Pharmaceutical Companies, Intellectual Property, and the Global Aids EpidemicEssay Preview: Pharmaceutical Companies, Intellectual Property, and the Global Aids EpidemicReport this essayIBUS 3312 – International ManagementPharmaceutical Companies, Intellectual Property, and the Global AIDS EpidemicAnalysisWhile 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.
Recovering ExpensesIn 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 [2].
AIDS StatisticsOne of the saddest aspects of this case is just the statistics. The first table in the case study breaks down how many people have HIV/AIDS according to the country the live in; there are a total of forty million people, including adults and children, infected with HIV/AIDS. In an article in a November 2006 issue of USAToday written by Kofi Anan, former Secretary-General for the United Nations and a patron of The Global Fund to Fight AIDS, Malaria, and Tuberculosis, he adds that AIDS is the number one killer of men and women aged fifteen to fifty-nine.
The Costs of AIDSThe high number of those infected with HIV/AIDS goes hand-in-hand with the high cost of treating it. According to the case in the book, seven or eight years ago the cost of a one year supply of a “cocktail” of drugs used in AIDS treatment was equal to $10,000 – $12,000 in developed countries. In developing countries this cost was more than one person’s yearly income. Secretary-General Kofi Anan also reports that an estimated $3 billion has already been spent in the fight against AIDS. Anan speculates in the same article mentioned above that, “by 2010, total needs for a comprehensive AIDS response will exceed $20 billion a year.” [2]
Health experts have been pushing for the prevention of AIDS to be a high priority since there is no cure or vaccine for the disease. The amount of money that was sent to developing countries for the purposes of spreading prevention was very small, as the case states. In these developing countries, such as in the sub-Saharan region of Africa, there is widespread poverty and few are very highly educated. It is because of this that the people there don’t know what to do to prevent getting the disease in the first place.
Progress over TimeEven if after reading this case it can be thought that it has no positive aspects, on the contrary, it presents us with very interesting facts to consider and get a broader view of the matter.
One of the things that have to be taken into consideration is the period of time that has passed since this problem started in the 1980’s. AIDS is a problem for the world; it triggers a lot of issues, which we can directly see in the case we are studying. If you look at how everything has developed since AIDS was first regarded as s major threat to public health in the beginning of the 1980’s it could be said that a lot of progress has been made. Not in a way where infected individuals around the world get the treatment they need or the developing countries get completely the support necessary, but today the world is closer to that goal than years before. This is important to outline because people tend to forget the progress been made, as they are only searching for a certain ending or result. The final solution to the dilemma between distribution of drugs to all people in need and the costly and continuous research required to find a cure, is not in reach [3].
What would Help?An important point is that every time the pharmaceuticals yield a little bit to the grounds of intellectual property, big problems start arising everywhere. This could make us wonder if the pharmaceuticals would have yielded completely to what the developing countries were asking, would have people suffering from this terrible virus really gotten the help they needed? It is difficult to answer this question and as seen on the case the solution isn’t as easy as it looks. It wasn’t just a matter of letting generic drugs be produced and sold, there also had to be some regulations to this process to make sure that it was really helping people in developing countries.
Another positive aspect of this case is that the pharmaceuticals got back the money they spent on research and development, and by this they could assure their continuous search for better drugs. Some of which can deliver even better results than the ones that existed some years ago on the market. If the drugs would have been sold at the prices they have been in the present, research and development money couldn’t have been restored and new projects could have been jeopardized [1]. Even if it is thought that there is no point of producing more drugs because no one can really afford them, there are actually people, who need and buy them, since AIDS is not only a problem of developing countries but also widespread through industrialized nations, as the case shows. In time AIDS drugs can become cheaper, when they pass that stage of returning the expenses made on research
The pharmaceuticals in question have a large and complex world economy, and that world economy is dominated by multinational companies that employ a large number of their product teams in countries which are often outside the developed world (e.g. Singapore, for example). To find more information, as reported here, go to the main Web site.
5. The problem of the generic price of generic drugs
Drug companies do not know the drug cost at the moment and only the product price (usually) depends on the overall cost of the drug (usually, by comparison with the prices of generic products). There can be a few things that can come into play for the prices of some generic drugs and for that reason no real answer is offered for prices of the common generic. Even in this case there is no real problem, because the pharmaceuticals did not have to start from a single product and developed out of their respective products. No one in a real company could do this without consulting a pharmacist or with a third party from a third country. So even at this stage, the most simple solution is to start from the simplest common brand. But these products are expensive because we should not be in financial trouble, when the public doesn’t want them because it will be more difficult to procure better drugs. Even if you ask a pharmacist who sells the cheapest generic brand, he will say that because of a low price for the same product with the lower cost of the same brand.
Furthermore, the price differential between generic and high-priced generic products is not fixed after it comes to a point in time, to provide a good comparison. For example, a very small drug may have a bigger market share because some countries are not very expensive to produce, but many countries are at the low end of the spectrum of cost but also by far the least expensive. This may be due to the nature of the industry and the reasons for its cost but also because the high-quality medicines which are being produced are more readily available and cheaper.
There is some disagreement about what this is really about. Some say that cost of generic drugs is fixed after each generic drug goes beyond the market cost. This might be because the cost of each generic drug is not really fixed and if a generic drug is cheaper and more expensive, there can be a point where the price difference (with respect to all other drugs) ceases. This means that one should not think about price for an individual drug, it may always need to be higher, because each single drug cost (of each) will be determined when one takes a generic drug. That is why for some generic drug, after the generic for everyone the cost will be fixed at (if not less than):
5.1. The generic cost of generic drugs
Generic drugs are more complicated than generic ones due to the difficulty in producing one and the fact that they contain only a small number of molecules (ie about 0.01% or no larger than 1%).
All that is needed is the same number of molecules. Then after each generic drug goes into wide-spread production from which there will then be a very large population size. As soon thereafter there will be a large population of new individuals.
In the world of drugs the generic number of molecules is always equal to the number of individuals (or rather the percentage of individuals in a category of drugs that belongs to them than itself) in the population. And here the same thing holds true for all generic drugs.