Health Policy$ense

Politics, Patents, and the Global Pharmaceutical Industry

Warnings of Potential Drug Shortages in Greece

Recent political events have underscored the interconnectedness of the global pharmaceutical system, and the important influence of political and economic factors in the domestic and international drug market.

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2015 SUMR Scholar Sharonya Vadakattu

Greece’s referendum  to reject austerity measures – which could lead to the country’s potential departure from the Eurozone – has justifiably received a great deal of recent press. [Editor’s note: Yesterday, Eurozone leaders announced an agreement  with Greece that would avert default.] On the surface, the “Grexit”  may not seem directly related to the drug market.

Potential drug shortages
However, various pharmaceutical companies released statements in response to Greece’s situation, asserting that Greece’s referendum would result in a shortage of medicines in Greece. Additionally, the companies argued, Greece’s rejection of austerity measures could cause a decrease in drug prices of neighboring European countries that import drugs from Greece or use Greece as a reference point for drug pricing. As shown below , medicinal and pharmaceutical products are Greece’s 2nd leading import and 4th leading export:

Impact on world pharmaceutical market
The price of drugs within a country correlates  with the amount of pharmaceutical revenue within that country – a factor that is directly related to the degree of innovation and accessibility of the country’s drug market. Thus, Greece’s vote can have international ramifications in the pharmaceutical market. The reaction of pharmaceutical companies to this vote demonstrates how general policy decisions in one country can have repercussions for drug access across the globe, due to the multinational nature of pharmaceutical companies, and the intricate economics of financing drug research, development, and distribution.

Furthermore, a unique – and incredibly important – aspect of the pharmaceutical industry is the role of patent and intellectual property laws. The importance of patents in this industry stems from the way in which drugs and drug companies differ from standard products and typical businesses. Namely, as compared to other industries, pharmaceutical companies spend a vastly greater amount of time and money researching and developing products. Because drug companies do not reap the potential profits of their investments until several years down the road, the industry depends on patents to protect its revenues once a viable discovery is made.

Trans-Pacific Partnership
In recent weeks, patent law has been at the forefront of international pricing debates. The recent debate over the Trans-Pacific Partnership is particularly important to large pharmaceutical companies, as the TPP could potentially raise the intellectual property standards  of the other countries involved to U.S standards. Commentators  note that this would slow the introduction of generics into these markets.

The pricing of the Hepatitis C treatment Sovaldi has been closely intertwined with patent policies. In China, a potentially massive market, a patent for the cure was recently rejected. In India, Gilead signed deals  with several companies to make cheaper versions of Sovaldi readily available to lower-income populations in India and other developing countries.

The importance of patent law to the pharmaceutical industry serves as a reminder that no country’s drug system operates in a vacuum. Rather, it is affected by the actions of policymakers and politicians across the globe. Appreciating the complexities of the industry is essential for those of us pursuing the goal of health equity and global access to life-saving medications.