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Patents and Prices By K Bala and Kiran Sagoo
In mid-1999, Consumers International and Health Action International (CI/HAI) conducted a survey on the retail
prices of 16 drugs in 36 countries. The objectives of the survey were to:
1. Study the impact of pharmaceutical patents on the availability and price of essential drugs.
2. Suggest solutions to ensure regular access to essential drugs in developing countries in a globalised economy
with tighter intellectual property system.
Selection of drugs
All the 16 drugs are widely prescribed in both developing and developed countries. They were
identified from the first 73 of the 500 top selling drugs [13 within the first 45] worldwide in 1997 for the
i. Ciprofloxacin, nifedipine, ceftriaxone sodium, acyclovir, captopril, metformin, atenolol and
zidovudine, are on the WHO list of essential drugs. The other drugs are not in the WHO list.
ii. Ranitidine, diclofenac sodium and diltiazem, are listed in the national essential drugs list of several
iii. Simvastatin and omeprazole are the world’s top two selling drugs.
iv. Fluconazole, lamivudine and indinavir sulphate are commonly used in the management of people
living with HIV/AIDS. There is a global campaign to make drugs commonly used for HIV/AIDS more
The drugs were grouped into three categories according to their patent status:
Group one: Drugs still under patents in some countries - ceftriaxone sodium, indinavir sulphate,
Group two: Drugs whose patents will be expiring soon or patents have recently expired in some
countries - ciprofloxacin, fluconazole and omeprazole. In this survey, few competitors’ products of these three
drugs had entered the markets in the 20 countries where the patents had recently expired.
Group three: Multisource drugs, with several competitors’ products available in all the countries -
ranitidine, diclofenac sodium, nifedipine, acyclovir, diltiazem, captopril, metformin and atenolol.
HAI partners and CI members were requested to select a leading retail pharmacy in the capital cities of the
respective countries, and discuss with the pharmacy the following:
• Ask for the availability and retail prices of the proprietary or brand name product of each drug
• Find out the total number of products which include the originators’ brand, branded generics and generics of
each of the 16 drugs available in the pharmacy.
• Record the retail prices of the originators’ brand and the package size
• In cases where there are several products of drug available, record the prices of the next two best selling
products in addition to the proprietary brand or top-selling brand.
• Record the prices of each package size in the national currency and convert it to US dollars
Data & Analysis
Tables 1a, 1b and 1c give the retail prices in US dollars of 100 units of 29 dosage form of 16 drugs in 36
countries in July/August 1999. The countries included ten advanced industrial countries, 25 developing
countries from Africa, Asia and Latin America and one from CIS (commonwealth of independent
Analysis of the data reveals the following:
Multinational drug firms market their proprietary brands at widely different prices in different
developing countries. Table 2 gives a comparison of retail prices of nine originators’ proprietary brands
of eight drugs sold in developing countries. There are wide variations in retail prices between countries
India has recorded the lowest prices for six out of the nine dosage forms.
Table 2 – Comparison of the lowest and highest retail prices in USD of 100 units of nine
originators’ proprietary brands of eight drugs in developing countries
Generic name of
Retail price of 100 units in USD
The retail prices of generic equivalents do not show the very wide variations seen in proprietary drugs,
as shown in table 3. This table shows the range and ratios of the retail prices of three originators’
proprietary drugs and their generic equivalents in developing countries. The range for three drugs vary
from 1:7 to 1:18 for generic drugs and 1:16 to 1:59 for proprietary drugs.
Table 3: The range and ratio of the retail prices of the orginators’ proprietary brands and the
generic equivalents of three selected drugs in developing countries
Generic name &
Range & ratios of the generic and originators’ proprietary brands
Range of prices Ratio of lowest to Range of prices Ratio of lowest to
The very wide variations in retail prices among developing countries are not seen in the ten OECD
countries as indicated in table 4. This table compares the range of ratios between the lowest and highest
prices of selected drugs under different patent status in developed and developing countries.
