|
Drug companies brace for patent laws, pricing issue
still simmers
Egypt will adopt its first pharmaceutical patent laws in January
– a boon to foreign pharmaceutical firms but a worry for local
manufacturers, who will face greater restrictions as they try to
make cheaper, generic versions of the drugs currently produced by
multinationals.
While Egypt was granted a 10-year respite for the adoption of
World Trade Organization (WTO) patent laws for pharmaceuticals,
this grace period will expire as of the beginning of next year.
The new regulations, it is hoped, will draw more foreign companies
to the country while encouraging the ones that are already here
to stay.
Nothing is held dearer to pharmaceutical manufacturers than their
research data and drug patents, with the cost of developing and
marketing most drugs exceeding a billion dollars for most companies.
Such patent laws, meanwhile, represent the only guarantee that there
will be any return on investment. High retail costs, though, mean
that such drugs, for the consumer, don’t come cheap.
That’s where local manufacturers – who make cheaper
versions of the drugs developed by research-based firms after the
patents on those drugs expire – come in.
Egypt’s dearth of patent laws has made it relatively easy
for local manufacturers to churn out cheap knock-offs of popular
pharmaceuticals. In 2001, a prime ministerial decree extended data
exclusivity to research findings, making it harder – but not
impossible – to produce generic drug equivalents.
Products made by big multinationals make up about 70 percent of
the domestic drug market, including local license holders with manufacturing
rights from foreign research-based companies.
Local firms producing generic products pick up the remainder.
Guaranteeing the protection of such research and patents, therefore,
is the kind of legal safety net that draws pharmaceutical heavyweights
from abroad, such as England-based AstraZeneca, which launched its
full-scale Egypt operations in January. “Egypt is one of the
biggest single markets in the region for the pharmaceutical industry,
despite the devaluation of the pound,” said AstraZeneca - Egypt
president Ahmed Zaghloul, noting that the environment for intellectual
property was getting better. The new WTO regulations, he added,
“will be in place by next year, and the government is keeping
to the obligations it has. I think this is the best time to invest
in Egypt.”
Nevertheless, some foreign firms have expressed concern that the
soon-to-be-implemented patent laws may spur a rush in the coming
months by local firms to get certain drugs approved that might be
excluded under the new rules. “We are hearing some very disturbing
news that local companies are submitting [drug applications] to
the government in anticipation of the law,” said Ahmed El Hakim,
director of external affairs at Pfizer Egypt. He added that the
approval of such applications would “be against the spirit”
of the imminent patent laws. He also pointed out that the laws would
only apply to new products entering the market – not to the
roughly 6,000 products already on the shelves of Egypt’s pharmacies.
The introduction of the new regulations may help overcome the
misgivings of foreign drug firms, still frustrated by their inability
to increase retail prices after a January 2003 currency devaluation
almost halved the value of the Egyptian pound.
While the government’s insistence that drug companies maintain
their original retail prices protected many low-end consumers, it
proved a major thorn in the side of pharmaceutical manufacturers.
At the behest of the pharmaceutical lobby, therefore, the government
has allowed price increases for a smattering of essential medicines
– but companies are still angling for a further lifting of
price controls, complaining that they are losing millions of pounds
a year due to the restrictions.
In the meantime, then, drug companies are caught in the politically
sensitive balancing act of protecting their bottom lines while trying
to avoid the perception that they are pricing life-saving medicines
out of the reach of the lower classes. The situation has remained
largely the same – with the exception of some minor price adjustments
– since the currency devaluation, despite ongoing entreaties
by drug firms.
The US-Egypt Business Council, the board of which includes representatives
of the pharmaceutical industry, recently issued a report suggesting
that companies supply medicines at discounted prices for the poor
directly to the government, which could then distribute them. “Without
such compromises, pharmaceutical firms will not be able to maintain
operations in the current business environment,” the report
stated. “These firms offer significant benefits to Egypt’s
economy and pharmaceutical industry through innovative product development,
capital investment, employment, medical research and clinical trials.”
Despite the ongoing debate over pricing, though, drug companies
can’t help but be cheered by the promise – in the form
of next year’s promised patent laws – of a more sophisticated
regime for IPR.
Jill Carroll
Submit
your comment
Top
|
