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Guide for Policy
Makers and Researchers: Understanding the
challenge Making Essential
Medicines Available to the World’s Poor
This guide provides a brief introduction to a diverse set of debates and initiatives aimed at improving access to medicines for the world’s poor. The global pharmaceutical industry is explained, and the situation in rich and poor nations contrasted in order to highlight current efforts and challenges involved in providing access to pharmaceuticals in resource poor nations. The World Health Organization estimates that over 1/3 of the world’s population lacks access to essential medicines; those medicines necessary to ensure that most major illnesses present in a population can be treated. Making access to medicine a reality involves individuals making decisions about their own health, decisions by global bodies such as the United Nations, along with decisions made by local, regional, and national governments and organizations. This guide provides a starting point for those interested in building an understanding of how all of these decisions fit together to provide or hinder access to medicines. The conditions in each nation and region vary substantially and it is beyond the scope of this guide to highlight those differences or discuss the circumstances in each country or region. Rather, the patterns and challenges that are faced around the world are highlighted. Wherever possible links and references to materials that provide more detailed and current information are provided. Because many of the issues highlighted here involve high profile international bodies there is a wealth of information online. The Pharmaceutical Industry in the developed and developing world[1] The development of pharmaceuticals takes place in wealthy developed countries and targets health problems that are prevalent in those countries. The vast majority of pharmaceuticals are also consumed in developed countries. Approximately 85% of pharmaceuticals are consumed in the developed world[2] and 99% of new medicines are invented in the United States, Japan or the European Union.[3] The need for pharmaceutical products is just as great in the developing world, but the resources and infrastructure necessary to create, purchase and deliver pharmaceuticals are largely absent.
The most striking aspect of
the pharmaceutical industry, and the most important to understanding the
challenges involved in improving access to pharmaceuticals in developing
nations, is the way in which the industry is integrated into the industrialized
nation state. Government regulation
structures and facilitates virtually every aspect of the pharmaceutical
industry. Government regulation creates
the conditions under which pharmaceutical innovation is possible - patent
legislation and other mechanisms that provide marketing exclusivity allow
pharmaceuticals to be profitably invented and sold. Government regulation also directly supports pharmaceutical
innovation through monetary grants for research. Billions of dollars are spent by governments each year on
research that improves the scientific understanding of disease and chemical
compounds in ways that support the development of new drugs. Government regulation also ensures the
safety of pharmaceutical products through rigorous drug approval processes. Drug
approval processes in turn, both ensure that patients trust the drugs that are
marketed to them and help to minimize the legal exposure of companies selling
drugs that may have serious adverse side effects. Government regulation controls the sale of pharmaceuticals
through doctors and pharmacies and governments continue to monitor the safety of
pharmaceuticals once they are available for sale. In Europe, Japan and Canada government backed health insurance plans are
also the largest purchaser of pharmaceuticals.[5] It is not exaggeration to suggest that the
pharmaceutical industry could not exist, in anything resembling its current
form, without the complex web of government regulation and support now in
place. The
various roles that government plays in regulating the pharmaceutical industry
are to some extent in conflict. On
the one hand, encouraging innovation requires patent protection and policies
that grant market exclusivity, which drives the price of pharmaceuticals up,
while on the other hand, governments as payers for health care wish to provide
the widest possible access to needed pharmaceuticals at the lowest cost.[6] Rich country governments operate in an
environment with sufficient resources to meaningfully regulate the price of
pharmaceuticals in order to meet national priorities, provide the regulatory
environment necessary to the success of the pharmaceutical industry, and at the
same time allow pharmaceutical companies to make a profit that encourages the
development of new drugs. In developing nations, governments generally
exert considerably less control over pharmaceutical companies and the prices
charged for pharmaceuticals.[7] Limited budgets prevent governments in most
developing nations from providing meaningful regulation for pharmaceuticals;
systems to regulate which drugs are sold and the quality of the drugs that are
sold are often lacking.[8] The size of the market for pharmaceuticals
is too small to attract private sector investment in drug development, and
governments do not have the resources to fund research themselves.[9] Individuals rather than governments or
insurace plans purchase the majority of pharmaceuticals in developing nations.[10] Lastly, recent global agreements limit the
ability of poor country governments to deny patent protection to
pharmaceuticals, thus limiting the ability of governments to make medicines
available at lowest cost (see box for details).[11] The benefits that pharmaceuticals do provide in poor nations are, from the perspective of development and regulation, a spill over from the industrialized nation pharmaceutical industry. This means that pharmaceuticals tend to have sub-optimal impact in poor nations. Because the pharmaceuticals that are bought and sold in developing nations have been invented by the developed world pharmaceutical industry for use in rich countries, some are not appropriate for use in the developing world.[12] Many drugs require climate-controlled storage that is unavailable in many parts of the world or complex diagnosis and testing in order to be effective. Additionally, because drugs are developed for rich country markets, the drugs that are invented only target diseases that are prevalent in the developed world. There is no effective drug treatment for a number of tropical diseases because there is no economic incentive for private sector development of such drugs and insufficient public sector knowledge and expertise in developing nations.[13] The need to better manage pharmaceutical research, development and regulation in poor countries is clear. The next section examines the pharmaceutical industry in more detail in order to highlight problems in the developing world.
