Drug Companies and Poor Nations

Drug Companies and Poor Nations

The idea of easing international patent laws for medical drugs has polarized the political and business community for sometime. It is clear that the World Trade Organization (WTO) is a central hub for this discussion, the key points are: keeping the drug supply up to standards and safe; allowing pharmaceutical countries a way to recoup their R&D costs; provide greater services to LDC (lesser developed countries). It is also clear that many drug companies now see poorer nations as emerging markets for their products, particularly in areas in which there are fewer regulatory issues.

The safety and requirements of pharmaceuticals is paramount: there must be an organization that monitors and ensures that the required chemicals and percentages are used. One of the U.S. FDAs most stringent comments about the use of foreign pharmaceuticals is that they have to set standard of ingredients and, in many cases, might do more harm than good. Similarly, it is important to all countries that pharmaceutical organizations continue to research and develop new substances, if they are prevented from that, and their rights to intellectual property, they will no longer have any impetus to fund research (e.g. It can cost millions of dollars to get even one new drug approved, and estimates range from 80-90% of those that are put on trial never make it to production). Other countries do not have such standards, saving pharmaceuticals millions of dollars in costs, as well as the threat of litigation that looms in the developed world.

In the current world of globalization, though, the prevailing economic thought it that individual countries will produce and export their best resources, while importing, or manufacturing, needed items. A large country like India, for instance, with a large amount of human capital and investment opportunities, could indeed form a new pharmaceutical industry, if not research and development, at least production. This could, of course, happen in two ways: 1) International companies could open manufacturing plants in India. It has 30 major ports for importing of supplies, a large newly educated population, and labor and fixed costs would result in 40-60% or more savings to those companies, making the final products less expensive, or 2) Opening up their own plants and focusing on the production of generic drugs, or drugs that are patent expired (the problem with this scenario is that many drugs needed in the LDCs are newer drugs to fight off HIV, etc.) (Wadhwa, Rissing, Gereffi, Trumpbour and Engardio, 2008).

Clearly, it is important to have standards for all pharmaceuticals. Perhaps the WHO or WTO could monitor the quality control of this globally, adding a few cents per dose to help defray the cost, or utilizing a United Nations budget to oversee this program. It is just as important, though, to realize that until the Developed Countries share in their own resources, whether that be intellectual property or certain types of manufacturing, there will remain a large inequity and thus, an inability for globalization to really work (See: Globalization, Patents and Drugs, 2001).