· Describe the nature of supplying drugs to emerging markets at an affordable price without undermining their profits
· Research and analyse in depth the effectiveness of one proposed policy response to this issue.
Introduction
1 2001 saw a flurry of events, as highlighted in the excepts of the case study, which caused an awareness by the international community of the inequality between rich and poor nations in the care and treatment of people living with HIV/AIDS.
2 Epitomized by the lawsuit against the South African government, the drug companies "want desperately to be seen helping fight the global AIDS crisis
but the companies also remain unwavering in their defense of patents, even if it means suing poor nations that want to make or buy bootleg generics because they can't afford brand-name drugs." The episode not only represents a "moral scandal", but also a major economic, political and social challenge. Can the needs of the poor be met through increased access to the drugs, without necessarily hurting the profits of the drug companies?
Past Trends and New Developments
3 The following table summarizes the price changes for brand and generic drugs from 2000 to 2001 (IAEN).
Patents and Monopoly Power
4 Prices charged by pharmaceutical companies for patented drugs are commonly several orders of magnitude higher than their marginal cost (the cost of producing an additional unit of the drug). For innovative products like antiretrovirals, private firms legitimately need to recover their high overhead costs for research and development and for fulfilling the regulatory prerequisites of market approval in high-income countries. This attributes a "temporary monopoly power" to the patent owner and creates socially useful long-term incentives for continued R&D.
5 However, actual production costs are low. The low marginal costs explain why generic drug producers, as soon as they do not have to pay royalties to patent holders, are able to offer substitutes to branded products at comparatively low prices. This was the case in Brazil where its national industry produced cheaper generic drugs and was delivered free to HIV-infected patients. In a perfectly competitive market, in which consumers will automatically buy a substitute good if its price is lower, international drug prices would spontaneously tend to be based on such marginal cost. The demand for the brand drug will be reduced (and become more elastic) with the introduction of substitutes.
6 However, the international market of branded antiretroviral products is characterized by imperfect competition i.e. a limited number of firms supplies a limited number of products.
It is not hard to obtain the same drugs from different sources so the customer loyalty is virtually non-existent and the pharmacies have to try extremely hard to sustain their consumer base.
The multinational pharmaceutical firm, Wellcome PLC, brought a product to the market to help treat the symptoms of AIDS and HIV. Wellcome PLC owns an American subsidiary known as the Burroughs Wellcome Company. In 1987, Burroughs Wellcome Company received FDA approval to sale Retrovir, which interferes with the ability of HIV infected cells to produce new virus. Burroughs Wellcome Company finds itself under siege in September 1989 by AIDS activists and various segments of the U.S. government. Despite two reductions in price in the last two years, Burroughs Wellcome Company’s executive management is under unrelenting pressure to decrease the price of Retrovir so that many more people can afford the prescription.
Poverty is the most influential issue in the book “The other Wes Moore”. Wes Moore states “He'd realized very early in the game that the drug market was a simple supply and-demand equation. The demand was bottomless.Your money was determined
In the recent years the drug industry underwent a significant transformation. Many of the big companies generate high revenues, which allow them to expand. Some of them expand on their own others through mergers and the buying of smaller companies.
Stan Frinkelstein and Peter Temin believes that one solution is to eliminate the link between drug prices and drug discovery. This will help ease the fear of losing research funding for new medicine and by doing so, drug prices should be a lot more reasonable. The next solution they have is to undo the blockbuster mentality and this is closely linked to eliminating the link between drug prices and drug discovery. Blockbuster refers to pharmaceutical companies that achieve an annual worldwide sale of $1 billion or more. They can achieve this because the drugs are used by many patients and/or used for a long period of time. This will solve the drug price crisis because by doing so, researchers can focus more on society’s needs instead of focusing on how to generate more revenue. Their solutions will help researchers develop drugs that society truly
Why do consumers purchase specific drugs for various ailments, sicknesses or diseases they might have? Why do physicians prescribe certain drugs over competitive drugs that may be available to the public? Why is it that most of us can easily name specific drugs that fit the many ailments of today’s society? On the surface the answer might be as simple as good TV advertising or radio commercials or even internet adds. The truth of matter is the major pharmaceutical manufacturers own the patents on these drugs and this gives them all of the marketing budget and muscle they need to promote the drug and control the pricing. The incentives for larger pharmaceutical companies are very enticing and as a result, they don’t mind spending the time in clinical trials and patent courts to get their drugs approved. Some will even get patents on the process by which the drug is manufactured, ensuring that no competitor can steal the drug or the process. This protects their large financial investment and nearly guarantees a large return for their investors. Many consumer rights groups claim this is nothing more than legalizing monopolies for the biggest manufacturers.
It is said that name-brand prescription drugs in Canada cost approximately 40% less than they do in America. But it is illegal for the transport of drugs from Canada to America. Why? It is because Pharmaceuticals are simply greedy and prey on victims that are in need of their products to survive. It makes it hard for large households on a budget to purchase drugs to keep healthy. The way pharmaceutical companies look at their clients is like this: It is a life or death situation for them so the customers have to buy it in order to survive. According to the annual Fortune 500 survey, the pharmaceutical industry, expectedly, made it at the top of the list of the most profitable. The top seven pharmaceutical companies took in more profit-money than the top seven media companies, the top seven airline companies, the top seven oil companies, and the top seven car manufacture companies. (…cost so much, CNN) The profits of pharmaceutical companies are outrageous and extreme. There are many reasons to why these companies are greedily taking advantage of customers. The number one reason is because people who are need of these prescriptions have no other choice but to purchase them.
