OFXAM report critical of fight against counterfeit medicines

A new report from OXFAM criticizes the battle against fake drugs in the developing world. The assumptions are that the fake drugs could do harm to people using it, so authorities work to get these drugs off of the streets. The OXFAM report warns that efforts to remove fake drugs actually do little to stop their trade on the black market.

From the Guardian, health reporter Sarah Boseley details the report.

Fake drugs and sub-standard drugs, such as antibiotics with too little of the active ingredient to do any good, are sold all over the developing world. They can do real harm, but the strategy against counterfeits will not stop much of that trade, according to Oxfam, because its focus is to strengthen the patent system. Patents prevent legal copies of new drugs from being made for a period of up to 20 years - but many of the fake and sub-standard drugs going around in Africa and Asia are not in patent anyhow.

Oxfam says rich countries, which are pushing for stronger patents in the interest of the pharmaceutical companies which contribute to their GDP, should instead be helping poor countries to strengthen their drug regulatory and policing systems. This is how Rohit Malpani, senior policy adviser, puts it:

Poor countries are facing a crisis of substandard and falsified medicines that can harm or even kill those who take them. Yet rather than help poor countries address the problem to ensure safe, effective and quality medicines for all, rich countries are putting commercial interests ahead of public health in these countries.

The European Union and the United States continue to focus almost exclusively on eliminating counterfeit medicines which form only a small part of this public health problem – but which are a serious concern for their multinational companies. They have used the crisis in medicine quality in developing countries as an excuse to push for new intellectual property rules that will boost the profits of pharmaceutical giants at the expense of affordable medicines for the poor.

A scheme to provide expensive AIDS drugs to the poor

An article in Forbes magazine yesterday talked about the availability of AIDS drugs in the under-developed world. The AIDS virus is starting to become resistant to the older, generic drugs. However, the new brand name drugs are much too expensive to provide to the poor.

Writers Megha Bahree and Matthew Herper write about a scheme that could pay drug companies a small royalty to allow generic companies to reproduce the drugs. Some companies are ready to run with the idea but others are wary. Our snippet focuses on the scheme and the obstacles in the way.

MSF and Unitaid, an international drug-purchasing agency in Geneva, are pushing a simple solution that could allow African patients to get Truvada and a third drug for only $86 a year, according to a Boston University analysis. The concept is to have companies like Merck ( MRK - news - people ), Abbott Laboratories ( ABT - news - people ) and GlaxoSmithkline ( GSK - news - people ) put patents for 19 HIV drugs into a patent pool that could be licensed to select generic-drug makers. The generic companies would manufacture copycats, pay the inventors a small royalty and sell them only in agreedupon developing countries. Competition among the generic companies, who are expert at producing drugs on the cheap, would cause prices to fall sharply, yet the inventors would still get some incremental revenue out of Africa. "The patent holders would get the royalty, and we'd get the drugs," says Goemaere.

It sounds straightforward, but the politics are anything but. Three years after Unitaid broached the idea, it says that so far only Gilead Sciences, Johnson & Johnson ( JNJ - news - people ) and Merck are "actively engaged" in negotiating with Unitaid over the patent pool. Since February Unitaid has been lobbying 9 other drugmakers and 17 generics manufacturers to sit down and discuss the idea. Unitaid met once with Abbott Laboratories, but it took eight months to schedule a second meeting. Abbott says it is open to discussions. GlaxoSmithkline says it has met several times with Unitaid to hear its ideas. Bristol-Myers Squibb ( BMY - news - people ) says the patent pool could remove incentives for innovation. But Lisa Haile, a drug patent lawyer at DLA Piper, says the pool won't hurt earnings. "The good will outweigh the bad."

Getting many different drugs into the pool is essential, because in order to control HIV (and keep resistant strains from erupting) patients must take three medicines at once. The big stumbling block is how many countries to include. AIDS activists and generic-drug makers want to include in the drug discount regime as many countries as possible. But a patent pool that covers China, Brazil or Thailand could be a deal breaker for branded drug makers. The matter is likely to come to a head at a mid-December meeting of Unitaid's board.

Patent pools have long been used by technology companies to cross-license products. James Love, of Knowledge Ecology International, a think tank, realized that the idea could get more AIDS drugs to Africa and convinced Unitaid to push the concept when it formed in 2006.

The patent pool got an unlikely boost last year from Gilead Sciences, the biggest maker of AIDS drugs in the U.S. In 2007 Love filed a complaint with the Federal Trade Commission contending that Gilead was violating antitrust laws by licensing its drugs only to select companies in the developing world. As luck had it, a few months later he wound up sitting across from Gilead chief counsel Gregg Alton at a dinner party held by the charity Oxfam. The two men hit it off and started talking at length about the patent pool idea. "He was not being a jerk," says Love. "I was struck by the fact that he didn't take it personally that I filed an antitrust complaint against his company."

