Taxes

Do Drug Companies Kill Poor People?

How for-profit medicine helps even the poorest

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"Less than 10 percent of the U.S.$73 billion spent globally every year on health research is allocated to study 90 percent of the world's health problems," claimed a report from the Global Forum for Health Research (GFHR) in 2002. The GFHR is an independent foundation under the auspices of the World Health Organization (WHO) that aims to redirect global research priorities toward the needs of the world's poorest people. Its report added, "For example, of 1,233 drugs that reached the global market between 1975 and 1997, 13 were for tropical infectious diseases that disproportionately affect the poor."

The international medical charity M?cins Sans Fronti?s (MSF) similarly issued a report in 2001 condemning eight of the world's largest 11 pharmaceutical companies, representing combined sales of nearly $117 billion, for reporting "no research activities in the last year for fatal diseases that almost exclusively affect the poor: sleeping sickness, Chagas disease and leishmaniasis."

"Drugs are not developed according to public health need, but according to profitability," bemoaned Dr. Bernard P?ul, director of MSF's Campaign for Access to Essential Medicines. "A new paradigm is urgently needed to address this fatal imbalance." Among other things MSF is calling for a potential "essential research obligation" mandate that would require companies to reinvest a percentage of pharmaceutical sales into R&D for neglected diseases, either directly or through public R&D programs. MSF also favors a global treaty on R&D for neglected diseases that could provide a framework for such mandates and help make drugs for neglected diseases global public goods.

So, distinguished international medical experts accuse companies in the developed world of putting profits over people. Millions of the world's poorest people are dying each year, they maintain, because of this alleged "10/90 Gap" in global health research priorities.

But there is less to these charges than meets the eye.

Rates of sickness and death are tragically higher in poor countries than they are in the rich countries. But can these higher rates of morbidity and mortality be chiefly blamed on the selfishness of rich pharmaceutical companies? An interesting new report, Diseases of Poverty and the 10/90 Gap, by the London-based International Policy Network (IPN) sheds considerable light on this question. (Full disclosure: I have reported on international trade issues with support from IPN in the past.)

First, are 90 percent of the diseases that afflict poor people in the developing world really being ignored by pharmaceutical company researchers? IPN points out that, according to WHO data, tropical diseases (trypanosomiasis, Chagas disease, schistosomiasis, leishmaniasis, lymphatic filariasis, onchocerciasis) account for only 0.5 percent of deaths in high-mortality poor countries and only 0.3 percent of deaths in low-mortality poor countries.

Furthermore, many treatments already exist for many of these diseases. Schistosomiasis is treated with praziquantel for 30 cents a dose; onchocerciasis can be controlled with ivermectin (which is being provided free of charge by its manufacturer Merck & Co. for as many people as needed, for as long as needed). Lymphatic filariasis is treated successfully with a combination of ivermectin and albendazole (which are being donated free by Merck and SmithKline Beecham). Note that these treatments were not developed by WHO or MSF researchers, but by profit-making private companies.

This leaves leishmaniasis, trypanosomiasis (sleeping sickness), and Chagas disease without really effective treatments. If these horrific tropical diseases are not the main causes of suffering and death among the poor in the developing world, what is?

Tuberculosis, malaria, and HIV/AIDS account for nearly 18 percent of the disease burden in the poorest countries. Effective methods of prevention and treatments exist for these diseases. Diarrheal diseases kill 1.8 million people each year and acute lower respiratory infections kill 2 million children under five annually. Vitamin A deficiency blinds 500,000 children per year. Again, cheap and effective treatments for these diseases already exist. About 25 percent of people in low-mortality poor countries also die of such "rich country diseases" as heart attacks and cancer. Current research on these diseases will benefit people in poorer countries as their disease profiles converge on those of today's rich countries.

As the IPN report notes, poor countries "currently benefit from drugs that were originally developed for wealthier markets"—treatments such as vaccines for polio, pertussis (whooping cough), diphtheria, and measles, and drugs to treat tuberculosis, HIV/AIDS, pneumonia, and many others. In fact, 90 percent of the products on the WHO's list of 319 essential medicines were originally discovered and/or developed by private companies in wealthier countries.

So if effective medicines are in fact available that could save millions of lives and avert much suffering among the world's poorest people, why are so many of them still sick and dying? In a word, poverty.

The abject poverty in which billions are mired is chiefly sustained by bad government economic policies. By adopting better economic policies, governments in poor countries would go a long way toward improving the health of their citizens. In addition, governments often impose high tariffs and taxes on medicines. For example, taxes account for 55 percent of the retail cost of medicines in India, 34 percent in Nigeria, 33 percent in Pakistan, 28 percent in China, and 24 percent in Mexico. And finally, in nearly all of the poorest countries, public expenditures on the military vastly outstrip those on health care.

"The health problems faced by the world's poorest populations are not caused by a lack of drugs specifically related to their problems and diseases," notes IPN. "The real problem is ensuring that these populations can actually access vital medicines." It turns out that the best way to address public health needs is through the profit motive. The IPN report correctly concludes: "A global R&D treaty, in which the profits of pharmaceutical companies are heavily taxed and their intellectual property rights undermined, would be almost certain to have the unintended consequence of effectively turning off the tap of innovation that is essential to dealing with the world's changing health problems." That would hurt the rich, but it would hurt the world's poor even more.