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Pharma Trend: Companies are Waiving Drug Patents in Developing Countries

Posted by Ireene Corsiga | May 23, 2016

There are approximately 5.5 billion people across the world who do not have access to lifesaving drugs. According to the The World Health Organization (WHO), medicines account for a major portion of health expenditures in developing countries. Treatment is dependent on the access to affordable life-saving medications.

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The lack of access to essential medicines has been receiving significant international attention, and the pressure to provide access is mounting on both governments and the pharmaceutical industry. Inefficient health systems, corruption, lack of research devoted to developing new drugs, limited resources and international aid, and high taxes and tariffs in developing countries are just some of the factors contributing to the shortage. But one factor has been getting significant attention in recent months: Drug patents. Strong intellectual property protection often leads to prohibitive drug prices.  Monopoly through a drug patent limits generic competition in developing countries. This aggravates the problem of access because generic competition is an effective way of reducing the prices of medicines. Nowhere is the debate on patents more heated than in the pharmaceutical industry.


In 2015, the World Trade Organization extended a waiver that will exempt developing countries from drug patent obligations until 2033. Until then,countries under the program will be able to continue purchasing, manufacturing, and importing cheaper generic medicines without breaching the patent rules of the WTO.   


In response to criticisms that many new drugs are too expensive for many people in Asia, Africa, and Latin America, pharmaceutical giant GlaxoSmithKline (GSK) announced on Thursday, March 31, that it will not be filing patents for its products in the world’s poorest countries, while continuously seeking patent protection in rich countries. The move will cover 85 countries with a combined population of more than 2 billion. The company will also be putting its future cancer drugs in a Medicine Patent Pool, which will give developing countries access to its intellectual property.


Waiving patents will give poor countries the opportunity to develop and strengthen domestic manufacturing. Uganda, Cambodia, and Rwanda have already started developing their own pharmaceutical industries, with the help of investments from drug companies in developed countries. Uganda’s Cipla Quality Chemicals, which is the only company in Africa that makes triple-combination antiretroviral drugs, was originally a joint-venture between Cipla, a large Indian generics manufacturer, and the government of Uganda. Uganda is also one of the countries lobbying for a permanent waiver for Least-Developed Countries (LDCs), until they are no longer considered “least-developed”.  Those who oppose patent waivers, on the other hand, argue that it will be detrimental to research and development in the long run, and millions will suffer the consequences. Patents ensure return of sales. With reduced profit, pharmaceutical companies will no longer innovate, considering that developing pharmaceutical products is risky and extremely costly, around US$2.6 billion. Proponents of the patent waiver argue that the poorest countries account for less than 2% of the world’s gross domestic product and about 1% of global trade in goods, which is not so much for developed countries, who can still support research and development from their own patents. It was argued, however, by those who opposed, that the largest consumer base for life-saving medicines is in these poor countries.  


As the debate persists, one-third of the world’s population still does not have access to essential healthcare—and over 13 million children under the age of 5 die every year from otherwise easily-treatable diseases. What should be clear is to be able to strike a balance between innovation and access, between people and profit, and eventually determine which would benefit majority of the world’s population in the long run.

 

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