Dear Mr. Trump: More Monopoly Pricing in Developing Countries Will Not Reduce U.S. Drug Prices

By Jason Blanchette

Doctors Without Borders, US

Those of us who believe that access to medicines should not differ by wealth status are nervously waiting for President Trump to pursue what will likely turn out to be an industry friendly approach to pharmaceutical prices. I, for one, hope that it turns out differently than what is expected. Kaiser Health News first broke a story about discussions within a White House Working Group. One prominent talking point within the group concerned increasing patent protection outside the United States – which would further extend Big Pharma’s monopoly pricing into developing countries. They are talking about increasing monopoly protection outside the United States as a means of decreasing monopoly prices in the United States.

Framing foreign monopoly pricing protection as a means to reduce domestic pharmaceutical prices suggests that the enforcement of intellectual property (IP) rights in foreign countries would (supposedly) ensure “that American consumers do not unfairly subsidize research and development for people throughout the globe.” In other words, the high price of Research and Development (R&D) is the central cause of high pharmaceutical drug prices: If pharma executives increase their revenue elsewhere they will voluntarily lower prices in the United States.

This is nothing new: The policy priority of big pharmaceutical companies has long been to block developing countries from licensing generic drugs to increase the affordability of otherwise unaffordable medicines in their countries.

genericpharmaindustry.com

The approach is also aligned with decades of U.S. trade policy. The Office of the United States Trade Representative (USTR), has regularly sought to favor domestic industries—especially the pharmaceutical industry—by increasing patent protection in developing countries. But this could be the first time such trade policy has been framed as a domestic pricing policy by government officials so closely connected to the White House.

Much has been written about the Working Group documents since Kaiser Health News first wrote about them. Commentators point out the absurdity of the idea that discouraging competition would somehow decrease U.S. drug prices. They similarly question the notion that higher profits overseas would magically stimulate big pharma philanthropy toward U.S. consumers.

But I think something has been missing from this discussion that further highlights the irrational policy stance that underlies it. My public health education and experience leads me to evaluate this proposed  policy by considering how the differences between countries, regarding the most prevalent diseases, would inform discussion on pharmaceutical prices. At the very core of public health – what separates healthcare from public health – is that in public health we identify problems and solutions within groups of people by comparisons between and among populations.  The proud public health nerd in me keeps a copy of Geoffrey Rose’s highly cited article, “Sick Individuals and Sick Populations,” on my desk because of its simplistic way of highlighting the importance of cross-population comparisons.

World Health Organization (WHO)

The Working Group’s identification of the problem – outrageously high pharmaceutical prices in the U.S. – is in agreement with public sentiment and makes sense. We need only identify the problem’s underlying cause and assess whether or not the proposal – strengthening intellectual property protections outside the United States – might help solve the it.

The big pharmaceutical companies have little interest in designing drugs for the diseases most prevalent in developing countries, which is one of the reasons that those diseases have barely been researched. Over the past two decades, the disease profiles of multiple middle-income countries have shifted quite rapidly toward the profiles of the United States and other developed countries. That is, non-communicable diseases such as cancer, diabetes, and heart disease are becoming more common in these countries. In addition, the governments of many developing countries have been making great strides toward increasing access to healthcare, including access to medicines. These improvements have led to rapid growth in pharmaceutical spending in developing countries. These countries, termed by Big Pharma as “pharmemerging” markets, now account for roughly one-third of global pharmaceutical spending.

Because of the convergence described above, entrance into the “pharmemerging markets” does not require new Research and Development (R&D) by the pharmaceutical companies that have been thriving on developed countries> Instead, these markets offer expanded revenue for already existing drugs. However, this ability of the industry to spread the R&D costs of drugs over a larger sales base, drug pricing by pharmaceuticals in the United States continues to escalate, and is increasingly out of control. This trend the conclusion that pharma executives will charge whatever the market will bear (a high price when it is a matter of life and death). It certainly does not support, and probably counters, the conclusion that monopoly enforcement internationally would somehow reduce prices domestically.

Medicins Sans Frontieres, Canada

Per capita pharmaceutical spending in the United States is roughly twice that of other high-income countries even though . United States per capita pharmaceutical spending—which continues to grow at a rate higher than in other developed countries—is expected to reach roughly $2,000 by the year 2021. This is an important comparison because of the similarities between the United States and other high-income countries. As members of the World Trade Organization and state members of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), the developed countries share similar Intellectual Property protections. Our pharmaceutical needs are similar because our populations suffer mostly from the same non-communicable diseases. And as high-income countries, we have similar abilities to pay outrageously high prices for pharmaceuticals.

What, then, could be the cause of the disparity of pharmaceutical costs? Answers to that question would require a different blog post, one centered on differences in domestic health policy.

Jason Blanchette is a third-year law student at Northeastern School of Law

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