Research Paper on "Pharmaceutical Companies Intellectual Property and the Global AIDS Epidemic"

Research Paper 8 pages (2455 words) Sources: 5

[EXCERPT] . . . .

Pharmaceutical Companies, Intellectual Property and the Global AIDS Epidemic

Over the last several years, there has been a focus in the world community on providing many developing nations with low cost prescriptions drugs to effectively fight the AIDS virus. This is because as the disease has spread too many regions of the world, as entire generations are on the verge of dying without any kind of assistance. Evidence of this can be seen by looking no further than a UN report. They found that African nations have higher mortality rates of the disease in comparison with the rest of the world. The below table illustrates the prevalence of HIV related cases and deaths for Africa in contrast with developed nations.

Regional Comparisons for HIV Cases

Region

% of Population

Total Cases

AIDS Deaths

Sub-Saharan Africa

million

million

Worldwide

.8%

million

million

North America

.5%

million

26,000

Europe

.2%

820,000

8,500

("Global Report," 2009)

These figures are important, because they are showing that without any kind of assistance in purchasing prescription drugs the mortality rates would increase exponentially in Africa. As a result, there has been a focus on providing these countries with as much help as possible in order to control the number deaths and new cases.

However, these kinds of programs have created tremendous amounts of controversy. Where, many citizens in developed nations believe that they are subsidizing the cost of medication in these countries. As, they will claim that prices (which ranges from $6.50 to $14.93 in the United States) is unfair in comparison to what African nations are paying of $2.43 to $12.97. ("Pharmaceutical Companies," n.d., pg. 95) This has fueled anger about the effectiveness of these programs and their long-term impact. To fully understand what is taking place requires: examining if the pharmaceutical companies have a responsibility to distribute low cost drugs to these regions, the reason why they are against changing IPR law, the impact on nations such as South Africa, the recent patent protections extended by the WTO, initiatives announced by global development / aid organizations and the role MNC's are playing. Together, these different elements will provide the greatest insights as to the function these stakeholders are playing and how intellectual property rights are changing to deal with these issues.

Do pharmaceutical companies have a responsibility to distribute drugs for free or at low cost in developing countries? What are the main arguments for and against such an approach?

Yes, pharmaceutical companies have responsibility to distribute drugs for free or at lower costs in developing countries. The reason why, is because they are making billions of dollars in revenues each year. For them to offer discounts on the prices in select nations will allow them to continue to increase their earnings and deal with this epidemic. Evidence of this can be seen by looking no further than the below table which is showing the revenues of the top three drug manufacturers (i.e. Merck, Pfizer and Glaxo Smith Kline)

Total Revenues for Merck, Pfizer and Glaxo Smith Kline

Company

Revenues

Merck

$47.7 billion

Pfizer

$32.3 billion

Glaxo Smith Kline

$29.7 billion

("Pharmaceutical Companies," n.d., pg. 96)

These different figures are important, because they are illustrating how: offering low costs or free prescriptions drugs in developing nations will not have an adverse impact on the bottom line numbers for these organizations. Instead, it will help to increase them by providing these companies with new markets they can go into.

The arguments that are for this kind of an approach are that these companies have a moral responsibility to do engage in these kinds actions. The reason why, is because they will often go around the world and extract different natural resources from various area to create numerous treatment options. In some cases, these remedies are coming from Africa and have been refined by Western medicine. As a result, these companies must give something back to those regions where they are extracting tremendous amounts of natural resources. This is important, because if these kinds of firms can engage in these types of activities, they will be seen as more than just for profit entities. Once this occurs, is when they can make a tremendous impact on these nations by helping to prevent a major catastrophe.

However, there are those individuals that believe if the drug companies engage in these kinds of activities it will erode their profit margins. This is because the costs of conducting research and development in these areas is higher. As scientists must be able to go to some of the most remote locations in the world, in order to find compounds that can possibly be used in the medication. This is time consuming and costly, with no guaranteed results at the end of the process. To encourage individuals and companies to engage in these kinds of activities means that there must be higher profit margins. That are rewarding them for the effort they have invested in these projects. This is important because, it is showing how there are legitimate reasons for having some kind incentives in the research and development of new drugs. As a result, firms should be allowed to engage in these activities. While offering, these drugs in select regions at lower costs to realize a profit. ("Pharmaceutical Companies," n.d., pg. 96)

What are the principal arguments of pharmaceutical companies who oppose making exception to IPR laws for developing countries? What are the arguments by NGOs and others for a differential treatment?

The principal arguments from the pharmaceutical companies are that any kind of changes to IPR laws will have an adverse impact on their profit margins. This is because you are taking away the basic patent protections that these firms have for conducting research and development in creating new treatment options. As a result, the industry believes that they need time to recoup their investment and realize a profit for their involvement in the project. This means that they are opposed to loosening IPR laws. Instead, they are focused on keeping them the same or making them more stringent to take these aspects into account. ("Pharmaceutical Companies," n.d., pp. 96-97)

The NGO's are claiming that without loosening these guidelines that there will be a major health epidemic in many developing regions of the world. The reason why, is because the inability to find affordable medication to help treat HIV / AIDS will result in a death sentence for large segments of the population in these areas. Once this occurs, it will cause the price for all available drugs to be limited to the wealthy and privileged who can afford these costs. Over the course of time, this will have devastating effect on families by taking away key members (i.e. The mother and father). While at the same time, it could create large numbers of orphaned children. This is the point that any kind of future economic growth in these regions will be impossible to achieve. As, they will face the reality of a decreasing population-based because of the disease. Therefore, they believe that there needs to be: an emphasis on having the major drug companies provide medication to these regions at lower costs. ("Pharmaceutical Companies," n.d., pp. 96-97) (Shinn, 2008)

What impact would you expect South Africa's decision to levy duties on drug imports from Western nations to have on the international distribution of drugs to South Africa?

This will cause the number of supplies to decrease. The reason why, is because the duty will force consumers to pay higher costs for the medication they need. Once this takes place, is when many individuals will often increase their supply to protect against possible hikes in duty on these drugs in the future. This will force the available supply to decrease. While at the same time, it is leading to higher prices for consumers. Once this take place, it means that large segments of the population will not be able to afford these drugs. This is when the total number of death related to HIV / AIDS will increase exponentially.

In June 2002, the WTO extended the transition period during which least-developed countries (LDCs) had to provide patent protection for pharmaceuticals. In your opinion, do you think this is an appropriate change in policy, or a dangerous precedent? What could be some of the negative ramifications of this resolution? What about effects for other industries?

Yes, this is an appropriate change in policy. The reason why, is because many drug companies will often use patent protection as way to increase their profit margins dramatically. Once this takes place, it means that the underlying costs of the drug will remain high and the available supply will be limited. This is due to the fact, that the firm is the only company that can produce and distribute the drug under the law. In situations where there is a health epidemic, this is problematic because it offers the medication to select groups within society. Once this takes place, is when there will be… READ MORE

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