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The Growing Dominance of Big Pharma in the Developing World

Written by Andrew Alan

While large pharmaceutical corporations and their monopolies over the drug market in America have been a major issue in the last few decades, there is an even larger health care monopoly in developing regions of the world that has been growing to become a particularly troubling development.


Here this graph highlights just how significant of an influence that pharmaceutical companies have within the health care sectors of these developing countries in Africa alone. As much as around 46% of some of these nations health expenditures goes to pharmaceutical medication and treatments. And with an overall growth trend being forecasted for these companies, some of these percentages may have grown higher since 2014. With the global Coronavirus pandemic in particular, pharmaceutical influence due to their control over the supply of covid medication and vaccines will only grow as the international effort to combat the virus strengthens, meaning this level of dependence does not seem to be declining anytime soon.


How do Pharmaceutical Companies Have Such a Prominent Influence Over Developing Nation’s Health Care?


According to a study on the challenges of access to medicine through a legal perspective, there are three major sources regarding the power of such corporations: patents, TRIPS-plus agreements, and bias in the pharmaceutical industry. While the practice of evergreening by pharmaceuticals, which involves the retention and recycling of patents so that they can hold a monopoly on their medication and keep receiving royalty payments, is a big issue in developed nations, pharmaceutical companies have also been able to exploit international patent laws like the TRIPS agreement, allowing them to get away with harmful practices. The Agreement on Trade-Related Aspects of Intellectual Property Rights was an international agreement between members of the World Trade Organization that provided, “more extensive protection of intellectual property,” by allowing nations, “to determine the appropriate method of implementing the provisions of the agreement within their own legal system and practice” (WTO). For U.S. based pharmaceutical companies, this is quite favorable as the U.S. has gone on to form various bilateral trade agreements between other TRIPS members (TRIPS+ Agreements), which decrease flexibility regarding patent laws and can even extend some patents. Interestingly, of the 20 nations in bilateral free trade agreements, 15 are considered developing, implying that American pharmaceutical companies do indeed have considerable influence over the health care sector of such countries.


These agreements have allowed pharmaceutical companies to extend their patents beyond their domestic sphere and control the production and trade of their medications while profiting off of royalties within a larger world economy. The study finds that this leads to the, “production of each medicine [being] initiated with a period of monopoly in the market with the highest possible price,” where, “there are no low price generic drugs in the market after signing the agreement by one state” (Ahmadiani and Nikfar). This means that patients are forced to pay for the expensive brand with insurance or by paying out of pocket. However, in the context of developing countries, most patients do not have the luxury to pay for access to this medication and therefore are barred from receiving the treatments they need. Moreover, developing nations have, “higher [medical] needs and lower economic ability … Providing branded medicine will result in a large load of expenditure for states, catastrophic expenditures for patients and increase of mortality and/or morbidity because of low access to medicine” (Ahmadiani and Nikfar).


In addition, if any nation that is a member of the TRIPS agreement tries to meet medical needs and produces or provides patented medication, then the pharmaceutical company can sue the state and fine them for financial losses. Such a scenario has happened in South Africa where large companies like GlaxoSmithKline filed a lawsuit in the 90s because of the government’s importation of the generic version of a HIV/AIDS drug while it was under patent. Due to the potential threat this posed for their profits in the pharmaceutical sector of the South African economy, they tried to prevent this from continuing even at the cost of allowing millions to continue suffering from HIV/AIDS as they could not afford the branded prices. In the end, the pharmaceutical companies actually lost the case and the patent law was overruled in favor of recognizing the right to the basic human rights for patients. However, Ahmadiani and Nikfar warn that, “no country can be sure that the court will give the right to the member state again and hence in many cases the government prefers to import the branded medicine from the beginning, even if it is not affordable for a part of the population”.


The Current Reality of Pharmaceutical Companies and Developing Nations

The 6 pharmaceutical companies, GlaxoSmithKline, Novartis, Johnson & Johnson, Merck KGaA, Takeda Pharmaceutical and Sanof, “account for 63 percent of the priority research and development (R&D) being undertaken,” according to the Access to Medicine Foundation’s sixth Access to Medicine index report (Keown). The five main diseases that these companies focus on are malaria, HIV/AIDS, tuberculosis, Chagas disease and leishmaniasis. However, the report also states that, “91 of 139 urgently needed drugs, vaccines, diagnostic tests or devices identified by the World Health Organization have yet to be developed, and 16 prioritised diseases have no projects at all,” with disease like several haemorrhagic fevers, several parasitic worm diseases, syphilis, cholera, and diarrhoea caused by E coli, having the least developmental attention. In addition to these diseases, cancer is also a major disease that is prevalent in developing countries, who account for about 55 percent of all new cancer cases according to Julio Frenk, a Dean of the School of Public Health at Harvard University. While it is clearly a huge problem in developing nations, pharmaceutical companies, “that focus on cancer drugs have largely failed in including access initiatives for oncology programs in their pipelines,” in favor of instead directing their efforts on more profitable drug treatments that aren’t as intensive and costly as cancer treatments that most patients in these countries can’t afford.


