October 28, 2004 · William Fisher
The fact that Americans pay more for prescription drugs than do Canadians or most Europeans has been prominent in the news lately. Both Kerry and Bush now promise to do something to reduce the gap. Virtually absent from the public discussion of the issue has been an even more troubling aspect of the way in which prescription drugs are currently distributed: the inability of the residents of developing countries to obtain life-saving drugs at prices they can afford. This post provides a few details concerning the seriousness of that problem. The next post will outline � and solicit reactions to � a few ways in which the problem might be solved or at least mitigated.
The phrase, �healthy life expectancy� (HALE) is used by the World Health Organization to denote �the number of years in full health that a newborn can expect to live based on current rates of ill-health and mortality.� The HALE of the residents of Japan is currently 75 years. The HALE of the residents of Canada and most countries in Western Europe is between 70 and 75. That of residents of the United States and the remainder of the countries in Western Europe is between 65 and 70. By contrast, the HALE of the residents of most countries in sub-Saharan Africa is between 28 and 45. (Click here to see a map of the world, showing the HALEs of all countries.)
Why the huge disparity? Why do people living in developing countries die so much younger than people living in the developed countries? As one might expect, many factors are at work. The most important are: poor nutrition, sanitation, and water; climates amenable to mosquitoes and other sources of disease; inadequate education concerning methods for preventing and treating diseases; poor health-care services; and, last but not least; lack of access to appropriate medicines.
It�s the last of these factors that we�ll focus on here � partly because, as Michael Kremer has shown, it represents an ever increasing source of the problem and partly because it may be the easiest of the factors to remedy through adjustments in the relevant legal rules.
The inaccessibility of appropriate medicines in developing countries has two causes or facets. First, second, existing drugs are priced at levels that place them out of the reach of most residents of those countries. The most dramatic example involves AIDS drugs. 93% of the residents of Southeast Asian countries who are infected with HIV cannot afford the anti-retroviral drugs that would save their lives. 99% of the 25,000,000 residents of sub-Saharan Africa who are infected with HIV cannot afford the anti-retroviral drugs. The figures for other diseases are not quite so appalling, but are still very grim.
Second, too little effort and money is being devoted by American, European, and Japanese pharmaceutical companies into the development of vaccines or treatments for the kinds of diseases that disproportionately affect developing countries � e.g., malaria, measles, pertussis, and diarrhoel diseases. One especially dramatic indicator: Between 1975 and 1997, 1233 new drugs were licensed in the world for the treatment of human diseases. Of that number, only 13 addressed the aforementioned �tropical diseases.� Of the 13, five were byproducts of veterinary research. (Sources: Pecoul; Kremer) Why this bias? The primary explanation is that the pharmaceutical companies derive the overwhelming majority of their revenue from countries where tropical diseases are not common. (For example, 94% of the 2003 revenues of American pharmaceutical companies came from North America, Western Europe, Australia, and Japan. Only 6% came from the rest of the world, which bore over 99% of the burdens of the tropical diseases mentioned above.) It�s neither surprising nor immoral that the companies would focus their research and development on diseases prevalent in regions where they make money and neglect diseases prevalent elsewhere. But the net effect is tragic: millions of people are needlessly suffering and dying.
So that�s a very brief sketch of the essential features of the problem. In the next post, I�ll identify a few potential solutions.