The report, "Investing for Life," looks at the world’s top 12 pharmaceutical companies, including their drug pricing policies, their record in developing medicines relevant to poorer countries and their stance on protecting intellectual property rights.
Oxfam says the industry is failing to ensure universal access to medicines because it refuses to put the issue at the heart of its business model. As a result, it is failing to capture the full potential of emerging markets touted as the "new frontier" for its business success.
According to a major consultancy firm, a loss of faith in the industry on the part of its investors has so far cost pharmaceutical's shareholders $1 trillion dollars.
“The industry is burying its head in the sand. More than 85% of world consumers are underserved or have no access to its medicines. The industry must recognise that charging high prices, quashing generic competition, developing medicines only for those rich enough to pay and fighting for harsher patent laws is an ineffective business strategy for new markets, as much as it is a moral outrage,” said Jeremy Hobbs, Oxfam International executive director.
“Investors are worried about the industry’s performance. They know that emerging markets are key for the industry’s future growth but companies have been responding to the challenge of breaking into emerging markets in an ad-hoc and inconsistent way. This is bad for the industry and bad for poor people who are still facing devastating diseases like malaria, tuberculosis, asthma, cancer, and HIV/AIDS without affordable medicines,” Hobbs said.
The report reveals shortcomings where the industry:
Oxfam notes that some companies are offering differentiated prices but this is extremely limited and mainly for high-profile diseases such as HIV and AIDS.
However, these offers are not systematic worldwide and are often still priced well above the means of people living in developing countries. Oxfam says that drug companies often adapt pricing in developing countries solely as a reflection of the publicity that surrounds the disease or the country.
For instance, Abbott Laboratories was selling Kaletra—a second line anti-retroviral medicine—at $2,200 per patient per year in low middle-income countries like Guatemala, where a person’s average wage is $2,400 a year. Only until Thailand, in response to the needs of poor HIV patients, issued a compulsory license to reduce the price of Kaletra to $1,000, did Abbott reduce the price of Kaletra worldwide to $1,000 per patient per year. Also in Thailand, French giant Sanofi-Aventis offered its cardiovascular disease medicine Plavix at a price that was 60 times more expensive than Emcure, the Indian generic version. In March 2007, it responded to Thailand’s use of compulsory licensing by offering a 70% cut.
Oxfam’s report says that companies are still not investing enough into researching and developing medicines for diseases that predominantly affect poor people in developing countries. Between 1999 and 2004, there were only three new innovative drugs targeted at diseases affecting the developing world out of 163 medicines brought to the market.
“Even people suffering from tuberculosis—which kills nearly two million people a year—need six months of treatment and the most recent medicine is 30 years old,” said Helena Vines-Fiestas, author of the report.
On the industry’s approach to intellectual property rights, Vines-Fiestas continued: “High levels of intellectual property protection have not resulted in new cures for diseases that affect poor people.”
Despite this, the report notes that the industry continues to insist that the global intellectual property regime does not prevent poor people from accessing affordable medicines. Oxfam says not only is the industry’s view narrow-minded and wrong, but that the evidence is overwhelming that generic competition is the most effective and proven method to reduce drug prices.
In recent years companies have mounted legal challenges or exerted direct pressure to protect their patents against the legitimate use of safeguards in Thailand, Brazil and India. “These challenges are made at the direct expense of poor people,” Oxfam said.
Pfizer even challenged the Philippines government over their use of public health safeguards in relation to the drug Norvasc.
“The industry is failing to make the systematic changes needed to serve developing country markets and meet its responsibility to make medicines universally available. Public pressure will intensify if companies continue to offer only patchy concessions, for example around high profile diseases such as HIV/AIDS and malaria,” said Vines-Fiestas.
The report concludes by arguing that companies will need to revamp their approaches on pricing structures, R&D investment and patent policies in order to serve these markets and make its medicines more accessible to poor people. Companies should adapt to the realities of developing country markets because up to 80 per cent of people in developing countries are vulnerable to falling or staying below the poverty line if they have to bear the cost of expensive medicines, particularly where treatment is long-term.
“The industry is operating in a short-sighted way because it could gain enormous benefits from emerging markets, including lower research and development costs and cheaper manufacturing. Yet instead it continues to blindly use its same strategies in poor countries. Even today, the richest 15% of the world consumes over 90% of its pharmaceuticals. At this rate, both the industry and millions of sick patients are losing out,” concluded Jeremy Hobbs.