What this all means is that pharmaceutical companies have a bias towards medicine that treat chronic conditions like HIV/AIDS as they offer a steady cash flow and have a large demand in developing countries. In addition, due to most pharmaceutical companies being based in developed nations and deriving most of their profits from such nations, their prioritization of drug development will also be skewed towards diseases of the developed world, which mainly deal with chronic conditions as opposed to the various acute tropical diseases of developing nations. This holds true even more for diseases with a prevalence less than 1/2000 as they are usually rare or restricted to certain areas or people so pharmaceutical companies find no monetary value in investing resources to treat such diseases, especially when there is no state funding from a nation’s government for that disease. To put this into perspective, according to data from a neglected diseases report, during the time period 1975-2004, of the 1500 drugs approved for use, “only about 1 % of them were related to the diseases which are known as neglected, while over 10 % of global burden of disease is caused by these diseases” (Ahmadiani and Nikfar). Furthermore, these numbers are in line with the 10/90 gap which was a term used by the Global Forum for Health Research to illustrate how less than 10% of world’s resources devoted to health research were put towards health in developing nations, where over 90% of all disease-related deaths worldwide occurred.


Big Pharma and Accountability

All in all, these numbers reveal the lack of necessary concern needed from these pharmaceutical companies in combating health issues in the developing world. Considering the role that the private sector in health care has in the development and mitigation of health issues throughout the world, part of the responsibility in ensuring that people around the world are given access to, “the highest attainable standard of physical and mental health,” as stated by Article 12 of the UN International Covenant on Economic, Social and Cultural Rights, lays on them as well as the world governments. The investment of resources into the interests of the developed world at the expense of the developing world will only serve to widen the gap between socioeconomic status of the people within these nations.


With all this in consideration, it is evident that there needs to be a greater effort to direct R&D towards areas of greater need throughout the world even if there is little financial gain to be had. As for how this is to be done, that will depend on the methods that leaders and pharmaceutical companies choose to follow. They could follow the pathway led by government intervention and legislative action where more antitrust laws can be enacted in an attempt to diversify the competition and lessen the impact of patents in the maintenance of a pharmaceutical monopoly within developing nations. This will help to decrease the price of patented drugs within a shorter time frame once generic versions can be made. Another possible method of action is to increase transparency when it comes to pricing and internal cost factors that led to its price evaluation. This can hold these companies more accountable for price gouging to levels that are not reasonable nor ethical in the context of medical treatment.


With government intervention, however, comes complex legal and bureaucratic issues that can greatly slow down the progress at which governments can realistically institute change. In such cases, non-government organizations and social organizations would have to garner enough attention and awareness within society to apply pressure on pharmaceutical companies to change their practices. This can be seen in reports like the Access to Medicine Index by the Bill & Melinda Gates Foundation where pharmaceutical companies are evaluated based on their pursuit and actions towards increasing health care accessibility around the world. Alternatively, campaigns and awareness movements on bad pharmaceutical practices may help in forcing these companies to change their behaviors and accept the responsibilities they hold in the fight against world wide health problems.


In the end, while it may seem as if the future for the health crises in developing nations is grim, there has been an overall improvement in the access to health care over the years as a result of greater pharmaceutical action and various programs run by different organizations. To what extent this trend will continue and how fast it goes in achieving higher and higher milestones in the fight against world health issues is yet to be seen. But through greater government action and the united efforts of both countries around the world and awareness groups within these nations, pharmaceutical corporations and other development institutes may be able to better address health problems in developing nations.


Works Cited

Ahmadiani, Saeed, and Shekoufeh Nikfar. “Challenges of Access to Medicine and the Responsibility of Pharmaceutical Companies: a Legal Perspective.” Daru : Journal of Faculty of Pharmacy, Tehran University of Medical Sciences, BioMed Central, 4 May 2016, www.ncbi.nlm.nih.gov/pmc/articles/PMC4855755/#CR11.

“Big Pharma 'Failing to Develop Urgent Drugs for Poorest Countries'.” The Guardian, Guardian News and Media, 20 Nov. 2018, www.theguardian.com/business/2018/nov/20/big-pharma-who-failing-to-develop-urgent-drugs-for-poorest-countries.

“Cancer Is on the Rise in Developing Countries.” News, The President and Fellows of Harvard College , 19 Feb. 2014, www.hsph.harvard.edu/news/magazine/shadow-epidemic/.

“Free Trade Agreements.” United States Trade Representative, United States Trade Representative, ustr.gov/trade-agreements/free-trade-agreements.

JayCoop. “FTAs with the United States.” Wikimedia Commons, Showing Results for Publisher of Wikipedia Search Instead for Publisher of Wikipeida Wikimedia Foundation, 27 Sept. 2017, commons.wikimedia.org/wiki/File:FTAs_with_the_United_States.svg.

“International Covenant on Economic, Social and Cultural Rights.” OHCHR, United Nations, www.ohchr.org/EN/ProfessionalInterest/Pages/CESCR.aspx.

Keown, Alex. “A Small Group of Pharma Companies Is Making the Bulk of Medicines Necessary for Developing Countries.” BioSpace, BioSpace, 21 Nov. 2018, www.biospace.com/article/a-small-group-of-pharma-companies-is-making-the-bulk-of-medicines-necessary-for-developing-countries/.

Mikulic, Matej. “Pharmaceutical Revenue as Percentage of Health Expenditure in Major African Countries in 2014 .” Statista, Ströer Media, 14 Dec. 2018, www.statista.com/statistics/418004/pharmaceutical-sales-as-percent-of-health-expenditure-in-africa-by-major-country/.

2020th ed., Science and Engineering Indicators, 2020, pp. 1–61, Research and Development: U.S. Trends and International Comparisons.

“WORLD TRADE ORGANIZATION.” WTO, World Trade Organization, www.wto.org/english/tratop_e/trips_e/intel2_e.htm.





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