A bitter war by drug industry

In Perspective

The conclusions of the final European Commission report on competition abuses in the pharmaceutical industry, released on July 8, are shocking and have wide-ranging ramifications.

In brief, the report found that in the pharmaceutical sector, competition is simply not working, and major pharmaceutical companies resort to any kind of underhanded tactic to prevent more effective medicines from reaching the market and especially to disqualify the production of generic versions, which are far less expensive.

The consequence is delays in consumer access to generics that means major financial costs not only to patients but also to government social assistance programmes, and consequently to all tax payers. This in turn provides arguments for proponents of privatising government healthcare systems, condemned as being sinkholes in the government budget.

In terms of their active ingredients, dosage, pharmaceutical form, safety, and efficacy, generic medications are identical to the original product initially produced exclusively by the major monopolies. A drug patent gives a company a 10-year period of exclusive manufacture of a given medication. After that, other manufacturers have the right to produce the drug generically and sell it at a 40 per cent lower cost.

The World Health Organisation and the majority of governments recommend the use of generic drugs because their lower cost makes access to them more equitable for populations exposed to avoidable diseases.

A strong lobby
The objective of the major drug companies, therefore, is to delay the date their patent protection expires. The world drug market is worth about 700 billion euros. A dozen large firms, including the so-called ‘Big Pharma’ —Bayer, GlaxoSmithKline (GSK), Merk, Novartis, Pfizer, Roche, and Sanofi-Aventis — control half of this market. Their profits exceed those of the military-industrial complex.

For every euro invested in production of a brand-name drug, the monopolies earn a thousand from sales. Three of these firms, GSK, Novartis, and Sanofi, stand to earn billions of euros in the next few months thanks to massive demand for the A(H1N1) flu vaccine.

Such massive quantities of money give the Big Pharma firms absolutely colossal financial power, which they use particularly to ruin, through multiple million-dollar court judgements, the modestly-sized manufacturers of generic drugs. Their innumerable lobbies are a permanent fixture at the European Patent Office  based in Munich, furiously working to delay any grant of permission for sale of a generic drug. They also launch misleading campaigns against generic drugs to frighten patients.

As a result, citizens have to wait an average of seven months longer to have access to the generic version of a drug. Over the past five years this has translated into about 3 billion euros in unnecessary spending by consumers and a 20 per cent increase in costs to public health systems.

The drug industry’s offensive knows no boundaries. It has even been implicated in the recent coup against Manuel Zelaya, president of Honduras, a country that imports all of its drugs, most of which are produced by Big Pharma. Since Honduras entered ALBA (the Bolivarian Alternative for the Peoples of America) in August 2008, Zelaya has been negotiating a trade accord with Havana to import generic Cuban drugs in order to reduce spending in Honduran public hospitals.

Moreover, at the Earth Summit of June 24 last year, ALBA presidents committed to “revising intellectual property doctrine,” challenging in particular the existing system of pharmaceutical patents. These two efforts, which directly threaten the interests of Big Pharma, drove the giant drug multinationals to forcefully back the movement that overthrew Zelaya in a coup last June 28.

Similarly, Barack Obama, hoping to reform the US health system which today leaves 47 million Americans without health coverage, is facing the wrath of the pharmaceutical industry. The sums in play are mind-boggling and controlled by a vigorous lobby of private interests that includes, in addition to Big Pharma, the major insurance companies, private hospitals and clinics. None of these elements wants to lose its extravagant privileges. And so, putting pressure on the media and the Republican Party, they are spending hundreds of millions of dollars on misinformation campaigns and scurrilous attacks against necessary healthcare reform.

It is a crucial battle, and it will be momentous if it is won by the pharmaceutical mafia, which would thus have doubled its power to fight the release of generic drugs and dampen hopes for a more solidary and less expensive healthcare system.

IPS

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