Big Pharma and the bullies

After getting kicked around by the likes of Thailand and Brazil, the pharmaceutical industry suddenly realizes, hey, maybe there's money to be made by lowering prices.

Topics: China, Globalization, How the World Works, Thailand, Brazil, Latin America,

In a remarkable display of schizophrenic journalism, the Economist kicks off an article about how Big Pharma is beginning to take developing country markets seriously by portraying the industry as if were a 90-pound weakling regularly pummeled by brawny bullies. Brazil “trampled” over Abbott Laboratories’ patents when it “browbeat” the company into lowering prices for an AIDS drug by threatening compulsory licensing. South Africa gave a “bloody nose” to GlaxoSmithKline, also on the issue of AIDS drug pricing. “And next week the industry can expect another drubbing over patents harming ‘innovation for the poor’ at the World Health Organisation’s annual assembly.”

It is amazing how some of the most profitable companies on the planet are able to play the victim at the hands of nations not formerly known for their potency in getting the West to dance to their tune. But never mind — because the bulk of the Economist’s story concerns how Big Pharma is finally realizing that maybe it should charge lower prices for drugs sold to poor people. Because, you know, it’s not only the right thing to do, but it might not even be so hard to charge one price to the desperately poor and another to the newly rich.

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This is referred to as “new thinking.”

New thinking is also needed when deciding how to sell drugs in developing countries. In the past Western firms either ignored such countries or saw them as charity cases. But now, says Tachi Yamada of the Gates Foundation, who was at GSK when the firm faced the South African backlash over HIV drugs, “pharma companies can’t possibly survive without recognising their responsibilities to the poor.”

Part of the story here is the rise of the middle class in countries such as Brazil, and the prospect that the newly emerging relatively well-heeled citizens of developing nations represent potential lucrative markets. But the governments of such nations are unlikely to let Big Pharma squeeze every cent they can out of such markets without simultaneously addressing the healthcare needs of the poor. Strangely, the governments of Brazil and Thailand feel like they have a mandate to ensure that Brazilians and Thais can gain access to drugs that will keep them alive — even if they can’t afford what Americans or Western Europeans pay for their drugs.

And if Big Pharma doesn’t get its developing world act together, new competition may be ready to eat its lunch. Reuters reported last week that China looks set to follow India onto the world scene as a major producer of generic drugs.

A coming wave of Chinese pills is set to push down the price of generic drugs, as more low-cost finished medicines from the country win approval in major markets, according to a report on Tuesday.

Pharmaceutical information group IMS Health Inc said last year’s first okay from the U.S. Food and Drug Administration for a Chinese generic — a copy of AIDS drug nevirapine — was a sign of things to come.

So “the China price” comes to pharmaceuticals. Might be bad news for the profit margins at some pharmaceutical companies, but probably pretty good for poor, sick people, the world over.

Andrew Leonard

Andrew Leonard is a staff writer at Salon. On Twitter, @koxinga21.

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