Lives or profits?

The drug industry needs to make up its mind

By: Aks e Zainab

Life-saving drugs are categorized as priceless products, products with exceptional value beyond the standard of market or market value that suits the business. There are many ethical concerns to being in the business of life-saving drugs, like their prices, availability, and profit margins. As far as the prices are concerned, many argue that there is a price for these priceless products. If the companies start charging according to demand and supply, it will create an inappropriate monopoly.

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Companies claim that they invest hefty amounts in R&D, production, legal requirements and safety measures. So they are bearing high production and operation costs while making such drugs. However, consumers are demanding low prices, but everyone may need them to cope with any life-threatening disease. So there is a clash between business and consumer. The consequence is shortage and unavailability of these drugs in the market as pharma companies are not motivated to produce these drugs on very low-profit margins. Businesses and the authorities need to solve this sensitive issue by creating a mutual benefit system for both.

An article argues that the pharmaceutical industry comprises many greedy people trying to make a buck off you and your ailing family member’s illnesses. They neglect the standard method of setting the prices, by demand and supply. Moreover, they charge arbitrary high fees. This industry is doing business based on the voluntary exchange of mutual benefit. However, the companies claim that they are charging high prices because they have assumed that the industry has somehow become able to work outside the constraints of demand and supply. On the supply side, the production cost is very high, and investors are demanding high returns from risky investments. Meanwhile, on the demand side, people are willing to pay to save lives.

Production of these drugs is extremely risky and expensive. The pharmaceutical industry has spent $30 billion on research. Not only this, but companies are also paying a healthy amount to FDA, which companies must have to pay to evaluate their product. So if we consider the lump sum amount on R&D that these companies pay is about $80 million. Like any ordinary business, companies in the pharmaceutical industry also want to profit from their investment as they have to spend millions on employees and meet the R&D and other operation costs.

Other enterprises reinvest four percent of revenue. This industry reinvests percent.This industry is extremely risky. As drug production is a long-term process, produced by trial and error, a high probability exists of the product’s failure.

When you are involved in producing products that are directly concerned with human life, it becomes as difficult to evaluate that product with respect to human life. There are several opinions on the pricing and availability of these drugs. Companies try to balance between their own and consumer’s benefit.

It is an ongoing debate what prices should be. Whether the comnies should charge hefty fees to keep themselves motivated or accept low profits to make the drugs affordable. Several biotech companies produce cancer drugs according to high market demand and avoid a shortage, but the number of approved drugs is in a single digit, so companies fail to earn from the drugs.

Some factors could mitigate prices. The first is to increase the competition. When the competition increases, the small compound is traditionally priced below the costs of cancer drugs. The second factor is improvement in patient selection for therapy.  Cancer drugs are set in a way that some patients would benefit. For example, the Cetuximab drug is one of the most expensive antibodies, helps only 10 to 15 percent of cancer patients, but there is no current test to find out the individual’s responsive subset. The government plays an important role pricing, as it is a significant purchaser. The government could also subsidize the industry that would help them to reduce the cost and ultimately the prices.

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It is challenging for a company to set the price of drugs, where highly challenging scientific innovation is required, and it also focuses on corporate social responsibility. Since scientific progress is driving high cost, ultimately, this progress is saving lives, but they have to be limited. However, the limits are still not defined appropriately.

After the price issue, there is availability of life-saving drugs to all in need. The concern is drugs must be available to every person suffering from deadly diseases. Whether the patient belongs to a developed or developing nation, everyone must have a supply. In the Pakistani context, many researchers have written articles on the shortage of drugs. In 2018, when the currency of Pakistan started devaluing, life-saving drugs began vanishing from the market. All the pharmaceutical companies, either national or multinational, stopped production because of increased costs.

Several national and international companies are manufacturing drugs in Pakistan, but the raw materials and other important inputs are being imported from other countries like India, China, and European states. So with the currency devaluation, the production cost increases. As they cannot raise their prices, so they stop the production of these drugs and they vanish from the market.

Even in 2020, reports suggest that Pakistan lacks life-saving drugs due to these pricing issues. According to the pharma industry, the medicines produced locally have one standardized price, which is not suitable for companies. That is why they stop manufacturing. Only five companies produce the nitrofurantoin drug. However, now they are not making it because Drug Regulatory Authority Pakistan (DRAP) has approved the retail price of Rs.144, which is not feasible for local manufacture.

Despite the lack of these life-saving drugs, many patients are surviving. Availability of these products is very critical as it is a matter of someone’s life. It is not a good thing that any patient gets the reply that there is a shortage of medicine. Whether government or non-governmental, authorities should take action on the lack of these priceless drugs and make them available to every needy customer.

As far as ethics are concerned, there is the point that many Pharma Industry companies are not only manufacturing the drugs because of the demand-supply gaps, or they are not meeting their expenses on that particular standardized prices but also they have halted the production for some other reasons. Whenever companies want to increase the retail prices and their profit margins, they artificially make the shortage of these drugs so that demand increase so they could charge any price. Customers would buy their product. After all, it is the concern of their lives.

Sometimes we have to decide what is more important. The vast profits the company enjoys, or its ethical and social responsibility towards other stakeholders. The decision is so tough and varies from mind to mind. Human life is considered priceless, and you cannot value it monetarily.

When you are involved in producing products that are directly concerned with human life, it becomes as difficult to evaluate that product with respect to human life. There are several opinions on the pricing and availability of these drugs. Companies try to balance between their own and consumer’s benefit.

The solution is for the authorities to regulate this industry from raw material to the end-user. A proper and standardized channel must ensure the fair allocation and availability of the products everywhere.

The writer is a freelance columnist


  1. Well done!

    I always believed you could do this. And here ww are finally. Here is to many more of those.

    One very fine moment, this. Kudos!

  2. Well-written exceptional article. You deserve thanks for your commitment to bringing the public such vital information.

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