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Developing Balance

Thu, 12/06/2012 - 3:11pm
Peter A. Bennett

Peter A. BennettIn the last issue’s Policy and Projection’s column, Ted Agres wrote about the allure of pharmerging markets—17 countries that have shown, and are expected to continue to show, strong growth, but still have a modest per capita gross domestic product. With sales projections in the United States and Europe forecast to slow and shrink respectively, the idea of a foreign port in the storm is an attractive one. The situation on the ground is proving to be less straightforward than hoped.

India, a country once infamous in pharmaceutical circles for failing to recognize product patents, amended its law in 2005 to comply with the World Trade Organization’s Agreement on Trade-Related Intellectual Property Rights (TRIPS). Despite this, the trials and tribulations of international drug companies in the country have been well-documented. Earlier this year, Bayer was ordered to license its liver and kidney cancer drug, Nexavar, to a local generic company to sell at a fraction of the cost. In early November, the patent for Roche’s Pegasys hepatitis C treatment was revoked because it failed to meet the “novel and inventive” criteria of India’s patent law. Novartis’ long-running dispute over the patentability of its cancer drug, Gleevec, finally reached the Indian Supreme Court in September, and a decision is expected before the end of the year. A major source of friction is a paragraph from the Doha Declaration:

“The TRIPS Agreement does not and should not prevent members from taking measures to protect public health. Accordingly, while reiterating our commitment to the TRIPS Agreement, we affirm that the agreement can and should be interpreted and implemented in a manner supportive of WTO members’ right to protect public health and, in particular, to promote access to medicines for all.”

The bolded portion allows countries to circumvent patent rights in order to improve access to essential medicines. Given that life-saving oncology and antiviral treatments can cost ten times the annual salary of an Indian citizen, the stage is set for conflict between governments trying to protect their citizens and pharmaceutical companies attempting to bring the latest treatments into new markets.

Conflicting interests don’t necessarily have to lead to a zero-sum outcome, however. Across the border in China, Roche has developed an innovative way to improve local access to its medicines. While the government provides basic insurance to its citizens, the plans primarily cover hospital and acute care expenses, rather than the expensive, outpatient biologic drugs used to treat cancer. To supplement this, the company partnered with Swiss Re to sell reinsurance that help cover the cost of treatments. In doing this, Roche managed to tap a robust, and unfortunately growing, market for its drugs without slashing prices to an untenable level or forcing the cost onto increasingly austere government ledgers—a recipe for populist backlash.

Not even the staunchest capitalist would argue that improving access to life-saving medicines is ever a bad thing. No one should suffer the pain of cancer or debilitation of liver damage if there is a means to prevent it. But neither should the years of work and massive costs associated with developing these treatments be shrugged off in the name of the greater good. As with most things in life, this is a situation that requires the proper balance. 

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