Big pharma's excuses for the monopolies on medicine won't wash
Several years ago, I began to learn about what I would come to regard as one of the great crimes in human history, whereby millions of people in Africa and elsewhere were cynically allowed to die of Aids, while western governments and pharmaceutical companies blocked access to available low-cost medication. The outrage I felt as I discovered the details of this story was exceeded only by a deep sense of betrayal mixed with shame for not having known more about it in the first place.
Today, I find those feelings mirrored in audiences who see my film, Fire in the Blood, which, incredibly, is the first comprehensive account of this horrendous atrocity and how it was eventually halted. As anyone who knows anything about pharmaceuticals will tell you, the name of the game is monopoly. In the case of medicine, monopolies emanate from patents. Typically a patent lasts for 20 years, but drug companies are expert at getting them extended. As long as the monopoly is in place, the company selling the drug can essentially charge whatever they want for it. Pricing is unrelated either to the cost of production (normally a few pennies per pill) or how much was spent in development, but a simple calculation of how to maximise revenue. Though most western countries do have price controls, these typically only keep price levels consistent with other comparable countries, so restraints are minimal.
Why does society accept this? The narrative the industry has been immensely successful in selling is that it spends vast sums of money on research and development, that this R&D is very high risk, and that monopolies and high prices are a "necessary evil" needed to finance innovation of new medicines. These arguments do not hold up under scrutiny. 84% of worldwide funding for drug discovery research comes from government and public sources, against just 12% from pharma companies, which on average spend 19 times more on marketing than they do on basic research (paywalled link). When we screened our film at the Sundance festival last month, audiences were dismayed to learn how much of their tax money goes to discover medicines which are then sold back to them at monopoly prices nearly half of all Americans surveyed say they have trouble affording.
In developing countries, where people typically pay for medicines out of pocket, the situation is far worse. Pharmaceutical company representatives have told me that in (relatively prosperous) South Africa, they price their products for the top 5% of the market, while in India their customer base might be just the top 1.5%. The rest of the population is of no interest. At the same time, drug companies are working tooth-and-nail to cut off supplies of lower-cost generic drugs originating in countries such as India, Brazil and Thailand, to make sure that they don't miss out on a single customer who could possibly pay their sky-high prices.
At the industry's behest, governments in the US and Europe use a dizzying variety of trade mechanisms, threats of sanctions and so on to curtail supplies of affordable medicine in the global south. The potential impact of these measures in human terms is nothing less than cataclysmic. As Peter Mugyenyi, director of Africa's largest Aids treatment centre says: "We are on standby awaiting another bloodbath."
To any suggestion that the prevailing system of monopolies on medicine is hugely inefficient, immoral and unsustainable, industry apologists contend that "it's tried and tested", whereas any proposed alternative would represent a massive gamble. This, again, is totally disingenuous. A vital first step is to raise the bar for granting patents: 90% of drug patents have no meaningful clinical advantages for patients, but nonetheless impede access.
More significantly, for 70 years Canada had a system prohibiting monopolies on medicine, where patent holders received a statutory royalty on sales of generic equivalents. This maintained profit incentives for innovation, while ensuring the public was not held to ransom by monopoly pricing (it did not, however, produce the windfall profits to which the industry is addicted – so US trade negotiators had it killed under Nafta).
This year may well be a tipping point. Relentless pressure is being applied to poor countries by western governments determined to strangle supplies of lower-cost medication relied upon by the vast majority of the world's people who will never be able to afford branded drugs, and the outlook for access to medicine in the global south grows bleaker by the day. As unthinkable as it may seem, the horror that saw millions of people die unnecessarily of HIV/Aids while being denied safe and effective generic medicines produced at a fraction of the prices brand-name companies were charging, could be a mere taste of things to come.