Is Dr Hamied a pirate or an Humanitarian ? (Nitish)
We would like to take an objective view of the situation and look at the factors which lead to the dilemma of Dr Hamied being either a pirate or humanitarian. Pharmaceutical Pharmaceutical industry unlike other industries in lassez-faire economy is perhaps the only one where private enterprise drive innovation research and new product development for a social good. !his nature of the industry makes it conscientiously different and therefore the general yardsticks of measuring the performances and the leeway given to enterprises in a free market set up isn"t applicable.
What the #$%s and patent driven developed world thinks& !he general line of argument forwarded by #$%s which undoubtedly spend a bulk in research and development of a drug 'in this case the drug for ()D*+. !he contention is that manufacture and sale of generic drugs erode their ability to recover the costs that goes into the drug development. ,or the big pharma companies Dr. Hamied is a pirate who is keen on plundering the value developed by the company over years of drug developmen developmentt process. He is taking away the margins their firm would generate in developing nations. )n the words of HEALTH): osh loom ' AMERICAN COUNCIL ON SCIENCE AND HEALTH): “Remember that manufacturers of generic drugs contribute nothing to innovation. Yet they take up to 90% of sales away from the comparable brand-name drugs whose makers risked the time and money to bring breakthrough treatments to market.
!he argument that can be put forth is that as per /0hibit 1 the pre-ta0 profit of %ipla is around 223. !here is little information as to whether %ipla like most #$%s is in for profit making or whether the cause is entirely humanitarian. 4pposers of generic manufacturers manufacturers may point out that %ipla is a listed company which essentially has a duty to ma0imise the returns to its investors. ( humanitarian humanitarian cause should be delinked with profit making . )f Dr Hamied is doing this for Humanitarian causes then why is %ipla reverse engineering 5iagra 5iagra which is not a life saving drug just for profit. !he increasing levels of e0ports also points to firm"s profit seeking agenda. His offer to provide ()D* ()D* Drug at dramatically low prices at world forum has also profit seeking agenda. !his offer has enabled %ipla to influence the patent laws. )t has imparted them huge social benefits branding and P6 marketing. )t has placed %ipla on world platform and at the end of it %ipla is still breaking even . !he cause doesn"t seem to be humanitarian at all.
What the generic drug manufacturers and patent regime in developing world thinks& ( crucial point point which stands out in the case is the fact that it was duly noted by the press that %ipla inadvertently inadvertently had amply demonstrated that the drug prices set by pharma #$%s were malleable. )n an environment where the drug companies paid little heed to the demand for life saving drugs which patients from third world country cannot afford and priced the drug to reap bumper pr ofits gene rics were needed ne eded to serve ser ve the people who would have died anyway for the t he lack lac k of o f cheaper cheape r variants va riants of the drugs. !he contention that the generic manufacturing companies like %ipla are responsible for loss in sales rings hollow when we consider the fact that %ipla had agreed to pay a royalty of 73 of the total sales. !his number could have been negotiated to cover the lost market potential in countries where these generics operated. #ore so these companies could have tied up with local generic manufacturers to create affordable versions of these drugs. From a legal perspective, Cipla is not indulging in any illegal activity. Under the Indian law, only manufacturing processes, not the products themselves, are covered by patents and so Dr. Hamied is carrying out a perfectly legal business under Indian laws. As and when the !I"# agreement is enforced and global patent regime is implemented he will be bound by those.
%onclusion& We believe that a pirate commits an illegal act which Dr. Hamied isn"t. #oreover if we keep aside the issue of re-imports %ipla is not taking the market share of these #$%s so there is no act of stealing because the #$%s are not in anyways able to serve the developing nation markets. 8nlike rogue pirates Dr. Hamied wants to get into a discussion with these pharma companies and have a meaningful dialogue to make the drugs readily available to the deprived masses. 9iven the activities of the big pharma companies which include :ever-greening; and under the table agreements to delay the launch of generics in affluent markets it is pretty evident that the only motive tha t these companies have is to make profits. )n light of these Dr. Hamied"s effort has to be categorized as humanitarian.
