Can Trump make us pay more?
and development (R&D) alone.
US economist Jeffrey Sachs said Gilead recouped its US$11 billion investment in R&D, marketing and legal costs for the drugs, and had a US$6b profit in the first 15 months of sales. ‘‘Gilead is making a fortune through astronomical pricing of Sofosbuvir that keeps the drug out of reach for the vast majority of those who need it.’’
Under intellectual property law, drug companies that get a patent for a new medicine can have a period of 20 years in which no other company can sell a copycat, or generic, version.
This gives the company a monopoly, or exclusive right, to market and sell the highly prized drug – enabling it to charge high prices.
The justification for the high prices is that the drug company needs time to recoup the large investment made in research and development.
Once a patent period ends, generic versions of the drug can be produced and this often drops the price by 90 to 95 per cent.
About 80 per cent of medicines worldwide are under a patent, according to Christchurch forensic psychologist and Doctors For Healthy Trade spokesman Erik Monasterio. Often drugs companies that want to sell patented drugs in New Zealand also want to sell nonpatented drugs, so Pharmac seeks to negotiate to get the best deal.
However, in some cases, this means medicines remain out of reach for New Zealanders for some time until the drug companies are able to drop the price to an acceptable level. Yes, if New Zealand signed a trade deal with the US which allowed its drug companies to extend the patent period.
Auckland University professor of law Jane Kelsey said if the US re-entered the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) deal it would demand extensions on patent periods.
The US is currently doing this in the North American Free Trade Agreement (NAFTA) with Mexico and Canada, adding an extra 12 years.
When America was part of the TPPA, it wanted an additional patent period of five to eight years.
Trump would struggle to do anything to push up prices of drugs which are already out of their patent period.
His administration has said that it plans to work with several federal agencies to address the ‘‘unfair disparity’’ between American and global prices.
But experts in the US are sceptical that Trump could really pressure foreign governments to pay more.
‘‘It’s hard to know why Germany or France or Australia would agree to something like that,’’ said Professor Jack Hoadley, of Georgetown University. More than 50 per cent of drug companies are based in the US, with others from Germany and Japan, Monasterio estimates .
Generics – and brand-name pharmaceuticals – are manufactured in factories worldwide.