Originally Published MPMN April 2001
Profits Versus Lives: Battle Lines Are Being Drawn in the Developing World
Conventional wisdom within our industry holds that the distinction between drugs and devices is a well-entrenched concept among governments and regulators. Look deeper, though, and you will find that the border separating drugs and devices is becoming more fluid. "Current developments in healthcare delivery and the provision of healthcare are leading to an integration of the device and pharmaceutical sectors," states a report on European medical technologies published by the pan-European trade group EUCOMED. "With the advent of biotechnology, the area between medical technologies and pharmaceuticals is further graying," the report adds. With that in mind, consider the recent announcement by pharmaceuticals giant Merck that it will supply AIDS drugs at cost to the developing world.
This decision has roiled the drug industry. Experts contend that, as competitors follow suit, a price war could develop among pharmaceutical companies that would have dire consequences for R&D funding. Equally vexing is how to define the developing world. Will China be eligible for cut-rate drugs? And if the wealthy elite of developing countries is able to procure medication at a discount, is it fair to demand that the poorest citizens of the richest countries pay the full sticker price?
For some people, this intersection of business interests and human suffering may be one of those times when the Orwellian concept of doublethink--the ability to hold two contradictory beliefs in your mind simultaneously--has a real-world application.
From a business perspective, it's clear that companies are entitled to make a fair return on their investment. The exorbitant cost of R&D in the pharmaceuticals industry, much of it spent on products that are never commercialized, must be recouped. Of course, not everyone will agree on what constitutes a reasonable ROI, especially when lives are at stake on a massive scale. It would be coldly cynical, however, to simply subtract the toll in lives resulting from a strict obedience to bottom-line calculations. Yet that is the perception many people have of the pharmaceuticals industry.
Ensuring a healthy profit may be a sound business practice, but how effectively can you defend denying millions of people access to life-saving medications on purely economic grounds? Activists have a forceful message when they argue that drug companies are placing the sanctity of patents [to prevent the availability of inexpensive copycat drugs] above the sanctity of life, as David Pilling writes in the March 9 issue of the Financial Times.
The device industry has been sheltered from this debate, partly because access to medical technology is mediated by reimbursement channels. In the eyes of the general public, insurers and government entities are the gatekeepers, whereas the device industry remains largely invisible. It won't always be so.
Replace AIDS medication with a device that has the potential to save millions of lives, but at a price that is prohibitive to a large percentage of the world's population. What stance should the device industry take when activists demand that the technology be supplied at cost (which, all things considered, means at a loss) because patient access has become a humanitarian issue?
I have two contradictory answers, both of which make a lot of sense, which is another way of saying that I don't know. I am certain, however, that the day will come when industry will have to wrestle with this Gordian knot. Keep an eye on what the pharmaceutical industry does to untangle itself--it is sure to be instructive.
Copyright ©2001 Medical Product Manufacturing News