Drug price controls may shorten lives – report

Imposing European-style price controls on prescription drugs in the United States would result in modest cost savings that would be more than offset by shortened life spans as the pace of drug innovation slows.

A Reuters article continues:

“We found policies that regulate the prices of drugs could result in modest savings for consumers, in the best cases on the order of $5,000 to $10,000 per person over a lifetime,” said Darius Lakdawalla of the nonprofit Rand Corporation, who worked on two studies appearing in a special report on drug pricing in the journal Health Affairs.

“But in many other cases, those policies resulted in very substantial losses to consumers in the form of reduced life expectancy and those would be worth tens of thousands of dollars,” Lakdawalla said in a telephone interview.

Some policymakers have suggested the United States adopt some form of price regulation as a way to curb rising prescription drug costs. Most European countries regulate drug costs, which is one reason European nations spend less than two-thirds as much per person on drugs each year than the United States.

Lakdawalla and colleagues used computer models of price regulation in 19 countries to simulate the impact of price controls that cut drug company revenues by 20 percent.

They said introducing price regulations into a largely unregulated market like the United States would result in less investment in developing life-saving drugs, which in the long run would reduce the life expectancy of Americans.

“We found longevity declines on the order of about a half of year for people at the age of 55 when you look out to people who are alive in 2050 and 2060,” he said.

Lakdawalla said a better approach would be to cut drug insurance co-payments by 20 percent, which would increase life expectancy in the United States by a half year by 2060 as more people take needed drugs and higher drug profits stimulate innovation.

Counterfeit Drugs: Definitions Matter, but Not as Much as Quality and Safety

 Dr. Kristina M. Lybecker

The safety and efficacy of medicines is something that most patients in developed countries take for granted.  Whether it’s a vaccination, prescription, or over the counter drug, most people assume that the medicines they’re getting are legitimate.  While bogus drugs are most frequently found in the most vulnerable markets – those of developing nations that all too often lack access to medicines –  this is certainly not always the case. 

Over the past year, many developed countries have placed a greater focus on ensuring the safety of the drug supply chain.  Brought to the fore by the deaths of a number of patients in the United States who received a counterfeit batch of the blood thinner heparin in early 2007, drug regulators in North America and Europe in particular have been placing a greater focus on ensuring the safety of the drug supply chain.  One of the great challenges facing regulators is the global scope of drug production and distribution.  No single country can effectively address this problem.

According to the US-based Centre for Medicines in the Public Interest (CMPI), counterfeit drug commerce is estimated to grow 13% annually through 2010.  “That means counterfeit drug sales will grow at nearly twice the rate of legitimate pharmaceutical commerce,” states Peter Pitts, President of CMPI.  “In 2010 this illegal business will generate $75 billion in revenues – a 92% increase from 2005.  The profits are high and the risks are low.  That’s a deadly combination.”

Earlier this year, a draft resolution on counterfeit medical products was submitted to the World Health Assembly by the nations of Gambia, Ghana, Nigeria, Tunisia and the United Arab Emirates.  Their efforts clearly bring a critical public health challenge to the WHA agenda, and yet special interest groups have side-tracked this initiative into a great debate over the definition of ‘counterfeit’. 

This is not to suggest that definitions don’t matter.  Certainly they do.  But those who are quibbling over words seem to have lost track of the bigger picture:  quality medicines and safe drugs.  Implicit in all efforts to eliminate counterfeiting is the recognition that drugs should be safe and consumers should have accurate information about their pharmaceutical choices.

Counterfeit and substandard drugs are dangerous not only to the patients who take them, but to the global community as a whole through the drug resistance that they propagate.  Antimalarial drugs are an unfortunate example of this situation.  In a recent article published by PLoS One, antimalarial drugs from the major cities of six African nations were purchased and chemically analyzed.  Thirty five percent of all samples failed to register active pharmaceutical ingredient content against internationally acceptable standards.  The case of malaria is particularly troubling given the limited therapies available.  As described in the article, the drug resistance fostered by substandard products “places the future of malaria treatment at risk globally”.  

Delegates at the 61st World Health Assembly spent much of their time discussing the recommendations of an Intergovernmental Working Group on ways to encourage research and development for neglected diseases and improve access to medicines for developing nations.   Unfortunately, the issue of counterfeit medicines was not considered in these discussions.

