Important note: Information in this article was accurate in 2007. The state of the art may have changed since the publication date.
Bangkok Post - December 1, 2007
The report, "Investing for Life", looks at the world's top 12 pharmaceutical companies, including their drug pricing policies, their record in developing medicines relevant to poor countries and their stance on protecting intellectual property rights.
Oxfam says the industry is failing to ensure universal access to medicines because it refuses to put the issue at the heart of its business model. As a result, it is failing to capture the full potential of emerging markets touted as the "new frontier" for its business success.
According to a major consultancy firm, loss of faith in the industry on the part of its investors has so far cost pharmaceutical shareholders $1 trillion.
"The industry is burying its head in the sand. More than 85% of the world's consumers are under-served or have no access to its medicines. The industry must recognise that charging high prices, quashing generic competition, developing medicines only for those rich enough to pay and fighting for harsher patent laws is an ineffective business strategy for new markets, as much as it is a moral outrage," said Jeremy Hobbs, Oxfam International executive director.
"Investors are worried about the industry's performance. They know that emerging markets are key for the industry's future growth, but companies have been responding to the challenge of breaking into emerging markets in an ad hoc and inconsistent way. This is bad for the industry and bad for poor people who are still facing devastating diseases like malaria, tuberculosis, asthma, cancer and HIV/Aids without affordable medicines,' Mr Hobbs said.
The report reveals shortcomings where the industry has failed to implement a systematic and transparent tiered-pricing policy, where prices for all essential medicines are set according to people's ability to pay.
More importantly, the investors continue largely to neglect research and development into diseases that predominantly affect poor people in developing countries.
They remain inflexible in protecting intellectual property, including challenging poor countries in court to stop them using legal public health safeguards. In addition, the investors continue to rely too heavily on donations to get affordable medicines to people, even though this is unsustainable and sometimes counter-productive.
Oxfam notes that some companies are offering differentiated prices but this is extremely limited and mainly for high-profile diseases such as HIV and Aids.
However, these offers are not systematic worldwide and are often still priced well above the means of people living in developing countries. Oxfam says that drug companies often adapt pricing in developing countries solely as a reflection of the publicity that surrounds the disease.
In Thailand, the industry failed to introduce pricing policies for key first and second line antiretroviral medicines that would enable sustainable treatment.
"The industry is operating in a short-sighted way because it could gain enormous benefits from emerging markets, including lower research and development costs and cheaper manufacturing. Yet instead it continues to blindly use its same strategies in poor countries. Even today, the richest 15% of the world consumes more than 90% of its pharmaceuticals. At this rate, both the industry and millions of sick patients are losing out," he concluded.
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