DAMN THEM BRAZILLIONS!

Since we are on the contentious subject of drugs and patents, it is worth pointing to another lively debate that has been going on in the blogosphere. In a nutshell, this is what it is about; Merck has a bestselling anti-HIV drug named Efavirenz. They offered to sell it to Brazil at a reduced price. Brazil did not accept the price, and then broke Merck's patent (due to expire in 2009) and now are going to produce the drug through a compulsory license issued by the President. And they think Ahmedinejad is defiant...

This has raised a lot of heckles. Some are pointing to Brazil's hypocrisy; while on one hand, they tout themselves as a fast-growing economy with a modern space program (and ethanol fueled cars), on the other hand they want to play the pauper and demand outrageously low prices for drugs. Of course, price control and price setting are very complex issues, but one question that surfaces is, does Merck have the right to decide whether a price is cheap enough for a country like Brazil to afford? On the other hand, it may always be in the interest of a developing country to display its (true or contrived) empty pockets to get the best deal. And of course, Merck simply may not be able to make enough profit if it sells the drug at that price, which leads us down the always thorny path of asking "How much profit is 'enough' profit?"

Many questions arise in this context, and I wonder what the world is going to look like ten years down the line if such things continue to happen. Firstly, who are the losers? Brazil, because its international image is going to suffer and this may deter further pharmaceutical investment in it? Or Merck, because now, where they were going to make at least some money earlier, they will make none? One thing is for sure, such brazen flaunting of patents is surely not going to encourage pharma to sell drugs to developing countries. And I don't think the option of regularly breaking patents and producing drugs is too favourable for a country's political and international health.

Merck also says that,

"Research and development-based pharmaceutical companies like Merck simply cannot sustain a situation in which the developed countries alone are expected to bear the cost for essential drugs in both least-developed countries and emerging markets. As such, we believe it is essential to price our medicines according to a country's level of development and HIV burden, thereby ensuring equitable access as well as our ability to invest in future innovative medicines. As the world's 12th largest economy, Brazil has a greater capacity to pay for HIV medicines than countries that are poorer or harder hit by the disease.

This decision by the Government of Brazil will have a negative impact on Brazil's reputation as an industrialized country seeking to attract inward investment, and thus its ability to build world-class research and development."

I sort of agree with that, and even generics producing countries have to consider this; it's not about profit making, it's about being a perpetual free (or cheap) rider, profiting on other hard-earned inventions. And this time, the IP laws also seem quite reasonable; it's not like Merck made a "slight" modification on some existing product and is now raking money off the patent.

One extreme result I can see of such generics piggybacking and/or sidestepping IP regimes, is that companies may refuse to disclose the formula for a new drug, simply asking the FDA and patients to be content with its therapeutic benefits. While this scenario does not sound realistic, every generic country and developing country would be in deep trouble if it is realised. There is also another serious problem that might surface. One of the grievances of the developing world is that western pharmaceutical companies are not focusing on diseases that are dominant in developing countries, such as infectious diseases. It's only recently that western companies are devoting resources to develop new medications for infectious diseases, motivated largely by hospital infections in patients in their own countries affected with HIV and other such ailments, but also motivated in part by the prospect of suddenly having a huge new market open up in developing countries. Imagine how much motivation will remain for them if generics for their anti-infection compounds are hijacked and produced by developing countries outside the patent the moment they are approved. That would pretty convincingly deter them not to devote further resources to such remedies.

A sane way out of this may have been for Brazil to subsidise the drug to make it cheaply available to the people. If the government of Brazil thinks something is too expensive, then it only sounds fair for them to pay for that product, instead of flaunting and trampling over patents and IP regimes. Isn't that what taxes are for?

I am not against generics companies, but at the same time, one has to keep within the boundaries of some IP regime, otherwise the world will descend into a free-for-all in which, ironically the "flaunters" will end up being the "flauntees".