2. What is your assessment o ho! !ell the parties handled the global "ID# pandemi$ (Nitish) We shall evaluate the handling of the ()D* crisis under the parameters of ethical principles that societies corporations and governments need to adhere to& Pharma players& !he companies have invested substantially substantially in research research and development development of new drugs to combat ()D*. ()D*. !here were no known formulation available to act against the disease but the companies invested in gaining the process knowhow to develop a drug to combat ()D*. However these organizations as any good organization want to ma0imize the profits to provide a good return to their shareholders. !hey established monopolies and started seeking monopolistic rent with very high margins.
$ot onl y that these monopolies must be sustained big pharmaceutical companies are known to indulge in practices like minor change to the drug to get patent e0tension. !o gain windfall profits they are also lobbied hard with the governments to maintain these monopolies. %ipla and other generics manufacturer on the other hand stood against profit ma0imization in case of lack of affordability. )n *outh (frican incidence %ipla helped markets discover the true prices of the drug. However the downside to %ipla"s philanthropy is the fact that it has refused to invest enough to tackle local medical issues and have relied only on generics manufacturing to make profits. 9lobal agencies and $94s& !hese players played an important role in highlighting the H)5 ()D* and the severity of the disease. !he agencies like WH4 and 8$)%/, often acted as mediators between the pharma companies and governments of countries in (frica for efficient delivery of life-saving treatments. !hese agencies are involved in aid and relief effort and therefore buy drugs in bulk this helps them reduce the price-point for these drugs. However the power to carry out the activities by these organizations were limited and there were allegations that they were controlled by the western governments and pharma lobbies. ut they have played an important role in creating social pressure on big pharma companies and highlighting the issue to the international community. !his helped the local government decision of treating the scenario as a special case. Developing %ountries& !hough these countries were vocal at international forums regarding the dangers of ()D* the developing countries often did not disclose the e0tent to which they were affected. !his made the
%. Does &ipla's business $onstitute unair $ompetition (init)
We would like to consider the perspectives of the different stakeholders involved before giving a judgement on the business practices of %ipla. %i pla ai ms to provide high idovudine '(>!+ which is first of the category referred to as antiretovirals for slowing down the progression of ()D*. !he drug was prices at ?@AAAA for a year"s dosage and was unaffordable to wide section of society. Despite the high cost of drug the company generated an estimated profit of ?7B2 million in a period of just C years. !his indicates that #$%s can recover their 6=D costs which they claim to be high even by pricing it a little lower as it can benefit the larger segment of society. ,or non-basic goods companies are free to charge whatever they are willing to but it is dangerous to allow such practices in essential goods like foods and medicines. 9eneric manufacturers like %ipla make essential medicines available to people at a very low price. !hey also ensure ig Pharma companies reduce the price of drugs. !hus in this view %ipla"s business is constituting fair competition.
:4ver the past five years the (#/ Pharmaceutical )nde0 composed of the @7 largest drug companies has given investors returns averaging 21.E3 a year far above the @13 of the *tandard and Poor"s 7AA inde0 a gauge of the broad market.; '*ource& Wharton.edu+. !his means pharmaceutical industry is very lucrative and any arguments by ig Pharma that they are losing business because of %ipla doesn"t seem to be valid. 