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Zhihong Xu
ENAS 335: Professional Ethics
Date Due: December 4th, 2014
Zhihong Xu
HIV/AIDS: A Case Study of Patient Rights over Patent Rights
ENAS 335: Professional Ethics
Date Due: December 4th, 2014
Abstract
Human immunodeficiency virus (HIV) and acquired immune deficiency
syndrome (AIDS) are diseases of inequality. Specifically, those living in
developed of areas of the world are able to receive the adequate treatment
of anti-retroviral drugs (ARVs) while those in developing areas are unable to
afford the costly regimen of drugs that prevent death. The high costs of the
drug are directly associated with the patent rights that large pharmaceutical
companies obtain, allowing them to generate profit after years of costly
research and development and clinical trials. Understanding that there is a
balance between saving the lives of those who cannot afford HIV/AIDS
treatment and protecting the interests of pharmaceutical companies as well
as the integrity of the patent system, this paper will present evidence from a
utilitarian and corporate social responsibility perspective, demonstrating that
there are instances where patients rights supersede patent rights.
I.
Introduction
HIV/AIDS is a chronic, life-threatening condition that suppresses a
HIV-count helps stop the weakening of the immune system and gives the
immune system a chance to recover any existing damage caused by
HIV/AIDS. Often, a mixture of ARVs is taken in a treatment known as
combination therapy that prevents HIV from acquiring resistance to the
drugs. These drugs have given millions of those affected by HIV/AIDS both
the ability to live a higher quality of life as well as the ability to live longer.
However, the regimen of drugs is extremely expensive and must be taken for
the rest of a patients life. Using the standard guidelines for HIV/AIDS
treatment, the cost of ARVs for a single patient ranges from $2,000 to $5,000
a month. With the lifespan of HIV/AIDS patients increasing, the lifetime cost
of these drugs is estimated to exceed half a million dollars. 3 In other words,
only those who have the financial resources to purchase the drugs are able
to receive the necessary treatment.
Having established the degree of financial burden in terms of
treatment necessary to keep a patient with HIV/AIDS alive, it is now
important to turn attention to the root cause of the extremely high costs
associated
with
not
only
ARVs
but
other
novel
drugs
that
major
must exceed the total costs associated with bringing the drug to market. On
the cost side of the equation, pharmaceutical companies spend on average 7
to 10 years and $500 million in research and development before a drug is
even submitted for clinical trials.4 Running clinical trials to obtain approval
for sale of the drug through organizations such as the Food and Drug
Administration is once again, a costly and lengthy endeavor. Finally, given
the laborious process it has already taken to obtain approval, pharmaceutical
companies desire to maximize the market share of their drugs and
consequently pour millions into marketing and educating doctors about the
new drugs. With four out of five drugs failing at the clinical trial stage,
pharmaceutical companies must leverage the few drugs that do pass the
clinical trials to cover the losses from their unsuccessful applications.
Accounting for the research and development costs of both drugs that are
successful and ones that fail, the cost to bring one successful drug to market
is estimated to be $5 billion. 5 With such high costs associated with the
development of the drug, not only do pharmaceutical companies file for
patent to protect their investments and maintain the exclusive right to
produce the drug for 20 years, but they also charge high prices under
monopolistic market conditions to recover their costs.
While protection under patent law to a certain degree gives large
pharmaceutical companies the incentive to develop potentially successful
drugs, they prevent generic, low cost pharmaceutical companies from
4 "Drugs: Why Drugs Cost So Much." MedicineNet. Web. 01 Dec. 2014.
5 Herper, Matthew. "The Cost Of Creating A New Drug Now $5 Billion, Pushing Big Pharma To Change." Forbes.
Forbes Magazine, 11 Aug. 2013. Web. 30 Nov. 2014.
replicating the drugs that are currently out of the price range of the roughly
27 million people living with HIV/AIDS in sub-Saharan African and South East
Asia. UNAIDS estimates that only 4% of those who require ARVs in subSaharan Africa are able to obtain access to these life-saving medications. As
the world has become increasingly globalized, the protection of intellectual
property rights has become a major issue of concern for public health. In
1994, the World Trade Organization (WTO) established the Agreement on
Trade Related Aspects of Intellectual Property Rights (TRIPS) that has created
a uniform, global guideline for intellectual property standards. Countries that
wish to receive preferential treatment for international trade that the WTO
offers to its member nations must adhere strictly to the provisions of TRIPS.
