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Pharmaceuticals and HIV/AIDS

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This presentation quickly presents the current dilemma with generic drugs for HIV/AIDS and 4 proposed solutions to the "patent problem."

This presentation quickly presents the current dilemma with generic drugs for HIV/AIDS and 4 proposed solutions to the "patent problem."


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  • lifestyle drugs (e.g., drugs for hair growth or male impotence)
  • African sales represent under 2 percent of the total—because the people are simply too poor to buy expensive drugs; and they spend little on the diseases that most affect developing countries.
  • 2001 anthrax scare, the U.S. government threatened to force the drug company Bayer to allow others to produce Cipro, the antibiotic most effective against anthrax at that time.For instance, Brazil’s state-run drug company, Farmanguinhos, estimates that in can produce the AIDS medicine Kaletra for a fraction of what Abbott charges in the United States. With more than 600,000 HIV-positive patients in the country, at one time, it was estimated that a generic Kaletra would save Brazil some $55 million off even the highly discounted price at which Abbott was then selling the drug to Brazil.
  • The prize fund concept has been championed by James Love and the Consumer Project on Technology. Congressman Bernard Sanders introduced HR 417, the Medical Innovation Prize Act of 2005, to implement the idea.)
  • Transcript

    • 1. Pharmaceutical Companies and HIV/AIDS
      Anna Guyton
      2007
    • 2. What about generic drugs?
      TRIPs – Trade Related Aspects of Intellectual Property
      Uruguay Round of trade negotiations (1994)
      A single standard for intellectual property law on the world
      raise the price of drugs to levels that were unaffordable in much of the world
      Big drug companies want TRIPs to make it more difficult for generics to be produced
      Profits = keeping as many generic drugs as possible off the market as long as possible
    • 3. Why keep generics off the market?
      Higher prices = more research? …Not really
      More $ spent on advertising than on research
      More research on lifestyle drugs than for disease
      Little research done on disease affecting LDCs
      Basic research funded by government
      Companies make huge profit!
    • 4. Why keep generics off the market?
      Allowing trade in generic drugs means low drug prices elsewhere will spoil domestic market
      Already huge disparities (Europe); problem limited
      Pharmaceuticals industry very regulated
      Most of the cost paid by insurance companies and governments
      Difficult to get drugs outside domestic economy
    • 5. Counterargument
      Providing LDCs with lifesaving drugs will:
      Have a negligible effect on drug companies’ investments in the diseases that affect LDCs
      Have a negligible effect on drug companies’ revenue (little revenue to begin with—under 2%)
      Save lives
      Increase productivity and economic efficiency in LDCs
    • 6. Knowledge and Innovation
      Knowledge is a public good
      Restricting knowledge = inefficiency and a lower pace of innovation
      Restricting knowledge in the case of AIDS medications = death
      “The marvels of modern medicine are truly astonishing; but the gap between the successes of the sciences in finding cures and the failures of the social sciences in finding ways of ensuring that the benefits of that knowledge are made available to all is equally astonishing.” –Joseph Stiglitz
    • 7. Solution #1
      Advanced industrial countries provide drugs or at least subsidize them
      Criticism: free-riding on industrial countries
      Response: yes, and they should
      No additional cost for developed countries (knowledge is a public good)
      Benefits to developing countries enormous
    • 8. Solution #2
      Compulsory licensing (when there is an urgent need to broaden access to technology or medicines)
      Right recognized globally
      2001 Anthrax scare and Cipro
      Firms can produce a drug and sell it at just above cost
      Efficiency = lots of money saved
    • 9. Solution #3
      A market-based incentive: a guarantee fund
      Developed world governments make a purchase guarantee
      Criticism: still monopoly problem and creates a winner-takes-all system
    • 10. Solution #4
      Innovation fund (prize system)
      Really important discoveries get really big rewards
      Allows for generic production
      Benefits developing countries (low-cost drugs)
      Benefits developed countries (improved knowledge)
      Bonus: developed-country governments able to aid the developing world without worrying whether the money will be well spent.