Pricing AIDS Drugs Sold to Developing Countries

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Table of Contents

Introduction
Overview
The actual cause of a pricing
The huge divide
Policies
Conclusion
Reference

Introduction

On 1^st December every year, the world celebrates World AIDS day which brings awareness and updates on the world AIDS statistics that have been seen throughout the year. These celebrations can be said to be fruitful in the developed world but in the developing and transitional countries, the dream is yet to be realized. The majority of the world’s HIV/AIDS cases are in Africa particularly the sub-Saharan and many of the infected have been faced with a huge challenge to live a normal life due to limitations in access to ARV drugs. These countries are poor and therefore the costs associated with these drugs are very high and unaffordable.

The trade of these drugs particularly in the developing world has been a controversial subject, with many pushing for the reduction in prices which they claim are unaffordable. This paper deals with the accessibility of AIDS drugs to developing countries and answers the questions; what laws, policies, or guidelines should be established for pricing AIDS drugs sold to developing countries? Why is this approach more appropriate than some of the other approaches being advocated? And what are the risks involved in implementing the policies and laws recommended?

Overview

According to a UNAIDS (2010 p.7), the number of cases of HIV continued to rise to reach estimates of 33.4 million, with sub-Saharan Africa taking the largest portion of 71% of reported new cases of infections. This shows that there is a dire need for treatment in the region. The report also gives the figures of the funding that is given to the countries from the funds contributed to UNAIDS by donors. Sub-Saharan Africa accounts for 57% of all the monies contributed with South Africa, Nigeria, Mozambique, Zambia, and Ethiopia getting $729, $432, $368, $361, and $357 million respectively (UNAIDS, 2010, p.25). However, these funds remain inadequate to fight the epidemic in the region.

People in developing countries have been affected by many problems and their lives remain a living hell particularly when infected or affected with HIV/AIDS. Most of the people live below a dollar per day while the cost of the drugs is beyond their reach (Flanagan & Gail, 2007). This is in contrast to people in the developed countries who have been living comfortably and for those infected with the virus, affording the drugs is no major problem. This can only be interpreted as a huge divide. The huge gap between the rich and poor remains big and this, about the AIDS drugs, can only be reduced or countered through a gap in the price of the drugs. Lowering the prices and making them affordable to the poor will go a long way in making their lives more comfortable.

The calls for pharmaceutical companies to reduce ARV drugs for the developing countries have been landing on deaf ears, with the companies giving fruitless promises. For example, as given by Torgeson & Phelan (2004) in the article “Merck Breaks Promise To Reduce Aids Drug Price In Developing Countries” the multinational Merck & Co had promised to lower the prices of its product EFV by one dollar each day until it becomes affordable to the developing countries but the drug is still at the same price as in the other countries.

This has made the macroeconomists come in to identify how the social issues and marketing coupled together with consumption, hunger, poverty, and other issues can be balanced to bring a mutual answer to the problems. It is outright and clear that there is a need for the reduction of drugs prices in poor countries due to the problems.

The actual cause of a pricing

The patent rights give the company immunity from other producers not to produce the drugs or invent similar drugs for a given period (patent term) and this has raised issues since they remain in control of the production and supply of the drug. This is also combined with the intellectual property rights which restrict other persons from producing the drugs. Given this immunity from other producers, the companies with the patent rights have been reaping millions at the expense of the sick and suffering, especially in the low and middle-income nations that cannot afford the drug. Torgeson & Phelan (2004) give a clear case study of the above situation; Merck & Co. produces the 600mg tablet formulation of the drug EFV that gives patients a choice to take the drugs once instead of three 200mg tablets daily, where the 600mg is cheaper but the drug is not registered in the low and middle-income countries which are poor and have the highest cases of HIV/AIDS.

It beats logic to see that the developed countries enjoy the cheaper drug rather than the developing countries. The company further frustrates the developing countries’ efforts to get the drugs by offering the same prices for the drug when it is available either in 200mg or 600mg. The costs of the drugs also come with inflated prices in the retail markets costing at 44% above the company’s stated price (Torgeson & Phelan, 2004).

