Trans-Pacific Partnership Reveals Deadly Cost of American Patents

11/03/2014 18:51

Source: Yves Smith, Naked Capitalism

 

While US news stories occasionally mention the breathtaking cost of some medications, they almost always skirt the issue of why American drugs are so grotesquely overpriced by world standards. The pharmaceutical industry has managed to sell the story that it’s because they need all that dough to pay for the cost of finding new drugs.

That account is patently false.

First, part of the story the drug industry chooses to omit is that a substantial portion of drug R&D, and the riskiest part (basic research) is heavily funded by the National Institutes of Health and other government agencies. It’s hard to put all the data together, but the latest estimates I’ve seen put the total funded by the government at over 30%.

Second, Big Pharma spends more on marketing on R&D. And it markets in the highest cost manner possible: in person sales calls to small business owners (doctors). The fact that it is worth it to sell in such an exceptionally high cost manner is proof of fat margins (the marginal value of a sale supports such a costly sales effort).

Third, and this is where the foreign debate over the TransPacific Partnership comes in, one of the big reasons US drugs are so costly is we allow drug companies to milk patents to a degree that is unparalleled elsewhere. Consider this section of an article from The Star (Malaysia) by Martin Khor:

It’s really a matter of life and death. For the TPPA can cut off the potential supply of cheaper generic life-saving medicines, especially when the branded products are priced so sky-high that very few can afford them.

The fight for cheaper medicines has moved to cancer and other deadly diseases, when once the controversy was over AIDS medicines.

Last week, a cancer specialist in New Zealand (one of the TPPA counties) warned that the TPPA would prolong the high cost of treating breast cancer because of new rules to protect biotechnology-based cancer drugs from competition from generics. And this will affect the lives of cancer patients.

Some cancer medicines can cost a patient over US$100,000 (RM329,600) for a year’s treatment, way above what an ordinary family can afford. But generic versions could be produced for a fraction, making it possible for patients to hope for a reprieve from death.

In India, local companies are leading the fight to make medicines more affordable to thousands suffering from breast, kidney, liver and gastrointestinal cancer and chronic leukeamia.

For example, an Indian company produced a generic drug for kidney and liver cancer 30 times cheaper than the branded product – US$140 (RM461) versus US$4,580 (RM15,100) for a month’s treatment – after it was given a compulsory license.

India has a patent law that disallows patents for newer forms of drugs or known substances unless it improves the medicine’s efficacy or effectiveness. Under WTO rules, countries are free to set their own standards for novelty, or whether a product is novel enough to be eligible for a patent.

Also, in many countries, including Malaysia, the patent law allows for companies to obtain compulsory licences to import or make generic versions of original medicines

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