Furthermore, recent developments in the United States have restricted the
ability for those living with HIV/AIDS around the world to access the lifesaving treatments.
The United States has recently carried out a series of secret
negotiations that have resulted in more stringent guidelines regarding the
protection of intellectual property. While having a solid foundation in
intellectual property is important to the vitality of any economy, the series of
new agreements known collectively as TRIPS-Plus have led to devastating
effects in the realm of public health. The agreements call for data exclusivity,
the extension of a patents life through evergreening methods, and the
equivalent
to
the
patented
product.
Instead,
generic
manufacturers must either wait for the exclusivity period to end upon which
the manufacturers can then gain access to the information about the drugs
safety or they are forced into the unethical position of repeating lengthy
clinical trials on human subjects when the information from the previous trial
of a clinically identical drug already exists.
Pharmaceutical
companies
can
also
use
method
known
as
licensing
under
instances
of
national
emergencies
and
9 "Compulsory Licensing of Pharmaceuticals and TRIPS." WTO. World Trade Organization, n.d. Web. 30 Nov. 2014.
8
lives
outweighs
the
utility
gained
from
generating
profits
for
not
forget
the
intermediary
between
the
patient
and
the
11
access to ARVs outweighs the profit and the benefits that are generated with
the protection of the pharmaceutical industrys patents. Given that the
discussion of utility ultimately boils down to happiness, one must first agree
upon the definition of what happiness is. For the purposes of this case,
happiness is defined as pleasure and the absence of pain.
There are two schools of utilitarian thought: Jeremy Benthams actutilitarianism and John Mills rule-utilitarianism. Act-utilitarianism advocates
for doing whatever maximizes utility at the end of the day. However,
Benthams act-utilitarianism runs into trouble as it does not respect
individual rights, it is unable to make interpersonal comparisons of utility,
and it cannot account for the ordinal nature of utility and happiness. Mills
rule-utilitarianism reconciles some of the objections that people have to
Benthams principles; he still advocates for maximizing utility, but focuses on
rules of conduct that if followed universally, would produce the greatest longterm utility, rather than reducing the decision tree to one singular event as
12
10 "Big Pharma." Manufacturers Drug & Device Companies; Lawsuits & Facts. N.p., n.d. Web. 28 Nov. 2014.
13
development
stages.
Understanding
that
large
pharmaceutical
companies can indeed sell the ARVs at the price of the inputs and not incur
losses from the sale, it seems that the losses from expanding access of ARVs
to the developing world is minimal. The only losses come from the inability to
recoup the costs of bringing a drug to market, but as previously mentioned,
these are sunk costs and thus should be considered bygones.
The attention now moves to determining what patients have to gain,
but evaluating the utility gained from granting access to ARVs is a tedious
and tricky process as it involves both hard, numerical metrics such as
economic productivity as well as intangible measures of happiness such as
satisfaction derived from living a long, fulfilling life. Furthermore, there is a
utility calculation at a personal level and then a calculation of utility across
the entire subset of the population that is affected by HIV/AIDS. Metrics such
as economic productivity of a human being are hard to measure let alone
metrics that assign numbers to the value of life itself. A variety of US
government agencies have attempted the difficult process of valuing a
14
human life. The United States Office of Budget and Management arrives at
$7 to $9 million, the Environmental Protection Agency comes up with $9.1
million, and the Food and Drug Administration allocates $8 million per life. 11
Economists at Stanford University have also run analyses that conclude the
value of each year of life is $129,000, which falls in line with the estimates
from the various United States government agencies.12
Using these figures, this paper will now run some back of the envelope
calculations to try to fix a numerical figure on the current loss from HIV/AIDS
deaths. The current loss equals the potential gain in utility from giving
HIV/AIDS patients access to the life-saving ARVs. The paper first will consider
the utility lost on an annual basis and then work on establishing a figure for
the total loss if all patients with HIV/AIDs were to die. With 1.7 million people
dying this year from HIV/AIDS and a value of roughly $9 million per life,
society as a whole lost roughly $15.3 trillion in utility in just one year.