Alton, who is charged with getting Gilead's drugs to the developing world, realized that the pool had advantages for Gilead. It would mean less hassle and expense than negotiating licenses for the developing world with one generics company at a time. In 2008, at an annual meeting of HIV doctors and drugmakers in Mexico City, Alton spoke up in favor of the Unitaid patent pool. His argument was so convincing that representatives from J&J and Merck stood up and expressed general support for the idea.

New Report Shows Medicare Drug Plan Prices Are 58 Percent Higher than VA Prices

from Families USA

Report Issued as House of Representatives Is Scheduled to Vote Soon to End Prohibition Preventing Medicare from Bargaining for Lower Drug Prices

Washington, D.C. – Medicare drug plan prices for the top drugs prescribed to seniors are 58 percent higher than the same drugs provided to veterans by the Department of Veterans Affairs (VA), according to a report released today.

The new report, issued by the consumer health organization Families USA, was released shortly before the House of Representatives was scheduled to vote on a bill to end the current prohibition preventing Medicare from bargaining for cheaper drug prices. The bill is a top priority for House Speaker Nancy Pelosi and her new Democratic majority.

Here's a link to the full report

For the top 20 drugs prescribed to seniors, the report examined prices charged by the VA compared to the prices charged by the five companies with the largest enrollment in the Medicare (Part D) drug program. Those companies, UnitedHealthcare/PacifiCare, Humana, Wellpoint, Member Health, and WellCare, enrolled almost two-thirds (65 percent) of the Medicare beneficiaries participating in Part D during 2006.

According to the report, the prices charged by plans sponsored by the five companies are 50-75 percent higher than the VA price for Celebrex; 51-82 percent higher for Lipitor (10 mg); 69-95 percent higher for Nexium; 205-261 percent higher for Fosamax; 435-522 percent higher for Protonix; and 1,066-1,229 percent higher for Zocor (20 mg).

“These high prices devastate seniors who need to take multiple medicines, especially when they reach the coverage gap known as the ‘doughnut hole,’” said Ron Pollack, Executive Director of Families USA. “They are also a rip-off of American taxpayers, who pay for three-quarters of the costs of Medicare Part D.”

For all of the top 20 drugs prescribed to seniors, VA prices were substantially lower than the lowest prices charged by the Part D insurers, according to the report. The median price difference was 58 percent. In other words, for half of the 20 drugs, the lowest price charged by the Part D insurers was at least 58 percent higher.

According to the report, the difference between the lowest VA price and lowest price of any of the Part D plans offered by the five largest companies is enormous, including:

* For Protonix, a gastrointestinal agent, the VA price was $214.52, and the lowest Part D plan price was $1,148.40—a $933.88 difference, or 435 percent.
* For Fosamax, an osteoporosis treatment, the VA price was $250.32, and the lowest Part D plan price was $763.56—a difference of $513.24, or 205 percent.
* For Toprol XL (100 mg), a beta blocker, the VA price was $250.06, and the lowest Part D plan price was $395.52—a difference of $145.46, or 58 percent.
* For Celebrex, an anti-inflammatory drug, the VA price was $632.09, and the lowest Part D plan price was $946.44—a difference of $314.35, or 50 percent.
* For Zocor (20 mg), a lipid-lowering agent, the VA price for a year’s treatment was $127.44, while the lowest Part D plan price was $1,485.96—a difference of $1,358.52, or 1,066 percent.

Although a generic version of Zocor (simvastatin) became available in June 2006, the lowest price offered by the top Part D insurers for Zocor's generic equivalent is still 706 percent higher than the lowest VA price for brand-name Zocor.

“Opponents of Medicare bargaining make two contradictory claims. First, they claim that private market competition under Part D is more effective in reducing prices than Medicare bargaining; and second, they claim that Medicare bargaining would reduce prices so significantly it would harm research and development,” said Pollack. “These arguments cannot both be true—and, indeed, neither is true.”

Using numbers the major drug companies have publicly submitted to the Securities and Exchange Commission (SEC), the Families USA report rebuts the assertion that Medicare bargaining would harm research and development (R&D). According to the report, the largest U.S.-based drug companies spent more than twice as much on marketing, advertising, and administration as they spent on R&D (13.9 percent versus 32.0 percent of revenues), and they retained more in profits than they spent on R&D (17.4 percent versus 13.9 percent).

* In 2005, for example, Pfizer spent 2.3 times as much on marketing, advertising, and administration as on R&D (33.1 percent versus 14.5 percent of revenues).
* Merck spent 1.9 times as much on marketing, advertising, and administration as on R&D (32.5 percent versus 17.5 percent of revenues).
* Abbott Laboratories spent 3.0 times as much on marketing, advertising, and administration as on R&D (24.6 versus 8.2 percent of revenues).

The Families USA report’s pricing data were for November 2006 as reported by Part D plans to the Centers for Medicare and Medicaid Services (CMS), as listed on the CMS Web site (www.medicare.gov). VA pricing information was obtained from the VA’s price schedules.

Full Report