Structure of Drug Development in Rich and Poor Nations[15]
Figures 1
and 2 illustrate the structure of pharmaceutical innovation and consumption in
the developed and developing world.
Figure 1 illustrates the cycle of demand, innovation and consumption in
the developed world. In developed
countries, the cycle begins with an economic evaluation of possible research
programs by pharmaceutical companies.
Companies review the state of biomedical knowledge and their own
expertise, seeking to evaluate where further research may lead to the
development of a drug that will be economically successful.[16] Because economic success depends on demand,
and demand is, to a large extent, shaped by the health needs of people in
developed countries, such needs actually drive research. Once a
research direction is selected, time and resources are spent to identify and do
preliminary testing of new chemical entities (NCE) that might treat the
targeted condition. When promising NCEs
are identified they undergo more rigorous testing.[17] NCEs will generally be patented at this time
as well. The patent ensures that if a
NCE is successfully developed into a medicine appropriate for human
consumption, the firm making the investment will have a period of market
exclusivity.
Much of
the pharmaceutical development process is dictated by regulatory requirements
intended to insure that new drugs are proven to be effective and safe before
they are sold to the public.[18] The studies undertaken generally take years
to complete and require an investment of hundreds of millions of dollars. Recent work done by the International Conference
on Harmonization (ICH) has led governments in the world’s most important
pharmaceutical markets, the United States, the European Union, and Japan, to
adopt substantially the same criteria for drug approvals.[19] This means that the clinical testing done to
gain approval in one developed country is likely to be sufficient to gain
approval in other developed countries.
If testing is successful, which means that the NCE is effective and
relatively safe, the NCE will be approved for sale. This has an ancillary benefit in poor nations in that they have
the option of adopting ICH standards for drug review and following the
developed country lead in drug approvals.[20] Once
approved the NCE is branded and marketed to physicians and possibly
consumers. If the new drug provides
significant clinical benefit over existing therapies, either better treatment
or lower rates of side effects, it is likely to be widely prescribed. Drugs that do not provide significant
clinical benefit over existing treatments may still be widely adopted if they
enter a market with low rates of competition.
Individuals respond differently to each drug, so if there are only a few
drugs in a therapeutic class all are likely to be widely prescribed, even if
the drugs have similar rates of side effects and benefits. This means that even drugs that do not
provide a statistically significant clinical benefit over existing therapies
may be financially successful.[21] Payment
for the drug in the European Union and Japan will come primarily from
government, while in the US and Canada government and private insurance pays
for the majority of drug expenditures.
Total drug expenditure typically amounts to between 1% and 2% of GDP in
developed nations.[22] Additionally, even in the US and Canada, individuals
who are unable to pay for medicines can generally gain access through
government programs designed to ensure access for people who are unable to
afford medicines without assistance. Once a
drug is on the market the medical profession and national regulatory bodies
monitor consumption. This helps to
ensure both that individual patients receive optimal benefit and that any
dangers posed by a drug, in the form of a severe adverse reaction not found
during clinical testing, are identified and responded to. A
clinically successful drug that treats a common ailment can be worth billions
of dollars in sales per year.[23] The
situation in developing countries is strikingly different. In the developing world there is no cycle of
innovation and consumption. Rather,
there is only consumption of drugs invented for rich country markets. Figure 2 illustrates dynamics of consumption
in the developed world. Weak economic
demand means that private industry will not invest in creating pharmaceuticals
that target the health needs of developing countries.[24] Additionally, differences between the health
infrastructure in developed and developing countries are not considered in the
drug design and development process, resulting in the development of drugs that
may be difficult to store or administer.[25]
Drugs that
are likely to have a significant market in a developing country are likely to
be patented and sold in that country.
