Pharmaceutical Companies, Intellectual Property, and the Global Aids Epidemic

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IBUS 3312 - International Management
Pharmaceutical Companies, Intellectual Property, and the Global AIDS Epidemic


While this case is literally full of negative aspects, we will only focus on the main points for both arguments. Pharmaceutical companies want to be sure that the products they spend years and millions of dollars to create are not easily reproduced and sold at discount prices. The profits pharmaceuticals make of their patented products are supposed to refinance new research. So taking away their exclusive distribution rights and allowing other manufacturers to just copy the product and sell it at minimal costs also harms the innovative processes in which new and better drugs are developed [1]. Those less concerned with the patents for these drugs are concerned about the alarming AIDS statistics, which clearly demonstrate the fact that there is an AIDS epidemic in some of the poorest countries in the world. Recovering Expenses

In some of the countries where the with AIDS infected population is not only very large but 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 introduced it and is trying to recover some of their costs from research and development. 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. With the protection of a patent, the companies that make the drugs can charge high prices in an attempt to make their money back. Due to the fact that people with HIV/AIDS are always going to need the medicine, the price of the drugs tends to be relatively price insensitive during the time when they are protected by a patent [2]. AIDS Statistics

One of the saddest aspects of this case is just the statistics. The first table in the case study breaks down how many people have HIV/AIDS according to the country the live in; there are a total of forty million people, including adults and children, infected with HIV/AIDS. In an article in a November 2006 issue of USAToday written by Kofi Anan, former Secretary-General for the United Nations and a patron of The Global Fund to Fight AIDS, Malaria, and Tuberculosis, he adds that AIDS is the number one killer of men and women aged fifteen to fifty-nine. The Costs of AIDS

The high number of those infected with HIV/AIDS goes hand-in-hand with the high cost of treating it. According to the case in the book, seven or eight years ago the cost of a one year supply of a “cocktail” of drugs used in AIDS treatment was equal to $10,000 - $12,000 in developed countries. In developing countries this cost was more than one person’s yearly income. Secretary-General Kofi Anan also reports that an estimated $3 billion has already been spent in the fight against AIDS. Anan speculates in the same article mentioned above that, “by 2010, total needs for a comprehensive AIDS response will exceed $20 billion a year.” [2] Health experts have been pushing for the prevention of AIDS to be a high priority since there is no cure or vaccine for the disease. The amount of money that was sent to developing countries for the purposes of spreading prevention was very small, as the case states. In these developing countries, such as in the sub-Saharan region of Africa, there is widespread poverty and few are very highly educated. It is because of this that the people there don’t know what to do to prevent getting the disease in the first place. Progress over Time

Even if after reading this case it can be thought that it has no positive aspects, on the contrary, it presents us with very interesting facts to consider and get a broader view of the matter. One of the things that have to be taken into consideration...
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