Pressure to meet developing countries' healthcare needs at lower cost collides with shareholders' demands for ever-increasing profits

Introduction
The world of pharmaceuticals may have changed dramatically in the aftermath of September 11 and the subsequent bioterrorism in the US, as the chairman and speakers at the FT World Pharmaceutical Conference said in London on November 5 and 6, but the issues on which they focused are fundamental and ongoing.

Compulsory Purchase - A Thorny Question?
The Canadian government's original reaction to anthrax bioterrorism in the US, which was to set aside Bayer's patent on Cipro® (ciprofloxacin) and order one million tablets of the antibiotic from Canadian company Apotex, was the first indication of a slippery slope for the pharma industry, according to George Poste, who heads the US Department of Defense's Task Force on Bioterrorism.

Health Canada subsequently agreed to purchase the one million Cipro tablets from Bayer, if they are needed within the company's period of patent exclusivity, as there was considerable embarrassment when it emerged that Apotex had contributed Cdn$50,000 to the Liberal Party of which Health Minister Alan Rock is a leadership contender.

Poste, who was chairing the FT conference, also expressed dismay at the way that the US government obtained a substantial discount on the purchase of 100 million Cipro tablets from Bayer. He was concerned that, if the US government could get away with that, when there were only a small number of anthrax victims, there might be pressure to adopt a similar approach for other drugs, such as those needed to treat the 800,000 cancer patients in the US.

Johnson & Johnson group vice president Alan Dunton reported that the US Department of Health and Human Services agreed to pay Bayer $95 million for a total initial order of 100 million tablets ($0.95 per tablet), compared to the discounted price of $1.77 per tablet before September 11, and well below the $4.67 per tablet wholesale price. Even at a price of $0.95 per tablet, generics manufacturers were complaining, according to Dunton, as they alleged that Bayer was manufacturing Cipro at $0.20 per tablet.

"Let's hope that the US government's pressure on the price of Cipro is an isolated incident," said Elan Pharmaceuticals president Daniel Welch, a panel member representing the views of the pharma industry.

However, Imperial College Management School research fellow Jim Attridge, formerly AstraZeneca's director of government & economic affairs, reckoned that, for such a big order, it was probably good business for Bayer to do the deal with the US government at $0.95 per tablet.

But Poste, Dunton and Welch and others are not so much concerned about the merits of the deals that Bayer eventually struck with the Canadian and US governments. They are perturbed about these governments' willingness to countenance compulsory licensing, whereby a government allows someone else to produce a patented product, such as Cipro, without the consent of the patent owner. It looked particularly strange because, at the November 9–13 meeting of the World Trade Organization (WTO) in Doha, Qatar, developing countries sought (and subsequently obtained) to have a clear statement - that patents can be overridden in the interests of public health - put into the WTO Agreement on Trade-related Aspects of Intellectual Property Rights (TRIPS). They were indignant that the US went into the WTO meeting opposed to this demand, when US Health and Human Services Tommy Thompson was reported to have threatened to break Bayer's Cipro patent in order to force down the price.

Market Imperfections in Europe
As perhaps befitting the chairman of the world's leading prescription drug manufacturer, Pfizer's Hank McKinnell captured the headlines with a strong attack on the imperfections of the marketplaces in Europe and Japan - imperfections which meant that their populations had much slower access to innovative medicines than people in the US. For example, he alleged that heart disease was costing the economies of European countries millions of dollars more than necessary because patients did not have the latest drugs available in the US. He urged European governments to introduce measures to make their marketplaces more effective; for example, by removing artificial supports for their own industries, stopping parallel trading, ending silo budgeting, providing patients with information, and engaging in win–win partnerships with pharmaceutical companies. "Better healthcare is national defense," said McKinnell by way of encouragement to European governments.

As if in response to McKinnell's attack, Pharmacia chief medical officer Mike Tansey pointed to five important initiatives that his chairman, Fred Hassan, has proposed to revitalize Europe's pharmaceutical industry in partnership with governments. These include integration of healthcare budgets to cover all aspects of care in health-financing decisions. "Among other positive outcomes, this approach will demonstrate that spending on new and more effective medicines brings overall cost and quality benefits when compared to spending on older, less effective products," said Hassan. He also wants to see the elimination of "cost-based bureaucratic criteria that seriously delay or inhibit access to new drugs." Hassan added, "Give individuals the power and the tools to participate fully in their own healthcare by expanding choice and encouraging the free flow of information about therapeutic alternatives. Let those who use healthcare - Europe's citizen's - drive the R&D agenda for the future."

Urgency of Need in the Developing World
McKinnell's most somber words, particularly in the light of the events of September 11, were in relation to AIDS in Africa, which is in danger of wiping out economically active segments of the population and leaving a generation of young people without hope.

"A CIA report warns that young Africans may turn to terrorism," said McKinnell. For him, this pointed to the urgent need for medical education and infrastructure, because, in the absence of these, patients could not benefit from medicines, even if they were donated free. He advocated partnerships between governments, agencies, and pharmaceutical companies, as hundreds of these were already working, but it needed thousands. "However, widespread political corruption in Africa will need to be tackled first," McKinnell warned.

The pharmaceutical industry may feel under threat from the world's media, which holds the industry responsible for the millions dying in Africa of AIDS when combination therapies are available to patients in rich developed countries to delay progression of HIV infection. However, the World Health Organization (WHO) is also seeking to progress a partnership approach, according to WHO communicable diseases executive director David Heymann.

For example, he noted that the broad coalition known as the Stop TB Partnership, which includes the WHO and the World Bank, has launched a plan to reverse an epidemic with a death toll of nearly two million people last year alone. TB's deadly association with the HIV/AIDS pandemic and growing drug-resistance to TB mean that TB is an imminent public health emergency, according to the Stop TB Partnership.

The Global Plan to Stop TB proposes the expansion of national access to DOTS, the internationally accepted strategy through which healthcare workers and community volunteers treat people suffering from TB with a powerful combination of medicines in ways that ensure the success of their lengthy treatment. The medicines cost as little as $10 for complete treatment. The global plan, which is backed by the pharmaceutical industry, also includes prevention of multi-drug-resistant TB (MDR-TB), R&D of new TB drugs with a shortened treatment period, and strategies to better treat people with TB who are HIV-positive.

It now remains to be seen whether developing countries' populations will benefit more from partnership - by which their governments engage pharmaceutical companies, international agencies, and donors - than from compulsory purchase, by which their governments override patents in the interests of public health.