As of 1995 developing counties are obligated under TRIPS to allow
pharmaceuticals to be registered for patent protection. Patents only need to come into force at the
end of 2005 in most developing countries and 2016 in least developed countries.[27] However, virtually all developing countries
have implemented patent protection for pharmaceuticals well in advance of this
deadline.[28] Patents
have the potential to raise the cost of pharmaceuticals in poor countries.[29] The extent to which this will actually
happen and to which patents will hinder access to needed medicines is not yet known. The reason for this uncertainty is firstly,
because patent protection has only recently been available in poor nations and
secondly, because there is ongoing conflict over the extent to which poor
nations can override patent protection in order to protect public health. The patenting of drugs in poor nations is
the current subject of significant debate and the topic of Chapter 2.
In the poorest regions of
the world most pharmaceuticals are not patented. Because there is likely to be no market for high priced
pharmaceuticals in those regions, even if it is possible to register patents in
those nations the expense of doing so likely outweighs the economic
benefit. One recent study of
Sub-Saharan Africa, where virtually of the countries studied did offer patent
protection, found that only in South Africa, by far the region’s most wealth
country, are more than 8 of 15 HIV/AIDS medicines patented, with the median and
mode number of patents being 3 of 15.[34] In developing countries with a sizable middle
class pharmaceutical companies are likely to register for patent
protection. Because there are dramatic
income disparities between the richest and poorest people in developing
nations, despite widespread poverty there is a significant market for high
priced pharmaceuticals in many poor nations.
Brazil, for example, is the world’s 9th largest
pharmaceutical market, but only 48% of the population has access to even
essential medicines.[35] If patent protection leads to higher priced
pharmaceuticals in poor nations this will make providing access to medicines
significantly more difficult. The manner
in which drugs are approved and regulated in developing nations varies
significantly, but generally, the approval process, regulation and enforcement
of regulation are weak. Generally,
developing nations do not have the resources necessary to create an effective
drug approval regime that is capable of ensuring only safe and effective
medications are sold. The World Health
Organization (WHO) has a number of ongoing initiatives to enhance drug safety
in developing countries. These focus on
reciprocal licensing, through which drug importing and exporting states
guarantee to one another that sufficient inspection and safety protocols are
implemented, along with model guidelines to assist in the implementation of
policies and programs that can increase the safety and efficacy of drugs
allowed onto the market.[36] Despite international support drug
regulation is still lacking on most poor nations. According to the WHO only 1 in 6 member countries, primarily
developed countries have a developed drug regulation system.[37] Marketing of pharmaceuticals is also largely unregulated in developing countries. This means that misleading or false information about available pharmaceuticals may be communicated to consumers. When true information is communicated such information by still bias consumers in favor of more expensive brands. This is particularly problematic in regions of the world with low education and literacy rates. In such places marketing materials may be a primary source of health information.[38] The WHO estimates that worldwide 50% of medicines are prescribed, dispensed or sold inappropriately and that 50% of patients fail to take their medicines correctly.[39] While these problems exist in developed countries, due to pharmacy or physician error, or non-compliant patients, they are far more serious in developing countries where access to well-trained health care professionals and pharmacists is scarce. In India for example, 70% of people who purchase pharmaceuticals consult a pharmacists and not a doctor and 50% of people avoid free government hospitals due to fear of poor service and non-accountability.[40] Even where
people have access to accurate information about the pharmaceuticals that they
need, and systems exist to ensure that people get the correct medicines in the
correct doses, poverty remains a major barrier. According to the WHO, 1/3 of people in the developing world are
unable to afford essential medicines.
In some particularly poor regions of the world, in particular
Sub-Saharan Africa, the number of people without economic access to essential
medicines is above 50%.[41] Conclusion
The global pharmaceutical industry is clearly controlled by a relatively small number of large institutional players, primarily global pharmaceutical manufacturers and developed world governments. The industry is clearly structured to serve the developed world. There is, however, the potential for significant spillover benefit in poor nations as can be seen in the case of HIV/AIDS. The research, in particular the advances in basic scientific funded by developed world governments, is also of potential benefit to efforts now underway that aim to develop drugs outside of the global pharmaceutical industry to treat diseases that predominantly affect developing nations (see Chapter 3 for a more detailed discussion of these initiatives). However, the economic exclusion of poor nations from significant involvement in regulating and shaping the global pharmaceutical industry suggests the need for different models as efforts are made to provide access to medicines for the world’s poor.