The calls from the international medical humanitarian organization (Doctors Without Borders/Medecins Sans Frontieres, 2008) to the companies to reduce the price for the drugs have been in vain and the drugs have continued to make a few people richer at the expense of other’s health. These are some of the problems that macro-economist need to address when dealing with this matter. The goal should be to come up with strategies and policies that will allow the countries with low and middle Human Development Index (HDI) and high HIV/AIDS prevalence rates to afford the drugs without strain and representatively as the developed countries (Flanagan, & Gail, 2007).

The huge divide

The companies have neglected the proper ethics of humanity by making the drugs unaffordable. However, if many African countries were given the chance, they would ignore the intellectual property rights and produce the drugs which would be cheaper even if it would be a generic form. This would force the companies to lower the prices of the drugs and hence become more affordable (Weissman, 1999). The developing countries are faced with poverty, hunger, unemployment, civil wars, droughts, poor education among others, making them more affected in the search for AIDS drugs. Is it then fair to give the same price for the same drug to a person living in developed countries? This brings inequity and imbalances which must be addressed.

Property rights and patent rights should be protected but in the case of life-saving situations then a compromise has to be offered. What people in developing countries ask for may sometimes be abstract and impractical to the world of business since all businesses are established to make profits. The question lies on the fate of the people dying for lack of the drugs which could have prolonged their lives and make them more bearable. This means that the world’s resource shortage ethics and the markets are not responding to people’s needs. In the case of the drugs, there is much controversy, thus highlighting the social consequences of marketing (Shapiro, 2008 p.193).

This does not take into account the embedded markets, societies, and most of all, the invisible hand of the social norm. The scenario can be explained as the rich doctors versus the poor patients who exploit their patients, ignoring humanity and ethics. This leads to market failures especially in the health care sector of the developing countries since the patients cannot afford the drugs and treatments unless they are subsidized or issued at lower prices (Flanagan & Gail, 2007). The health care market systems need to be under strict supervision to avoid collapse, a situation that can cause detrimental effects on the side of the communities. The drugs bring a huge rift between the rich and poor; however, in health care, there are policies of balanced and affordable health services to all walks of life. This enables the health sector to achieve the dream of impacting the quality of life of society (Shapiro, 2008, p.187).

Sometimes it is very difficult to avoid marketing and macro-economics externalities. There will always be conflicting factors especially in sensitive sectors such as health, which will be revealed in the social outcome of marketing. It is important to try to relate macro-marketing and public policy, market apparatus, and the peripheral benefit of consumption. The AIDS drugs are not affordable to the developing nations, which means that their prices must be reduced to affordability while all stakeholders must be included to make the best mutual reasoning consultatively.

Policies

Macro-economists must take into account normative perspectives that relate to ethics and socially acceptable and responsible marketing. This includes the lives at stake when the drugs are not affordable and the value of the drugs. Indeed, the approach to be taken must be related to value maximization (Shapiro, 2008, p.187). The drug’s value should not be underrated, and it is worth and importance degraded. This gives the people involved limited options to solve the problem without consulting the drug producers. The patent rights must also be taken into account concerning making other drugs. Moreover, the issues must address a change in the social paradigm dominance.

Adelman, Norris & Weicher (n.d.) in the report “Myths and realities on prices of AIDS drugs” give another perspective that disqualifies the use of copy generic drugs since most people think that the patented drugs are more expensive but according to the report, the copy of drugs are more expensive. This means that even if the patent rights are overlooked, the drugs will remain unaffordable. Even with the fixed-dose combinations (FDC), the patented drugs remain cheap hence the right should still be protected. For any drug that is given prequalification by the world health organization (WHO), the prices are greater than $234 without added expenses such as transport.

Many people think that taking a risk with cheap unapproved drugs is more worth dying, though this will be more costly in the long run. Indeed, “this approach fails to consider the cost benefits of AIDS treatment using copy drugs vs. patented products” (Adelman, Norris & Weicher, n.d.). This perspective gives a clear view that even with breaking the patent right and property intellectual right the drugs will remain unaffordable, hence it will only be viable if other measures are taken.

Many have thought of ignoring the patent rights and making their cheap generic drugs but this has not been a solution since the drugs reach the market more expensive than the patented ones. This means that the patent right should be protected at all costs since companies that have dedicated their research need to get their rewards. The options left for macroeconomists are to allow for subsidies that will allow the companies to produce drugs cheaply and market them cheaply (Warren, 2002). This will contribute a lot to price reductions since the production cost will be low.

