TCS Daily


Self Interest in the Public Interest

By Richard Tren - April 5, 2005 12:00 AM

The Indian government just approved patent legislation that will provide protection for innovators that, to date, has been largely lacking. The legislation, which will grant product patents for medicines as well as other novel technologies, has been heavily criticised by activists such as Medicines Sans Frontiers and Oxfam as well as the Indian communist party who worry that the legislation 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 from which South Africa's pharmaceutical industry could learn.

The notion that patent legislation will halt the production of cheap generic drugs and thereby stop the world's poorest and most vulnerable from accessing treatment is not a new one. It is however largely a false one. A study last year in the health journal, Health Affairs, found that 98% of the World Health Organisation's list of essential medicines is off patent. Despite the fact that patents that no longer exist by definition cannot stand in the way of treatment, millions of people in poor countries can't access 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 to their plight.

According to the United Nations only 35% of the Indian population has access to essential medicines, despite the fact that the country is the world's 4th largest producer of medicines, most of them cheap generics. One of India's biggest generic drug manufacturers, Cipla, benefited enormously from the lack of patent protection; not so that it could supply malaria and TB drugs to India's poor and needy, but because it could supply cardiovascular drugs to the wealthy US and European markets.

Other Indian drug manufacturers, such as Ranbaxy, had however for some time been conducting original research. 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. Given that patents can hardly be considered to be a major barrier to accessing drugs in India -- and the considerable benefits to patients from the discovery of new drugs as well as to the entire innovation sector -- Ranbaxy's self-interested lobbying will benefit more than just that company.

This is where the South African pharmaceutical industry could learn at thing or two. Currently the government is battling the private sector over drug pricing regulations that are not only proving to be harmful to the producers, distributors and retailers of medicine, but to patients as well. The government has been extremely shrewd in setting one sector of the healthcare industry against another so that retailers blamed manufactures for high prices and vice versa. This strategy of divide and conquer is one that European colonisers of Africa used successfully for years.

The more the healthcare sector fights itself, the less it is able to fight the government. And fight the government it must. The private healthcare industry in South Africa is ranked as one of the best in the world. The 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 decaying public healthcare sector that is crumbling under the demands made upon it. Yet the 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 healthcare 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 healthcare.

Yet instead of doing this, Innovative Medicines South Africa (IMSA), one of the research based drug manufacturer associations has become amicus curae, or friend of the court, to the government in the Constitutional Court battle over the drug price regulations. Perhaps IMSA fears that if the Constitutional Court throws the regulations out in their entirety, they might get something even worse and more damaging down the line. The government could even draft new legislation to give the Minister of Health the powers to dictate drug prices that she doesn't currently have.

However one rationalises IMSA's position, it is very 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.

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 individual companies now, but will leave all consumers and the entire country worse off in the long run. Some savvy lobbying ala Ranbaxy and some moral courage and principles from South Africa's private sector will benefit all of us.


 

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