[1] The division of the world into developed and developing world countries is somewhat artificial. There are significant differences between the world’s developing nations. Countries in Eastern Europe for example are far wealthier than those in Sub-Saharan Africa. This guide tends to minimize those differences and may make some generalizations that do not apply well to wealthier developing nations. [2] See Table 1.1 below. [3] Borrus, Michael. “The Global Pharmaceutical Market.” Hass School of Business, 2002 citing IMS Health report 2001 hereinafter “The Global Pharmaceutical Market.” [4] The patentee is the entity (person, company or institution) who owns the patent. [5] Ikegami, Naoki & John Creighton Campbell. “Health Care Reform in Japan: The virtues of muddling through,” 18(3) Health Affairs 56 at pp. 62-64. Garrison, Lou & Adrian Towse. “The Drug Budget Silo Mentality in Europe: An Overview,” 6(s1) Value in Health s1, July 2003. [6] Jacobzone, Stephane. “Pharmaceutical Policies in OECD Countries: Reconciling Social and Industrial Goals.” Labour Market and Social Policy Occasional Paper No. 40, OECD, Paris, 2000. [7] While a strong majority of poor nations lack the capacity to effectively regulate pharmaceuticals there are limited exceptions. India, for example, has a system of price controls on pharmaceutical products. See Parmar, Sharron & Vivek Divan, “Drug Financing and Price Control: Legislative Intervention in the Public Interest,” in Putting Third First: Vaccines, Access to Treatment & the Law, Canadian HIV/AIDS Legal Network, 2002. [8] WHO. “Effective Drug Regulation: What can countries do?” WHO, Geneva, 1999 at pp.13-14. [9] Henry, David & Joel Lexchin. “The pharmaceutical industry as a medicines provider,” 360 The Lancet 1590-1595, 2002, at 1592. [10] WHO. “Selected topics in health reform and drug financing.” Geneva: Action Program on Essential Drugs (WHO/DAP/98.3) hereinafter “Selected topics in health reform”, at p.4 and16, individuals’ expenditures account for 65 to 81 percent of overall heath care and over two-thirds of pharmaceutical expenditures. [11] See generally, Cohen, Jillian Clair & Patricia Illingsworth. “The Dilemma of Intellectual Property Rights for Pharmaceuticals: The tension between ensuring access of the poor to medicines and committing to international agreements,” 3(1) Developing World Bioethics 27. [12] Schweitzer, Stuart. “Pharmaceutical Economics and Policy.” Oxford University Press, New York, 1997, hereinafter “Pharmaceutical Economics and Policy” at p. 128. [13] Trouiller, Patrice et al. “Drug development for neglected diseases: a deficient market and a public-health failure,” 359 The Lancet 2188-2194 at p. 2189. [14] DiMasi, Joseph A. “Winners and losers in new drug innovation,” Medical Marketing and Media, 26(6), 98-110, Sept 2001. Hereinafter “Winners and losers” [15] This section depends heavily on Stuart Schweitzer’s excellent analysis of the pharmaceutical industry - “Pharmaceutical Economics and Policy” see note 8. Please see his book for a more complete account of the industry. For current information on the pharmaceutical industry see the Scrip Magazine, PjB Publications, http://www.scripmag.com. [16] Ibid at p. 30. [17] Ibid at p. 34. [18] See generally Blanchard, Randall IV. “The U.S. Drug Approval Process: A Primer.” CRS Report for Congress, 2001, Order Code, RL30989, available online at http://rxpolicy.com/studies/crs-approvalprocess-0601.pdf. [19] See the ICH website, http://www.ich.org in particular the page of IHC history and future activities http://www.ich.org/ich8.html accessed 2003-08-07. [20] The ICH has been criticized by groups such as MSF for threatening to raise the bar for approval of medicines in rich markets too high, thus stifling competition from developing countries. See for example MSF Access to Essential Medicines Campaign "Fatal Imbalance: The Crisis in Research and Development for Drugs for Neglected Diseases."MSG, Geniva, 2001. [21] “Pharmaceutical Economics and Policy” at 103. [22] OECD data indicate that countries spend between 6% and 13% of their GDP on health and between 10% and 20% of their health budget on pharmaceuticals. See www.odec.org accessed 2003-08-12. [23] Grabowski, Vernon H, DiMasi, JA. “Returns on research and development for 1990s new drug introductions,” Pharmacoeconomics, 2002, 20(Suppl 3), 11-29. [24] See note 5. [25] For example, there is reason to fear that wide spread use of AIDS drugs requiring complex adherence regimens in poor countries could lead to drug resistant strains of HIV, see Pharma, “Danger Head: Drug-Resistant Strains Show There Are No Simple Solutions.” At http://world.phrma.org/challenges.drug.resistance.html accessed 2003-08-12. See also Health Gap Coalition, “Myths vs. Reality: Distortion About AIDS Drugs & The Developing World.” 