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Don't expect "ethical" pharmaceuticals to save the world

Philip Stevens
Medical Progress Today
January 25, 2007

This month, scientists at Imperial College, London, unveiled their model for "ethical pharmaceuticals", claiming that they will slash drug prices and save poor countries from disease. But their scheme—little more than suborning patents to speed generic market access—fails to take into account the realities of developing and distributing new medicines, and seems aimed more at salving western consciences than helping the poor.

In reality, the price of new drugs has little to do with the high disease burden in developing nations. Promoting good health in the poorest countries depends on training more local health professionals and building more clinics and diagnostic facilities. Better health care infrastructure—combined with efforts to tackle corruption and reform inept bureaucracies—will in turn improve access to effective treatments, many of which are very cheap already. "Ethical" pharmaceuticals will not solve those problems, and will only reduce companies' incentives to produce new medicines that are desperately needed by rich and poor nations alike.

The premise of "ethical pharmaceuticals" is simple: access to medicines is low in poor countries because of the high prices that arise when pharmaceutical companies patent their drugs, giving them a monopoly on those drugs. Imperial College scientists claim that by slightly altering the molecular structure of an existing drug they can circumvent the patent and market their "new" product at rock bottom prices, thus rescuing the poor from a whole host of diseases.

The Imperial College team is currently working on an amendment to an existing Hepatitis C drug, a disease which affects 170 million people worldwide. The clinical trials and manufacture will be outsourced to an Indian biotech company, and will be financed by the government of India. The team claims that they can reduce the cost of developing the new drug from the usual $800m to just a couple of million dollars.

This looks like a good scheme on paper, and has received a lot of excited coverage in certain sections of the media. But the prosaic truth is that—even if the scheme produces a marketable drug—it is unlikely to make much difference to patients on the ground.

First off, there's the scientists' blithe assumption that just because the clinical trials and manufacturing will be conducted in India, the costs will be minimal. It is certainly true that clinical trials are much cheaper in the sub–Continent, evidenced by the fact that the majority of big pharmaceutical companies are now outsourcing their trials to India. According to research by Rabo India Finance, US companies can cut the typical $150m cost of clinical trials by around 60 per cent by outsourcing them to the sub–Continent. But this is still $60m, a figure far greater than the estimates of the ethical pharmacists.

Once they have passed the clinical trials, the scientists will then have to persuade various governments to permit the drug to be used in their countries. This is one of the toughest challenges faced by would–be exporters of medicines, as the drug regulatory authorities of less developed countries often make the process as complicated and lengthy as possible.

For instance, it takes South Africa's Medicines Control Council an average of 39 months to approve a new drug, even if it has already been approved by the FDA. Add to this a host of other non–tariff barriers, such as meeting differing labelling requirements for different countries and receiving regulatory information only in the local language, the scientists will soon find that they will have to create and finance a costly bureaucracy just to get the drug registered in all the countries in which it is needed.

With the clinical trials and regulatory procedures taken care of, the team will then have to move their drug from the lab to mass production. Sterile manufacturing plants that conform to the latest international standards are not cheap, even subsidised by the government. They will then face the problem of physically distributing the product all around the world. This will require a complex global supply chain that must be completely secure, in order to prevent theft, inappropriate storage of the drug and the possibility of counterfeit drugs compromising the supply.

After pulling this off, the scientists will then have to gear up a massive marketing campaign in order to alert the global medical community not only about the existence of this new drug, but also about how to use it correctly.

It seems improbable that all this could be done for a couple of million dollars, even if the drug gains marketing approval following clinical trials. According to a 2002 study by the FDA, only 1 in 1,000 drugs make it past pre–clinical trials, and only 0.03% make it to final FDA approval. The chances of the philanthropic pharmacists jumping though all these hoops and then globally marketing a drug for significantly less than the brand version are slim.

The 'ethical' model also blithely ignores the considerable period of time required to take a candidate drug from the laboratory to the pharmacy shelf. It takes between 8 and 13.5 years to develop a new medicine, so by the time the 'ethical' drug comes onto the market, the original brand drug will be in the dying days of its patent monopoly (typically 7.8 years after marketing approval). So just as the cheap ethical pharmaceutical comes on the market, the brand drug it is emulating will fall in price dramatically in the face of competition from generics—thus undermining the very raison d'être of the ethical model.

Finally, the 'ethical' model's reliance on tweaking existing patented medicines risks undermining truly innovative research and development into those diseases which particularly affect poor countries. The financial returns for investing in the diseases of poverty are less than can be gained for researching 'lifestyle' diseases and diseases prevalent in wealthier markets. If the companies that do create medicines for poorer countries routinely have their patents circumvented by 'ethical' pharmaceuticals, the logical step will be to exit the poorer markets and concentrate on 'western' diseases. The 'ethical' model would eventually have no brand name drugs on which to cannibalize, and patients in poor countries will have fewer innovative drugs.

In most poor countries, health infrastructure is so marginal that many existing treatments, even when given away for free, still don't reach the people who most need them. In the Philippines, for example, 45 per cent of people never see a doctor in their entire lives.

The 'ethical' pharmaceutical model, however attractive in theory, only perpetuates this situation by ignoring the real roadblocks to health care access. By reinforcing the fallacy that drug prices are to blame for the healthcare crises faced by many countries, pressure is taken off national governments who preside over dysfunctional and corrupt healthcare systems. If we want to imply that anyone is being unethical, we should probably start there.

Philip Stevens is the Health Programme Director at the International Policy Network and the author of numerous health policy publications, including Free trade for better health (2005), The real determinants of health (2005) and The 10/90 Gap and the diseases of poverty (2004). His writings on health policy have appeared in a wide range of international newspapers. Philip has also held research positions at the Adam Smith Institute and Reform in London, and spent several years as a management consultant. He holds degrees from the London School of Economics and Durham University.
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