Why Chemotherapy That Costs $70,000 in the U.S. Costs $2,500 in India

By rejecting patent applications, developing countries have kept down the costs of much-needed medications. Can they continue to do so without harming efforts to develop new drugs?
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Why does Gleevec, a leukemia drug that costs $70,000 per year in the United States, cost just $2,500 in India?

It's seemingly simple. Gleevec is under patent in the U.S., but not in India. Accordingly, Novartis, its Swiss-based manufacturer, may prevent competitors from making and selling lower-cost versions of the drug in the U.S., but not in India.

Last week, India's highest court rejected an application to patent Gleevec. While the legal issue in the case is important -- the patentability of modifications to existing drugs under Indian law -- the impact of the decision will likely be broader than just that issue, escalating a long-simmering fight over patented cancer medications in emerging markets.

U.S. patients will not indefinitely pay a 20-fold increase on the price of medicines that Indian consumers pay.

Rejecting the Gleevec patent application is not the only step that the Indian government has taken to circumvent patents on cancer drugs. Last year, India issued a compulsory license on Nexavar, a late-stage kidney and liver cancer treatment, enabling a local drug firm to produce a generic version of this medicine without the permission of Bayer, the patent holder. India has recently announced plans to grant compulsory licenses on another leukemia drug and two breast cancer therapies.

India is not alone. Indonesia recently issued a compulsory license for a treatment for liver cancer-causing hepatitis B. China and the Philippines amended their pharmaceutical patent laws, making it easier for those governments to take similar measures as India.

Three trends are driving these moves, suggesting more fights over patients, patents, and drug prices are forthcoming.

First, cancer rates are increasing fast in many developing countries. With rising incomes and better access to childhood vaccinations, people are living longer in most developed countries. The major health risks worldwide are now behavioral -- such as tobacco use and household air pollution. The increases in longevity and exposure to behavioral risks are outpacing the improvement in health and regulatory systems in developing countries. As a result, people in these countries are developing cancers younger, in greater numbers, and suffering more chronic disability for cancer and other noncommunicable diseases (NCDs) than ever seen in developed countries.

Second, access to effective cancer treatment, patented or otherwise, is limited in developing countries. Most patients pay out-of-pocket for most of their medicines, and high prices put drugs beyond their reach. Cancers that are preventable or treatable in wealthy countries are death sentences in the developing world. Cervical cancer is largely preventable in developed countries with the human papillomavirus vaccine; in sub-Saharan Africa and South Asia, it is the leading cause of cancer death among women. Ninety percent of children with leukemia in high-income countries will be cured, but 90 percent of those with that disease in low-income countries will die from it.

Ninety percent of children with leukemia in high-income countries will be cured, but 90 percent of those with that disease in low-income countries will die from it.

Third, middle-income countries like India have both health and industrial policy reasons for encouraging domestic production of cancer drugs. Cancer rates are growing fastest in these populations, and governments are under pressure to better address the health needs of their ailing citizens. India, China, and other emerging nations are expanding coverage of medicines in their public sectors, but expenditures are rising astonishingly fast. IMS Health projects that annual drug spending in middle-income countries will double between 2012 and 2016, to more than $300 billion. Requiring local production of cancer drugs lowers their cost and also helps domestic manufacturers break into the oncology market, a lucrative therapeutic area in which multinational drug firms are heavily invested.

The measures that India and other countries have taken -- compulsory licensing and adopting strict standards on patentability -- are consistent with its international trade commitments, but will be corrosive to the way that pharmaceutical research and development (R&D) is funded internationally. More countries are likely to follow India's lead. Cancer is not the only NCD on the rise in developing countries, with rates of diabetes, cardiovascular, and chronic respiratory illnesses likewise increasing. U.S. patients will not indefinitely pay a 20-fold increase on the price of medicines that Indian consumers pay.

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Thomas Bollyky is the senior fellow for global health, economics, and development at the Council on Foreign Relations and an adjunct professor of law at Georgetown University. He writes regularly at CFR.org.

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