Pharmaceutical Companies, Intellectual Property, and the Global Aids Epidemic
IBUS 3312 - International Management
Pharmaceutical Companies, Intellectual Property, and the Global AIDS Epidemic
Analysis
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
Pharmaceutical Companies, Intellectual Property, and the Global AIDS Epidemic
Analysis
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
Bibliography: [1] http://usinfo.state.gov/products/pubs/intelprp/industry.htm [2] Hodgett, Luthans, Doh; International Management, 6th Ed.; McGraw Hill [3] http://www.avert.org/aidstarget.htm [4] http://www.fightingmalaria.org/pdfs/treatment_obstacles.pdf [5] http://siteresources.worldbank.org/INTPROCUREMENT/Resources/Technical-Guide-Procure-HIV-AIDS-Meds.pdf [6] http://www.avert.org/prevent-hiv.htm [7] http://www.avert.org/generic.htm [8] http://medicine.plosjournals.org/perlserv?request=get-document&doi=10.1371/journal.pmed.0030332