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Why Consumers aren’t Buying “High Cost-of-Developing Drugs” Argument

The Economist recently published an article on the government of India denying Novartis the patent for its cancer drug, Glivec (in the U.S. marketed as Gleevec).

In reading the reader comments, it is obvious that a sense of fairness violation was perceived by readers who felt that the government was correct in denying Novartis this patent, given that the readers perceived the company should have “made back its R&D losses” in developing this drug and beyond.
Image by Chris Holder
Pharma companies cite R&D development costs as well as the pitiful yield in its success rate in developing novel drugs as the reason why drugs cost so much. Thus patent is given as a way for companies to recover overall losses in this risk-intensive business as well as remain sustainable over the long term.

Yet companies are also known to go for patent extension strategies that do not represent truly novel contribution to market, by creating slightly different forms – or formulations of the drug – and then gaining patent on that slightly different form. Then companies use their sales and marketing arms to then keep patients on the “newer” (in patients’ mind, “better”?) version of the drug instead of the cheaper generic.

Those who argue for patent protection speaks about the risk and astronomical costs in bringing a drug to market. This is true, especially during human clinical trials, which consumers are rarely given the full picture of just how much “each patient” in a clinical trial actually costs the company to run the complete trial, especially when there is tremendous overhead in setting up these trials across different clinical settings within the country.

But consumers also perceive the unfairness of the pricing and when it comes to healthcare and medicine, emotions run high and it is common to conclude that pharma companies are greedy and being unfair given that they should have had already recuperated on their fixed costs and now they are using strategies to boost their bottom-line when they aren’t really investing in that drug (but they have to keep investing in their pipelines of drugs, many of which will fail, rendering huge losses to the companies).

Drug companies try, and its advocacy arm (PhRMA in the u.s.) tries, but the approach and message don’t seem effective. These messages are often very abstract and statistics-driven, which do not lend well to personalization. Statistics aren’t stories the average consumer can relate to.

Updated: June 30, 2013 — 8:03 am

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  1. The rationale for this policy was explained by a government official: “This would spur innovation and make sure price-control regime doesn’t dissuade pharma firms from research and development”. You can also envision that these new rules could be used by Indian generic companies to circumvent pharmaceutical company patents . For example, what is to stop an Indian company from developing a new process for making an important new drug developed by a non-Indian pharma company? It would not be surprising for the Indian government to allow a patent on this process and again the innovative company would be out of luck in protecting their commercial rights for this medicine in India.

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