8nfair competition (nother view that can be looked into is ig Pharma companies have spent a large amount of money'@73+ in 6=D • compared to %ipla whose investment'A.23+ is nowhere near to them. )n general )ndian pharma companies spend only @.F3 of their sales on 6=D as compared to @C3 spent by 8*. )t leads to violation of intellectual property rights. )f ig Pharma companies patents are not protected then the incentive of carrying out innovation is lost and decreases reward of doing research. %ipla has a pre-ta0 profit of 223 which is comparable to other ig Pharma companies. • %ipla has allocated a part of the 6=D budget for subscriptions to foreign chemical = medical journals that is used to • identify the new innovations to be used for genetic manufacturing. )ndian pharma companies believe that it is less costly to reverse-engineer than to develop a new medication from scratch. %onclusion& Geeping in view the above points it can be concluded that only for diseases which are epidemic and life-taking and where no medicines are available other than that provided by ig Pharma %ipla should be allowed to manufacture. 4therwise this type of behaviour should not be encouraged and constitute for unfair competition. . What is the role o the ollo!ing parties in $ombating global "ID# $risis pharma $ompanies i.e "re big pharma $ompanies responsible to the so$iety (Nitish) · !he e0cuse given by the drug companies in having sky high prices for the drugs related to ()D* treatment often pertains to e0penses on innovation. ( report by Wall street journal
*ri$h $ountry' +overnments
6ich country governments especially of 8* have incentivized companies to focus on ()D* medication development by funding 7E3 of the development cost and @I of the cost of clinical trials. !hey have also helped by cutting the time to approval to nearly half from industry average of FE.1 months to 11.C months without decreasing the patent duration thus increasing the revenue period. )n 2AAA the 8* government revoked the ban on reimportati on of prescrip tion drugs manufacture d in 8* and e0ported t o foreign countries. !his not only ensured cheaper imports but it also killed the incentive for pharma companies to go for e0ports to foreign countries at a lower price. Jater on rich countries tried to put pressure on the pharmaceutical companies to reduce the price of drugs for combating the disease. ut the considerable time lag between the events displays that the governments were working in silos. rd
,o$al +overnments (Nitish) · Top two countries with the greatest number of HIV-AIDS patients are South Africa and India. The approach adopted by these countries have been to spread the message of prevention of AIDS. Not much has been done by either to oo! into the root cause of the epidemic or the treatment needed by the patients. In India" the ground eve medica care system is dysfunctiona and not geared for deaing with a disease of magnitude as big as AIDS. #hat the oca governments fai to reaise is that the day to day iving and wor!ing conditions have a direct forbearing on the vunerabiity of the popuation to the disease. The fundamenta drivers of this epidemic are the more deep rooted institutiona probems of poverty" underdeveopment and the ow status of women" incuding gender based vioence" in s ociety. At a oca eve there is aso a severe ac! of resources. $navaiabiity of contraceptives precede the unavaiabiity of remedia drugs. %rom a governance perspective" any wefare measure in a deveoping country i!e India is mired steepy in corruption and it hampers the efficacy of the scheme. &oreover the schemes that are deveoped are often centraised and are not taior made to suit the oca re'uirements. The oca governments can ma!e poicy decisions which woud enabe an
AIDS victim to ive a respectabe ife" m ost nationa aws and di!tats have scant effect at a oca eve and it is upto the oca governments to enabe AIDS prevention and treatment. ·
N+-'s su$h as &linton oundation (init)
$94s have convinced big pharma companies like ristol-#yers 9la0osmithkline and #erck etc to reduce the cost of medication. !hey have created awareness that fighting a pandemic is a joint responsibility of the society as a whole. Hence pharma companies must share the responsibilities of m aking life-saving drugs affordable. !hey have also partnered with %linton ,oundation to distribute H)5 drugs in (frica to combat ()D*. )n addition to these $94s can work side by side with the developing countries government and mobilize
resources to help countries with the treatment plan. !hey can purchase drugs in bulk to reduce cost and also distribute drugs in poor countries at a nominal price to prevent ()D*. !hey can very well intervene in slowing the spread of ()D* through various programs which can spread awareness about safer se0 and various contraceptive practices. !hey can provide education tra ining and support services to the general public and also confidential counselling testing and health care to those afflicted with ()D*.