Because HIV/AIDS is ultimately fatal without treatment, one can assume that
all people who cannot afford ARVs will die unless prices are lowered. With
95% of the 40 million living with HIV/AIDS residing in developing areas of the
world and assuming that none of these individuals can afford treatment,
there are approximately 38 million individuals with HIV/AIDs will ultimately
die from the disease. Using the baseline of $9 million per life again, the
cumulative losses in the long run are roughly $342 trillion. These calculations
prove that there are no circumstances under which the losses of forgoing
11 Partnoy, Frank. "The Cost of a Human Life, Statistically Speaking - The Globalist."The Globalist. N.p., 21 July
2012. Web. 28 Nov. 2014.
12 Kingsbury, Kathleen. "The Value of a Human Life: $129,000." Time. Time Inc., 20 May 2008. Web. 28 Nov. 2014.
15
This paper will now transition to analyzing patent rights vs. patient
rights in the case of HIV/AIDs from a CSR perspective. More specifically, the
paper will show that it is actually in the pharmaceutical companies best
interest to give up the patent protection and the potential profits and
instead, lower the prices of ARVs. First, it is important to understand what
CSR is and how companies can engage in CSR. CSR is the corporate initiative
to assess and take responsibility for a companys effect on the environment
and impact on social welfare. CSR is also known as corporate citizenship and
often means that a company bears short-term costs that do not provide
immediate, financial gains to the company, but rather invests in a long-term
social or environmental strategy. According to Michael Porter and Mark
Kramer in Strategy and Society, leveraging CSR properly can be a source of
opportunity, innovation, and competitive rather than cost.
Two justifications of moral obligation and reputation for CSR resonate in
the context of the HIV/AIDS case study. The moral obligation argues that
companies have an intrinsic duty to be good citizens and to do the right
thing. Companies should achieve commercial success in ways that honor
ethical values and respect people, communities, and the environment.
Forbes Magazine investigates the benefits of CSR in Why CSR? The Benefits
of Corporate Social Responsibility Will Move You to Act. In an interview with
Forbes, Garratt Hasenstab, Director of Sustainability at the Verdigris Group, a
real estate development and consulting firm, points to the value added
dimensions of CSR from the moral perspective:
17
Our CSR policy is at the core of our daily operations and guides our
future progress. We benefit from these efforts in a number of ways.
Our clients want to work with us because we are focused on a healthier
and more productive world. The true value we receive from our
ongoing initiatives is that of social good will we believe that setting a
good example is the greatest benefit in that we inspire other
organizations, companies and individuals to up their game when it
comes to social and environmental responsibility, which in turn
encourages further inspiration in the community leading to a more
enlightened perspective on how to run ones business or lead ones
life. 13
John G. Taft, CEO of RBC Wealth Management-USA, adds to the discussion of
the value of CSR and states, Employees and customers want to work with a
company that they respect. By engaging in CSR and honoring the previously
mentioned universal rights to health and life, pharmaceutical companies can
fulfill their moral obligation of doing the right thing and also can reap the
benefits of employee and customer satisfaction.
Reputation is also another justification for CSR as reputation improves
a companys image, strengthens its brand, enlivens the morale of its
employees, and can even raise the value of the companys stock. Many of
the worlds largest companies such as Coca-Cola, Apple, and Starbucks are
participating in a campaign known as RED where a certain percentage of
13 Thorpe, Devin. "Why CSR? The Benefits Of Corporate Social Responsibility Will Move You To Act." Forbes. Forbes
Magazine, 8 May 2013. Web. 01 Dec. 2014.
