BIG Pharma and costly medicines

Zerohedge carried an article on medicines in Greek and the role of BIG Pharma - reported here. The first paragraph is reproduced below:
________________
Greece is facing a serious shortage of medicines amid claims that pharmaceutical multinationals have halted shipments to the country because of the economic crisis and, as The Guardian reports, concerns that the drugs will be exported by middlemen because prices are higher in other European countries. Rubbing further salt into the Greek (un-medicated) wound, the Red Cross slashed its supply of donor blood to Greece because it had not paid its bills on time. Pharmacies in Greece describe chaotic scenes as clients desperately search from shop to shop for much-needed drugs. Greece's Pharmaceutical Association said "around 300 drugs are in very short supply," adding that "It's a disgrace. The companies are ensuring that they come in dribs and drabs to avoid prosecution. Everyone is really frightened." The fear for the multinationals remains that wholesalers can legally sell to other nations at higher prices and a "combination of Greece's low medicine prices and unpaid debt by the state." Lines form early and 'get very aggressive' one pharmacy exclaimed, "We have reached a tragic point."
_________________
Recently, the "Intellectual Property Appellate Board (IPAB)" in India upheld the grant of compulsory license of a Bayer drug to Natco. Some more licenses are in the pipeline. However, what comes as a surprise is the attempt by the government to set up another committee for pricing drugs - which may effectively put a stop to this licensing. Is this a case of success of foreign lobbying. Already, price of drugs in India have risen steeply. It would indeed be unfortunate if another scam were brewing in as essential commodity as medicine.

More on Patents

A well written article on why patents used to "defend" against potential lawsuits are destructive. The article refers to a recent academic work - worth reading.

Patent Wars

An explosion in patent litigation, .... threatens to stifle innovation

Sounds like the crib of an "smoke stack" company out of an emerging economy? Heck No. Its none other than Google thats complaining about software patents as it spends millions on purchasing patents to defend itself against litigation. Google bid $900m for patents of Nortel. Nortel's patents were valued at $4.5bn.

As reported in Businessinsider.com, Jefferies analyst Misek explains how: "Through litigation and licensing, Apple could cause the free Android OS to actually become a burden for OEMs, forcing them to become more conservative in their aggressive pricing plans. This is likely to slow the price cuts Android OEMs are likely to bring. So rather than a $150 Android smartphones, we could see a ~$200 device that is less likely to hurt a lower-cost iPhone ."

Google finally bought more than 1000 patents from IBM.

Readers of this blog will remember my long-standing objection to patents. Big budget lobbying has convinced many that patents are needed for innovation - despite overwhelming evidence to the contrary. It remains one of the key barriers to free trade - a non-tariff barrier that wealthier countries impose on poorer ones. One can only hope that rising costs of litigation, and healthcare will convince the consumers of the "developed" world, that protecting corporate profits for a few is NOT in the larger interest of humankind.

Insurance and IP - an academic view

For years, I have held the view that IP (intellectual property) is no more than a trade barrier imposed by rich countries on poorer ones. I also maintain that once countries like India develop enough to generate their own IP, these very same developed countries will start questioning the need for IP.

Another issue I have long felt that India is going the wrong way on, is patent protection for medicines. Given the large population in India requiring cheap medicines, the model of insurance-led health care is completely flawed. Our negotiators at the WTO have sold India down the path of disaster by conceding to patent protection for pharma products in India, and by allowing private sector companies to offer health insurance - both steps that will take the price of medication out of reach of the common man.

A recent article I read in the TOI from a nobel prize winning economist provides some support to my arguments.  The operating parts from a discussion with Joseph Stiglitz, are :

On Insurance - "Rather than provide better healthcare at lower costs, insurance companies innovate at finding better ways of discrimination. They are inefficient because they are trying to figure out how to insure people who don't need the cover and keep out people who need it......India would be in a terrible mess, given the size of its population, if it went down the wrong route (of private companies for health insurance). They should learn from the mess that the US has got into."


On IP - "...the benefits of IP have been exaggerated and the costs underestimated. IP creates monopolies. And it does interfere with economic efficiency by interfering with the flow of knowledge and the use of knowledge, particularly for developing countries....The question is whether IP promotes innovation. Increasingly, the evidence is that it may actually impede innovation. It is leading to infinite negotiations around patents. More money is being spent on lawyers than on research. The legal cost of using the system takes up more resources than the benefits from the system."


Now that, from a Professor of Columbia University, and a former Chief Economist of the world bank - may carry more weight than my own arguments - but I'm happy that atleast a part of the academic world is taking a sensible stance. I wonder if the bureaucrats in the Indian government that make up these policies are listening!

