Why are our medicines so expensive?
By Els Torreele
In the lead-up to an inter ministerial meeting between EU and India next week, European trade negotiators continue to pressure India and other developing countries to accept so-called “free trade” agreements that favour patent monopolies, high medicines prices, and the interests of the pharmaceutical industry.
Instead, the EU should be promoting open innovation and should work to bring down the prices of essential medicines, both abroad and within its borders.
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For Europeans who have never had to worry about access to health care or medicines, it comes as a shock that the downward spiral of financial crisis and ensuing austerity politics have put at risk our once sacrosanct right to access affordable, quality health care.
Reading the agonizing stories of cancer patients in Greece who can no longer afford the medicines that keep them alive, or immigrants in Spain who no longer get costly AIDS cocktails because their health care is being revoked, it is clear we have our priorities wrong.
But why are our medicines so expensive?
For decades, Western countries have relied on an innovation model that provides generous incentives to pharmaceutical companies to develop and test medicines. Public funds support much of the early research for new medicines, and companies that bring new drugs to market receive tax credits and patents that let them charge monopoly prices and make high profits.
For a long time, wealthy countries with comprehensive health insurance coverage considered expensive medicines an acceptable price to pay for medical innovation and a booming pharmaceutical sector, since no one had to pay the full cost of medicines out-of-pocket.
Now that austerity measures are shifting these high cost to patients, however, we must ask - what is the point of having medical innovation if we cannot afford the therapies it delivers?
This, of course, is the situation that people living in low and middle income countries have confronted all along. For example, the price of life-saving hepatitis C medicines, sold under monopoly pricing by Merck and Roche can easily cost €15,000 per treatment.
Similarly, Novartis has maintained a global price of around €2,000 per month for its breakthrough cancer drug Glivec.
Treatment access gap
It is no surprise that virtually no one outside of rich countries can access these medicines. Now, austerity politics in the EU mean that poor, unemployed, and otherwise disadvantaged groups in Europe are also facing a growing treatment access gap.
We know from other countries that most medicines can be produced at a fraction of the price they cost in Europe. For instance, a generic version of Glivec is available in India at around €120 per month, much to the discontent of Novartis, who challenged India’s patent law in court to maintain its grip on profits.
Last week, after a seven year legal battle, patients won a landmark victory when India’s Supreme Court upheld the legality of the generic, thus safeguarding India’s role as a global hub for generic medicines.
Yet instead of finding ways to reduce the price of medicines, the European Commission’ is pursuing deals that would further restrict countries’ abilities to speed up generic availability and effective price competition. Following what Commissioner Karel De Gucht calls an “ambitious European free trade agenda”, they seek to promote the exportation of Europe's pharmaceutical products at high prices, favouring pharma companies over the health of the people.
EU India trade talks
In protracted closed door negotiations for an EU-India Free Trade Agreement, the Directorate General for Trade and corporate advisors continue to pressure India to accept provisions that undermine public health safeguards and favour corporate interests.
These include enhanced protection of patents and clinical data, which are known to delay entry of generic medicines into the market. Patients and health activists in countries such as Jordan and Guatemala have learnt the hard way that access to medicines is among the first issues to be compromised in such trade negotiations, seeing medicines prices soar once the agreements were signed.
In effect, the EU is pressuring India to make concessions that will undermine the health of millions of people worldwide, for whom India is their affordable pharmacy.
Rather than exporting its unsustainable model of patent-driven innovation and expensive medicines, Europe should stay focused on one of its greatest traditions - accessible health care for all.
While it could learn lessons from India about reducing medicine prices, Europe is ideally positioned to lead the way towards novel, open, and collaborative models of medical innovation that will ensure new medicines meet our health needs at prices people can afford.
We know this is possible. Even the head of GlaxoSmithKline Andrew Witty admits that the alleged $1 billion price tag for drug development - the chief excuse for high medicines prices - is “one of the great myths of the industry.”
In this age of financial difficulties, expensive medicines need not be.
The writer is the director of the Open Society Public Health Programme’s Access to Essential Medicines Initiative.