Tuesday, August 10, 2010

Manufacturing Markets for Big Pharma

There’s a distinct tension between two articles I came across recently on generic antiretroviral drugs (ARV). The first, entitled ‘PEPFAR success critically dependent on use of generic ARVs, study shows’, claims that use of generic ARVs have allowed PEPFAR (the US President’s Emergency Plan for Aids Relief) to reach its target of getting 2 million people on treatment in low and middle-income countries. The article describes how use of generics has overcome various objections from some US politicians, who were well lobbied by the pharmaceutical industry and its cronies.

I would guess that what pharmaceutical companies settled for was to be in control of generics, rather than wishing their use to be banned. They would have wanted to control who produced generics, where and at what price. There’s no reason to lobby against them if they bring in a healthy profit. We are told that PEPFAR saved around 323 billion dollars by using generics. Regardless of whether they would really have spent that much money on overpriced pharmaceutical products, pharmaceutical companies still took in hundreds of millions of dollars. Anyone with shares in the industry need have no worries about that.

The article concludes that “Drugs are no longer the main driver of treatment costs”, which is good to hear. But it is interesting to note that drugs for sick people are potentially just a small part of the ARV market. A much hyped microbicide, a gel containing the ARV Tenofovir, is aimed at women who are HIV negative. And the same Tenofovir is behind the current pre-exposure prophylaxis trials (or ‘PrEP’, the process of taking antiretrovirals to reduce the likelihood of being infected with HIV), amply supported by Bill Gates’s Foundation. PrEP could potentially be used by any HIV negative person, though it may be targeted especially at men who have sex with men and perhaps commercial sex workers.

Current estimates are that in excess of 30, perhaps nearly 40 million people are HIV positive. That sounds like a vast market for ARVs when you consider that people will have to take them for the rest of their lives. But this is nothing compared to the number of people who could be customers for microbicides, PrEP and any other ways of selling ARVs that the pharmaceutical industry dream up. In Africa alone, the potential market could run into hundreds of millions of people. It is to be wondered if PEPFAR will still have the stomach for that. Gates needn’t worry, the Foundation stands to gain if microbicides and PrEP get off the ground.

In case hundreds of millions of customers doesn’t satisfy Big Pharma, and it won’t keep them happy for long, newer versions of ARVs are constantly being produced with improvements or claimed improvements. These are gradually replacing older versions. And those on ARVs, sooner or later, develop resistance to first line drugs. Second line drugs can cost many times more, but without them people will die. Third line drugs are still beyond the reach of developing countries, despite all the donor money available for treatment. It’s not clear where all the money will come from as it will exceed PEPFAR, the World Bank’s Global Fund and Bill Gate’s savings many times over. But things are going well for Big Pharma so far.

The second article is entitled ‘HIV generics under threat from tighter patenting rules’. This is about the pharmaceutical industry lobbying that is still going on to persuade governments, and anyone else who will listen, to create intellectual property laws that prevent generics from being produced. The US and the EU are the main culprits, as usual. Although generics can be produced once a ‘voluntary licence’ has been obtained, the original patent holder still gets a big say in how the drugs can be distributed, how they are priced and where they are sold.

Some object to this on the grounds that it leaves too much power in the hands of the patent holders. As I suggested above, the pharmaceutical industry likes to be able to control things and it seems unlikely that they would have conceded anything without getting their pound of flesh. Far from trying to relax intellectual property laws so that poor countries with high HIV prevalence can benefit, the US and the EU have been trying for some time to make it more difficult for countries like India, the biggest producer of generic ARVs, to produce these drugs. And there have been efforts, some of them successful, to prevent other countries from buying them. An example is Kenya, and other African countries are now trying to create similar laws.

Given the weight behind increasing the cost of ARVs, it seems very odd that PEPFAR should be fighting to reduce them. Are we supposed to believe that PEPFAR is in conflict with the government that allowed it so many billions of dollars? Could PEPFAR be a champion of fair intellectual property and trade laws that benefit poor people in poor countries? This is difficult to accept. The PEPFAR billions were unlikely to have been forthcoming in the first place unless they stood to benefit the US industry as a whole and Big Pharma in particular.

The World Trade Organization (WTO) has talked the talk of allowing developing countries access to ARVs by giving them a nominal right to produce generic ARVs under a compulsory licence. But this has had little impact in practice. And in case it should ever any impact, the US and EU are busy trying to get developing countries to sign up to Free Trade Agreements and Economic Partnership Agreements so that whatever the WTO has done is irrelevant.

Big Pharma seems to have used a classic bargaining trick; they have started the bidding at a price many times higher than would be reasonable. They have then been in a good position to accept a price a few times lower, probably set by parties who had an interest in maximizing pharmaceutical company profits. Giving the industry so much control means that they can add in the pretence that there is some level of competition, though there is unlikely to be any. A spokesperson for UNITAID, Ellen ‘t Hoen, said that “financing for HIV had to remain strong, as even the lowest-cost drugs needed an assured market”. So that’s the level of competition!

The pretence that the global pharmaceutical industry is just trying to make its way in a competitive business is sickening enough, when you consider how much effort goes into stacking the odds in their favour. But the expansion of the ARV market to include those thought to be at risk of being infected with HIV is outrageous. UNAIDS and various other commercial interests, academic institutions and the like, view almost all Africans as being at risk of infection with HIV. Yet this same group has failed adequately to describe serious HIV epidemics to the extent that they are in any position to make a useful assessment of risk.

Not only is the carefully crafted market for ARVs huge and expanding, it also enjoys the full protection of ‘global’ trade laws. And judging by the emphasis on microbicides and PrEP at the recent Vienna Aids Conference, the HIV industry appears to see its primary role as helping Big Pharma expand. The right to health has shrunk to a ‘right to treatment’ and those providing ‘the treatment’ have moved in to supply it to the healthy and the unhealthy alike. As for the HIV pandemic, Big Pharma says ‘don’t worry, we have the treatment’. But if health has been reduced to treatment, will there be any resources to ensure that healthy people stay healthy, even to reduce the spread of HIV and perhaps eventually eradicate it? Already, the HIV pandemic seems far too valuable to risk destroying.

(For further discussion of PrEP, see my other blog, pre-exposureprophylaxis.blogspot.com)


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