. What are your vie!s on the allegations against /ig 0harma parti$ularly !ith respe$t to diseases su$h as / 3alaria and "ids (init)
!he pharmaceutical industry is dominated b y large multinational enterprises collectively known as ig Pharma. !he allegation against these companies that they want to reap only huge profits even if it"s a matter of life and death seems to be valid. !hese companies invest heavily in 6=D to bring new drugs to the market so as to combat chronic diseases. 8nder the • laws of intellectual property rights these companies get monopoly grants for 2A years which makes them eligible to charge as much as they want. /ven many pharma companies are involved in the act of evergreening where they get the e0tension of their patents by merely bringing a small change in the process of drug manufacturing. !his provides them the e0tension of charging more to the public where some people are forced to pay that amount so as to save their lives and many others have to lose their lives due to these high prices. Pricing in case of monopoly is not at all related to the production cost or development cost but is decided as to how to • ma0imise the revenue. !his was the case in case of ()D* in (frica as well when millions of people lost their lives just because of these big pharma companies who opposed the generic dru gs to reach these people. )nfecti ous diseases like ()D* malaria and ! kill over @A million people each year out of which more than BA3 are from developing countries[1]. #illions of people in the world do not have access to the medicines that are needed to treat these chronic diseases. )t has been discovered that F13 of worldwide funding for drug discovery research comes from government and public • sources with pharma companies providing only @23. !hese companies rather spend @B times more on marketing than on basic research. !his indicates that a portion of ta0es paid by the people goes into the discovery of drugs which are then sold back to them at monopoly prices. (s even figured out in the case of >idovudine- popularly known as (>! which is a drug to slow down the progression of ()D* the basic clinical research was done by $ational )nstitute of Health while urroughs enjoyed ,D(-e0pedited approval and orphan drug ta0 credits. !he prices charged by these big companies are only for a meagre top percentage of the population leaving a large chunk • of population aside. (part from this these big companies even try to cut off the supplies of generic drugs so as to derive revenue out of • each and every consumer possible. )n 2AAA %ongress overturned the provision of the Prescription Drug marketing act of @BFF that banned the • reimportation. !he new legislation allowed pharmacies and wholesalers to reimport drugs into 8* thus disincentivising 8* pharmaceutical companies to reduce prices outside home market.
usiness 5iew
(nother view which can be looked into is since the ig Pharma bear huge 6=D costs they would e0pect to compensate this through high prices of drugs. (lso if their patents are not protected they will not be able to carry out innovations in the future. )n addition to this if they sell drugs at a lower price in poor countries they might make their way back to developed countries. ecause of this differential pricing they would have to cut prices in their homes also which will have huge repercussions on them. [1] World Health -rgani4ation5 he World Health 6eport 2771. WH- 1 277 7
8. What are the ethi$al dilemma*s in this $ase (3angesh)
In the case we see a tug-of-war between (ipa" &N(s" )overnment organisations and humanitarian agencies. They have been steadiy negotiating on grounds of *usiness and Humanity. #e can ceary see a continuous tusse in the decision ma!ing wherein ta!ing sides between profits +business, and humanity. The ethicaity in the case is subective at times as the vaues differ for different parties. Cipla copying foreign drugs The mere practice of (ipa of reverse-engineering e/pensive patented drugs and seing them at very ow prices in deveoping countries where there is no enforcement of Internationa patents poses a strong diemma ethicay. 0n one side it is trying to hep the poor peope of the country by ma!ing the e/pensive drugs affordabe and aso ma!ing profit for itsef whereas on the other hand it is misusing the inteectua property which is a resut of huge investment in 12D in terms of time and money. As per the &N(s the patent aws in the deveoping countries +India, support unfair competition which ed the )eneric drug manufacturers +(ipa, to drasticay reduce the prices and gain mar!et share. “Evergreening” practices by MNCs: As per internationa patent aw drug companies can have monopoy of their drugs for 34 years and after that they have to give away patent. However on the contrary the &N(s use techni'ues to e/tend the ife of their patents we beyond 34 years by ma!ing sight modifications to the e/isting patent. &N(s do this to increase their profits and maintain their mar!et share as they have spend so much in 12D at the start for the deveopment of the drug" but they aso have responsibiity towards the society and giving away the patents woud ma!e the drug more affordabe. Medicine and Related Substances Control Act: South African president Neson &endea signed the &edicine and 1eated Substance (ontro Act to aow two practices" %irsty" import of pharmaceuticas from any sources regardess of patent hoder approva and Secondy" compusory icensing to oca companies to manufacture generic drugs when vaid patents are hed by &N(s. To this pharmaceutica industry reacted by fiing a awsuit. The &N(s were righteous owing to their huge initia e/penses towards 12D which ed to deveopment of such drugs. *ut even the discounted prices at which the &N(s were seing the drugs woud be unaffordabe for most of South Africa5s AIDS sufferers and these companies were aready earning profits from $S and european mar!ets. *ut a move i!e this by south african government is not ustified. *urroughs charging heaviy for 6idovudine even when the initia cinic research was sponsored and carried out by Nationa Institute of Heath Elaborate (ipa was seing products in India but annua reports reveaed that the e/ports to countries with simiar patent aws were increasing. Elaborate
