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Tuesday
2nd November 2004


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HEALTH-EU:
Cheaper Medicines for AIDS Welcomed

Stefania Bianchi



BRUSSELS, Nov 1 (IPS) - A leading development group has welcomed EU proposals to allow export of cheap medicines to poor countries fighting HIV/AIDS and other killer diseases.

The European Commission, the European Union (EU) executive, proposed a regulation Friday (Oct. 29) to allow generic pharmaceutical manufacturers to produce patented medicines for export to ”countries in need.”

Under a system to be known as 'compulsory licensing', poor countries facing public health crises will be able to override patents on expensive drugs and order cheaper copies from generic manufacturers in other countries.

The country seeking the cheap medicine would have to notify the World Trade Organisation (WTO) that it is applying for the medicine covered by the licence. Patent holders would receive a small payment for the service.

Under the current system, governments can only issue compulsory licenses for use within their own countries and are banned from exporting to the majority of countries that have no domestic pharmaceuticals industry for the needed medicines.

The EU says the new system will help ”ensure that medicines get to the patients who need them and to protect patent holders.”

The commission adds that the proposals will prohibit re-importation of medicines produced under the system into the EU and will allow patent holders to use existing national laws to enforce their rights if the drugs were smuggled back in.

The proposals implement a decision made at the WTO last August to lift restrictions on the export of generic medicines.

Outgoing EU trade commissioner Pascal Lamy said Friday that the proposals demonstrated the EU's commitment to the Doha Development trade round.

”By adopting this proposal the EU leads the way in ensuring access to affordable medicines for poor countries,” he told media representatives. ”It shows that we are delivering on our promises in the Doha Development Agenda.”

Internal market commissioner Frits Bolkestein said the proposals would help save lives in developing countries.

”The WTO decision and our proposed regulation can help save lives by helping countries in need to acquire affordable medicines, without undermining the patent system, which is one of the main incentives for the research and development of new medicines,” he added.

The development group Oxfam said the EU was sending ”a positive political signal” to developing countries. ”With 14 million people dying every year from infectious diseases, it is essential that developing countries feel confident about supplying cheaper generic medicines to their citizens in the face of hostility from the giant drug companies and the United States government,” Michael Bailey, senior policy advisor at Oxfam said in a statement.

But the group urged the EU to ensure the regulation does not lead to ”too much red tape” that could slow poor nations' efforts to get cheap drugs in a health emergency.

”The legal mechanism agreed by the WTO is complex, and even if a developing country fights through the red tape, its market may not be large enough to allow generic companies to offer lower prices,” said Bailey.

”The European Commission and the World Health Organisation will need to monitor carefully how this legislative change works in practice, across the full range of diseases affecting developing countries,” he added.

Oxfam is urging the EU to extend its proposals.

”The longer term solution is for generic production to be the norm in developing countries, not the exception,” said Bailey.

The regulation will need to be approved by the bloc's 25 national governments and the European Parliament. It is expected to be submitted for approval early next year. (END/2004)

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High-priced drugs and fat-cat salaries

 
Dr T Umapathi
 
An estimated 40 million people around the world die every year from preventable diseases because the drugs they need are too expensive or existing drugs are no longer effective.
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Many have called for intellectual rights and patents of drugs — such as those used to control Aids — to be suspended and generic medications made available widely.
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Opponents of this idea assert that innovation, research and the discovery of new drugs would suffer as the big drug companies shy away from R&D initiatives.
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However, what proportion of these companies' profits really go into research?
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In 2002, Families USA, a patient-advocacy group, published a report: Profiting From Pain: Where Prescription Dollars Go? (www.familiesusa.org). It scrutinised the annual financial reports of nine companies that market the top 50 prescription drugs used for the elderly.
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On average, only 11 per cent of the revenues of these nine went to research, with 27 per cent going to marketing, advertising and administration. Profit was an average of 18 per cent of the total revenue.
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Eight of these companies spent more than twice the amount on the marketing and administration than on R&D.
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My scepticism also stems from witnessing the inordinate efforts of drug firms to advertise their patented drugs; doctors, naturally, being their primary target.
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How do drug companies decide which diseases to target? Are they likely to spend resources to find new drugs against diseases of global importance such as malaria and dengue, or will they concentrate on lifestyle drugs that treat "conditions" such as obesity and facial wrinkling?
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The answer is obvious if the chief executive's only mission is to increase the value of company stocks.
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From 1989 to 2000, 65 per cent of the drugs approved by the US Food and Drug Administration contained ingredients already in the market. In other words, these were "drug re-hashes".
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Rather than risk funds in research for novel drugs, these companies try to get a share of an already-established market. Successful novel drugs like Prozac and Viagra were followed by many "second- and third-generation" drugs touting marginal improvements in effect.
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Another common approach in the industry is to modify slightly the chemical structure of a drug just as it is losing its patent.
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A year ago, we read about the proposed US$35.7-million ($59.4-million) severance pay or "golden parachute" for the chief executive of GlaxoSmithKline. And this "award" is for failure — it will be paid out if the chief executive were to be sacked before the end of a two-year contract.
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The 10 highest-paid individuals of the nine drug companies studied by Families USA received a total of US$236 million in compensation in 2001, from US$75 million to a "low" of about US$9 million — excluding unexercised stock options, which can average US$52 million per person. Is any single individual's labour worth so much?
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Patients and their doctors often grapple with the cost of expensive patented drugs when there are no cheap generic alternatives. In countries with comprehensive national health funding, the cost is borne collectively by taxpayers. Regardless, for diseases that are highly prevalent, the burden on the individual and the state's coffers from rising drug costs is considerable.
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The fundamental issue, therefore, is not one of suspending intellectual rights and patents of newly-discovered medicines, but deciding what is fair pricing.
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Free-market principles that work well for other commodities cannot be applied to drug pricing. Until a reasonable limit is put on the size of profits that big pharmaceutical companies expect, the vilification of their bosses as "fat cats" will continue.
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Profitability of a company cannot take precedence over human lives. And one has to acknowledge that "profiteering" by any other name would smell just as foul.
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The writer is the head of the Department of Neurology at the National Neuroscience Institute. This article is written in his personal capacity.
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If you have a view on this, email us at news@newstoday.com.sg

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