Tuesday, August 31, 2010

CSR and the pharmaceutical industry

Dear Colleagues

I am very confused. At the end of July I attended an event at Fairleigh Dickerson University organized by NetImpact where CSR staff and consultants from the pharmaceutical industry talked about CSR and the industry. They made a very plausible case for the industry's interest in CSR and the CSR work they were doing ... except that it was their job to put a good face on the CSR that was being done.

During the Q&A, I tried to make the point that at a "higher" level the industry was maximizing profit but not maximizing value simply because profits are being measured and value is not being measured. Corporate performance is really only about profit and not at all about value. I asserted that if value was being optimized the pharmaceutical industry would not only be profitable but also be respected! The CSR panel acknowledged it would help if there were value metrics ... in fact they were very positive about the potential for a good system of value to strengthen what CSR was doing.

And then I read the following list posting in connection with IP and the international pharmaceutical regime. This makes everything the pharmaceutical industry CSR people are doing totally inconsequential. Hurray for profit ... and to hell with the affordability of life saving medicines for most of the population of the planet! The post was written by Donald Light, a professor involved with public health policy. IP and knowledge control is hardly at all about value ... but mainly about profit. This is the post:
E-DRUG: IPS: (India) Trade talks with EU put drug manufacturers on Edge
Aug 8

Dear Readers,

These so-called free trade agreements have usually raised trade barriers and prices for medicines because they include a strong IP clause, as if IP provisions are not high barriers to free trade. The greatest focus in recent times by the pharmaceutical industry has been on extending protection from normal price competition through "data exclusivity." You all probably know what that is, but essentially IP lawyers for the industry developed the claim that results of trials and tests done for the public regulator belong to the company, not the regulator. (This is not true of the test results on the cars we drive or the planes or buses we ride.) Thus, a generic competitor is prohibited from referring to it or invoking it when applying to market a medicine once patents have expired, even though the regulator has the data already! An authoritative article last year in the Journal of Health Politics, Policy and Law (34;6:979) (Adamini et al, "Policy making on data exclusivity in the European Union") details how advocates for the innovative branch of the industry inside DG Enterprise wrote, managed, revised, and got passed the longest data exclusivity protection in the world without any credible evidence that it increases R&D or innovation, only sustains high prices.

Data exclusivity operates regardless of patent status and in all countries in which patents are not registered. Thus, this European law harms most seriously ill patients in developing countries, not Europe. A big win for the industry in the U.S. reforms was to get DE extended to 12 years.

An important study of how these trade restrictions affect access of medicines for seriously ill patients is by Ellen Shaffer and Joe Brenner, "A trade agreement's impact on access to generic drugs," Health Affairs - web exclusive 2009; 28 (5): w957-w968, at http://content.healthaffairs.org/cgi/content/abstract/hlthaff.28.5.w957.

The main point for legislators is that there is no credible evidence that longer patents or DE increases the development of therapeutically superior drugs, but there is clear evidence that they extend high prices by transferring more taxpayers' money to profits for drug companies.

Donald W. Light
Professor of comparative health policy
University of Medicine & Dentistry of New Jersey
Lokey visiting professor, Stanford University

Donald Light
The performance of the pharmaceutical industry might have been quite exceptional from the perspective of the stock market and financial investors ... but in terms of its contribution to global health it has done rather little compared to what could have been done ... and should have been done. This is caused in some part because the only universal measure of performance is the money profit accounting measure and there is nothing of any substance about the role of corporate activity on quality of life in society. With a value accounting system of substance, the pharmaceutical industry might well be working much more effectively in the interest of global health performance.

I am an optimist ... value accounting is going to be used sooner than later!

Peter Burgess

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