Tuesday, June 16, 2009

Genzyme's Business Model-You've Got to Read This!

An excellent, thought provoking article by Stephen Heuser, "One girl's hope, a nation's dilemma," appeared in the Boston Globe on June 14. Mr. Heuser details the appalling, rapacious approach Genzyme takes to marketing orphan drugs. A guest response, detailing some of the lesser known implications of Genzyme's predatory practices, follows:

"The Boston Globe article about Genzyme’s business tactics is quite alarming.
Nearly every country in Latin America has incorporat ed a legal guarantee to the "right to the highest attainable standard of health" (a.k.a. right to health) in their constitutions. This judicial language has been enforced in a number of countries.

The right to essential medicines is defined by WHO as “those that satisfy the priority health care needs of the population," with the caveat that they “are intended to be available within the context of functioning health systems at all times in adequate amounts, in the appropriate dosage forms, with assured quality, and at a price the individual and the community can afford."

Recent court cases, particularly in Brazil (initially surrounding access to ARVs) have increasing granted the right to access to essential medicines in Latin America, insisting that the government provide the drugs, no matter the cost. In the past this has led to successful cost-lowering mechanisms which both made the drugs available and didn't run the health budget completely dry. For instance, Brazil put significant pressure on international pharmaceutical companies to lower the prices on anti-retrovirals by developing the pharmaceutical capacity to produce their own generic forms as well as fighting heavily in the World Trade Organization. They also focused attention on prevention efforts, as a way to curb the number of people who would eventually need the drugs.

However, the same leverage does not necessarily apply to a small country like Costa Rica. The pharmaceutical capacity is probably not there, and it is too small a population for market interest in many circumstances.

But this particualar case raises a interesting and less discussed issue--- are drugs for rare diseases considered essential medicines, and does the government have the responsibility to provide them to any affected citizens, no matter the cost? In some ways the problem is ultimately about the ability of the pharmaceutical country to charge any amount, unrelated to a reasonable assessment of the costs of production and a marginal profit.

The U.S. has dealt with the issue of rare diseases by creating special incentives for companies to develop drugs for these diseases, on the assumption that there will be no market for profits. This has been moderately successful.

But Genzyme, is breaking the rules (at least in a moral sense). They are using very dirty tactics and enormous resources to engage governments in a questionable manner. While the right to health is open to interpretation, I find it hard to justify such enormous expenditures for so few individuals. That being said, it is not inconceivable for the drug to be viewed as essential.

The problem really lies in the fact that the company is charging such an enormous price, with a huge profit margin, and very little threat of competition in the form of generics, and they stay below the public health activists radar to a great degree.

While pharmaceutical companies have the right to make a profit, just like any other corporation, they should not be allowed to intentionally drain the already strapped resources of the Ministries of Health of developing countries."

Heather Stone
Founder, President of G.A.A.P.E.:
Global Action Against Poverty Everywhere!
Smith College