Attempts at ‘cheap at all cost’ medicines kills innovation

In late April, public health activists and policy experts will head to Geneva, Switzerland, to attend a World Health Organization conference on intellectual property rights. The attendees will discuss the best ways to get medicine to the world’s poor. The resulting recommendations will have a huge impact on the healthcare programs of many governments in Southeast Asia.

Many of the participants support the suspension of patents on pharmaceuticals. Indeed, they’re already pushing for governments to follow this policy.

In the Philippines, for instance, Congress is currently considering a measure called the "Cheaper Medicines Bill," which aims to lower the cost of medicine by weakening or revoking patents on drugs.

The bill’s proponents claim they’re fighting for "patients over patents." But gutting patents will not only retard the development of medicines, it could also harm and kill patients now.

There are better – and safer – ways to get quality treatments to the poor.

Simply put, patents are not responsible for the problems the poor face in gaining access to medicine. Only 1 percent of the medicines on the World Health Organization’s "Essential Medicines" list are patented. The remaining 99 percent of drugs are off-patent and could be cheaply produced as generics.

Yet access problems remain.

The real access problems are systemic. Plenty of cheap, generic drugs are present in the Philippines and elsewhere, but they’re not the genuine article.

Many are of dubious quality or do not pass bioequivalence testing for safety and efficacy. Some are not tested at all. Dr. Suzette Lazo of the University of the Philippines has said, "not all generic drugs in the...market have been tested; in fact only a very small minority has undergone this crucial testing."

This lack of testing could have dangerous consequences. The WHO estimates that about 30 percent of the medicines supplied in developing countries are fake. India’s firms are the most notorious culprits, as the 8,000 pharmaceutical companies there turn out a drug supply that is nearly 42 percent counterfeit.

Patented medicines, by contrast, go through intensive screening and approval procedures in order to guarantee their safety. Patents generally last for 20 years, but clinical trials eat into eight to 12 years of that period – and there’s no guarantee that those clinical trials will result in a successful product.

That leaves little time to recoup the US$800 million it costs on average to develop and bring a new drug to market. Without the "profitability period" guaranteed by a patent, it’s unlikely that any firm or individual would undertake the time- and money-intensive research necessary to discover the next "miracle" product.

Instead of interfering with the market for medical treatments, governments in the Philippines and elsewhere should step aside.

Scrapping taxes on medicines would be a good start.

In the Philippines at present, medicines are slapped with an import tax of 5 percent and a value-added tax of 12 percent.

In other countries, the government take is even higher. The total burden of taxes, charges, and fees can ranges from 55 percent in India to 34 percent in Nigeria to 29 percent in Bangladesh. Medicines in Mexico are a relative bargain, with only 24 percent in additional fees.

Such excessive government charges put critical treatments out of reach for thousands. Abolishing them entirely would do wonders to lower the cost of medicine and to get it to those who need it, particularly the poor.

Geneva will be crowded with technocrats who have little familiarity with the on-the-ground realities of Southeast Asia’s public and personal healthcare problems, yet they won’t hesitate to further incite national governments to extend their intervention in medical innovation and patients’ right to choose effective and safe medicines.

It’s nothing short of ideological imperialism - pushing us in Southeast Asia to accept confiscatory policies that disrespect the property rights of innovators and freedom to choose of patients. This is condescending to citizens and political leaders alike.

And its pretensions come at a price. Patent busting might bring cheaper drugs in the short term, but it threatens the well-being of poor patients and stifles medical innovation over the long haul.