After India, Now Indonesia Introduces Patent Licenses For Generic Versions Of Drugs

from the who's-going-to-be-next? dept

As we noted a couple of weeks ago, when we wrote about India’s moves to issue compulsory licences for the production of generic versions of expensive, patented drugs, the big fear for Western pharmaceutical companies was that other countries might follow suit. It looks like that’s happening in Indonesia, where the country’s president has signed a decree authorizing low-cost versions of key HIV drugs:

the measure would introduce widespread generic competition and generate major cost savings in the world’s fourth most populous country. The decree licenses patents for a slate of HIV medicines, and represents one of the most robust uses of pharmaceutical patent licensing power by a country since the World Trade Organization 1995 Agreement on Trade-Related Aspects of Intellectual Property (WTO’s TRIPS).

Again, the concern for the major drug manufacturers must be that this latest move will encourage even more countries to start granting patent licenses for drugs needed by their populations, but which are currently unaffordable thanks to Western-level pricing. Indeed, it’s hard to see what can stop that happening now that India and Indonesia have shown the way by invoking the right of countries to issue compulsory patent licenses, as enshrined in TRIPS.

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Comments on “After India, Now Indonesia Introduces Patent Licenses For Generic Versions Of Drugs”

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28 Comments
Anonymous Coward says:

The big fear for Western pharmaceutical companies is what, that no sales will be replaced by sales of a locally made cheap product. It seems that they would rather let people die than make drugs available at an affordable price. So long as the drugs are not exported the impact on their bottom line is nearly zero.

Anonymous Coward says:

Re: Re: Re: Re:

A reasonable price in such a market is hard to set.

1. It is a heterogenous market with some able to afford very high prices and a large percentage still not able to afford it at a much lower cost. Generally: The poorer the country the less linear the pricing curve is!

2. If you lower a price too much, you will start to see parrallel import to other market and competition against your own company! Look at publishers of books and their fight against that import! That is completely unacceptable for a company and to bet that it will get caught and shot down in court is just too shady for the companys renome and very risky.

3. You need to look at “overhead” and compare it to the research-investment. You cannot afford to have a low overhead with more than 5 years (or whatever the lenght of the patent is.) payback-time on research-investment since the peanuts after a patent goes out of order is not really enough.

Taking those effects into account it is almost impossible for the company to enter the poorer of markets!

Compulsary licensing is actually a somewhat good deal for the company. It no longer has to enter the market and they will get some money out of it. The compulsarily licensed product is illegal to move to other markets for sale and it is a lot easier to spot in costums.

Anonymous Coward says:

Re: Re:

“It seems that they would rather let people die than make drugs available at an affordable price.”

Sort of two sided. Would you like them to jack the price up in the Western markets another 30% to make up for it? Do you really think it’s fair to keep making the western countries pay for it all? Is it an American’s fault for doing well, is it America’s fault for having one of the biggest economies?

I think they would love to make the drugs available at an affordable price, but also at one that allows them to stay in business. Generic companies don’t have to pay for the research to get there, making it possible for them to sell for much less. It’s not really fair, is it?

Anonymous Coward says:

Re: Re: Re: Re:

The marginal cost is not $70k/treatment, but when you include the fixed cost for R&D it is. Someone has to develop these treatments.

I understand why the governments of these countries would do this. It makes sense to me and I’m glad lifesaving treatments are available to the 3rd world poor. But they only work in a world where the US has its current set of laws and market conditions that allow pharma companies to recoup their development. Our high healthcare costs subsidize the research and development of these kinds of treatments that the whole world gets to use. Other countries – even western european ones – pay much less for drugs because their laws limit pricing and patent-based monopoly on new drugs.

I look at it not as a negative but rather as one of the ways that the richest country in the world gives back a little bit. But if we adopt a healthcare system that mirrors Western Europe odds are pretty good that either other countries are going to start feeling the pain of prescriptions or a lot less money is going to be spent on researching new treatments.

TheLastCzarnian (profile) says:

Re: Re: Re:2 Re:

I would like to take this time to mention that your are totally full of shit.
NO fixed R&D cost justifies $70k per treatment. (Note, as mentioned, that often the government is footing the bulk of the bill!)
Also, have you NOT noticed the massive profits the pharma’s are making? They are not breaking even. They are not making a tidy profit. They are gouging people in need, because they know they can. Plain and simple.

And lying about it puts you squarely in their corner.

Anonymous Coward says:

If I owned a pharmaceutical company I wouldn’t take any risk, I wouldn’t invest lots of money to try to create new drugs. What is to prevent a third world country from taking that drug and giving it away to a generic manufacturer? Why would I as the owner of a company dump tens of millions of dollars into research, development, and testing, when the end result would be that a third world country would just take ownership of that drug?

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