Although the sub-Saharan region accounts for just 10% of the world’s population, 67% (22.5 million) of the 33.4 million people living with HIV/AIDS in 1998 were residents of one of the 34 countries of sub-Saharan Africa, and of all AIDS deaths since the epidemic started, 83% have occurred in sub-Saharan Africa (Gilks, 1999, p. 180). Among children under age 15 living with HIV/AIDS, 90% live in sub-Saharan Africa as do 95% of all AIDS orphans. In several of the 34 sub-Saharan nations, 1 out of every 4 adults is HIV-positive (UNAIDS, 1998, p. 1). Taxing low-income countries with health care systems inadequate to handle the burden of non-AIDS related illnesses, AIDS has devastated many of the sub-Saharan African economies. The impact of AIDS on the region is such that it is now affecting demographics - changing mortality and fertility rates, reducing lifespan, and ultimately affecting population growth.
Although monopolies appear damaging at times, there are arguments that they are an advantage to society. Monopolies in the pharmaceutical industry drive companies to pursue research and development (R&D) efforts to gain new patents. According to a 1992 study, among the 24 US. Industry groups, pharmaceuticals dedicated 16.6% of their amounts to basic research, while all other industries averaged at 5.3% (Sherer 1307). This fact validates the incentive pharmaceutical companies have to get a patent and acquire more power. Pfizer encourages R&D because of the incentives and a want to obtain patents to receive more profit. Pfizer has to promote itself to be successful, creating a good brand image that consumers will trust. If the company can advertise successfully, more consumers will purc...
"Reducing Demand for Drugs." UN General Assembly Special Session on the World Drug Problem. May 1998. Web. 02 Mar. 2011. .
Today’s business industry is comprised of various businesses, from the small “Ma and Pa” shops to well-known corporations. Each organization or business establishment tends to provide certain commodities or services to the public. For instance, pharmaceuticals are one of the many organizations that produce and distribute medicinal products and renders its services to consumers. In fact, pharmaceuticals play a significant role in the medical field and in societies medical needs. For this reason, one will further elaborate on pharmaceutical and its significance. In addition, one will discuss what it entails to bring a pharmaceutical to market.
With the low success rated private firms invest millions into several produces. When a drug does make it too market and is successful companies need to make-up money spent in development as well as the cost of drugs which did not make it to market. After all investments are taken care of there is still the need for profit. Some are concerned if the United States government implements control over prescription drug cost then private firms will be less motivated to invest in pharmaceuticals development of our fear they would not make their investment back. This would supply pharmaceutical companies with less finances for the research and development process. According to the information collected by Abbott and Vernon a drop in the price of pharmaceuticals would result in significant loss in investment of research and development (Abbott and Vernon). If drug cost were to drop 40-45% the amount of a drug to move from animal testing to human clinics would decrease by 50-60% (Abbott and Vernon). With such high risk and low reward pharmaceutical companies will likely stop or slow research on new technologies and compounds. In 1969 Canada imposed regulations on drug prices (Weidenbaum). After the regulations were imposed there was a decline in new drugs being created (Weidenbaum). This change in the pharmaceutical
In the business of drug production over the years, there have been astronomical gains in the technology of pharmaceutical drugs. More and more drugs are being made for diseases and viruses each day, and there are many more drugs still undergoing research and testing. These "miracle" drugs are expensive, however, and many Americans cannot afford these prices.
By the year 2000, 58 million people have been infected by HIV/AIDS and alarming numbers such as 22 million would have already died. And the epidemic continues to spread. HIV/AIDS historically is considered to be one of the longest running worldwide epidemics that we have ever seen, and figures cannot be placed on the true death tolls or estimation of the damage as the cycle still is yet to reach an end (Whiteside 2002). With Africa being the worst hit continent in the world in terms of the HIV/AIDS epidemic and the severity of it’s prevalence; one can only begin to question whether HIV/AIDS and poverty and directly connected or the inter-linkages exacerbate one or the other. This paper aims to argue that HIV/AIDS is a manifestation of poverty, and simultaneously poverty contributes to growing HIV/AIDS epidemic. Development in response both to poverty reduction and to HIV/AIDS is complicated when both have multi-dimensional and multi-faceted impacts on a society, whether it be social, economic or human development impacts. This paper will argue that pre-existing socio economic conditions within a country such as high levels of poverty, poor sanitation, malnutrition, environmental degradation and poor public healthcare systems and limited access to preventative care are crucial factors in contributing to the transfer of the infection (Pasteur: 2000, Mann: 1999).
The Human Immunodeficiency Virus/Acquired Immunodeficiency Syndrome, commonly known as HIV/AIDS is a disease, with which the human immune system, unlike in other disease, cannot cope. AIDS, which is caused by the HIV virus, causes severe disorder of the immune system and slowly progresses through stages which disable the body’s capability to protect and instead makes it vulnerable for other infections. The first blood sample to contain HIV was drawn in 1959 in Zaire, Africa while molecular genetics have suggested that the epidemic first began in the 1930s (Smallman & Brown, 2011). Currently, according to the Joint UN Program on HIV/AIDS, 35.3 million people worldwide are living with HIV. In 2012, an estimated 2.3 million people became newly infected with the virus and 1.6 million people lost their lives to AIDS (Fact Sheet, UNAIDS). It is due to the globalized international society that a disease which existed in one part of the world has managed to infect so many around the world. Globalization is narrowly defined by Joseph Stiglitz as "the removal of barriers to free trade and the closer integration of national economies" (Stiglitz, 2003). Globalization has its effects in different aspects such as economy, politics, culture, across different parts of the world. Like other aspects, globalization affects the health sector as well. In a society, one finds different things that connect us globally. As Barnett and Whiteside point out (2000), “health and wellbeing are international concerns and global goods, and inherent in the epidemic are lessons to be learned regarding collective responsibility for universal human health” (Barnett & Whiteside, 2000). Therefore, through all these global connections in the international society, t...