Monday, 30 November 2009

Third World Exploitation

Did you know that when you buy Panadol you are buying Paracetamol but paying a lot more for the name? If Joe Public can spend over the odds for something that is relatively straightforward then what chance do we have with relatively complex medicines on a world scale? What chance do we have if one company has a monopoly on a drug? We often see this from the point of view of the patient. If they received a particular drug then it could prolong their life but it is so expensive. One example is a drug called Nexavar that helps prolong life for those with liver cancer. Hower it costs around £3 000 per month so the National Institute for Health and Clinical Excellence (NICE - notice the irony of the acronym) get the criticism for saying that it is too expensive.

Why do NICE get criticised? Who says that the drug is so expensive? I haven't noticed drugs companies being hit by the recession. In fact they tend to do rather well especially when they can charge thousands of pounds for drugs. I won't mention the company but I was once part of a very nice two-day course in Cambridge and I jokingly praised the company for weeks afterwards, but someone has to pay for the free bar, the meals and the accomodation.

I did make a joke but it is a serious problem. Take Tamiflu. The company tells us that H1N1 is a more serious flu than we might think. I have heard of students who organise parties when they hear that one of their friends has the H1N1 virus, but for a moment let's take the company's point of view. Then why ia Tamiflu so expensive? Trials are conducted by universities and companies tend to come in at the later stages to produce the drug and get a patent. Poorer countries can't produce life-saving drugs unless under licence and even then the costs have rocketed. If the World Health Organisation are serious about health in poorer countries then they need to have a good look at the costs of production in the wealthy countries.

It is no use complaining of third world debt only to find that the poorer countries are poor because of exploitation. If we can be fooled into buying Panadol then we have a long way to go before we help the poor.

Change the world

1 comment:

  1. Absolutely spot on. The patent system creates an artificial monopoly and distortion of a genuinely free market. Under a free market the benefits of technological innovation (like new drugs)are meant to flow to the consumer in lower costs, better services etc. Under our current State sanctioned monopoly the benefits of innovation are stolen and horded. The idea that it is only patents, and the huge profits that they yield, will provide enough incentive for innovation is economically illiterate. In a perfectly competitive market, which by definition means zero profit (known as normal profit), people working to find new drugs will still receive high salaries because their work is difficult, most of us can't do it. But the super profits would not exist. The second argument for patents is similarly bogus. Its standard formulation is: high profits are the pay off for the high risk and investment drugs firms take on when they research a new drug. This "problem" is merely a failing in the insurance markets caused by patents and the monopolization of benefit. If there were no patents, smaller profits, and cheaper drugs, then drugs companies would ensure themselves against the cost of not finding the drug they were after. One model of this insurance would be for 10 firms, all undertaking their own research, to band together into a mutual structure, whereby if one firm finds the solution it subsidizes all those that did not. Nobody makes a huge profit, but all the scientist and other staff get paid their good salaries and pool their risk. But this is not the only model for pooling risk. Most of our failures in the insurance market to properly spread risk stem from Government endorsed privatization of benefits and socialization of costs, just like the joint stock company.