Table 4: Range of ratios between the lowest and highest prices of selected drugs under different patent
status in developed and developing countries
Range of ratios between lowest and highest retail prices of 100 units of selected
No of dosage forms Range of ratios No of dosage forms Range of ratios
The ratios for monopoly drugs range from 1:1.7–1:2.2 in OECD countries and from 1:1.2–1:4 in
developing countries. However, multi-source drugs show a much wider differences in the range of retail
prices both within and between OECD and developing countries. These findings indicate the
1. In OECD countries, the patented drugs enjoy a monopoly and there is very little price difference
2. Developing countries do not provide patent protection to these drugs. However being newly
introduced drugs, competing national firms have not had adequate time to manufacture market and
3. The retail prices of multi-source drugs show that price competition has enabled competing firms to
put into the market their drugs at lower prices. The competition is greater in some developing
countries. Table 1c and 4 also show that some developing countries, particularly in Africa, have not put
into their markets cheaper generic equivalents available in the world market.
The ratio of the lowest to the highest price of a multi-source drug, Zantac in developing countries is
1:58. It is US$2 per 100 units in India and Nepal while it is $116 in South Africa. (Table 5).
Table 5 – Retail prices of 100 units of Zantac (ranitidine) 150 mg in 9 developing countries
Price in USD
Source: Tables 1a, 1b & 1c.
One would expect developing countries to make available low-priced generics of multi-source drugs.
But in some countries in Africa although there is no patent protection, there are monopoly markets for
multi-source drugs. Table 6 gives the number of countries, among the 12 surveyed in Africa, where
only the originators’ proprietary brands of 11 drugs are marketed exclusively. These are all multi-source
drugs and competitors’ products are available in the world market.
Table 6 – Number of countries, among the 12 surveyed in Africa, where only the originators’
proprietary brands of 11 multi-source drugs are exclusively marketed
Generic name of drug
Number of countries in Africawhere only the originators
proprietary brand is marketed
* Eritrea is not included. Only four of the 29 dosage forms of drugs surveyed were available in Eritrea.
Of the sample of drugs surveyed, the average retail prices of some of the proprietary drugs are higher in
the developing countries of Africa and Latin America compared to much more affluent OECD
countries. Table 7 gives the comparison of the range of prices of 14 dosage forms of proprietary brands
of 12 drugs in OECD, African, Asian and Latin American countries.
Table 7 - Comparison of the ranges in retail prices of 100 units of 14 proprietary dosage forms in
OECD countries and developing countries in Africa, Asia and Latin America
Generic name of drug Range of retail prices in USD
countries in Asia
Table 8 gives the average retail prices of the 14 proprietary dosage forms in the four geographical areas.
Table 8 – Comparison of the average retail prices of 100 units of 14 proprietary dosage forms in OECD countries and
developing countries in Africa, Asia and Latin America
Generic name of drug Average retail prices in USD
countries in Asia
The average retail prices of eight of the dosage forms are higher in African countries than in the much
more affluent countries. The average retail prices of eleven out of 13 dosage forms are higher in Latin
America than in the OECD. It should be noted that in Latin America out of the 14 dosage forms, only:
• Five dosage forms were available in four countries;
• Three dosage forms were available in two countries;
• Two dosage forms were available in three countries;
• One dosage form was available in three countries;
• One dosage form not available in any of the five.
This may explain the small variations in the ratio between the lowest and the highest prices of these
dosage forms in the Latin American countries (Table 7). The ratios of the lowest to highest retail prices
The small variations in the ratios between the lowest and highest prices of these dosage forms in OECD
countries may be due to reasons including the following:
• Co-marketing arrangements among manufacturers;
Monopoly markets thrive in the absence of competition. Left to themselves without competition, the
multinational drug companies will keep up the high prices wherever they can and up to as long as they
can as shown in tables 2, 3, 5 and 7. Price competition is the best way to bring down monopoly prices.
This is best illustrated in table 9, which compares the retail prices of originators proprietary brands in
India and Indian competitors’ products.
