Drugs sector needs a dose of courage

Richard Tren | 29 Mar 2005
Business Day (South Africa)
India's lower house, the Lok Sabha, has just passed patent legislation that will provide protection for innovators that, to date, has been largely lacking. The new rules — which will grant product patents for medicines and other novel technologies — have been heavily criticised by activist organisations such as Mèdicins Sans Frontiéres and Oxfam, which fear it will deny poor people cheap drugs. Their concerns are largely misplaced: although they have been watered down, the patent rules will probably greatly benefit the Indian economy and its people.

The passage of this legislation highlights some important lessons on industry lobbying for SA's pharmaceutical industry. The notion that patent legislation will halt the production of cheap generic drugs and stop the world's poorest and most vulnerable from access to treatment is not new. It is, however, largely a false one. A study last year in the journal Health Affairs found that 98% of the World Health Organisation's list of essential medicines were off-patent. Despite the fact that patents cannot stand in the way of treatment, because they do not exist, countless millions of people in poor countries cannot obtain these drugs.

The reason people die of preventable and curable disease and go without even the cheapest medicines is, of course, because of extreme poverty and very often government intransigence. According to the United Nations, only 35% of India's population has access to essential medicines, despite it being the world's fourth-largest producer of medicines, most of them cheap generics. One of India's biggest generic drug manufacturers, Cipla, benefited greatly from the lack of patent protection, not by supplying malaria and tuberculosis drugs to India's poor and needy, but because it could supply cardiovascular drugs to wealthy US and European markets.

Other Indian drug manufacturers, such as Ranbaxy, had, however, been conducting original research for some time. Without protection of future profit streams, there was little incentive to conduct research. This is something that Ranbaxy understood well and so lobbied hard for the government to protect its investment and innovation. This is where the South African pharmaceutical industry could learn a thing or two. Government is battling the private sector over drug-pricing regulations that are proving harmful to the producers, distributors and retailers of medicine, and to patients.

Government has been extremely shrewd in setting one sector of the health-care industry against another so that retailers blame manufacturers for high prices and vice versa. The more the South African health-care sector fights itself, the less it is able to fight government. And fight government it must. SA's private health-care sector is ranked as one of the best in the world. Government should be trying to encourage this sector to expand and continue to innovate and improve, particularly as one news story after another tells of a public health-care sector that is crumbling under heavy demands. Yet government is punishing the private sector and seems, maliciously, to want to drive it out of existence.

This is the time for all actors in the private health-care industry to stand together and defend the principles of private enterprise. This self-interested move will not only heal their bottom lines, but will benefit millions of South Africans who require health care. Yet, instead of doing this, Innovative Medicines SA (Imsa), one of the research-based drug manufacturer associations, has become amicus curiae, or a friend of the court, to government in the Constitutional Court battle over the drug-price regulations. Perhaps Imsa fears that if the court throws the regulations out in their entirety, it might get something even worse and more damaging down the line. Government could even draft new legislation to give the health minister the powers, which she does not currently have, to dictate drug prices. However one rationalises Imsa's position, it is depressing.

It is astonishing that an industry that can make such costly and long-term investments in developing products is so cheap and short-sighted when it comes to public policy. Industry has to stand up to government. Government has to be made to understand that nearly all goods, be they hamburgers or life-saving medicines, come from the private sector. Its efforts to strangle the private sector will harm companies now, and will leave all consumers and the entire country worse off in the long run. It may be the health-care industry that is strangled today, but every industry tomorrow. Some savvy lobbying and moral courage from SA's private sector will benefit all of us.

Tren is a director of health advocacy group Africa Fighting Malaria.