Pharmaceutical Companies, Intellectual Property, and the Global AIDS Epidemic
For this case study, six questions had been asked. The first one is: Should pharmaceutical companies distribute drugs at low cost in third world countries? What are the pros and cons of such an approach? The second one is: What are the principal arguments of pharma companies who oppose making exception to IPR laws for developing countries? What are the arguments by NGOs and others for a differential treatment? The third question is: 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? The fourth question is: 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? The fifth one is: Given the initiatives announced by global development and aid organizations and among pharmaceutical companies themselves, was it necessary to relax IPR rules in order to ensure that adequate supplies of AIDs medications would be available for distribution in the developing world? The sixth and last one is: What role do MNCs have in providing funding or other assistance to international organizations such as the Global Fund?
Answers and Analysis
AIDS is a case full of holes embedded with negativity. The basic points will be discussed in this case. Pharmaceutical corporations dislike the idea of creating products to be sold at less market rates or duplicated for that matter. It takes millions of dollars to research and develop, then manufacture drugs. The profits yielding from these products fuel further research finance. When lesser known companies duplicate their products and sell it at lower prices, it does hamper the innovation atmosphere. The motivation to create newer products diminishes (state.gov). But the concerned individuals look at the bigger picture, not at the patent issues here. The number of people affected by AIDS is sky high. AIDS is an epidemic in third world countries.
In some countries where the population isn't that large but poor with AIDS infected patients available, local medical companies can manufacture AIDS cocktail and market it at low prices than those who created it originally. The original companies look to recover their profits for research and development.
A textbook case claims that it takes nearly 10-15 years for a particular drug to be developed at a huge price of $800 million. Still then, only 30% of the products really claim back the revenues spent on heavy research and development. With a patent protection, pharmaceutical companies can charge higher prices to obtain their money back. The patients of HIV / AIDS will need this medicine continuously over the course of time; their price remains steady as a rock with patent protection (Bate and Tren, 2004).
It's an ethical responsibility of the pharmaceutical companies to distribute drugs at a lesser price to third world countries. Not doing so will result in deaths of millions of people while countless rendered sick. Discount price have an acute economic, political and moral sense.
Ninety five percent of the AIDS population lives in the developing countries. AIDS is an epidemic. In South Africa, one person out of every four has AIDS/HIV. This disease means death of the affected individual. In first world countries, AIDS/HIV is taken as a chronic disease, not a killing disease; all credit goes to antiretroviral drugs. In countries such as South Africa, such medicines are far too expensive for government and people to purchase at the market price (Avert.org (b)).
The prices of drugs are regulated by the pharmaceutical companies themselves. The research and development expenses must be covered up, the first world countries pay up for the research and development of newer medicines. Due to this, it's a moral and ethical obligation of large pharmaceutical companies to promote two tiered price system. Since the first world countries have paid up the R&D costs, medicines should be available at lower prices in the developing countries (Avert.org (b)).
The pharmaceutical companies dislike the very notion of distributing drugs at steal away prices because their products tend to get duplicated and sold at fractional prices. The environments are unregulated and an unreliable. Also, they argue that drug resistant HIV virus would form soon. There are growing concerns of corruption within government and public distribution channels. The probability of the product reaching to its target audience is next to zero. Then, there is a risk of drugs being available at open market. The debate between global AIDS crisis, intellectual property and pharmaceutical companies is intense. Is it the moral and ethical responsibility of pharmaceutical companies to distribute AIDS medicine to third world countries?
Intellectual property is an asset for the pharmaceutical company. How would the worldwide distribution of drugs be affected by South Africa's decision to charge duties on drugs? Why is this patent protection a card which pharmaceutical companies hold so close to their chests? Is it important to dismiss intellectual property rights for supplying AIDS drugs worldwide? What's the role of multinational companies in funding and assisting organizations such as Global Fund? All of these are huge question marks. Arguments ensue from both sides while the issue remains in the center of it all (Westerhaus and Castro, 2006).
Affordable medicine is a serious issue and huge challenge humanity faces today. Common perception of public of medical companies is pretty pessimistic. Evidence supports them with huge prices of their products. High priced medications don't sound feasible as long it isn't realized that pharmaceutical companies are also business enterprises who can face expensive lawsuits. To create and manufacture medicines takes years and years of research and development. It takes true grit for bigger pharmaceutical companies to let unknown smaller medical companies to duplicate and sell their products. The patent protection gives an option for pharmaceutical companies to obtain return on investment. Profits are given back to investors and propel further research for better medicines (Westerhaus and Castro, 2006).
Statistics on AIDS
The statistics in this case are depressing. First table shows how many people are affected by AIDS/HIV in each country. There are 40 million people for that matter comprising of men, women and children. Former Secretary General of United Nations Kofi Annan and patron for The Global Fund to Fight AIDS, Malaria and Tuberculosis in an article of USA Today (November 2006) states that AIDS is number one cause of death in men/women aged fifty-fifty nine (Hodgett et al., 2005).
AIDS is heavy duty
The treatment of for HIV / AIDS is so costly while the number of people affected from it is sky high at the same time. According to a textbook case, some eight years ago, the price of an annual supply of cocktail of AIDS drugs was around $10,000-$12,000 in first world countries. For the third world countries, this amount is much more than a daily wager's yearly salary. Secretary General Kofi Annan claims to have spent around $3 billion dollars in war against AIDS. Then later in the article, he reports that AIDS war can cost $20 billion annually by the end of 2010 (Hodget et al., 2005).
Health experts have emphasized to fight against AIDS as it's a high priority disease with no visible cure and vaccine. The amount sent to third world countries is too less for fight against AIDS. These countries include some parts of Africa; poverty is woven in the fabric of many nations, while education is unheard of. Lack of awareness is very predictable here hence. Prevention is unheard of (Hodgett et al., 2005).
Progress with passage of time
Some very intriguing aspects come into light, while some negative perceptions might be created. It gives us a clear picture of the broader perspective. The AIDS crisis long began back in the 1980's. It's not a new disease. AIDS is a global problem. It fires up many issues which will become apparent later in this study. Sincerely, a lot of progress has made since the 1980's, AIDS has been regarded as a major threat to humanity. Still, the third world countries are distant from receiving the support they deserve to curb AIDS down. The world is more aware and better equipped than before. This is imperative for people to notice as they look for a one stop solution to the AIDS crisis. The final frontier is to distribute the AIDS drugs equally for those who are in dire need while continuing the research for finding a cure (Avert.org).
The fact of the matter is that when pharmaceutical companies decide to a step back anddismiss the intellectual property issues, new problems starts materializing. This in turn makes a suspicious case whether the pharmaceutical companies would have yielded to the demands of third world countries, would people have really received the medial help…
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"Pharmaceutical Companies Intellectual Property And The Global AIDS Epidemic" 03 November 2013. Web.26 April. 2017. < http://www.paperdue.com/essay/pharmaceutical-companies-intellectual-property-126191>
"Pharmaceutical Companies Intellectual Property And The Global AIDS Epidemic", 03 November 2013, Accessed.26 April. 2017, http://www.paperdue.com/essay/pharmaceutical-companies-intellectual-property-126191