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News :: Miscellaneous |
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Why We Need Free Trade for Life-Saving Medicines |
Current rating: 0 |
by Mark Weisbrot
(No verified email address) |
19 Mar 2001
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Mark Weisbrot is co-director of the Center for
Economic and Policy Research in Washington, DC. |
The story of the decade, and perhaps the
century, has finally made it to the front pages:
millions of people who could be saved are dying from
AIDS. The reason for their unnecessary, premature,
and often agonizing deaths is now becoming clear: it
is pure, unadulterated greed.
This is a scandal of biblical proportions. The
$350 billion pharmaceutical industry -- one of the
most profitable and powerful in the world -- has
teamed up with its allies in the US government to
deny millions of people access to affordable, life-
saving drugs.
In the United States, people who are infected
with the HIV virus can now have their lives extended
indefinitely through a combination of drugs known as
AIDS cocktails. The cost of these drugs is $10,000 to
$15,000 a year -- placing them far out of reach of the
33 million people in low-income countries, including
25 million in sub-Saharan Africa, who need them.
But the cost of producing these drugs is a tiny
fraction of their price. An Indian generic drug
manufacturer, Cipla, recently offered to provide the
drugs to governments for $600 and to non-
governmental organizations for $350.
For millions of people these drugs would
become affordable; in the poorer countries, where
annual income per person is in this range, they would
be affordable with relatively modest foreign aid from
the richer countries.
But the pharmaceutical companies are
adamant. \"They are stealing my intellectual property,
and I cannot accept that,\" said a top Merck official.
Most people would not be convinced by this
argument. Should millions of people be condemned to
death in order to protect the patents of pharmaceutical
companies?
In the face of growing political pressure and
moral outrage, the drug companies have begun to
offer some of these drugs at increasingly steep
discounts. But even Merck\'s latest offer, ostensibly at
cost for two of the commonly used drugs that make
up the AIDS \"triple cocktail,\" would still leave the
price at 3-4 times what generic competition would
bring.
There are also a number of other problems
with allowing private monopolies to determine the
price and availability of these desperately needed
medicines. The cost in human life could be very high
if they decide to drag their feet, demand other
concessions, change their prices, or otherwise abuse
their God-like power over the lives of millions.
The companies counter with an economic
argument: these drugs would not exist if not for the
monopoly profits that finance research and
development. But there are other ways to fund this
research -- in fact many of most expensive new drugs
were discovered with the help of public funds.
From a strictly economic point of view, a
patent monopoly is a very inferior means of financing
research. A basic principle of standard
microeconomics is that the price of a good should be
equal to the cost of producing an additional unit.
Monopoly pricing, especially at 15 or 20 times the
cost of production -- is enormously wasteful and
inefficient. And in the case of essential medicines, the
toll of this inefficiency is measured in human lives.
As a matter of law, US patents do not
automatically extend beyond our borders. But the
drug companies and their allies in Washington have a
formidable arsenal of weapons to force compliance
from poor countries. These include economic
pressures, lawsuits, and the World Trade
Organization. When South Africa -- where 4.2 million
people are infected with the AIDS virus -- passed its
Medicines Act in 1997 to make these drugs more
cheaply available, Washington retaliated with trade
sanctions, postponed aid, and other economic threats.
Public pressure from activist groups forced the
Clinton administration to reverse its policy against
South Africa. But the battle was far from over. For
example, the United States is currently pursuing a
complaint against Brazil at the World Trade
Organization over a Brazilian law aimed at increasing
domestic production of AIDS drugs. And the
pharmaceutical companies are still challenging South
Africa\'s law in that country\'s courts.
Here is a simple reform that is consistent with
basic humanitarian as well as economic principles: no
enforcement of patents for essential medicines in low-
income countries. This would allow for treatment of
millions of people who would otherwise die.
The pharmaceutical companies do not appear
ready to abandon their quest for worldwide
monopolies over the drugs that they produce. But the
public is becoming increasingly aware of their role,
and it is hideously indefensible. It may take more
severe pressures -- such as boycotts by consumers and
investors of the offending companies -- before they
get the message. But sooner or later, they will have to
let go. |
See also:
www.cepr.net
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