Sunder on Patents and Access to Drugs

By Frank Pasquale

Last week, the blog Concurring Opinions featured a symposium on Madhavi Sunder’s new book, From Goods to a Good Life: Intellectual Property and Global Justice. A chapter relevant to health law scholars is available online, here.  The chapter focuses on access to drugs in less developed countries (LDCs), and makes the following case:

Not too long ago, an HIV-positive diagnosis was tantamount to a death sentence — for people in the East and the West, in the South and the North. The drug companies that perfected the antiretroviral therapies invested princely sums to find these miracle cures. To justify their investment, they rely on the promise of a patent . . . . Thus patents have saved countless lives. But this structure has its limits. Indeed, the evidence is mounting that in crucial ways patents fail to promote the health of people in the developing world, and in some cases in the developed world as well.

The chapter begins by telling the moving story of Thembisa Mkhosana, one of thousands of South Africans who cannot afford the third-line antiretroviral treatments needed to survive AIDS.   “My blood test results have worsened dramatically,” Mkhosana told a reporter, “And now I suddenly have fever and am in pain. I’m really worried.”  ”I know that I’m going to die,” she said, but “who is going to look after my children?”  Her story appears in this video.

Mkhosana’s plight raises difficult interpretive issues.  Is she “collateral damage” from a patent system that depends on the strict rules that deny her access to the medicine she needs? Or is this an entirely avoidable tragedy, a consequence of misapplied and misinterpreted laws?  Sunder makes the case for the latter view very convincingly, while providing a compact and accessible account of the development of international patent policy over the past 20 years.

Sunder acknowledges the importance of patent law to incentivizing the development of new drugs. However, as she wisely notes, one can’t squeeze blood from a stone, however important the “skin in the game” ideology has become to advocates of “free-market” healthcare.  According to Sunder, “creation of generic drug markets for the poor ought not significantly impact the bottom line of Big Pharma, which derives only 5 to 7 percent of its profits from this part of the world.”  It may well be possible to make up for some of that figure by cutting back on promotional budgets in the developed world. It’s also a rather trivial figure compared to tax avoided or evaded on the tens of trillions now hidden away in tax havens.

On the other hand, Big Pharma has a number of justifications and excuses for aggressive assertion of their patents. Spokesmen aver that they are only concerned about what would happen to their profit margins if drugs circulated in an uncontrolled manner. They claim that, if poor countries are permitted to manufacture vast quantities of their drugs, those countries may sell them on the black or grey markets. That, in turn, would reduce the return on such drugs in the developed world, leaving less money for research in the future.Sunder responds that, “The grey-markets concern is a valid one—but . . .the World Trade Organization has begun to craft creative solutions to this problem (requiring generic drugs made for developing world markets to be distinctively labeled, for example).”  As surveillance of both people and goods is better perfected by state security apparatuses and RFID technology, the grey market concern should also become more technologically manageable, enabling finer-grained and more effective price discrimination.

Access to drugs is a key area where ordinary markets simply can’t be expected to achieve humane and rational results.  In 2008, the purchasing power of the average American dog was higher than that of forty percent of the world’s population. Given the extensive extant involvement of the U.S. government both in the domestic pharmaceutical industry and in the international negotiations determining its powers and duties abroad, there is a special moral obligation for U.S. citizens and politicians to assure the widespread and equitable distribution of lifesaving drugs. As Sunder states:

Economists call the millions of people who need a drug but cannot afford it “dead weight loss.” But the millions who die needlessly because of the patent system—a number that some scholars calculate as nine million in the developing world annually—are more than an inefficiency in the system. . . . We must both adopt alternative mechanisms for developing and distributing medicines to the poor (including prizes), and fully support the use of compulsory licenses by developing countries to treat their sick poor. Patent law cannot draw the line at rectifying market failure. Our law must contend with moral failure as well.

Sunder’s eloquent case for access to drugs commends respect and admiration for the Health Impact Fund, Knowledge Ecology International, Medecins sans Frontieres, and other groups for trying to close this gap.

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