Unbiased Analysis of Today's Healthcare Issues

Pharmaceuticals in Developing Countries

Written By: Jason Shafrin - May• 18•08

The Economist has an interesting article on how pharmaceutical companies are trying to hawk their wares in developing countries (“Quagmire or goldmine?“) Generally, Pharma has stayed away from selling in developing countries due to uncertainties in their level of patent protection. For instance, Brazil has “threatened to invoke compulsory licensing (a legal mechanism that, in effect, legitimises such trampling [of patent rights]) to browbeat a foreign drugs firm into offering huge discounts.”

However, emerging economies are a growing market. Companies such as Moksha8, have started to market branded drugs to affluent customers in developing countries. Further, research into emerging economy-specific diseases is growing.

Hopefully, all this money rushing into emerging market pharmaceuticals will better the health of those living in poorer regions around the world.

You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.

No Comments

  1. This is an odd explanation: “Generally, Pharma has stayed away from selling in developing countries due to uncertainties in their level of patent protection.”

    The number of developing countries engaging or — or seriously threatening to engage in — compulsory licensing is a tiny minority (the most obvious examples being Brazil, Thailand, and India). The vast majority of developing countries lack the economic power to be able to produce credible threats of such licensing.

    To the best of my knowledge, most commentators on the subject agree that Pharma stays away from selling their products in developing countries because those countries cannot afford the biologics at the prices Pharma wants to sell them at. Indeed, this is what gives rise to the compulsory licensing phenomenon you discuss, which means that the latter is more an effect of the overall problem than a cause of Pharma’s choice not to sell drugs in developing countries.

    The most succinct way of referring to this problem is the 10-90 gap, in which 90% of the world’s pharmaceuticals are produced for 10% of the world’s population. Obviously, there is significant disagreement on the normative implications of this issue — whether Pharma ought to be selling medications at substantially reduced prices in developing countries — but the primary reason they don’t do so is not because of uncertain patent protections, but because they cannot capture the rents they are seeking in developing countries (or, if you prefer, because they cannot earn a return on their investment).