]]>The decision will protect India's special role as the world's leading provider of affordable medicines to the poor. The agencies welcome Novartis's response today that it is unlikely to appeal the ruling.
Novartis had challenged a law that allows India to refuse a patent for an existing medicine when it had been modified only slightly. The agencies said the case was a direct attack against India's right to protect public health.
Novartis and the pharmaceutical industry have been given a clear message to respect developing countries' legal right to use the World Trade Organization TRIPS (trade-related intellectual property) safeguards to strike the right balance between protecting public health and intellectual property, the agencies said.
India—known as the 'pharmacy of the developing world' due to its massive generic drug production industry—supplies most of the world's affordable generics to developing countries where patented medicines are priced out of most people's reach. More than two-thirds of generic medicines exported from India are sold in developing countries at a fraction of the cost of patented brand medicines.
Novartis's legal challenge posed an enormous threat in developing countries to millions of people suffering from cancer, HIV and AIDS, diabetes and other diseases who are too poor to pay for expensive patented medicines.
Sandhya Venkateswaran, Head of Advocacy for CARE International in India said: "This ruling is a lifeline for the millions of people who cannot afford brand-name drugs, and ensures that essential medicines from India will reach those who rely on them. CARE and other agencies can breathe easily now and continue to deliver treatment programs.
"More than 5 million people with HIV around the world still cannot afford anti-retroviral medicine, but this ruling reduces the number of people for whom HIV is a virtual death sentence. CARE has been able to buy more than twice the amount of anti-retrovirals to treat the HIV and AIDS patients we work with in Peru, thanks to the generic industry in India."
A global campaign by civil society has seen nearly half a million people around the world campaigning against Novartis to drop its case.
Celine Charveriat, head of Oxfam's Make Trade Fair campaign said: "This ruling is a vindication for India and a victory for campaigners. Developing countries should not be bullied by pharmaceutical companies and forced into having to defend themselves in court for correctly using the safeguards available to them to protect public health."
Linda Hartke, coordinator of the Ecumenical Advocacy Alliance, which mobilized church leaders to campaign against Novartis’ case in India, said, “This is a victory for all those who believe people, not profits, must come first in public health.”
CARE, Oxfam, and the EAA call on Novartis to continue to take positive steps to promote access to medicines in developing countries, to promote research and development for neglected diseases and to strike an appropriate balance between protecting public health safeguards in developing countries and intellectual property rights.
]]>G8 countries are "running to stand still" said Max Lawson, Senior Policy Advisor at Oxfam, as last minute talks between officials ended inconclusively, with some countries reluctant even to reiterate past aid promises on the eve of the summit.
Lawson: "G8 officials have today been involved in feverish negotiation over the final texts but have failed to agree. Italy, Canada and Japan are leading the scramble for reverse gear, refusing even to reiterate promises to increase aid that they made in 2005 - mainly because they have been busy breaking those promises ever since."
"The extra aid that was promised at the G8 summit in Gleneagles two years ago could put millions of kids into school, employ nurses, doctors and teachers, buy medicines for people with AIDS—literally save lives. But collectively, the G8 looks set to fall short of their pledge by a massive $30bn. If they do not get back on track, 5 million extra people will die by 2010. This is about a lot more than numbers on a piece of paper."
Climate change is the other issue that remains controversial ahead of the official summit start on Wednesday, with Germany pushing for consensus on a global stabilization target and proposals for multilateral negotiations on a post-2012 framework. The first phase of the Kyoto protocol runs from 2008-2012.
Lawson: "Over the last few days we have seen a plethora of new initiatives on climate change, led by former leading naysayers, but we don't need a new process or approach. There is already a process in place at the UN that countries should follow, and the G8 should support, so that they can come up with a global solution to global problem.
"We are already seeing poor people in developing countries suffering the effects of climate change. They can't wait for the results of a beauty parade of different country initiatives. They need the G8 to provide money now to help them adapt to climate change, while at the same time agreeing on measures to cut emissions and limit global warming to as far below 2 degrees as possible."
Also over the weekend, violent protests attracted the attention of G8 watchers and the media. Peaceful campaigning was overshadowed by violence and injury.
Lawson: "This summit must not be remembered for broken promises and burning cars. There is huge potential here and a huge chance for the world richest and most powerful countries to live up to their responsibility to support development and poverty reduction in the developing world. Failure to act on this would be unforgivable."
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