The pharmaceutical industry as a medicines providerAccess to drugsMarket failure and the pharmaceutical industryCorporate philanthropySubsidisation of drugsPrice controlsThe international pharmaceutical industry as a businessThe generic drugs industryPrivatisation of researchIdentification of development targetsCosts of drug developmentUse and abuse of patentsTrade-related intellectual property rightsConclusionsReferencesFor personal use. Only reproduce with permission from The Lancet Publishing Group.1590 THE LANCET • Vol 360 • November 16, 2002 • www.thelancet.comMEDICINES, SOCIETY, AND INDUSTRY IIIProducts of the modern pharmaceutical industry haveimproved the outlook for patients with many disorders.Drug manufacturers have been highly successful intranslation of discoveries into successful products. Despitethese successes, pharmaceutical companies have comeunder increasingly critical public scrutiny,1,2for example,the unsuccessful legal campaign against the South Africangovernment, their tardiness in lowering of prices forantiretroviral drugs in the face of the pandemic of AIDS,and the high price of many drugs in the USA comparedwith other countries.3–6Despite these controversies, companies have remainedprofitable, with better margins than other industries.6International companies now face increasingly demandingcustomers, constrained expenditure on drugs, anexpanding generics business, and imminent expiry ofpatents for several very profitable products. Thecombination of these factors is creating uncertainty aboutthe continued growth of the industry.Access to drugsWHO has maintained a list of essential drugs since 1977;the 12th version of the list contains 325 drugs, many ofwhich are available in bulk generic forms from low-costsuppliers.7Despite the relatively low prices that can beobtained on the international market, availability ofessential drugs remains deficient, and over half thepoorest people in Africa and Asia still do not have accessto these drugs.8High prices (in part attributable toinappropriately high taxes, mark-ups, and dispensingfees), poor purchasing and distribution programmes,uncertain product quality (including counterfeit drugs),and inappropriate prescribing practices continue toundermine availability.5,9Lancet 2002; 360: 1590–95School of Medical Practice and Population Health, Faculty ofHealth, University of Newcastle, New South Wales, Australia(Prof D Henry MBChB); Department of Family and CommunityMedicine, University of Toronto, Toronto, Ontario, Canada (J Lexchin MD); and School of Health Policy and Management, YorkUniversity, Toronto (J Lexchin)Correspondence to: Prof David Henry, Level 5, Clinical SciencesBuilding, Newcastle Mater Hospital, Waratah, NSW 2298, Australia(e-mail: [email protected])Inadequate access to essential drugs is not confined toless developed countries. In the USA, many elderly anduninsured people cannot afford the drugs they need. Largebuyers—such as health maintenance organisations—cannegotiate discounts, but individual patients cannot.10Theabsence of pharmaceutical benefits has left a third ofMedicare recipients in the USA (over 13 million elderlypeople) without insurance cover, and they are asked to paythe highest prices in the world.10Market failure and the pharmaceuticalindustryMarkets work well for society when there is pricecompetition, comprehensive and accurate information, anadequate supply of drugs, where consumers are able tomake informed unpressured choices between competingproducts, and when there are few barriers for entry to themarket. However, substantial evidence shows thatmarkets have failed to work. Timely, independent,comprehensive, and accurate information on new drugs is hard to find.11Diseases that affect a large proportion of the world’s population have been neglected in drugdevelopment.5Where treatments are available fordisorders, drugs are unaffordable for those who need themmost.5Price competition between patented products isweak and pharmaceutical companies have featuredprominently in antitrust court actions.12,13Corporate philanthropyThe pharmaceutical industry has responded to the pooravailability of its products in the developing world bydonations. Some companies have maintained excellentprogrammes. Since 1987, Merck has given away well over 100 million treatments with ivermectin foronchocerciasis.14SmithKline Beecham (nowGlaxoSmithKline) has made a similar commitment withalbendazole for helminth infection.14Other programmeshave not been so well received, mainly because oflimitations imposed by sponsors. Pfizer offered to supplyfluconazole free in South Africa for treatment ofcryptococcal meningitis, but not for people with AIDS-related monilial infections.15However, the company didnot extend its offer to other sub-Saharan countries wherethe need is as great as in South Africa. A concern about philanthropic programmes is that theyare a mechanism for keeping world prices high while beingseen to assist the most disadvantaged groups. MédecinsThe pharmaceutical industry as a medicines providerDavid Henry, Joel LexchinRising prices of medicines are putting them beyond the reach of many people, even in rich countries. In less-developedcountries, millions of individuals do not have access to essential drugs. Drug development is failing to address the majorhealth needs of these countries. The prices of patented medicines usually far exceed the marginal costs of theirproduction; the industry maintains that high prices and patent protection are necessary to compensate for highdevelopment costs of innovative products. There is controversy over these claims. Concerns about the harmful effects ofthe international system of intellectual property rights have led the World Trade Organization to relax the demands placedon least developed countries, and to advocate differential pricing of essential drugs. How these actions will help countriesthat lack domestic production capacity is unclear. Better access to essential drugs may be achieved through voluntarylicensing arrangements between international pharmaceutical companies and manufacturers in