Big Pharma’s “Pay-for-delay” tactics delay generic drugs and kill people

It is not often that the Huffington Post can bring itself to criticise President Obama. But even their usual blind support for Democrats in general and for Barack Obama in particular has taken a back-seat to their outrage over Obama’s support for Big Pharma and his opposition to generic drugs (often from India) and to Medicines Sans Frontiers (Doctors without borders).

Much of their indignation is due to the collusive practice of “pay-for delay” agreements made by Big Pharma with drug manufacturers – often in developing countries – to delay the introduction of generic medicines – many for life threatening conditions. The purpose of course is to keep their prices high and to maximise their profits on their successful drugs. They delayed the introduction of generic AIDS drugs and are now opposing the introduction of cancer fighting generics.

ThinkProgress: ….. the widespread and arguably collusive practice of “reverse payment” settlements — commonly referred to as “pay for delay” — between brand name drug manufacturers and their cheaper generic drug counterparts. Such arrangements involve brand name drug makers paying off generic manufacturers to delay a generic drug’s release into the market, allowing the brand name producers to further profit off of their significantly more expensive drugs. …..

The practice has been quite successful in maintaining profits. But in the developed world the high – and protected – cost of medicines take away from other resources (people and equipment). In the developing world it denies treatment to many who need it. The difference in price between a generic drug and a “brand name” drug is almost obscene. AIDS treatments of over $12,000 per year reduced to less than $400 using generics from India. A generic version of Nexavar (for treatment of liver and kidney cancer) reduced cost of treatment from $5,000 per month to just $157 per month.

A generic drug only enters the market after patent protection has expired. The original developer has by then had his time to exploit his invention. Production costs at Big Pharma are perhaps upto twice that at low-cost manufacturers – but not much more. Yet they often have support from their governments in the developed countries (in extension of patent protection through patent “bombing” and in global and bi-lateral trade agreements) in maintaining prices which are hundreds of times higher than the production cost.

In an article today HuffPo writes:

Obama Has Been Fighting Doctors Without Borders For Years

It’s a little unusual to see the Obama administration singing the praises of Doctors Without Borders, the Nobel Peace Prize-winning nonprofit that is shipping doctors, drugs and supplies to West Africa to combat the Ebola outbreak. …… But the recent executive branch acclaim for Doctors Without Borders obscures a long-running struggle between the humanitarian group and the White House over global drug prices. Through trade talks, meetings with foreign governments and negotiations with multiple U.N. bodies, the Obama administration has aggressively pursued policies that prevent poor countries from accessing low-cost generic versions of expensive name-brand medications, despite persistent calls from Doctors Without Borders for the White House to reverse course.

Americans pay the highest prescription drug prices in the world. Those prices are elevated in large part by aggressive intellectual property standards that grant pharmaceutical companies long-term monopolies on new drugs, letting firms charge whatever they want without regard to traditional market pressures. Generic drugs can’t enter the market whenever those monopolies are in place. Doctors Without Borders, along with many other medical groups and nonprofits, has spent years advocating for looser standards and greater flexibility for developing countries.

Drug companies, of course, argue that they need patents and other government perks to recoup their research and development costs. Large U.S. drug companies don’t seem to be having trouble breaking even, however. Pfizer made $22 billion in 2013, while Merck & Co. posted a $4.5 billion profit and Eli Lilly & Co. earned $4.7 billion.

India’s generic drug market has been at the center of disputes between the White House and Doctors Without Borders. AIDS and HIV medication was wildly expensive in developing countries in the late 1990s — about $12,000 a year per patient in South Africa, a country with an average income of just $2,600 a year, for instance. When Indian generics entered the global market, they were priced as low as $1 a day, enabling programs like George W. Bush’s global AIDS relief plan to serve millions of people.

U.S. drug companies are particularly concerned about repeating that experience with expensive cancer treatments, and they’ve been backed up by the Obama administration, which has placed India on it’s international trade blacklist. In the spring of 2012, U.S. Patent and Trademark Office Deputy Director Teresa Stanek Rea attacked India’s government in congressional testimony for approving a generic version of a Bayer AG cancer drug called Nexavar. The generic version cost patients$157 a month. Bayer had been charging over $5,000 a month there, in a country with a per capita income of just $1,410 per year, a price so high that less than 2 percent of potential patients were able to access the drug. But before Congress, Rea falsely called the generic approval an “egregious” violation of World Trade Organization treaties.

Doctors Without Borders called it “unprecedented, really shocking testimony,” but it wasn’t a one-time gaffe from an obscure agency official. In the summer of 2013, Secretary of State John Kerry went to India to pressure its government over its approval of generic versions of patented U.S. and European drugs. When India’s new prime minister, Narendra Modi, made his first visit to the United States in September of this year, Doctors Without Borders urged him to resist the Obama administration’s demands on generic medicine.

“India’s production of affordable medicines is a vital life-line for MSF’s medical humanitarian operations and millions of people in developing countries,” said Rohit Malpani, director of policy and analysis for MSF’s Access Campaign. “India’s patent laws and policies have fostered robust generic competition over the past decade, which has brought the price of medicines down substantially — in the case of HIV, by more than 90 percent. The world can’t afford to see India’s pharmacy shut down by U.S. commercial interests.”

Big Pharma is surely entitled to make a reasonable profit from its inventions. The development costs of unsuccessful drugs also has to be paid for. But any concept of Intellectual Property (which itself is deeply flawed) can be defended when it is based on the denial of the benefits of the invention to other than a privileged few. A denial to the point of loss of life.

Tags: , , ,

%d bloggers like this: