There are legitimate market-failures in developing nations that slow the deployment of new medicines. But observing that there are market failures—poor countries may not have the infrastructure or funding to pay for even low-cost treatments—shouldn’t lead us to attack intellectual property or multi-national corporations whose first obligation is to protect their share-holders and business models.
“It is not,” Adam Smith wrote in The Wealth of Nations, “from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our necessities but of their advantages.”
Smith reminds us that while bakers—or in this instance, pharmaceutical companies—often act charitably, in their everyday activities they are driven by self-interest. This doesn’t make them immoral, since the pursuit of self-interest makes more goods available for markets and consumers than if producers were obliged to give away their wares for free (or at low, government-dictated prices). Attacking pharmaceutical companies for not being charities is as illogical as complaining that bakers don’t give away their bread for free.
Of course, philanthropy often makes good social and market sense. Consider the case of Bayer pharmaceuticals, which is making one of its newest antibiotics available as a much needed treatment for tuberculosis. When it comes to TB, “no new medication has been registered for 40 years,” and the illness kills millions of patients every year, particularly in Africa where victims often succumb to a deadly combination of TB and AIDS.
In an unusual step, Bayer Healthcare announced yesterday that it had agreed to allow its most promising new antibiotic, moxifloxacin, be tested against tuberculosis, a disease that kills 5,000 people a day and is the immediate cause of death for a third of the world's AIDS victims. If the antibiotic substantially shortens TB treatment, which now typically lasts six months, the company will make millions of doses and sell them at low prices to poor countries.
Bayer's decision is unusual because major drug companies rarely test their best-selling patented antibiotics against diseases of the poor - and virtually never test them against tuberculosis - for fear of hurting sales in rich countries. Bayer makes about $500 million a year from moxifloxacin, which it sells in the United States as Avelox and elsewhere as Avalox, Avelon, Megaxin, Actira and Izilox. …
Bayer's decision is part of a contract with the Global Alliance for TB Drug Development, a public-private partnership. The clinical trials of moxifloxacin, involving thousands of patients in eight countries including Brazil and Zambia, will be paid for by the Bill and Melinda Gates Foundation and by the Centers for Disease Control and Prevention, the new European and Developing Countries Clinical Trials Partnership and the Food and Drug Administration.
"As someone who's been working on TB for 12 years, this is one of the most exciting advances I've seen," said Dr. Kenneth G. Castro, director of TB elimination at the C.D.C.
The U.S. Constitution mandates that when the government takes private property for public use, it must fairly compensate the owner of that property. The same principle should hold in discussions of how best to treat the intellectual property of pharmaceutical companies used in developing nations. Rather than sling invectives at companies, as groups like Medicins San Frontieres tend to do, policymakers should work harder to provide market-based incentives that compensate companies for their products without slashing financial incentives to create new, life-saving drugs.
After all, forcing down prices for badly-needed medicines in poor countries (or threatening revenues through compulsory licensing) will only discourage companies from researching new medicines that might be confiscated at a later date. Appealing to self-interest, rightly understood, is the best course to take for everyone concerned about global health.
Groups like the Global Alliance for TB development and the Bill and Melinda Gates Foundation are doing just that by offsetting the costs of clinical trials and agreeing to buy large quantities of critical medicines and vaccines.
For their own part, pharmaceutical companies should be more proactive in reaching across the aisle to moderate groups that are more interested in results than scoring public relations coups. A bit more good faith —and more recognition that companies have some legitimate market concerns—would go a long way towards improving global health without wrecking the incentives driving medical innovation.