The Juggernaut: On Drugs

Profits or the people? That's the ongoing conflict in the pharmaceutical` industry, as Chris Owen explores.

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While John Howard and his government praise the mechanics of free market economies as the inspiration behind the development of life saving drugs, the Australian Pharmaceutical Manufacturers Association (APMA) continue to push the line that the industry is only interested in helping people overcome illness...not profit. As the two entities contradict each other and themselves in the ongoing drug subsidies debate, the $7 billion Australian pharmaceutical juggernaut rolls on with no sign of humanitarianism, nor any respect for the free market in which it thrives.

In August 2001, Howard made it clear that he believed competition for market share and drug company profits were the key drivers for drug development, and in doing so dismissed any notion that social or humanitarian obligations could be motivators. "The industry plays a vital role in securing the future welfare of all Australians . . .the great pharmaceutical discoveries have come from free-market economies and none were from behind the iron curtain." Little wonder Howard is willing to scale back what many analysts argue as one of the greatest social health programs in the western world, the Labor initiated Pharmaceutical Benefits Scheme (PBS).

Pharmaceutical industry heavyweight Alan Evans of APMA contradicted Howard's profit driven view and himself at the same time. As CEO of the key lobby organisation representing the pharmaceutical industry in Australia, Mr Evans recently said, "Other industries are focused on taking money off people or doing something else...This is an industry which is about making you and I and our children and our relatives better, getting rid of diseases which they have, and making sure that they have a longer life and a better life." At the same time Mr Evans is representing the pharmaceutical industry against the government's planned scaling back of the PBS list of drugs--a drug on the list is sure to be profitable as it is subsidised by the government making the drug cheaper for patients and therefore more popular, and the drug company still makes its full retail profit from both the subsidy and point of sale.

Far from reducing prices of their own accord, the multinational drug companies would prefer have lobbyists such as APMA fight tooth and nail for inclusion on the PBS list in a market that only provides about 1% of worldwide sales. Swedish juggernaut AstraZeneca is the largest player in the Australian market with a turnover of about AUS$380 million and 9.8% market share, small-time in comparison to its US$16.5 billion worldwide sales last year resulting in a US$4.2 billion profit. It is hard to accept that AstraZeneca is only concerned with saving lives when only about 15% of revenue was spent on research and development of new drugs, and done so purely to maintain future market share ahead of its competitors.

It is equally hard to accept that Australian listed pharmaceutical company Sigma is interested in anything else other than profit. With only 1.64% market share, it reassures investors at every opportunity of a bright future failing to mention any benefits it products may have for patients...no reports, no testimonials just bottom line rhetoric. Sigma reported an AUS$21.9 million profit last financial year and spent only AUS$1.3 million on research and development. Here we have a company in Howard's free economy spending less than 8% of the resources available to it on developing new drugs for the 'future welfare of all Australians'.

The Howard government, concerned for the welfare of all Australians, continues to tighten social spending and intends to slap a 28% increase on pharmaceutical costs for older people in the 2002-03 Federal Budget by scaling back PBS. The deluded APMA on the other hand, continues to fight for the profit of an industry it believes doesn't care about money. Meanwhile, the $700 billion dollar worldwide pharmaceutical juggernaut could care less about the outcome here, as it remains focused on its ongoing battle to profit from AIDS in Africa and Asia.

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Contact:   Peter Lewis

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