Pharmaceutical Companies

Topics: Generic drug, Developing country, Developed country Pages: 7 (2392 words) Published: July 28, 2011
NAU- Management Across Cultures
November 2010
There is a lot of discussion about pharmaceutical companies, intellectual property, and the global AIDS epidemic. Do pharmaceutical companies have a responsibility to distribute drugs for free or low cost in developing countries? Why is intellectual property such a big deal? What impact would South Africa’s decision to levy duties on drugs in the country have on the international distribution of drugs? Was the change that provided patent protection for pharmaceutical companies an appropriate change or a dangerous precedent? Was it necessary to relax intellectual property rules in order to ensure that adequate supplies of AIDs medications would be available for distribution in the developing world? What role to multi-national corporations have in providing funding or other assistance to international organizations such as the Global Fund? All these questions have many arguments for and against but the right answers probably lie somewhere in between. Having and providing access to affordable medication is one of the greatest challenges we face today. Many people see the pharmaceutical companies as socially irresponsible. The evidence is in the outrageous prices individuals have to pay for medications. Although I don’t like high priced medications I do believe in the right for a business who has the chance to face many lawsuits to make money. To come up with medications it takes years of research and licensing. The pharmaceutical companies don’t want their hard work to be the catalyst for another company to come in and make a cheaper version and take all the profits. With the protection of a patent, the companies that make the drugs can charge high prices in an attempt to make their money back. The profits are then spread to investors and also used for more research for better medications. According to the case in the textbook, on average it takes ten to fifteen years for a drug to be created from start to finish, at a cost of $800 million. Even then, the case goes on to state that only 30 % of the completed product will earn revenues equal to its research and development (R&D). Pharmaceutical companies tend to fund R&D that addresses problems of the developed world, not the developing one. This is because the developed world has the means to finance the research and pay for the completed product. Around 90% of the money spent of health R&D focuses on medical conditions responsible for only 10% of the world’s burden of disease (Benatar, 2000). Pharmaceutical companies feel they have a commitment to deliver performance to their shareholders, and I agree, that is why they focus on diseases prevalent to the market.

Most people in the developing world cannot afford medications used to treat or prevent infectious diseases, such as HIV/AIDS. Some governments, such as India, Bangladesh, Thailand, and Brazil do not honor patents pharmaceutical manufacturing processes but not patents on pharmaceutical products. This strategy allows generic companies operating in these countries to manufacture patented drugs without paying any royalties to the patent holders, as long as they use a manufacturing process that has not been patented (McNeil, 2000a). In some of the countries where AIDS has infected a large portion of the population where it also very poor, local companies will reproduce one or more of the drugs that comprise the AIDS “cocktail” and sell it at prices lower than those of the company who originally manufactured and designed it. This takes business away from the companies that have the equipment and potential funding to continue research and create better medication. By countries allowing this it stifles innovation. If pharmaceutical companies had a greater commitment to social responsibility, then they would help people in the developing world obtain access to affordable medications instead of losing money to the generics being sold. There would still be...
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