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From birth control pills to antiviral drugs, the pharmaceutical industry has shaped not only how people live, but has also been instrumental in pushing the limits of life itself. It is perhaps not surprising then that global revenues for pharmaceuticals topped more than $600 billion in 2007, with Americans spending $246 billion in 2009. But for all its enormous sales, bringing a drug to market is an equally risky and expensive business. On average, it takes $800 million and 10-15 years of rigorous research and development to develop just one drug. Although millions of compounds are tested, only about 25 truly new drugs enter the market each year. Once developed, it would seem morally wrong to deny a person access to life-saving medicine simply because they could not afford it. But if the price of a drug dropped to a point where it ceased to be profitable, than drug companies would have no incentive to develop it at all. But putting a price on life is a necessary condition of this business.
What that price should be is continually evolving, and perhaps the most important factor influencing it today is healthcare reform, the generic drug market, and the changing sphere of the global market. Perhaps drug companies are so adamant about extending their patent protection rights for biologics because of their experience with the current generic drug market. Indeed, in 2013, nearly $137 billion worth of branded products are expected to be lost due to the expiration of their market exclusivity. China, India, Latin America, and Central and Eastern Europe represent significant potential markets for the production of generic drugs. In addition, China is projected to become the largest consumer of generics by 2013, with 26% of the market share compared to the United States’ 20.5%.
Challenges in Healthcare Patents
The World Health Organization (WHO) estimates that up to 30% of branded drugs sold in developing nations are counterfeit which can have profound implications for patients, for example- tuberculosis (TB) and Malaria counterfeits, which largely originate in India and China, are estimated to kill some 700,000 people a year! Counterfeiters, similar to legitimate drug manufactures, are keen to benefit from manufacturing costs in India that are around 40% cheaper than other markets. But in many ways India is the ideal location to conduct clinical trials given its diverse pool of patients with diverse treatment needs and access to a large, scientifically skilled, workforce. This has caused huge growth in the number of clinical trials however, capacity to regulate trials has not kept pace leading to a number of unethical practices such as, a lack of patient compensation for adverse events; approval of drugs without clinical trials and lapses in informed consent procedures. As a result, India’s counterfeit market has reportedly grown at a rate of about 25% per-annum, and represents a significant proportion of the global counterfeit drug market (thought to be worth between $75 billion and $200 billion a year.
Patent issues in Indian Subcontinent and Latest Trends
In India, 70% of expenditure on healthcare is out-of-pocket, which has led the government and its judiciary to take steps to promote the use of generic products and prevent prices of lifesaving drugs being set by market forces. This has caused a number of issues for multinational companies, leading some to question the commercial viability of India:
- April 2013, Novartis lost a six-year legal battle after the Supreme Court ruled that small changes to its leukemia drug Glivec would not get a new patent
- Recently India upheld a compulsory license of Bayer’s cancer drug Nexavar, effectively allowing generics firms to copy the patented drug
- The patent for Pfizer’s cancer drug Sutent was revoked
- Roche’s patent on Pegasys, a hepatitis C drug, was denied.
Future Trends in Healthcare and Pharmaceutical Industry
According to South African Trade and Industry Minister Rob Davies, the government’s policy on intellectual property, which is under discussion, will seek to balance the needs of public health and the interests of innovative pharmaceutical companies. And lastly of the 2,900 drugs currently undergoing research and development in the U.S., 312 are targeted toward heart diseases, 150 for diabetes, and 109 for AIDS. How many more of these drugs being developed and who gets access to them will affect everybody’s bottom line. And only emerging markets often have weaker institutions and more dubious patent laws than in developed markets, which will certainly also have an impact on the ways that drugs are developed and sold in the future.