Thomas Pogge – TRANSCRIPT
Well I hope you’re all healthy and I hope you all will remain healthy for the indefinite future. But that hope is a little bit unrealistic and so I’ve got a second back-up hope. This second back-up hope is that insofar as we have health problems, we will have good medicines to take care of them. Medicines are very cheap to produce and they’re very effective. Much more pleasant actually than the alternatives: hospitalization, operations, emergency rooms, the morgue… None of these are good things.
So we should be very grateful that we have pharmacologists around, people who research these things and develop new medicines, and we should be grateful that we have a pharmaceutical industry that supports their activities. But there is a problem and you can tell from the fact that the pharmaceutical industry isn’t well-loved. In fact, in terms of popularity, they rank just about with the tobacco companies and the arms manufacturers. So that’s the problem that I want to talk about with you today.
How would you organize the pharmaceutical industry? If we did it all over again, how would you do it? I think we would think of three main principles. The first one is: we want patients to have access to all the important medicines. Remember, these things are very cheap to produce. So everybody in the world should have access to all the important medicines.
Secondly, we want innovative activities, the research and development that pharmaceutical companies do, to track the diseases that are the most important, the most damaging. We want them to aim for the greatest health impact.
And thirdly, we want the whole system to be efficient. We want as little of the money that goes into the system to go to waste. To go for overhead, for red tape, and so on.
Very simple three points. Now, what about the existing system? I think it does poorly on all these three counts. First: Universal access. Forget about it. The vast majority of human beings do not have access to medicines, at least not while they’re still under patent. There are extremely high mark-ups and that’s the problem. The problem is that even though these medicines are very cheap to produce, they cost a great amount of money during the time that they’re under patent, and the reason for that is that rich people can pay a lot of money, pharmaceutical companies have a temporary monopoly, they price for the rich, they forget about the poor.
The second problem is innovation. Again, we don’t focus on the diseases that do the most damage, and that’s often put into the phrase of the 10/90 gap. Ten percent of all the money spent on pharmaceutical research is focusing on diseases that account for ninety percent of the global burden of disease. And vice versa: Ninety percent of the money is spent on diseases that account for only ten percent of the global burden of disease. So there’s a huge mismatch between where we spend the research money and where the greatest problems are.
Now, both these problems, the problem with innovation and the problem with access have to do with this: The distribution of money in the world. It’s extremely unequal. The blue area here is the top quarter of the human population. They have more than ninety percent of the global household income. The bottom half of humanity on the other hand has not even three percent of global household income.
So if you’re a pharmaceutical company and you look for profit opportunities, you look at this sort of chart and you say: “Well, where’s the money? What am I gonna research? Who am I going to provide with medicine?” And again, that is in the context of there being only one way in which pharmaceutical companies make money under the present system, that is through patent-protected mark-ups. That’s how they make their money. Through mark-ups. And if you make money through mark-ups, then obviously you will go to where the people have the most income.
Now in terms of overall efficiency, the system also does very, very poorly. A lot of money goes for lobbying politicians in order to extend patent periods to “evergreen”, as it’s called. Data exclusivity and so on. A lot of money goes for gaming, where brand name companies pay generic companies to delay entry, for example. A lot of money goes to take our patents into all the different jurisdictions. Money goes – even larger amounts – for litigation. They’re litigating endlessly. Brand name company against brand name company, brand name company against generic company – enormous amounts go there.
People say pharmaceutical companies make a lot of profit. Well, yes and no, they do, but a lot of it goes to these wasteful activities. Deadweight losses, I won’t even tell you what they are because it’s too complicated. But there’s also wasteful marketing. A lot of the money that pharmaceutical companies make goes into advertising campaigns, trying to win favor with doctors, trying to persuade patients to try this medicine. And these marketing battles, of course, are a pure waste, because what one company spends to get patients over to their drug another company spends to win them back.
And then there is counterfeiting in the developing countries. A lot of the drugs there, often more than fifty percent of what’s sold, are counterfeit drugs where people say, “Because the drug is so expensive, I can offer you a cheaper version.” But of course it’s not the real thing. It’s either diluted or it’s completely inert. So on the whole, all the money that is spent on pharmaceuticals, and it’s roughly a trillion dollars now, per annum, much of that money is absolutely going to waste, it’s not going to where it should be going, namely to the development of new medicines and to the manufacturing of the ones we already have.
Now, many people think that the solution to the problem is moral pressure on pharmaceutical companies. And, sure, pharmaceutical companies have moral obligations just like we do. When we have to make a choice, often between having a little extra money and saving a human life, we often feel that we have a duty to spend the money and save the life. And why should pharmaceutical companies be any different? But really, it isn’t realistic to expect pharmaceutical companies to act as well as you or maybe I might act. And the reason is threefold.
One is that pharmaceutical companies are bound to their shareholders. The executive of such a company wouldn’t last very long if he gave a lot of money away, or she, for good purposes, and thereby lost money for the shareholders. They would be replaced.
Also, pharmaceutical companies stand in fierce competition with one another and if you do more, if you are nicer than the other company, sooner or later, you’ll be driven off the market. You will not survive. The other company will gain market share.
And finally, remember, the entire industry is dependent for its income on one thing and one thing only: mark-ups. And ultimately you have to be sustainable. If you spend a lot of money on helping poor people and you don’t get paid for it, you lose this money, you cannot continue with your innovative activities. So for these reasons it’s just unrealistic to expect that pharmaceutical companies will solve the problem on moral grounds.
Who, then, should solve the problem? I suggest it has to be us. We, citizens and politicians, have to do better in terms of regulating the pharmaceutical industry, focusing them, giving them the right incentives, focusing them on the problems that really matter. The potential gains here are enormous. About one third of all deaths each day, each year are due to the diseases of poverty in the developing world. Fifty thousand people every day die prematurely from these diseases. And that’s not even counting all the diseases we know only too well in the rich countries. Cancer, heart disease and so on.