21
were for =93neglected diseases=94 - diseases endemic to developing countrie=
s.

At the World Health Organization negotiations, debate is underway about
different arrangements to spur private sector R&D - ideas that would pay
drug companies, but not lead to high drug prices. One exciting idea
revolves around prize funds, with drug innovators paid large cash
awards, but all drugs being made available, immediately, as low-priced
generics.

Ideologues and those who would prioritize the narrow commercial
interests of Big Pharma over public health objectives have reason to
reflexively defend a patent monopoly-based R&D system that is not
working for the developing world.

For everyone else, the rising interest in new institutional arrangements
to promote the complementary public health objectives of innovation and
access is something to embrace.

Robert Weissman is director of Essential Action, a public health
advocacy and corporate accountability group based in Washington, DC.

---

This op-ed responds to a previously published op-ed by Thompson Ayodele.
Here is the text of that piece:

The New Times
April 28, 2008

Africa's failing infrastructure renders compulsory licensing pointless
Thompson Ayodele

Switzerland is about to become ground zero for the future of health
policy in Africa. Next week, the World Health Organization's (WHO)
Intergovernmental Working Group will convene in Geneva to discuss public
health, medical innovation, and intellectual property.

Many participants are expected to express their support for efforts to
undermine patent protections for drugs. In doing so, however, these
attendees ignore the more fundamental problem facing poor African
nations -- dilapidated healthcare infrastructure.

The anti-patent crowd believes that patents keep prices high and drugs
out of the reach of the poor. They blame pharmaceutical firms for the
suffering of the impoverished and call on developing nations to employ
patent-revoking compulsory licenses that encourage the production of
unauthorized generics.

But even if medicine were available for free, as it often is in poor
nations, dysfunctional institutions and personnel ensure that the needy
can't access it.

Despite unprecedented quantities of monetary aid to the ministries of
health of many African countries, health systems on the continent have
languished.

Between 1990 and 2005, Development Assistance for Health (DAH) increased
from $2.5 billion to over $13 billion. Overall, about ten percent of
Africa's healthcare expenditure is financed by donor aid.

And yet over 50 percent of Africans lack access to essential medicines,
according to the WHO. Around the world, more than 10 million children in
developing countries die unnecessarily from diseases that are easily
preventable and cheap to treat, like diarrhoea, measles, and malaria.

Furthermore, up to 80 percent of Africans have to pay for treatment
straight from their own pockets. In short, public health systems are
failing to deliver. Why? For starters, nearly all foreign aid must first
pass through health ministries before reaching patients.

According to studies undertaken by the WHO and the Center for Global
Development, donor nations rarely know what happens to their money after
they hand it over to a recipient government.

As a result of these lax controls, money is routinely subverted by
health officials for private gain. One problem is leakage of drugs from
the supply chain. Publicly funded drugs can fetch a higher price if
stolen and resold on the black market.

Recent surveys in Nigeria show that 28 public health centers received no
drugs from the federal government over a two-year period.

Meanwhile, a 2001 study by the World Bank showed that fewer than half of
government health facilities in the Nigerian states of Lagos and Kogi
had received any drugs from the federal government.

Last year, Dora Akunyili, the director general of Nigeria's National
Agency for Food and Drug Administration and Control, disclosed that it
was commonplace for donated drugs such as Vitamin A capsules, Mectizan
and Coartem tablets, and oral rehydration salt to be pilfered and resold
on the open market.

With incidents like these in mind, the Global Fund has considered
suspending two grants to Nigeria totaling $80 million. The Fund has
already terminated grants to Uganda and Chad because of bad management,
a lack of transparency, and poor implementation of grant monies.

Theft is not the only problem. Countless other forms of corruption
plague Nigeria's health system, including mismanagement of funds at the
local level; employee absenteeism; extortion of patients by staff
members; and the abuse of procurement contracts for hospital supplies.

According to Human Rights Watch, "the government's failure to tackle
local-level corruption violates Nigeria's obligation to provide basic
health and education services to its citizens."

Compulsory licenses will do nothing to solve these critical issues. And
they'd unleash a whole host of new problems concerning access and safety.

Last year in Thailand, for example, the government used compulsory
licenses to grant the state-run Government Pharmaceutical Organization
(GPO) the right to manufacture generic versions of AIDS and
heart-disease medications.

Many activists applauded the move, even as Thai leaders turned down the
Global Fund's offers of free medicine. Unfortunately, domestic
production has proved too expensive, and access to needed medicines has
decreased substantially for sick Thais.

Further, the GPO has a history of producing shoddy products, including a
different anti-AIDS medication called GPO-Vir. This substandard
antiretroviral actually accelerated the resistance of HIV to treatment,
consigning scores of Thai patients to early death.

Yet Thailand's patent theft continues. Last month, the nation announced
that it would rescind the patents on four cancer drugs.

As long as healthcare delivery remains in the hands of dysfunctional
governments, the health of the poor in developing nations will never
improve.

Aid groups and policymakers must instead enlist the help and expertise
of the private sector. The advantages of this are two-fold.

First, it would reduce corruption. Corruption certainly exists in the
private sector as well, but private enterprises with ethical problems
risk exclusion from the next round of programs and contracts.

Second, competition governs the private sector. Firms that fail or
receive low marks from customers or aid organizations will lose out to
competitors. Market participants are forced to improve productivity and
patient care or face extinction.

In the public sector, by contrast, organizations or governments proven
inefficient tend to get more money -- even as they've demonstrated
themselves incapable of doing the job.

According to the International Finance Corporation, 60 percent of the
$16.7 billion spent on health in Africa in 2005 was privately financed,
with half of that spent in the private sector. It is time to harness
this vast sum so it can work for patients in an efficient and equitable way=
.

Rather than encourage the willful destruction of drug patents,
conference attendees ought to call for measures that would actually
improve the health of those in poor nations, like increased investment
in infrastructure. To do otherwise would hurt those who most need help.

Thompson Ayodele is the Executive Director of Initiative for Public
Policy Analysis, a Lagos-based think tank.

Contact: ippanigeria@gmail.com

--
Sarah Rimmington
Attorney
Essential Action, Access to Medicines Project
Washington, DC
Tel: (202) 387-8030
Cell: (202) 422-2687
www.essentialaction.org/access/