Pharmaceutical industry vs public health

Pharmaceutical industry vs public health

First, due to the fact that they have a captive market (people who suffer from diseases or are concerned about their health), which is a vulnerable clientele, whose purchasing decisions depend not so much on their tastes, nor in many cases on their real purchasing power, but rather of those who prescribe the drugs (usually doctors) or of the urgency to cure or alleviate any ailment at any cost. This is also an area where product quality can be life-threatening. The latter, and patent protection, are factors that reduce competition.

This table gives the pharmaceutical industry an inordinate power to set marketing prices, not so much in proportion to the real cost of production, but as a function of what the market price can reach. The phenomenal income of these transnational companies testify to this reality; the three largest global companies: Novartis, Roche and Pfizer, have a total annual revenue of $ 129 billion; GDP in many countries is nowhere near this figure.

As a flagrant example of the over-price, it is enough to remember the case of Sofosbuvir, developed to treat hepatitis C (a disease that previously had no cure), which affects more than 170 million people in the world and can cause death. Five years ago, Gilead Sciences of the USA bought the company Pharmasset for 11,000 million dollars, together with the patent on Sofosbuvir, a drug whose sale price was multiplied by 100. A daily treatment for 12 weeks cost up to US $ 84,000 [1 ]. With the sale of this product, in one year the company recovered all its investment. Although the price has dropped somewhat, the drug remains inaccessible to many hepatitis C patients.

It should be said that, if the impoverished sectors cannot afford the high prices, it is not a concern for the industry either: the poor are seen as a market to sell the most common and cheap medicines. Not to mention the “forgotten diseases”, those that mainly affect poor sectors of the South and for which the pharmaceutical companies do not insist on researching drugs to counteract them, because they are not seen as a profitable option; This is the case, for example, of Chagas disease, of which it is estimated that only 1% of affected people have access to medication.

Faced with this panorama of the population's defenselessness against the power of the pharmaceutical industry, the public sector has a high responsibility to apply the necessary measures and regulations for the control and balance of market power, to guarantee the human right to health, particularly for the poorest sectors. An encouraging sign in this regard was the resolution, this year, at the UN Human Rights Council, which reaffirms that universal access to affordable, safe, effective and quality medicines is a condition for enjoying the right to health.

The agreement reiterates the call to States to continue collaborating to decouple the cost of new research and development from the prices of drugs, vaccines and diagnostics, in the case of diseases that mainly affect developing countries and diseases forgotten tropics. In another agreement, the need to strengthen the capacities of States in public health is recognized, through, among other measures, the effective application of the flexibilities recognized for developing countries under the WTO agreement on TRIPS (aspects related to trade in intellectual property rights), to reduce the cost of medicines, for example by establishing compulsory licenses to produce generic medicines.

In practice, however, countries are often pressured to renounce these rights, particularly if they have signed trade agreements. Such agreements often include “TRIPS plus” provisions, such as an extension of the term of patents and the investor-state dispute system that threatens the use of compulsory licenses and other TRIPS flexibilities. The Trans-Pacific Agreement (TPP), if ratified, would, for example, extend the patents for new biological drugs (resulting from biotechnology), which in themselves tend to be much more expensive, and also foresees that, in the short term , developing country signatories must adopt the same patent rules that apply in developed countries.

Regional responses

In Latin America various responses to these challenges are being sought. For example, in 2010, the Ministry of Health of Peru launched an Observatory of Pharmaceutical Products (, where consumers can locate where to buy the most convenient medicines for their treatments already lower prices. The measure has contributed to lowering prices.

One of the most effective measures is aggregate public procurement, which means that the State negotiates en masse the purchase of the drugs most needed by the public health services, which allows it greater negotiating power with the producing companies. For example, this year the Ecuadorian government bought 326 medicines, of the most used for the treatment of the main causes of death, through a reverse auction (that is, where the sellers bid, and the lowest priced offer wins), which allowed him to save about 320 million dollars, (and that, compared to the lowest selling price in the region of each drug; then it represents a much greater saving in relation to what he previously paid). The entire process is publicly accessible:[2]

Before launching the auction, Ecuador conducted a study of the prices of all the most essential drugs in the region, and found that the same pharmaceutical company sells the same drug in different countries with price variations of up to 300% or even 600%, in some cases. The study allowed him to set the referential price of the auction, since normally the pharmaceutical companies do not release this type of information.

Undoubtedly, this advantage would increase if several countries buy together, which is made possible within the framework of regional integration agreements. The Central American countries already have a common mechanism for the purchase of some 64 basic medicines; And now the countries of South America (or several of them) are considering the possibility of doing the same, for which Ecuador has made its database of prices in the region available to Unasur.

For its part, the South American Institute of Government in Health (ISAGS), an entity of Unasur, is promoting a series of measures for these purposes. In addition to promoting aggregate public procurement among interested countries and expanding the price database (which will be made public), a mapping of the productive capacities of medicines in the region is being developed, particularly in the public sector. with the idea that a producing country could supply all of South America with a specific medicine at a lower cost. There are also initiatives that aim to develop new drugs for particular diseases in the region, particularly the "forgotten" ones.

Other responses that are being worked on regionally include: developing drug-therapeutic vademecums in the public health system (historically they have been prepared by companies) with more complete and objective information to guide doctors; adopt adequate legislation to set drug price ceilings, avoiding the misuse of patents; standardize the sanitary registration and quality control systems, which do not have to be different in each country. In the case of “biosimilar” medicines (an equivalent of generics, for biological medicines), as they are more complex, there is an additional requirement to ensure that they have the same quality, which requires investing in prior research, which could be done jointly .


However, it continues to face various problems. One of them is the "judicialization of health" as explained to ALAI, in an interview, by the new executive director of ISAGS, Carina Vance. The health ministers of the region have identified that it is one of the main threats to health systems, both for the rational use of drugs and for the sustainability of the systems, he said. For example, there are lawsuits filed by groups of patients who have forced the State to cover the cost of patented drugs, which are not in the national list of drugs, nor are they necessarily better, and the judicial system is not technically qualified to judge them. . Colombia, in 2003, had to spend more than a billion dollars for judicialized cases. On several occasions, it has been discovered that the law firms or NGOs that sponsor these patient groups receive funding from transnational pharmaceutical companies, which constitutes a clear conflict of interest.

Along with these practices, the levels of corruption are penetrating various levels of society. This is the case of the prizes and financial incentives that the pharmaceutical companies give to certain doctors to prescribe their brand-name drugs, or to the pharmacies that sell their products the most.

There are also national courts that have blocked, for example, the use of “biosimilar” drugs, at the request of companies. Or there are pharmaceutical companies that unilaterally decide to withdraw a drug and replace it with a more expensive one, as recently denounced in Ecuador by a foundation that works with people with hemophilia.

In sum, the concentration of market power of the pharmaceutical transnationals represents a direct threat to the right to health. The only way to effectively confront this power is with public policies, which will have greater force if they are agreed regionally and internationally. All governments, regardless of their political color, are affected. In this sense, the trend in some countries towards the reprivatization of public services is worrying, which would reduce this room for maneuver; Furthermore, given the nature of the pharmaceutical sector, it could lend itself to consolidating the corruption picture. Likewise, it would be inadmissible for these companies to continue to be granted greater prerogatives in the name of free trade or attracting foreign investment.

Article published in issue 517 (September 2016) of ALAI's Latin America in Movement magazine, entitled “Transnational power and the new FTAs”.
[1] Martin Khor, Access to medicines and the right to health and life,
[2] See also: Sally Burch, The power of pharmaceutical companies and the right to medicines,

Video: The Truth About Drug Companies (May 2021).