Table 9 - Comparison of retail prices of 100 units of originators’ brands and competitors’ products of eight dosage
forms of seven drugs in India
Generic name of drug
Price of 100 units in
Price competition has forced the multinationals to bring down their prices to compete with the Indian
manufacturers. When faced with competition, multinationals will not leave the market. They will lower
their prices and stay on to compete with the nationals. Another example comes from Bolivia where 100
units of 100mg of Retrovir (zidovudine) was priced at US$626 in 1997. Prices dropped to US$258 in
1998 when the competitor’s product of zidovudine was made available and sold at US$427. The best
way to compete is to produce the drug at very low costs. It takes few years for national manufacturers to
copy products by reverse engineering and enter the market as shown in table 10. This table gives an
indication of the time lag between the introduction of a new drug in the world market and its
introduction in India by national firms. It has taken about two to four years for an Indian firm to
produce a new drug by reverse engineering.
Table 10 – Time lag between introduction of a new drug in the world market and its introduction in
By originators in the world
By national firms in the Indian
Source: B.K. Keayla. Conquest by patents. TRIPs Agreement on Patent Laws: Impact on
Pharmaceuticals & Health for All., Centre for Study of Global Trade System and Development, New
It may take several years, after a drug is introduced in the market to capture a sizeable share, and reduce
production costs to levels much lower than the originators. Table 11 illustrates this. It gives the retail
prices of three dosage forms of three drugs still under patent protection in OECD countries and five
dosage forms of 4 multi-source drugs in India and the lowest retail prices of the originators’
proprietary brands of these seven dosage forms in the other 35 countries surveyed.
Table 11 – The retail prices of eight dosage forms of seven drugs manufactured and marketed by
Indian firms and the lowest retail prices of the same dosage forms of the originators product
recorded among the 35 countries surveyed. The ratio between the Indian and the originators’
price are also given.
Generic name of drug
Retail price in US dollars
Ratio of Indian
Prices in India:
prices to lowest
Competitor’s product Lowest price
Source: Tables 1a, 1b & 1c.
(i) Retail prices in India of the competitors’ product.
(ii) The lowest retail prices of the originators’ brands of the same seven dosage forms recorded among the
The three drugs still under patent protection would have been introduced into the world market later than
the four multi-source drugs. The Indian firms’ competing products for these three drugs would,
therefore, have been in the market for shorter period compared to the four multi-source drugs.
The shorter period would not have given Indian firms adequate time to capture a sizeable market share,
increase production volume, lower production costs and effectively compete in prices. The Indian firms
were able to market these drugs at about two to four times cheaper than the lowest prices of the
originators’ proprietary drug recorded among the other 35 countries surveyed. On the other hand, the
Indian prices for the multi-source drugs were about 6 to 15 times cheaper than the lowest prices of the
originators’ proprietary drugs recorded among the 35 countries surveyed. The Indian manufacturers had
adequate time to capture considerable market share, increase production volume, lower production costs
and offer low-priced drugs to consumers.
Time is, therefore, crucial in introducing generic equivalents of essential drugs soon after new drugs are
put into the market, so that they can enter into price competition well before the originators secure brand
loyalty for their products by skillful promotion. Many of the African countries surveyed had only the
originators’ proprietary brand forms of the majority of the eight multi-source drugs, while lower priced
generic equivalents were available in the African market. It will be in the interest of public health to
have low-priced drugs available in the market in every developing country. This is very critical since
one of the criteria developing countries use for selecting drugs into their national lists of essential drugs
is the price of drugs. High costs drugs, for example some of the new anti-retroviral drugs for the
treatment of HIV/AIDS, are not included in the lists of essential drugs in many developing countries,
Conclusions & Recommendations
The most striking feature in this survey are the following:
• The higher prices of proprietary drugs in some of the developing countries of Africa, Asia and
Latin America compared to prices in the 10 OECD countries. The retail prices of 15 out of the 18
dosage forms of eleven drugs for which comparable data are available are all higher in some of the
developing countries than in the OECD countries.
