PHM-Exch> Blueprint for making medicines more affordable for everyone

[Claudio Schuftan]

*Non-communicable
diseases<http://theconversation.edu.au/pages/non-communicable-diseases>–
Philip Soos examines the importance of essential drugs and
technologies to
the world’s poor, a priority action area noted by the Lancet NCD Action
Group and the NCD Alliance.*

The magnitude and severity of preventable and treatable NCDs – diabetes,
stroke, cancer and heart disease – has brought the affordability of
medicines to the forefront of global public health.

For more than a decade, a worldwide campaign has been agitating for more timely
and affordable access to medicines <http://www.msfaccess.org/> for the
world’s poor.

This is because hundreds of millions of people around the world don’t have
access to the medicines they require to combat and alleviate suffering from
a plethora of NCDs.
Patently obvious

One of the direct causes of the lack of affordability of pharmaceuticals is
the patents system.

Patents are a monopoly granted by the government ostensibly to promote
greater levels of research and development (R&D) than would exist without
some form of intervention.

But the problem is that monopolistic pricing makes medicines less affordable
to individuals.

While traditional forms of protectionism such as tariffs result in markups
of 20% to 30%, patents can increase medicine prices by a thousand or even
ten thousand percent above market competitive prices.

And monopolistic pricing is not the only
hurdle<http://theconversation.edu.au/patent-controversy-its-time-big-pharma-took-its-medicine-2697>to
making medicines more affordable and accessible.

It is compounded by perverse incentives for pharmaceutical companies to
spend R&D on creating largely non-innovative medicines for high-income
markets.

Add to this, the temptation for pharmaceutical companies to withhold
clinical research that indicates negative side-effects of some drugs.

Merck knew before Vioxx was released on the market, for instance, that it
substantially increased the incidence of heart attack and stroke, resulting
in tens of thousands of preventable
deaths<http://www.consumersunion.org/pub/core_health_care/001651.html>in
the United States.

It’s pointless to advocate policies that result in cheaper medicines if they
are defective so consumers are harmed rather than treated.

But under the patent system, firms are faced with such perverse incentives
that are clearly not aligned with the common good.
All over the world

It’s wrong to assume that patents are the sole cause for lack of medicines'
affordability.

The lack of a well-functioning public health-care systems and medicine
subsidy schemes; sales taxes; poverty; government corruption; and the high
cost of on-going medical treatment are also reasons why many individuals and
entire populations lack timely and affordable access to pharmaceuticals.

One of the oddities of the access to medicines campaign is that many assume
only developing nations are in need of help.

In fact, the affordability crisis also strikes closer to home in many of the
wealthier Western nations.

The United States, for instance, lacks a comprehensive national subsidy
scheme and there’s an expectation that private insurers provide coverage
alongside Medicare and Medicaid.

Despite this, many millions of Americans can’t afford to purchase medicines,
which are often sold at grossly inflated prices.

Australia has one of the best medicine subsidy schemes in the world: the
Pharmaceutical Benefits Scheme (PBS). But the PBS cannot subsidize every
medicine on the market for the simple reason of containing costs.

The PBS will soon cost $10 billion and is expected to continue to grow. And
even now there are instances of Australians who cannot afford unsubsidised
medicines and are placed at an economic (and health) disadvantage.
True cost

The US pharmaceutical market recently reached US$300 billion in size. It
would actually only be worth approximately US$30 billion at competitive
market prices.

If medicines were priced at the cost of production under an alternative R&D
system, not only would they become more afford but the budgets of government
subsidy programs and charities would be able to provide greater coverage and
treatment to those who need it.

It’s critical for activists driving the access to medicines campaign to
examine the assumptions and justifications that uphold the pharmaceutical
patents system.

They shouldn’t accept what the industry and the economics profession say in
support of an R&D system that’s grossly inefficient in both economic and
social terms.

There are much better
systems<http://www.cepr.net/index.php/Publications/Reports/financing-drug-research-what-are-the-issues>to
promote research and development.

And there’s no plausible rationale for relying on 15th century government
monopolies to finance R&D – a creation from the time of the feudal guild
system.

Overturning pharmaceutical patents, rather than fiddling around the margins,
should comprise a core focus of the access to medicines campaign.

This will help bring our scientific and innovation research structures into
the 21st century, and most importantly, improve the affordability of
medicines at a time when the world is facing an epidemic of non-communicable
diseases.
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