If the World Health Organization and the global community are serious about improving access to medicines, they must aggressively tackle combating counterfeit drugs.  It is essential to move beyond fine tuning definitions to establishing an effective, global anti-counterfeiting strategy.   Ensuring quality in pharmaceutical manufacturing begins with the ingredients or APIs (active pharmaceutical ingredients) and must be safeguarded through to final products.   Effective oversight and a secure pharmaceutical supply chain will help to protect consumers from counterfeits as well as substandard production.

The United States, European Union and Australia recently announced a joint venture to improve the inspection processes of pharmaceutical manufacturing facilities around the world.  While this is an encouraging start, a more comprehensive effort is required to truly improve global health and to eliminate all barriers to access, including counterfeits.  

Lybecker is an Assistant Professor in the Department of Economics and Business at Colorado College.  She has consulted for the US FDA, Reconnaissance International, the World Bank, PhRMA, as well as several multinational pharmaceutical firms on the issues of pharmaceutical counterfeiting, access to medicines, corruption, and innovation.

A Nigerian perspective on access barriers to medicines and treatment

What are the real access barriers to healthcare for people in Sub-Saharan Africa?  The following article from the Wall Street Journal Europe provides an interesting perspective on the healthcare challenges in Nigeria, with a focus on AIDS patients.  Mr. Ayodele states that the “real causes of restricted access to to AIDS drugs are Africa’s derelict transportation systems, widespread corruption and poor utility infrastructure.”

Moreover, he cautions that counterfeit and low-quality drugs are a serious threat — as they not only don’t provide patients with effective treatment, but may also speed drug resistance.

Dangerous AIDS Policy
Drug patents are not the problem.

By THOMPSON AYODELE | LAGOS, Nigeria
November 30, 2008

Today, as we mark World AIDS Day, we should take stock of the suffering this disease continues to inflict, particularly in developing countries.

Twenty-five years after the disease was first discovered, AIDS continues to claim around two million lives each year. As an African, I’ve witnessed the suffering first-hand. My home region of sub-Saharan Africa has 12% of the world’s population, but accounts for two-thirds of those infected with AIDS and 75% of all AIDS-related deaths.

Western activists continue to blame the high price of drugs for the disease’s continued prevalence in Africa. They argue that poor countries should be permitted to break pharmaceutical patents to produce cheap knock-off versions at home.

Unfortunately, the activists are not just wrong; their policy proposal is flat-out dangerous. The real causes of restricted access to AIDS drugs are Africa’s derelict transportation systems, widespread corruption and poor utility infrastructure.

Most of the high-quality AIDS drugs that Africa imports have to be transported over vast distances and stored for extended periods of time before they can be distributed. But the roads and warehouses in most African countries are poorly maintained. Electricity, needed to keep drugs refrigerated, is scarce. Corrupt officials often exploit weaknesses in the supply chain, and extort hefty bribes from aid personnel.

In 2001, African leaders pledged to invest 15% of their budgets in health-care infrastructure. Seven years later, very few have come even close to meeting that commitment. Nigeria, for example, devotes less than 6% of its budget to health. Most of Africa’s impoverished people still lack health insurance. Medical workers earn low wages, which has led to low morale and a dearth of qualified personnel. The National Association of Nigerian Nurses and Midwifes says the country’s hospitals urgently need 300,000 additional nurses.

The trade policies of African governments often make the AIDS problem worse. Generic drugs imported into Kenya, Uganda and Tanzania are subject to a 10% tariff. The rate jumps to 40% in Sierra Leone, and to 50% in Kenya. Nigeria charges an import tariff of up to 39%.

Giving African governments the power to locally manufacture patent-protected pharmaceuticals will likely result in patients receiving low-quality drugs. In Thailand and India, for example, locally produced Aids drugs are often of such low quality that they’re actually fueling drug resistance.

Western drug companies have already gone to great lengths to make their drugs affordable to the world’s poorest patients. Many use tiered pricing models, in which Western customers pay substantially higher prices than people in poor countries. And just last year, GlaxoSmithKline, Merck and Pfizer donated hundreds of millions of dollars worth of drugs to Africa.

On World AIDS Day, it’s important to look at how the West can better assist the developing world in its battle against this deadly disease. But we cannot forget that local governments need to play their part as well. Instead of meddling with patent protections, without which there would be no drug innovation, they need to clean up their policies.

Mr. Ayodele is executive director of Initiative for Public Policy Analysis.