Monday, March 09, 2009

How friendly can Big Pharma be to developing countries in a down economy?

Pharmaceutical companies are easy targets of ethical criticism, and it is easy to see why. They invest vast amounts of capital to develop drugs that can be crucial for health, and seek a profitable return on their investment through consumption of the drugs by patients. Profitable returns are only likely when significant numbers of consumers suffer from the condition the drug aims to treat, and when those consumers have sufficient buying power. From a profit-seeking pharmaceutical perspective, there is little incentive to develop drugs for conditions that are prevalent in countries where few people have the wherewithal to purchase the drugs. There may be an urgent health need for such medicines, but if there is no market for them, no return on investment, then it is unlikely that pharmaceutical companies will develop such drugs or faciliate access to them. Unless, of course, developing such drugs and increasing access to them is part of a public relations ploy, meant to enhance the company's brand.

The head of GlaxoSmithKlein (GSK), Andrew Witty, apparently caused a stir at Harvard Medical School last month by promising that his company would make essential medicines accessible to developing countries and commit more resources to research on neglected diseases. More precisely, GSK will take 20% of its profits from sales in developing countries and reinvest back in local health care infrastructure, and patented medicines produced by GSK will be sold at 25% of their market value in the 50 poorest countries of the world. In addition, there was talk of a 'patent pool' for neglected diseases, i.e. an agreement between various patent-holders to share (for some fee) those patents with each other and with third parties.

These promises may make GSK look saintly, but the impression largely fades on reflection. 20% of GSK's profits in developing countries does not amount to much; an editorial in the Lancet calculates it as less than 0.1% of GSK's total profits, and the folks at Policy Innovations see this as boiling down to about $50,000 per country, hardly a generous investment in local health infrastructure. Selling patented medicines at a quarter of the usual (bloated) price may not be of much help either to those who live on a few dollars per day. And while giving access to patents sounds nice, the road from possession of patent information to research to marketing is a long and winding road paved by a great deal of money. Who has that kind of money? The big pharmaceutical companies, like GSK. But they won't really invest to create drugs for conditions affecting developing countries because the profit margin would be meagre. We come full circle.

Gestures of philanthropy towards the world's poorer nations, on the part of aggressively profit- seeking pharmaceutical companies, is to be taken with a grain of salt at the best of times. In a down economy, when pharmaceutical companies are merging for their own survival, full-blown skepticism is in order.

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6 Comments:

Blogger Jason said...

I believe GlaxoSmithKlein is trying to look like "the good guy" during tough economic times. They know that if people have the perception that their company is a giver it will help their company image.

In reality it's not really affecting their pocket book as much as a big annual company party but that's another story. It seems that Big Pharma is calling a Press Release in a rough part of town so they can be seen working for one day in a soup kitchen. It makes for a good picture but doesn't really make a difference.

Jason
http://www.jrsmedical.com

2:53 PM  
Blogger Jason said...

Honestly, if Big Pharma wanted to make a difference they would provide setup medical clinics to actually make a difference down there instead of just $. When you get your hands dirty you start understanding the problem instead of just throwing money at it so you sleep better at night.

Jason
JRS Medical

2:55 PM  
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