So what happens when deadly diseases are treated with donated western medicine? The population dies of western overindulgence disease. Kenya, like much of Africa, has seen a surge in donated foreign aid to fight infectious diseases. As an example, access to antiretroviral treatments means HIV is no longer a death sentence. But the decline of one disease means that people are living long enough to fall sick in other ways such as hypertension and cancer. This is not necessarily a bad thing.
Treatment often depends on the pharmaceutical firms’ philanthropic programs. Some of the most common diseases are treated at a low cost to poor nations. But for diseases like cancer, third world countries can’t afford access to these drugs. Plus not to mention, big pharma is not donating this new generation of money makers.
The market is growing: patients in rich countries are ageing and those in developing ones are getting richer and suffering from chronic diseases. But as demand for drugs rises, so does concern at their price. The costs of many new medical products are becoming unsustainable for even the wealthiest countries in the world.
Legal Drug War
A new drug war is looming. Negotiators for the Trans-Pacific Partnership (TPP), a giant trade deal that would cover 12 countries, including America, are battling over access to medicines. Africa are mulling over patent reforms that could make drugs cheaper. Eli Lilly, an American pharmaceutical firm, is suing Canada for letting competitors sell copies of two medicines there. Brazil has used its huge purchasing power to win low prices and persuade firms to transfer the technology for some drugs to local manufacturers when patents expire.
This war is for access to cheaper drugs to treat the population. The prelude to today’s fight came more than a decade ago. Africans with HIV were dying by the million. South Africa’s government passed a law allowing cheaper patented drugs to be imported; dozens of pharmaceutical firms sued, claiming a breach of trade rules. Protesters accused them of putting “profits before people”. They backed down.
Rich vs Poor Nations of Medicine Donation
Today’s battle pits drug firms against governments both rich and poor. Rich ones want to slow the growth of health budgets; poor ones want to improve health care, but are struggling to decide which drugs to supply and at what cost. Compounding the problem are new products with hefty prices. America is the pharmaceutical industry’s honeypot, accounting for a third of global drugs spending. Prices there are higher than elsewhere, and in contrast to many other rich countries, treatments are chosen with little regard for cost.
High American prices support research and subsidise lower prices elsewhere But this looks unsustainable. Until recently in poorer countries pharmaceutical firms mainly sold off-patent branded drugs, which command a premium over local generics, since patients trust their quality. The pricier patented ones they marketed only to the few very rich patients who could pay out of pocket.
But price-pressures are fierce in developing countries, as drugs must compete for new spending with many other health-care needs, including new hospitals, more staff and more surgery. In part because health budgets are small, drugs often account for a bigger share of health spending in poorer countries than in rich ones.
Seeking a Balance
One can argue that the best way to balance altruism and capitalism is to vary prices according to income, both between countries and within them. But such schemes create opportunities for underground markets. An illicit export of drugs from poorer countries to richer ones where their price is higher can occur. Because drugs are cheap to produce, governments are tempted to tie their prices to those in poorer markets. That saves them money, but cuts firms’ incentives to innovate.
The answer might lie in with what some firms and countries are experimenting with in varied pricing. Roche sells a drug for Hepatitis C to the Egyptian government at a deep discount, with different branding and packaging to try to stop exports to rich countries. In established markets firms are testing another idea: charging only if a drug works. New pricing models should eventually ensure that drug firms profit from innovation and more patients get the care they need. But for the millions who need treatment now, the wait will seem very long.
Should we pay high prices to help third world countries?