Pharmaceutical Companies, Intellectual Property, and the Global AIDS Epidemic
For this case study, six questions had been asked. The first one is: Should pharmaceutical companies distribute drugs at low cost in third world countries? What are the pros and cons of such an approach? The second one is: What are the principal arguments of pharma companies who oppose making exception to IPR laws for developing countries? What are the arguments by NGOs and others for a differential treatment? The third question is: What impact would you expect South Africa's decision to levy duties on drug imports from Western nations to have on the international distribution of drugs to South Africa? The fourth question is: In June 2002, the WTO extended the transition period during which least-developed countries (LDCs) had to provide patent protection for pharmaceuticals. In your opinion, do you think this is an appropriate change in policy, or a dangerous precedent? What could be some of the negative ramifications of this resolution? What about effects for other industries? The fifth one is: Given the initiatives announced by global development and aid organizations and among pharmaceutical companies themselves, was it necessary to relax IPR rules in order to ensure that adequate supplies of AIDs medications would be available for distribution in the developing world? The sixth and last one is: What role do MNCs have in providing funding or other assistance to international organizations such as the Global Fund?
Answers and Analysis
AIDS is a case full of holes embedded with negativity. The basic points will be discussed in this case. Pharmaceutical corporations dislike the idea of creating products to be sold at less market rates or duplicated for that matter. It takes millions of dollars to research and develop, then manufacture drugs. The profits yielding from these products fuel further research finance. When lesser known companies duplicate their products and sell it at lower prices, it does hamper the innovation atmosphere. The motivation to create newer products diminishes (state.gov). But the concerned individuals look at the bigger picture, not at the patent issues here. The number of people affected by AIDS is sky high. AIDS is an epidemic in third world countries.
In some countries where the population isn't that large but poor with AIDS infected patients available, local medical companies can manufacture AIDS cocktail and market it at low prices than those who created it originally. The original companies look to recover their profits for research and development.
A textbook case claims that it takes nearly 10-15 years for a particular drug to be developed at a huge price of $800 million. Still then, only 30% of the products really claim back the revenues spent on heavy research and development. With a patent protection, pharmaceutical companies can charge higher prices to obtain their money back. The patients of HIV / AIDS will need this medicine continuously over the course of time; their price remains steady as a rock with patent protection (Bate and Tren, 2004).
It's an ethical responsibility of the pharmaceutical companies to distribute drugs at a lesser price to third world countries. Not doing so will result in deaths of millions of people while countless rendered sick. Discount price have an acute economic, political and moral sense.
Ninety five percent of the AIDS population lives in the developing countries. AIDS is an epidemic. In South Africa, one person out of every four has AIDS/HIV. This disease means death of the affected individual. In first world countries, AIDS/HIV is taken as a chronic disease, not a killing disease; all credit goes to antiretroviral drugs. In countries such as South Africa, such medicines are far too expensive for government and people to purchase at the market price (Avert.org (b)).
The prices of drugs are regulated by the pharmaceutical companies themselves. The research and development expenses must be covered up, the first world countries pay up for the research and development of newer medicines. Due to this, it's a moral and ethical obligation of large pharmaceutical companies to promote two tiered price system. Since the first world countries have paid up the R&D costs, medicines should be available at lower prices in the developing countries (Avert.org (b)).
The pharmaceutical companies dislike the very notion of distributing drugs at steal away prices because their products tend to get duplicated and sold at fractional prices. The environments are unregulated and an unreliable. Also, they argue that drug resistant HIV virus...
As a result, this protection was removed to increase the supply and ensure that the public has access to affordable drugs. ("Pharmaceutical Companies," n.d., pp. 97-99) Some of the negative implications of this decision are that there could be large amounts of generic drugs produced. This is because the various protections were removed to the point, that a number of players could begin manufacturing the medication. Over the course of
Management Case Analysis: Pharma, Intellectual Property Prior to 2003, the U.S. pharmaceutical industry heavily restricted intellectual property rights that would allow African countries and others ravaged by AIDS to receive generic medicine There are a great deal of shocking statistics regarding the global populations living with and dying from AIDS, particularly in the age group of 15 -- 19 Health is a factors that is considered relative to a country's wealth; in Africa, a
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