Markets flunk challenge of poor people’s health


Special To The Japan Times

India has had to suffer much criticism in the developed world for the decision by its supreme court to refuse to grant a new patent to the Swiss pharmaceutical company Novartis for an updated, or tweaked, version of its leukemia treatment drug Glivec.

Instead, the court should be given a thorough resounding cheer. The decision firmly tells big drug companies that patents will be granted only when research and development really advances.

The judgment still leaves open questions about India and its attitudes to investment and intellectual property and about the operations of the giant pharmaceutical companies, or Big Pharma. Equally important, it throws a small light on the failure of governments and markets in tackling critical questions of health and well-being of the 7 billion people on Earth.

Novartis and Big Pharma immediately damned the judgment and howled that it would discourage pharmaceutical companies from investing the necessary millions of dollars to try to find cures for all manner of unconquered life-threatening diseases. Ranjit Shahani, managing director of Novartis India, said, “This ruling is a setback for patients that will hinder medical progress for diseases without effective treatment options.”

He noted that Novartis in 2005 transferred its investment in drug research to China where manufacturers, in the company’s view, are more welcome.

Big Pharma’s American industry group complained that India’s supreme court decision “marks yet another example of the deteriorating innovation environment in India. Innovation is critical in meeting unmet needs of patients. … Protecting intellectual property is fundamental to the discovery of new medicines.”

True enough, India’s overall regime of attracting foreign investment and protecting intellectual property rights still leaves much to be desired. Ernst and Young pointed out recently that India’s foreign direct investment regime has been “progressively liberalized, with most restrictions being removed and procedures simplified.”

Even so, the practical business of doing business in India means going through a maze of bureaucracy and corruption that makes the country less attractive than China. The Global Intellectual Property Center, an offshoot of the U.S. Chamber of Commerce, recently placed India at the bottom of 11 countries in terms of protection of intellectual property, a long way below its nearest rival China.

But in pharmaceuticals, India is becoming a world leader, particularly because of the growth of its giant generic drug manufacturers. India’s drug industry is worth more than $26 billion a year and is earning a reputation as “the pharmacy of the developing world” because it produces large quantities of generic drugs such as the Indian version of Glivec.

Glivec produced by Novartis costs $2,200 for a month’s supply of 30 tablets; the Indian version costs $175 for the same dose. Novartis says it gives Glivec free of charge to 95 percent of patients; but why not then adopt a more realistic pricing policy that would bring the drugs within the reach of those who need them?

PricewaterhouseCoopers has just reported that Indian manufacturers had begun doing research and development and started conducting original research, and recommended “a strong case” for big pharmaceutical companies “for partnering with Indian companies around R&D, including clinical testing.”

Big Pharma, dominated by Western companies based in high-cost, slow-growing countries, has a real problem, compounded because big companies rely heavily on patented drugs, cheered or jeered on by stock markets, which tend to mark down a company’s shares heavily when a valuable patent is running out.

That is why companies twist and tweak old formulas to win a new patent and reset the clock for another 20 years of protection to keep the money rolling in.

A cynic might ask what this has to do with creating lifesaving new drugs for sufferers of real pain.

This is why the Indian supreme court decision is worth applauding. Novartis did not demonstrate, in the court’s view, that the new tweaked formula enhanced the therapeutic efficacy of the drug. It was a considered judgment, weighing and balancing interests, but carefully not being against all patent rights.

It is certainly possible to argue whether the Indian supreme court got it right, but its concept of therapeutic efficacy as a touchstone for whether to grant or extend a patent is one that the U.S. authorities might like to consider as a better basis for patents, rather than current U.S. standards that have been attacked for hindering competition by offering too-easy protection for patent holders with plenty of money to go to court.

There are complicated issues here in which Big Pharma does not always act like angels. A cynic might also remember Jonas Salk who created the really lifesaving polio vaccine. Broadcaster Ed Murrow asked Salk who owned the patent. Salk, surprised, responded: “Well, the people. There is no patent. Could you patent the sun?”

Scientists and commercial companies have gone on a spree of patenting everything in sight, including human genes. One company, Myriad Genetics, holds patents to two genes associated with breast cancer. Should Myriad be allowed to patent these genes?

Beyond this, the real questions are whether the development of modern capitalism and markets has become too dangerous for the survival of the planet.

In a radical lecture, professor Mikako Hayashi of Osaka University argued this month that the world of health care is topsy-turvy and spends too much on looking for cures for diseases of the rich than on preventive care that would ensure a healthy lifestyle for all. (Disclosure: Dr. Hayashi is my wife.)

Even Bill Gates, whom you would imagine to be supportive of capitalism, given the billions he earned at Microsoft, recently lamented that capitalism is “flawed” because it devotes more money to trying to cure male baldness — $2 billion a year than it does to diseases such as malaria — a mere $547 million.

There is certainly a lack of balance between the needs of the really poor people of the world for help in surviving and the demands of the rich and super-rich who want to be well-dressed followers of fashion.

Let us not even think of the spending on armies and arms, about $1.6 trillion a year. The people of the U.S. and Europe spend $12 billion a year on perfumes and $17 billion a year on pet food. Indeed, only 10 percent of global expenditure on health research is devoted to diseases that afflict 90 percent of the world’s population.

But what can you expect when capitalism is increasingly being driven and distorted by the super-rich?

Kevin Rafferty is professor at the Institute for Academic Initiatives, Osaka University.