A Visit to the USA - The Good, the Bad, the Ugly

I just returned from an 18 day vacation to the USA. This time around, my understanding of the issues affecting the country was certainly better than ever in the past. Some thoughts.

The Good

Nature has been kind to the USA, and the citizens have used nature well. Large open spaces (outside the metro cities – and large parks in most metros), clean air and reasonable infrastructure in most parts make the country extremely livable. I envy the houses and community infrastructure most places enjoy – something India may take a long time to achieve, if at all.

Obama’s policy of funding infrastructure is clearly visible, with roads being built in most places I visited. Perhaps more so than in India!

Local government representatives seem responsive to needs of their electorate. I heard stories of people reaching out to their senators to get issues sorted out, and the senators responding! India seems to have the same population per MP. Some lessons to learn here.

The Bad

Bureaucracy is abundant. JFK immigration took 90 minutes to clear – with immigration officers either absent from their stations, or busy sipping coffee and chatting among themselves – oblivious to the mile long line of travelers waiting to have their passports checked. Reminded me of Calcutta of the late ’70 when communists were at their peak!

Compared to that, Indian immigration is now a breeze – at 3:30 at night, it takes less than 10 mins to clear two plane load of travelers.

Socialism exists in various forms – housing taxes come bundled with school fees – clearly detrimental to those who have no children, but have to pay. This forces ghetto of a different kind – communities are generally homogenous with age and social strata determining housing – because of the taxes involved. The argument that the same level of education is available to all levels of income earners is fallacious – you can only stay in a community if you can afford to pay the house taxes of that area!

The Ugly

The healthcare system is a rip-off. Hospitals charge fees that have no connection to the value of service provided – George Washington University Hospital charged me a $1000 for a clinical examination of my daughter – no tests, no ambulance, no admission. I was advised (later on) that these fees are best “negotiated”! Wow!

The pharmacies are even more of a rip-off. A medicine that was supplied by Sun Pharma (which would, I assume, be making about 20 paise per tablet) was charged at $6 per tablet! Further, the pharmacy keeps the prescription – so that more than the prescribed medication is not made available to the patient. In a country where guns can be purchased in the department stores (almost), and where freedom to harm yourself is protected as a fundamental right (almost), the need to “protect” the patient against medication, (increasing the cost of drug delivery by several times what it needs to be – by eliminating competition in distribution) is criminal.

Overall, the country remains seriously uncompetitive in most matters. Most businesses make money through cartelization (finance), or through regulations (patent protection, visa controls, minimum wages) creating entry barriers. The basic education system stresses more on games and less on studies – a football coach at a college will likely earn 5x-10x what the math teacher makes. The country has some serious challenges to face as it comes to terms with a world where other countries offer greater opportunities for growth.

The PMO intervenes in the Pharma IPR case

Yet another case of the PMO going out of its way to facilitate foreign companies at the expense of Indians. With large Indian companies rapidly getting taken over by multinationals, the lobbying strength of OPPI is only going to increase - and Indian healthcare costs will rise. I wonder what gives with our PM - why is he SO eager to dance to the wishes of the foreigner. Anyone for Laloo as PM? Just saying.

Good for the market - terrible for the country

A recent development in the stock market has the potential to harm India and Indians in the long term. The irony is that this is a result of "progressive policies". The development in question is the acquisition of Nicholas Piramal's pharmaceutical business by Abbott. In itself, the acquisition raises few issues. However, it portends a resurgence of multinational pharma companies in the Indian market, with consequent detrimental effects to the lives of Indians.
 
I have long been opposed to so-called "Intellectual property" - which, in my opinion, is just the latest way to exploit the poorer sections of society. Especially after physical assets/resources required for human existence have been captured by the "developed world". Using the power of lobbyists and under the guise of IP, poor countries like India have been forced to accept product patents. With this come expensive, and unaffordable medicines, and usurious health insurance costs - social costs we could do without.

India shook off its dependence on foreign medicines and developed a thriving domestic pharma business when it abandoned product patents and recognised only process patents. Consequently, Indian pharma industry today is well developed, with excellently developed chemistry skills and low cost production - benefitting not only Indian patients, but those around the globe - including those in "regulated" markets. This is now set to change - with India having succumbed to political pressure and signed up for product patents a few years ago.

Surprisingly despite countries like the USA drowning in health care costs, so-called free marketeers continue to push the case of "IP"  - and poor countries like India acquise. If the above seems overly leftist (after all the patent laws in India do offer compulsory licensing and price setting by the government) - well, read this