Setting up production companies in the developing companies will be beneficial in not only reducing the costs of production but also reducing unemployment in the region. Empowerment is necessary for the whole region of developing countries so that people may achieve an economic level that is self-sustaining.

The pharmaceuticals also have to be approached to sell the drugs at affordable prices in the low-and-middle-income countries. The governments and private philanthropists should be held accountable to recompense the pharmaceutical companies due to this lost revenue for lowering prices. This approach is viable but the fact that many of the governments have hefty loans with Breton-wood institutions leaves them unable to get grants for such projects and hence can only rely on donations and support schemes; this also means since they are poor, they will not be able to reimburse the costs to the companies (Calfee & Roger, 2004).

Price control can be a very effective measure but the markets are already liberal while price control will face much resistance from the involved companies which will find a sabotage mission to control them. This may even lead to withdrawal of the drugs in the markets that are price regulated and controlled. Though price control will stabilize the prices, the goods might lack in the long run and hence lead to destabilization of the market, thus leading to higher prices later. The companies will also withdraw when the cost of production cannot be regained with profits in the developing countries’ markets; they will not initiate the drug-making process once they are not sure of the returns. This will mean that even future developments will be ignored since they may be economically unviable to the companies, thus limiting or stalling future developments that may be expected (Kennedy, Harris, and Lord, 2004).

Even with the prices being lower, the high number of affected cases in the region will stretch the health systems making it unable to provide the drugs to all who need them. Although many projects of supplying ART to victims have been initiated, they are overwhelmed by a high number of patients that attend.

The best solution will be for governments and all stakeholders to take the necessary initiatives to reduce the epidemic from spreading further. Much of the resources should be focused on prevention rather than cure. Although treatment of the epidemic is temporary, the best and 100% guarantee will be living negatively and free from the epidemic to ensure the demand for the drugs is low. Once the demand is low then it dictates that prices must reduce.

Conclusion

The HIV/AIDS epidemic has been declared a national disaster in many countries, especially in sub-Saharan Africa, and has continued to be the leading cause of death within developing countries. Though measures are being taken, there is a need for more assistance to help the nations from suffering more. Measures should aim more on the prevention and keeping people safe from the virus rather than focus on treating the infected.

A serious campaign on behavior change should be undertaken which will end all the questions of what laws, policies, or guidelines should be established for pricing AIDS drugs sold to developing countries. Macroeconomists may be able to come up with policies but without behavior change, the epidemic will keep the demand for the drugs high thus prices will remain higher.

Reference

Adelman, C. C., Norris, J. & Weicher, S. J., N.d. Myths and Realities on Prices of AIDS Drugs.2010. Web.

Calfee, J. E. and Roger, B., 2004. Pharmaceuticals and the Worldwide HIV Epidemic: Can a Stakeholder Model Work? Journal of Public Policy & Marketing, Vol.23, pp.140-152. Web.

Doctors Without Borders/Médecins Sans Frontières (MSF)., 2008. Affordability, Availability and Adaptability of AIDS Drugs in Developing Countries: An On-going Challenge. Web.

Flanagan, W. & Gail, W., 2007. AIDS is NOT a Business: A Study in Global Corporate Responsibility—Securing Access to Low-Cost HIV Medication. Journal of Business Ethics, Vol.73, pp.65-75. Web.

Kennedy, C. R., Harris, F. H. & Lord, M., 2004. Integrating Public Policy and Public Affairs in a Pharmaceutical Marketing Program: The Aids Pandemic. Journal of Public Policy & Marketing, Vol.23, pp.128-139. Web.

Shapiro, S. J., 2008. Macro marketing. New York, SAGE Publications.Web.

UNAIDS. 2010. Outlook. (Online). Web.

Warren, V., 2002. What Price AIDS Drugs? Developing Countries and Strategies for Paying for AIDS Drugs, Academy for Health Services Research and Health Policy. Experimental Medicine. Web.

Weissman, R., 1999. AIDS and Developing Countries: Democratizing Access. Web.

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