In this case study I was asked six question the first one was,Do pharmaceutical companies have a responsibility to distribute drugs for free or at low cost in developing countries? What are the main arguments for and against such an approach? While this case is literally full of negative aspects, we will only focus on the main points for both arguments. Pharmaceutical companies want to be sure that the products they spend years and millions of dollars to create are not easily reproduced and sold at discount prices.
The profits pharmaceuticals make of their patented products are supposed to refinance new research. So taking away their exclusive distribution rights and allowing other manufacturers to just copy the product and sell it at minimal costs also harms the innovative processes in which new and better drugs are developed [1]. Those less concerned with the patents for these drugs are concerned about the alarming AIDS statistics, which clearly demonstrate the fact that there is an AIDS epidemic in some of the poorest countries in the world.
In some of the countries where the with AIDS infected population is not only very large but also very poor, local companies will reproduce one or more of the drugs that comprise the AIDS “cocktail” and sell it at prices lower than those of the company who originally introduced it and is trying to recover some of their costs from research and development. According to the case in the textbook, on average it takes ten to fifteen years for a drug to be created from start to finish, at a cost of $800 million. Even then, the case goes on to state that only 30 % of the completed product will earn revenues equal to its research and development.
With the protection of a patent, the companies that make the drugs can charge high prices in an attempt to make their money back. Due to the fact that people with HIV/AIDS are always going to need the medicine, the price of the drugs tends to be relatively price insensitive during the time when they are protected by a patent . Pharmaceutical companies have a responsibility to distribute drugs to developing countries at low cost, as failure to do so means millions of people are sick or dying unnecessarily. Discounted prices make political, economic, and, most importantly, moral sense.
Although ninety-five percent of people living with HIV/AIDS are in developing countries, the impact of this epidemic is global. In South Africa, where one in four adults are living with the disease, HIV/AIDS means almost certain death for those infected. In developed countries however, the introduction of antiretroviral drugs has meant HIV/AIDS is treated as a chronic condition rather than a killer disease. In developing countries like South Africa, the drugs that allow people to live with the disease elsewhere in the world, are simply too expensive for individuals and governments to afford at market price.
Drug prices are set by pharmaceutical companies to cover research and development costs. While R&D costs clearly need to be covered, markets in developed countries already pay for most R&D of new products. Because of this, it makes moral and economical sense to establish a two-tiered pricing system; for R&D costs to be paid for by developed countries, allowing significantly reduced prices to be charged in developing countries. Pharmaceutical companies had been reluctant to provide drugs to developing countries at reduced prices because of concerns around distributing drugs in unregulated and unreliable environments.
They argued that this could create new drug-resistant strains of the HIV virus. There was also concern about corruption or diversion of supplies from both government and distributors, and no guarantee the product would in fact reach the people who need it. There is a significant risk of the discounted drugs beiThere is a lot of discussion about pharmaceutical companies, intellectual property, and the global AIDS epidemic. Do pharmaceutical companies have a responsibility to distribute drugs for free or low cost in developing countries? Why is intellectual property such a big deal?
What impact would South Africa’s decision to levy duties on drugs in the country have on the international distribution of drugs? Was the change that provided patent protection for pharmaceutical companies an appropriate change or a dangerous precedent? Was it necessary to relax intellectual property rules in order to ensure that adequate supplies of AIDs medications would be available for distribution in the developing world? What role to multi-national corporations have in providing funding or other assistance to international organizations such as the Global Fund?
All these questions have many arguments for and against but the right answers probably lie somewhere in between. Having and providing access to affordable medication is one of the greatest challenges we face today. Many people see the pharmaceutical companies as socially irresponsible. The evidence is in the outrageous prices individuals have to pay for medications. Although I don’t like high priced medications I do believe in the right for a business who has the chance to face many lawsuits to make money.
To come up with medications it takes years of research and licensing. The pharmaceutical companies don’t want their hard work to be the catalyst for another company to come in and make a cheaper version and take all the profits. With the protection of a patent, the companies that make the drugs can charge high prices in an attempt to make their money back. The profits are then spread to investors and also used for more research for better medications illegally re-imported back to into the West.