Monday, 6 June 2011

Rich countries to subsidise drugs for developing world

The BBC has reported that several major drugs companies have announced big cuts to the amounts they will charge for their vaccines in the developing world. For example, GlaxoSmithKline will cut the price of its vaccine for rotavirus (which kills more than half a million children per year) by 67% to $2.50 a dose in poor countries. Since GSK remains a commercial company, and nothing is ever free, this means the vaccine will be subsidised by higher prices being charged in richer countries.

I'm comfortable with this concept. As a parent, the idea that my child could die from an easily preventable bout of diahorrea is unthinkable. And I live in a country where nobody is prevented from receiving healthcare by lack of means. But since GSK has admitted that at the reduced price it will still make a profit on each dose, there has been an outcry over its "excessive profits".

The main cost in the pharmaceutical industry is not the manufacture of the drugs themselves, but the research and development that goes into developing them. And this needs to be recovered during the life of the product in order for the business to remain commercially sustainable. It seems perfectly legitimate to me that this R&D investment should be recovered from the countries which can afford to pay it, enabling those with limited means to acquite the drug for the cost of manufacture alone.

No comments: