Pharmaceutical pricing
The new drugs war
Patents on drugs are in the interests of the sick as well as the industry. Protection should not be weakened
Jan 4th 2014 |

OF ALL the goods and services traded in the market economy, pharmaceuticals are perhaps the most contentious. Though produced by private companies, they constitute a public good, both because they can prevent epidemics and because healthy people function better as members of society than sick ones do. They carry a moral weight that most privately traded goods do not, for there is a widespread belief that people have a right to health care that they do not have to smartphones or trainers. Innovation accounts for most of the cost of production, so the price of drugs is much higher than their cost of manufacture, making them unaffordable to many poor people. Firms protect the intellectual property (IP) that drugs represent and sue those who try to manufacture and sell patented drugs cheaply. For all these reasons, pharmaceutical companies are widely regarded as vampires who exploit the sick and ignore the sufferings of the poor.
These criticisms reached a crescendo more than a decade ago at the peak of the HIV plague. When South Africa’s government sought to legalise the import of cheap generic copies of patented AIDS drugs, pharmaceutical companies took it to court. The case earned the nickname “Big Pharma v Nelson Mandela”. It was a low point for the industry, which wisely backed down.
Now arguments over drugs pricing are rising again. Activists are suing to block the patenting in India of a new Hepatitis C drug that has just been approved by American regulators. Other skirmishes are breaking out, in countries from Brazil to Britain (see article). But the main battlefield is the Trans-Pacific Partnership (TPP), a proposed trade deal between countries in Asia and the Americas. The parties have yet