Dr. Arroyo and the ‘Law of INTENDED Consequences’

Here is the refresher (DEAR DR. ARROYO, JUST WHAT MEDICINE ARE YOU PRESCRIBING?)….

And now the consequences…

An article Pfizer takes aim in patent row, posted today in our Financial Times.

I quote my previous view from the above mentioned blog post:

If I recall, if we fix the price “p” at below what is considered market equilibrium, suppliers will supply less and consumers will demand more (wish I could draw the line on the graph!). Is it possible that some of the international pharma companies will realize a growing opportunity cost to selling/providing the drug in the Philippines vis a vis “good” paying countries elsewhere? I suppose you could also prohibit the export of any pharmaceuticals in these classes as well for locally produced drugs. But then maybe the pharma companies will decrease production. No matter how you cut it, over the long term I reckon it means less drugs for the poor.
Unless… you had short term considerations in mind. In that case it would appear that policy was implemented for short term political gain.

And quoted from today’s article:

Pfizer was particularly hard hit by the imposition of mandatory price cuts. Most of the 27 drug preparations covered by the price caps were being sold by Pfizer, including Norvasc, the country’s best-selling drug by value, and Lipitor.

The government order could cut its revenues in the Philippines by 40 per cent this year and trigger staff lay-offs, Pfizer said.

The introduction of a generics alternative to Lipitor three years ahead of the expected expiry of the Lipitor patent represents a fresh blow to Pfizer. It could erode its almost 30 per cent share of the market segment for anti-cholesterol treatments.

So there we have it. International pharma companies will lose revenue and cut production and staff. Usually this means less drugs for the poor but in this case it is obvious that political expediency will facilitate a local Philippino firm, UniLab in its efforts to violate international law and introduce a cheaper generic alternative 3 years prior to patent expiration (Lipitor). Of course, Pfizer can and is pursuing legal remedy, but my bet is a settlement and the ultimate loss of market share for Pfizer.

Some more…

A Manila court, which held a second hearing on the case this month, is considering Pfizer’s petition to stop UniLab from importing and selling a generic version of Lipitor, the cholesterol-lowering drug that is the US company’s best-selling product.

Pfizer has alleged that UniLab violated a patent issued in 1995 for Atorvastatin calcium, the active ingredient in Lipitor, by distributing a generics equivalent before the patent expires in 2012.

UniLab says that the initial patent for Atorvastatin, issued in 1990, has already expired. It argues that the subsequent patent in 1995 was invalid because it was merely for a new form of the substance and therefore not entitled to a patent.

In July, it filed a petition asking the Philippine intellectual property office to cancel the 1995 patent for Atorvastatin calcium.

UniLab and Pfizer have met in patent disputes before but this is the first time a dispute has led to suits before the country’s patents office and a judicial court. Previous disputes were settled amicably, and Pfizer even licenses the production of one of its products to UniLab.

It appears that the business model for Pharma companies in developing nations is violate the law, copy the drug, steal the market share, and if necessary, settle in court since the future profits from capturing the generics market share sooner rather than later far outweighs legal ramifications. And President Gloria consolidates another political victory for the local under-dog.

Innovation be damned. The Law be damned.

Tej Deol, M.D.