Big Pharma, Big Profits

Edd Millar

Last year the top ten pharmaceuticals companies made a net profit of over $35 billion. Pharmaceutical products have the highest profit margins in the world at around 25% of sales; just one of the reasons they can have such high returns is due to the protection they are given by the World Trade Organisation (WTO). The WTO operates a system called ‘TRIPS’ (Agreement on Trade Related Aspects of Intellectual Property Rights) which exists to protect intellectual property on an international level. TRIPS enable companies to have an exclusive right (for twenty years) to produce products they have developed, meaning no-one else can make cheaper copies; everything from software, to music, to drugs is included under the same agreement. This means that if a drug company was to produce, say, a cure for cancer, they would have twenty years during which only they could make it and hence they could charge whatever they want and only sell it in the countries they thought would give the best monetary return.

There is a concession built into the agreement, namely that of a ‘compulsory license’, designed to accommodate a medical emergency in a country; if this happens then the country can in theory produce their own versions of drugs for their own citizens. However, one of the only countries that has so far managed to successfully exploit this clause is the USA; none of the countries who are suffering the most from diseases such as AIDS have been able to because the conditions on its use are so specific and complex, and also because the countries don’t have the facilities to produce the drugs themselves. When Thailand tried to implement a compulsory license for HIV/AIDS drugs, the company producing the drugs (Abbott) responded by totally withdrawing all their products from the Thai market, and the US placed Thailand on its trade ‘watch list’; even though Thailand was acting totally within international law.

As it stands, the WTO is contributing to an international environment where the people who need drugs the most are unable to access them, whilst the companies who make the drugs are making massive profits.

www.ghwatch.org