Pharmaceutical News 2.0

Pharmaceuticals is an industry exposed to many unique risks. The capital intensive research and development (R&D), the uncertainty of Food and Drug Administration (FDA) approval, and a constant shroud of legislative risks may seem like a lot to deal with, but one of the fastest growing threats for pharmaceuticals are patent trolls.

The Pharmaceutical Process
FDA approval is already a long process, and even properly-approved drugs have left companies open for litigation. To take just one example from 2008/2009, there is an ongoing legal argument about whether federally approved warning labels pre-empt state law. The main problem was that if the Supreme Court ruled that warning labels didn’t pre-empt state law, or if Congress changed the rules to give state law equal importance, then drug companies could find themselves facing more lawsuits. In addition, the drug companies would have to go through FDA approval followed by state by state compliance checks - all of this adding to the already considerable costs of doing business.

Patent trolls, by either attacking existing patents or hoarding vague patents, hurt pharmaceutical companies more acutely by reducing returns on investment at a time when both the companies’ costs and risks are rising. Drug companies need large cash reserves/war chests at all times to pay for capital-intensive research, FDA approval and settling lawsuits. To maintain this war chest they need strong and, more importantly, stable profits from their products.

Risk and Return
These companies pay out the huge R&D costs in return for huge possible rewards on patented drugs. The rewards are more or less proportional to the risks, as many drugs never make it to market, meaning they never pay back their R&D costs. Drug companies want their patents, essentially their intellectual property rights, protected for as long as possible. They want an exclusive monopoly over their product in order pay back the costs of development along with a profit equal to the risks taken on by the company. Excess profits will either go to the shareholders or cover the costs of the many failed drugs that never make it out of developmental stages.

Trolls Provide Short-Term Benefit
Whether it is generic aspirin or generic Viagra, the patient receives an immediate benefit from patent trolls in the form of a lower price for medicines. This short-term benefit is no doubt much appreciated. The government also tends to think short-term - a cynic would say in four-year cycles - and generally in line with patients. They want cheap pills for voters and are more than willing to see corporate profits take a hit to meet that end. Governments have shown their support for patent trolls by creating legislative loopholes and eroding patent rights.

By attacking long-term patents, trolls are able to open up specific formulas for generic mass production and bring cheap generic drugs to market quicker. In the short-term, it’s hard to argue that cheap medicine doesn’t benefit the general population. In the long-term, however, the actions of patent trolls may actually hurt everyone.

Read more about pharmaceutical patent trolls.

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Watch this video on fake medicine.

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DAKAR, 8 July 2009 (IRIN) - Contraband trafficking threatens rule of law, democracy and the health of people throughout West Africa, a region that offers criminals “resources, a strategic location, weak governance and an endless source of foot soldiers who see few viable alternatives to a life in crime,” said UN Office on Drugs and Crime (UNODC) Executive Director Antonio Costa.

Illegal income from trafficking rivals West African countries’ entire GDPs, fuels conflict and corruption and spawns disease, according to the UN crime agency’s recent trafficking threat assessment.

UNODC measured the flows of cocaine through the region, women from West Africa to Europe, oil from Nigeria, cigarettes from Europe and Asia to West and North Africa, counterfeit medicines from Asia to West Africa, small arms to West Africa, toxic waste from Europe to West Africa and would-be migrants from West Africa to Europe, concluding that smuggled oil generates the most money – more than US$1 billion annually–and is the greatest rule-of-law challenge in the region. Smuggled oil “directly destabilises the most powerful economy in the region [Nigeria], with implications far beyond the Niger Delta,” says the report.

On the corrosive nature of smuggling profits, the report noted: “This money accrues to law-breakers and corrupt officials who may have an interest in maintaining state weakness…Where the rule of law is weak, the lawless prosper, and they further cultivate the disorder that provides their best defence.”

Antonio Mazzitelli, the director of UNODC’s West African office in Senegal, told IRIN illegal money undermines order. “Those with access to funds in West Africa have enormous power to corrupt. It is not alarmist to link trafficking to political instability.”

Read the rest of this article on fake medicine in West Africa.

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