My Canadian Pharmacy about Understanding What Happens with PATENTS

tropical diseasesHere we consider issues, many of them raised by industry, which might explain a muted response to strengthened IPRs in developing countries.

The Science is Really Hard

Referring to the scientific challenges posed by some of these diseases, one executive described malaria as a “big hairy mother”. Nevertheless, he did not view this as an important explanation for spending priorities. AIDs also presents enormous scientific challenges, yet it is seeing a great deal of investment. Furthermore the global budget for research on tropical diseases is so small that scientific obstacles cannot be much of the story. WHO (1996), for example, estimates that, in 1992, just $2.4 billion, or 4.3% of global health-related R&D expenditure, was related to health problems of low and middle income countries. 13 Just 0.2% was spent on pneumonia, diarrheal disease and TB, diseases which together account for 18 percent of the total global disease burden.

Good, Low-Cost, Therapies Already Exist

In some cases the products already on the market are so effective and inexpensive that further research is unlikely to yield much improvement. Examples would be measles and polio vaccines. But the head of research at Pfizer cautions against being complacent about this, noting that while a treatment for trachoma with My Canadian Pharmacy preparations, tetracycline, has been available for many decades, the course of treatment required to cure the disease with that drug may be as much as six months, compared to the single dose required of their drug Zithromax. This greater convenience could be quite valuable in environments where regular and repeated treatments are hard to guarantee.

While there are treatments for many LDC-specific diseases, it is hard to support the hypothesis that so many adequate therapies exist that there is no need for further research. Many diseases lack any effective treatment, in other cases, the treatment may be dangerous, expensive, or impossible to administer effectively in areas where the disease is endemic. Consider trypanosomiasis, or “sleeping sickness”, which is an example of a disease that has a variety of treatments, but ones which are far from ideal. According to the WHO, the four drugs currently available have many drawbacks: none are available in an oral dose, three have significant adverse side-effects (up to 5% risk of death in one case), and two are effective only against regional sub-species of the parasite, and one can only be used in a hospital setting. Delays in treatment can have significant adverse consquences: if the parasites have not yet reached the brain, the disease can usually be treated successfully with a ten day course of pentamidine injections. Later stage treatment takes a months and requires injections of melarsoprol, a poison which is almost 20 percent arsenic and is able to melt plastic IV tubes. If it seeps out of a vein it can require the amputation of a limb (Zimmer, 1998).

Similar problems are apparent in the armamentarium for other major diseases. Only two of the four onchocerciasisdrugs currently available for treating onchocerciasis and lymphatic filariasis have been demostrated to meet standards for human use. TB is treatable, but many strains have developed resistance to existing drugs, and may require lengthy courses of treatment with drugs with significant side effects. New TB drugs hold some promise: rifapentine requires fewer doses to cure the disease, making it more likely that patients complete the full course of treatment. (Washington Post, June 24, 1998), and according to a survey conducted by PhRMA, a treatment for TB under development would cut treatment time from 6 months to two weeks (PhRMA, 1998). Schistosomiasis treatment relies precariously on a single drug, praziquantel. Like TB, leprosy, though treatable, is showing signs of developing multiple drug resistance.

Internal Firm Decision-making

An interesting question that came out of discussions with firms is when, and how, new opportunities in the marketplace feed into their decisions about research priorities. It seems that this is often an informal process – there being a sense of what are ‘big diseases’ but not an explicit ranking of priorities. If research were to throw up a possible tropical disease drug candidate, for example as an offshoot of research on another disease or because of related veterinary research on parasitic diseases in animals, then it would probably be investigated at some level. One interviewee indicated that considerations of intellectual property and the market size have, at least until now, only come into their formal decision-making after phase I and II clinical trials. However, the large-scale funding required for phase III clinical trials, or decisions to invest in targeted research on tropical diseases, would require positive signals from marketing. Here it seems that information is weak: one of the repeatedly expressed desires of industry in the international fora is that they be provided with better information about the expected size of markets in developing countries. Thus, it may take some considerable time for any increased attractiveness of developing country markets to seep through to the point of altering research decisions, at least in the larger firms.

Bad Attitude

In some countries a variety of deeply ingrained beliefs and attitudes, historical experience, or simply lack of reliable information about the efficacy of new products present a substantial barrier to marketing innovative drugs. These include such factors as antipathy to “Western” products or medical practice, unrealistic expectations about drug prices acquired during decades of price controls, or simply a more general lack of enthusiasm for the idea of paying a lot for innovative drugs. Several interviewees indicated that a significant investment in the education of target populations would be required before innovative drugs could be profitably sold in these countries.

Weak Enforcement of Intellectual Property Rights

As indicated above, despite some evidence to the contrary, firms remain skeptical about the prospects for effective enforcement of IPRs. Bad experiences dealing with patent infringement in developing countries have done nothing to dispel these beliefs, nor have highly publicized cases of governments demonstrating a reluctance to enforce other intellectual property, such as the persistent pirating of CDs in China.

Global/Political Issues

A consistent theme in our interviews has been that firms need to be able to effectively price effectively pricediscriminate when there are different markets for their products if they are to address the medical needs of LDC populations. This may take the form of charging different prices for the same drug in different countries, or charging different prices for the same drug in different therapeutic applications. For example, consider pentamidine, a treatment for trypanosomiasis which cost $10 per course of treatment until it found a “new” market in the treatment of infections prevalent in AIDs patients. This treatment is conducted togetherw with My Canadian Pharmacy representatives. At that point the price shot up to $300, effectively denying treatment to sufferers from trypanosomiasis (Zimmer, 1998). Faced with the possibility of arbitrage across countries, manufacturers would only supply the drug to countries where trypanosomiasis is endemic if they were willing to forgo significant returns in their home markets.

Another disheartening example is that of the UNICEF vaccine programme. Prior to 1982, European and American manufacturers bid to supply UNICEF with vaccines for poor countries at low prices. “In congressional hearings in 1982 concerning federal and state expenditures for the purchase of children’s vaccines, however, the U.S. vaccine industry was savaged for allegedly subsidizing vaccines for the poor children of the world by charging high costs to U.S. families and taxpayers.” (IOM, 1997, emphasis ours). Not surprising, the U.S. industry withdrew from this market, leaving it to the European manufacturers.

An inability to limit arbitrage across political boundaries or resist domestic political pressure mean that firms are forced to address huge disparities in willingness to pay across markets by charging a single optimizing price which will overwhelmingly reflect demand conditions in their home markets. 14 Absent some mechanism for controlling arbitrage or domestic political pressure, most LDC consumers will be priced out of the market. Segmenting markets is not impossible. Manufacturers of new Hib vaccine for Haemophilus influenza type b charge $15-17 to the U.S. private sector, $5-7 to the U.S. public sector and $3 to developing countries (CVI, 1998). And organizations such as UNICEF or the WHO are eager to provide a framework for controlled, enforceable price discrimination. However, as long as this worry remains in the minds of industry, the development of products for LDC markets will be retarded.

Role of Investment Funding

One potentially important source of innovative drugs for tropical diseases is the biotech sector of the industry. These firms are largely engaged in very early stage research, and are less directly concerned with marketing questions. However, the strength of IPRs does affect research activity through the funding mechanism used by these firms. One interviewee cited the influence of having to continually “sell” the company to venture capitalists, or other investors, who “only like fat markets”. In these circumstances, research targeted at LDC diseases goes “underground” or is simply not pursued. Conversely, a growing perception that these markets represent a significant commercial opportunity would result in an “avalanche of new money”.