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Poverty and health 3 September 2002 Across the world, there is a high correlation between health and wealth, and between poverty, illness and early death. Poverty deprives populations of clean water and sanitation, a good diet, education and comprehensive vaccination programmes. Poverty weakens health infrastructures, limits the numbers of medical personnel, reduces access to many drugs and encourages corruption - the private selling of state-provided services or drugs. Poverty is not the only factor underlying poor health - such factors as recreational drug use and violence also play a part - but poverty both undermines the foundations of good health and reduces options for the ill. In 1990 $1,702 billion was spent worldwide on health; 87 percent of that sum was spent by the 15 percent of the global population that lives in developed countries. Whether health care is best provided as a social good by the state or as a commodity in a free market, continues to be the subject of worldwide debate. Opponents of government-provided care argue that it is slow and bureaucratic, while opponents of the market system claim that it fails to provide care for the poor who most need it. Yet health is a crucial public good and fundamental socio-economic resource, and access to health care is a human right. Governments therefore have both an interest and obligation in ensuring that their citizens have equitable access to good health facilities. The reality is that no country relies solely on either government or the market to provide health care, and even in countries where the prevailing philosophy is private health insurance, national or local government provides health facilities at little or no cost for the uninsured. Everyone who uses health care pays for it, either directly, through payments to the medical profession or health insurers, or indirectly through taxes and national insurance / social security payments. Overall, the financial burden of health care is lower for individuals when the government takes primary responsibility. Yet that burden falls heaviest on those least able to bear it - in countries where people are poorest, they are most likely to pay for health care out of their own pockets. In Germany in 1998, for example, health care absorbed 10.5 percent of the country's gross domestic product (GDP = national wealth); 7.9 percent came from public funds and only 2.6 percent from private sources. In the same year in Ghana health care absorbed 4.7 percent of GDP, of which 1.8 percent came from public funds and 2.9 percent from individuals. In other words, not only did Ghana spend much less of its national wealth on health than Germany, but private citizens spent 60 per cent more than the state. Drugs are a critical factor in the cost of health care. In poorer countries they form a higher proportion of the total health care bill: 74 percent of all health expenditure in sub-Saharan Africa, compared with 25 percent in Latin America and the Caribbean and only 7.4 percent in developed countries. Here too, individuals in poorer countries bear a larger proportion of the cost. In rich countries, under 40 percent of medicines are purchased privately, whereas the figure is 66.8 percent for sub-Saharan Africa and as high as 81.4 in Asia and the Pacific. Intellectual Property Rights and Patents Globalisation of trade in the last twenty years has been accompanied by development of an international standard for intellectual property rights, codified in the agreement on Trade-Related Intellectual Property Rights (TRIPs), discussed in the next chapter. Intellectual property refers to creations of the mind such as inventions and artistic works. A patent is the intellectual property right (IPR) for that invention - the monopoly right to control and benefit from the invention for a limited period, usually twenty years. A patent is applied for and functions in one specific country. Most countries have laws to protect intellectual property and a national patent office to assess and approve patent applications. Some countries have grouped together to form regional patent offices, such as the European Patent Office and the African Regional Industrial Property Organisation. For most of history, patents were not universally applied. Some countries had no patent laws and others restricted patents to specific areas of technology. Patents have always been a source of dispute between more and less developed nations. Wealthier countries have tended to insist on patents to protect their wealth, while poorer countries have tended to ignore them. In the nineteenth century, the United States copied British inventions to build up its industrial base. Now that it has joined the ranks of the rich, the US is now one of the strongest defenders of intellectual property rights. Pharmaceutical patents did not spread rapidly until the 1960s and 1970s. Countries such as India and Brazil implemented laws in the early 1970s which loosened patents on pharmaceuticals and stimulated national economic development and domestic entrepreneurs. Switzerland did not recognise drug patents until 1978 ? unlike India and Brazil, but like the United States, Switzerland, which now has a strong pharmaceutical industry, now argues strongly for strict interpretation of IPR. Conflict of Interest Intellectual property rights mediate the conflict between a creator's right to benefit from his / her creation and the public's right to use that creation. The limited duration of patents - twenty years, although this may be extended by "evergreening" - is intended to strike a social bargain between ensuring diffusion of useful knowledge and protecting the incentives for inventors. [Evergreening is the registering of additional patents on an already patented drug, triggering an automatic extension of two years or more during which generic versions of the drug cannot be approved.] A strong intellectual property regime gives considerable power to the creator, while a weak IP regime allows others to use the invention with little / no recompense to the inventor. The argument in favour of strong intellectual property rights (IPR) is that patents provide financial incentives for research and development. Substantial investment of time and money may be required to produce technological innovations, but once an invention is disclosed to the public, if there is no patent protection, it is difficult for the inventor to control its use and benefit from his / her investment. The argument in favour of weak IPR, particularly in relation to pharmaceuticals, is that the monopoly allows the patent-holder to charge high prices, thereby depriving the poor from an essential technology. The community (here defined as the global community) suffers at the expense of the "individual" (almost always a commercial enterprise). The Pharmaceutical Industry Generally speaking, drugs are made by two kinds of companies: "pharmaceuticals", which primarily undertake research and development and hold patents in their new discoveries, and "generics", which primarily manufacture products based on formulae in the public domain or on formulae patented by other companies. Most pharmaceuticals are based in Western countries while generics are based both in the West and in a few countries in the developing world, particularly in Brazil, India and Thailand. The primary goal of both pharmaceutical and generic companies is to make a profit. For pharmaceuticals, profit mostly comes from the sales of patented drugs which only they have the right to manufacture and sell. For generics, profit comes from selling unpatented drugs at prices lower than that of their competitors; in countries where patent protection has been weak, generics have also made money from manufacture of versions of drugs patented elsewhere. The pharmaceutical sector is dominated by a few large northern-based multinational companies, which continue to merge in a process of conglomeration begun in the 1980s. In 1999 the top 25 companies accounted for 48 percent of global pharmaceutical sales, with a single company sometimes controlling 90 percent of some regional markets for specific types of drugs. Meanwhile developing countries' share of global production fell from 22.6% in 1975 to 18.4% in 1990. Pharmaceutical companies are among the world's most profitable commercial enterprises. In 24 of the years between 1960 and 1991, pharmaceuticals were the first or second most profitable industry in the US. In 2000 the magazine Fortune estimated that pharmaceutical companies were the most profitable of all companies, yielding a return of 49 per cent to shareholders. In 1999, the CEO of a UK-based drug company received a pay package that amounted to more than the public spending on health in some least developed countries. Back to Opinion |
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