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762 Words Jun 19th, 2015 4 Pages
Pharmaceutical pricing
The new drugs war
Patents on drugs are in the interests of the sick as well as the industry. Protection should not be weakened
Jan 4th 2014 |

OF ALL the goods and services traded in the market economy, pharmaceuticals are perhaps the most contentious. Though produced by private companies, they constitute a public good, both because they can prevent epidemics and because healthy people function better as members of society than sick ones do. They carry a moral weight that most privately traded goods do not, for there is a widespread belief that people have a right to health care that they do not have to smartphones or trainers. Innovation accounts for most of the cost of production, so the price of drugs is
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America—home of most of the world’s big pharma, whose consumers pay the world’s highest prices for drugs and thus keep down prices for others—wants to use the TPP to restrict such compulsory licences to infectious epidemics, while emerging-market countries want to make it harder for drug firms to win patents.
The resurgence of conflict over drug pricing is the result not of a sudden emergency, but of broad, long-term changes. Rich countries want to slash health costs. In emerging markets, people are living longer and getting rich-country diseases. This is boosting demand for drugs for cancer, diabetes and other chronic ailments. In emerging markets, governments want to expand access to treatment, but drugs already account for a large share of health-care spending—44% and 43% in India and China respectively, compared with 12% in Britain and America. Meanwhile, a wave of innovation is producing expensive new treatments. In 2012 American regulators approved 39 drugs, the largest number since 1996. Cancer treatment, especially, is entering a new era (see article).
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During the peak of HIV, the arguments for compulsory licensing were strong, for drugs should be made as widely available as possible during an epidemic to prevent it from spreading. But compulsory licensing also discourages innovation, and will do so increasingly as emerging markets make a bigger contribution to pharmaceutical company revenues. What is more, as such

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