• Proprietary brand forms of several of the multi-source drugs surveyed are the only products
available in many of the African countries enjoying a monopoly market, although low priced generic
equivalents, are available in the world market. These countries do not offer patent protection to drugs.
• There is a very wide variation of retail prices in the countries surveyed:
(i) The variation in the retail prices of proprietary drugs are much wider (range: 1:16-1:59), than the variation
in prices of generic equivalents (range 1:7-1:18).
(ii) The variation in the retail prices of multi-source drugs in developing countries (range 1:1.7-1:59) are much
wider than the variations in OECD countries (range 1:2-1:11.5)
It is assumed that market forces promote competition. It should therefore follow that in a free market,
competition will result in lowering and more importantly, leveling of the prices. This appears to be so,
in the OECD countries and to a certain extent in the generic drugs market in the developing countries
but not in the proprietary drug market in developing countries.
The smaller variation in retail drug prices in OECD may be due, as stated earlier, among others, to the
• Co-marketing arrangement by manufacturers;
The wide variation in prices of proprietary drugs in the developing countries suggests that the guiding
principle which the drug industry seems to adopt in fixing prices is to set the limits according to what
the market can bear. Profit maximisation seems to be the only objective.
There is evidence that competition is possible in the pharmaceutical market and this will bring prices
down. Data from India proves this. When competitors introduce their products, the originators will
lower their prices and compete with the national firms. They will not withdraw from the market. Thus,
it is important to introduce generic competitors as early as possible to prevent the originators having
time to secure brand loyalty to their products by skillful promotion.
There is a time lag between the introduction of a drug in the world market and a competitor to get its
product into the home market. It takes further time to capture adequate market share so as to increase
production, lower costs and compete with the originator. The Indian data on retail prices of three drugs
recently introduced and four others which were introduced much earlier, illustrate this phenomenon and
underscores the need for national policies on intellectual property system with provisions to enable
national firms to initiate production of new drugs as early as possible. Indian firms were able to do this
by a process of reverse engineering. This was possible because the Indian national legislation on patents
did not provide patent protection for products.
However with TRIPs Agreement taking effect, all member states of the WTO should provide patent
protection for products and processes for 20 years. The only way national firms can initiate production
is by compulsory licensing which is allowed in the TRIPs Agreement. Nevertheless, only a few of the
advanced developing countries can use compulsory licensing to manufacture new drugs. A vast
majority of developing countries do not have any facilities for production of pharmaceuticals.
These countries depend on imports of raw materials and finished products. They can have access to
lower priced drugs produced in the more advanced developing countries or by generic manufacturers in
some developed countries only by parallel importing. This is also allowed in the TRIPs Agreement.
Analysis of empirical data provided in this paper supports the position that compulsory licensing and
parallel imports are two provisions which should be in all national legislations on intellectual property
rights. TRIPs Agreement allows these provisions to be included in the national legislation on prices.
This will enable developing countries regular access to good quality essential drugs at affordable prices.
 India and Nepal seem to have a ‘common market’ in pharmaceuticals. Drugs introduced in India are
immediately available in Nepal at Indian prices.
Administrative Appeals Tribunal DECISION AND REASONS FOR DECISION  AATA 639 ADMINISTRATIVE APPEALS TRIBUNAL No NT2005/7, NT2005/56 to 65 TAXATION APPEALS DIVISION ROCHE PRODUCTS PTY LIMITED Applicant COMMISSIONER OF TAXATION Respondent DECISION Tribunal Place Sydney Decision The decision of the Commissioner of Taxation is
Curriculum Vitae Nasrin Maleki-Dizaji Personal Details: Date of Birth: Place of Birth: Nationality: Marital Status: Address: Department of Pharmacology & Toxicology; Faculty of Pharmacy; Tabriz University of Medical Sciences; Tabriz, Iran. Education: 1982-1988 Pharm D., Faculty of Pharmacy; Tabriz University; Tabriz; Iran M.Sc. in Immunopharmacol