2001, available at http://www.globaltreatmentaccess.org/content/press_releases/01/061001_HGAP_PP_MYTHS.pdf accessed 2003-08-12 for coverage of initiatives to simplify AIDS drug regimens for poor regions. [26] While this figure represents the drug development cycle as it applies to the development of new pharmaceuticals in developing countries it is not meant to imply that there is no drug development at all in those countries. For example India has a small number of increasingly innovative pharmaceutical companies that develop new drugs for both developed and developing country markets. These companies, however, are subject to the same market pressures as developed country pharmaceutical companies and so can be expected to focus their drug development efforts on diseases that affect rich countries. 27] See the box “Where are medicines patentable” for a discussion of TRIPS, the international law relating to patents and current conflict between rich and poor nations over the implementation of patent protection for pharmaceuticals. [28] See WTO website, http://www.wto.org/english/thewto_e/whatis_e/tif_e/dev6_e.htm accessed 2003-08-12, only 11 developing countries were on record as not having implemented patent protection for pharmaceuticals. [29] See Lanjouw, Jean O. “The Introduction of Pharmaceutical Patents in India: ‘Heartless Exploitation of the Poor and Suffering’?” Economic Growth Center, Yale University, Center Discussion Paper No. 775, 1997 hereinafter “The Introduction of Pharmaceutical Patents in India” for a discussion of the likely effect of pharmaceutical patents in India. [30] Gwatkin, Davidson and Michel Guillot. “The Burden of Disease among the Global Poor: Current Situation, Future Trends and Implications for Strategy.” World Bank, Washington, 2000 p. 9. [31] Moran, Mary. “Reneging on Doha.” Médecins Sans Frontières, 2002. [32] Ibid. The “Reneging on Doha” study shows that there are patented medicines for the most important causes of mortality in Africa, but does not address off patent medicines. Most of the medicines on the WHO essential medicines list are off patent medicines. This, in together with the “Reneging on Doha” study suggests that there are pharmaceuticals to treat the majority of the major diseases affecting poor nations. [33] WHO. “World Health Report: Making a difference, 1999.” WHO, Geneva, 1999 at p. 23. [34] Attaran, Amir & Lee Gillespie-White. “Do Patents for Antiretroviral Drugs Constrain Access to AIDS Treatment in Africa?” 286(15) Journal of the American Medical Association 1886. Please not that this paper was enormously controversial when published. It has been used by the innovative pharmaceutical manufacturer lobby to suggest that patents do not affect access to medicines. The paper does not make such an argument, and can not responsibly be taken to imply that patents do not generally affect access to medicines. [35] Schweitzer, Stuart. “Pharmaceutical Economics and Policy.” Oxford University Press, New York, 1997, p 129. [36] See the WHO website “Essential Drugs and Medicines Policy” at www.who.int/medicines and in particular the section on “Quality Assurance and Safety of Medicines” at http://www.who.int/medicines/organization/qsm/orgqsm.shtml. See for example Woo-Ming, RB. “The drug regulatory and review process in Guyana,” Journal of Clinical Pharmacology, 33(1), 14-21 for a review of Guyana’s success in adopting WHO programs to improve the safety of drugs entering the country. [37] According to the WHO only 1 in 6 member nations have well-developed drug regulation systems. WHO Essential Drugs and Medicines Policy website, Drug Regulation and Quality Assurance Systems page at http://www.who.int/medicines/strategy/quality_safety/stqsmdrqa.shtml accessed 2003-08-12. [38] Mintzes, Barbara. “Blurring the Boundaries: New trends in drug promotion.” HAI-Europe, 1999, available at http://www.haiweb.org/pubs/blurring/blurring.intro.html accessed 2003-08-12. Covers drug promotion in developed and developing world, see in particular Ch. 1. [39] World Health Organization, “Promoting Rational Use of Medicines: Core Concepts”, WHO, Geneva, World Health Organization, 2002 [40] Script, Nov. 1, 2002, Issue 2795, p. 19, Study by the National Pharmaceutical Pricing Authority. [41] Habiyambere, V, et al. “Progress of WHO Member States in developing national drug policies and in revising essential drug lists.” World Health Organization, Geneva, 1998. WHO document number WHO/DAP/98.7. See Table 6, p. 12. Hereinafter “Progress of Who Member Sates” |
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