Attachment
Gates Package, p.1009 · gates:exh:00419
Page text: p.1009 · original PDF
- Date
- — (unknown precision)
- Type
- attachment · document
make sense to tinker with the manufacturing process to lower the cost of making the product--
by reducing the number of steps involved, for example--because that would require going
through some of the regulatory process again. This can mean that the cost stays too high for
developing countries, and it's why it sometimes takes decades for drugs that are widely available
in the rich countries to reach poor ones.
This is where low-cost generic manufacturers come in. Their mission is to help people in
poor countries get access to the same drugs and other lifesaving inventions that are widely
available in rich countries.*
Generics made their mark on global health around two decades ago. At the time,
lifesaving HIV drugs were too expensive for countries like Brazil and South Africa, which meant
millions of people living with HIV were priced out of the market. So, the governments in those
countries had generic manufacturers duplicate the drugs, violating the intellectual property rights
of the companies that had invented them. At first, the companies resisted, but they eventually
backed off after realizing that a tiered pricing approach would work better. They made all the
information about their drugs available to low-cost generic manufacturers, which were allowed
to sell to developing countries without paying any royalties. This is what's known as tiered
pricing: the highest price for rich countries, a lower price for middle-income countries, and the
lowest possible price--one that matches the cost of manufacturing--for low-income countries..
One problem is that once a drug is made generic, no one has an incentive to invest in
reducing the manufacturing cost since other companies could immediately copy their
* Generic manufacturers are also the reason why you might be able to get significantly
cheaper versions of some of the prescriptions you take.