The Costs to Live – Part 4

In wrapping up this series (for now), I would like to present an international view of the effects of the high prices of medications and the high cost to live by discussing both economics and human rights laws.

As I mentioned in the first post, pharmaceutical companies today, enjoy the benefits of patents, meaning that another company cannot produce generic equivalents until the patent expires. This leaves the pharmaceutical company who invented the medicine with a monopoly on the market – meaning they can charge whatever price they want (as long as the market will bear it). Again, as I previously introduced, the goal of patents is to sustain inventing incentives and continue to attract investors – helping firms recuperate their extraordinary R&D costs by allowing it to impose prices for their medicines that might be higher than the market value considering the current supply and demand.

The Trade Related Aspects of Intellectual Property Rights (TRIPs) Agreement, developed as part of the 1994 General Agreement on Tariffs and Trade Uruguay Round Agreement by the World Trade Organization, established international recognition of patents (along with copyrights, trademarks, and others). Article 27 of the TRIPS Agreement specifically states that “patents shall be available for any inventions, whether products or processes, in all fields of technology,” establishing patent protection for pharmaceuticals for 20 years To maximize profits in this period of monopoly, pharmaceutical companies often set high prices for their medicines. They not only set high prices for their medicines, but they are able to increase prices, as they are currently doing in anticipation of patent expirations in the next few years.

Patents are not inviolable though, limited exceptions may be made “provided that such exceptions do not unreasonably conflict with a normal exploitation of the patent and do not unreasonably prejudice the legitimate interests of the patent owner.” Some countries allow others to use a patented invention for research purposes where the aim is to understand more fully the invention as a basis for advancing science and technology. Canadian permits generic producers to use patented products, without authorization and prior to the expiration of the patent, in order to seeking regulatory approval from public health authorities for the marketing of their generic version as soon as the patent expires.

The Agreement also allows Members to authorize compulsory licenses or for government use without the authorization of the patent owner. If a country experiences a “national emergency”, “other circumstances of extreme urgency,” or “government use” or anti-competitive practices, there is no need to try for a voluntary license before issuing a compulsory license. And in these instances, and others of compulsory licensing, the patent owner still has to be paid and the prices are still high.

Patented drug sales in Africa and the Indian sub-continent were only 2.3% of global sales. This might not only be due to high prices. Between 1975 and 1999, only 0.1% of new chemical entities produced were for tropical disease and tuberculosis – the medicines needed most in these areas. (For I’m fairly certain when you have tuberculosis, you are not as worried about erectile dysfunction). Noting the low sales and the trifling research and development on medicines to meet the needs of these populations, patents aren’t incentivizing innovation or drawing in investors.

Under Article 12 of the International Covenant on Economic, Social and Cultural Rights (ICESCR) states must “recognize the right of everyone to enjoyment of the highest attainable standard of physical and mental health.” Assisting with implementation of the ICESCR, the Committee on Economic, Social, and Cultural Rights (CESCR) provides guidance and has interpreted that the provision of essential drugs as defined by the WHO is a core obligation of states under the right to health. The World Health Organization (WHO) lists essential medicines and recommends they be available within the context of a functioning health system at all times, in the appropriate dosage forms, with assured quality and adequate information, and at a price the individual and the community can afford.

The ICESCR also requires, in Article 2, “each State party to the present Covenant undertakes to take steps individually and through international assistance and cooperation…” In assisting and cooperating, countries must then protect human rights in their actions and must “take measures to prevent non-state entities under their jurisdiction from interfering with the enjoyment of… rights abroad.” Non-state entities include private corporations… such as pharmaceutical companies. Furthermore, countries have a duty to facilitate, provide, and promoting human rights in other countries.

Unfortunately, the United States (home to many pharmaceutical companies, and patent issuer to many of the medications they produce) has not taken steps to fulfill these obligations. In fact, the US has placed countries that attempt to exercise compulsory licensing on the US Trade Representative Watch List, effectively pressuring them to act as the US would like – which is to protect patents. Nor has the US taken action against pharmaceutical companies for interfering with the right to health by such actions as their pricing mechanisms.

In her article, “Rights” and wrongs: what utility for the right to health in reforming trade rules on medicines, Lisa Forman, argues that “factors like infrastructure (and poverty) are less of a bar to access than is commonly believed, and that political willingness to address other access factors may be fundamentally linked to removing financial barriers. Thus, addressing economic (price) factors may facilitate action on all other access fronts.

From the discussion I lay out, we can begin to understand advancing the right to health, part of a much bigger human rights movement, focuses heavily on economics including the effects of costs and the barriers they create to realizing this right.

What then can we do to address the inequities in the right to health and particularly the access to pharmaceuticals? Social movement to engage others in discussing and debating the right to health can have a huge impact.  According to Forman, “…rights in concert with social movement offer a powerful tool for raising the priority of the health needs of the global poor, particularly when these are deemed to conflict with free trade and commercial interests.” But social movement alone may not be enough, we also must encourage our leaders in government to embrace international agreements which they signed by ratifying these agreements and enforcing them legally. Even more so, across the world we (individually and through government and private industry) have to change our priorities trading in profits for life.

Vast disparities of wealth and opportunity divide us… Nowhere are the disparities more shocking than when it comes to health. Infectious diseases that have been banished from the most fortunate nations continue to kill millions among the poorest people on the plant – illnesses that can easily be prevented with a vaccine or a safe drug. Infant mortality is a rare and tragic event in the developed world; in the developing world it remains an everyday occurrence. In some places, one in five children dies before the age of five… The wonders and promise of modern medicine must reach everyone, not just a privileged few.[1]

Note: I will address other social determinants of health in a future post as the right to health is interdependent and inextricably linked with other rights and must be addressed not just by attacking pharmaceutical pricing but by considering issues such as clean water, quality food, education, and shelter.

2 Responses to The Costs to Live – Part 4

  1. […] In the past few years, I have had the privilege to talk with some of the decisions makers of large pharmaceutical companies through conferences and patient advocacy.  If you’ve read my blog from the beginning, you’ll know I’m not Big Pharma’s biggest fan – having grown up with them paying for extravagant dinners and vacations to “educate” doctors while others could/can barely afford the costs of their medicines – what I call the Costs to Live.  (See The Costs to Live Parts 1, 2, 3, and 4). […]

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