Big Pharma cannot ignore developing world diseases anymore

We may not realise this but a lot of us today live better lives than those of medieval kings. Most people then died under the age of 40 and lived in constant fear of contracting diseases. The worst killers were infectious diseases, such as plague, caused by bacteria and spread by poor sanitation. The last century has seen us banish these evils with the help of antibiotics and easier access to better hygiene.

Sadly the benefits of medicine haven’t been spread evenly throughout the world. In developing countries, there remain many diseases that were eliminated in the developed world decades ago. One of the biggest causes for this is that Big Pharma finds it unprofitable. Because it is not the rich world that they affect, the economics of drug discovery – which admittedly requires huge investments – to treat poor people’s diseases do not work out in favour of the pharmaceutical industry.

A matter of timing

Alexander Fleming’s discovery of penicillin – the first antibiotic – in 1928 was an accident, but the world had been waiting a long time for something like it. The timing couldn’t have been better. By then the pharmaceutical industry had begun to systematically search for new drugs. Governments had recognised the role that new medicines could play in improving health and, in turn, economic productivity. By the time World War II started, they had set up the right safeguards to allow the industry to mass produce drugs. Historical records suggest that Nazi Germany’s inability to produce enough penicillin may have played a role in their eventual loss.

As the decades rolled on, pharmaceutical industry, such as German company Bayer and British company Glaxo, grew bigger and bigger. Today, a bunch of these giants are collectively referred to as Big Pharma. And all of them have most of their operations in the rich world.

While India has a pharmaceutical industry, which is increasingly playing a bigger role in the global market, drug development is too big a challenge for it. That is because the price of drug development has been rising quickly. Today the development of a single drug can cost billions of dollars (lakhs of crores of rupees). And this has created a negative cycle, where Big Pharma mostly invests in the development of those drugs that will provide them a return on the billions of dollars they invest to develop it. The upshot is that poor people’s diseases are neglected.

Ignore no more

So severe has this neglicence been in recent years that the World Health Organisation now lists 17 diseases under a priority list of “Neglected Tropical Diseases”. These include dengue,chikungunya, rabies and leprosy. Even beyond that list, however, other diseases remain under-researched. These include malaria, tuberculosis and diarrhoea. All these don’t exist in the developed world, but cause millions of deaths in developing countries.

This must change. There are moral reasons for why letting millions die from preventable causes is wrong, but the nature of modern corporations is such that moral reasons work only in extreme circumstances. Fortunately, there is now a growing economic case. As markets in the west become saturated, pharma industry is looking to the emerging world, especially countries such as India and China, for a new market.

As they start coming they will first cater to the rich and the growing middle class, but these companies won’t be able to survive without serving the poor too. For instance, India’s patent laws force Western firms to provide compulsory licenses or provide their own drugs at cheaper rates, if the country’s courts find the drugs are essential but unaffordable. Instead of giving up their exclusivity, many firms are choosing the latter option. Profit margins will fall but sale volumes will rise.

With such changes underfoot, it is now time that Big Pharma also look to cater to poor people’s diseases. While the economic case to profit from such work is becoming stronger, governments could help through subsidies to attract these companies to begin their work sooner. The expertise and knowledge that they will bring could revolutionise healthcare for the poor.

First published in Lokmat Times.

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1 thought on “Big Pharma cannot ignore developing world diseases anymore”

  1. Interesting post!

    It’s probably a mistake to run *any* kind of large organization by appealing to moral obligations alone. A company that prevailed on its employees’ morals alone to come in to work every day would quickly fail. A charity that made no effort to publicize their endeavors and instead relied on donors’ morals alone to give money would receive no donations. And a government that relied only on moral obligations to bind firms would collapse. This is not a moral failing of firms — it’s a universal fact of game theory, and applies to individuals, small groups, and firms alike.

    One way to encourage pharma firms to invest in diseases of the poor is probably to give cash to the poor, and then get out of the way and let the poor choose how to spend it. If they decide that they want to spend it on pharmaceuticals, then their is the economic incentive for pharma companies. There is probably also room for large government-backed research grants to help the R&D along. But playing games by restricting pharma IP and enforcing strange licensing provisions doesn’t seem like a good idea at all.

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