18
revenue from products that are red colored, with red being the color
associated with HIV/AIDS, are donated towards the Global Fund that provides
humanitarian assistance for those living with HIV/AIDS. 14 To date, this
campaign has already contributed $275 million to the Global Fund. This
highly visible campaign not only provides a revenue boost to the companies
by encouraging consumers to help a worthy cause, but also allows the
company to remain on high ground in the eyes of the public as leaders in the
crusade to eliminate HIV/AIDS. Furthermore, this high profile nature of the
RED campaign acts as a free marketing opportunity for companies such
Coca-Cola. Given the benefits to these companies reputation by engaging in
CSR, pharmaceutical companies should seize the opportunity to also partake
in this practice. Instead of being viewed by the public as giants that
manipulate prices through patent protection and monopolistic practices,
pharmaceutical companies can positively transform their image into one of
being powerful leaders spearheading the fight against HIV/AIDS by allowing
for patient rights to come before patent rights.
V. Conclusion
This paper has used HIV/AIDs as a platform to evaluate whether patent
rights or patient rights carry more weight. This paper has established the
scale of the HIV/AIDS epidemic, the treatment necessary to combat the
disease, and the mechanisms such as patent protection that prevent millions
in the developing world from obtaining access to ARVs at affordable prices.
14 "WHAT WILL IT TAKE?" (RED). N.p., n.d. Web. 01 Dec. 2014.
19
The paper also constructed the motivations of the relevant parties in the
debate. Based on Mills utilitarian approach, the paper has shown that the
potential utility gains from granting access to ARVs far outweigh the
potential loss in profits for the pharmaceutical companies. Furthermore, this
paper has reinforced its stance that patient rights exceed patent rights in
instances of humanitarian crises by presenting evidence that engaging in
corporate
social
responsibility
is
in
the
best
interest
of
the
large
"Declaration on the TRIPS Agreement and Public Health." WTO. World Trade Organization, 20 Nov. 2001. Web.
01 Dec. 2014.
20
References
Aguirre, Jessica C. "Cost Of Treatment Still A Challenge For HIV Patients In
U.S." NPR. NPR, 27 July 2012. Web. 28 Nov. 2014.
21
"Big Pharma." Manufacturers Drug & Device Companies; Lawsuits & Facts.
N.p., n.d. Web. 28 Nov. 2014.
Collier, R. "Drug Patents: The Evergreening Problem." Canadian Medical
Association Journal 185.9 (2013): E385-386. Web. 1 Dec. 2014.
"Compulsory Licensing of Pharmaceuticals and TRIPS." WTO. World Trade
Organization, n.d. Web. 30 Nov. 2014.
"Declaration on the TRIPS Agreement and Public Health." WTO. World Trade
Organization, 20 Nov. 2001. Web. 01 Dec. 2014.
"Drugs: Why Drugs Cost So Much." MedicineNet. N.p., n.d. Web. 01 Dec.
2014.
Herper, Matthew. "The Cost Of Creating A New Drug Now $5 Billion, Pushing
Big Pharma To Change." Forbes. Forbes Magazine, 11 Aug. 2013.
Web. 30 Nov. 2014.
Kingsbury, Kathleen. "The Value of a Human Life: $129,000." Time. Time Inc.,
20 May 2008. Web. 28 Nov. 2014.
Partnoy, Frank. "The Cost of a Human Life, Statistically Speaking - The
Globalist." The Globalist. N.p., 21 July 2012. Web. 28 Nov. 2014.
Thorpe, Devin. "Why CSR? The Benefits Of Corporate Social Responsibility
Will Move You To Act." Forbes. Forbes Magazine, 8 May 2013. Web.
01 Dec. 2014.
"TRIPS, TRIPS Plus and Doha." MSF Access Campaign. N.p., n.d. Web. 30 Nov.
2014.
"WHAT WILL IT TAKE?" (RED). N.p., n.d. Web. 01 Dec. 2014.
22
"Worldwide HIV & AIDS Statistics." HIV and AIDS Information and Resources.
N.p., n.d. Web. 27 Nov. 2014.
23