Summary
From the case study provided, it is evident that the major problem is revolving around HIV/AIDS, pharmaceutical products and pricing approaches. Merc & Company is thinking about whether to go on with regard to a legal suit against the South African government.
The firm accuses the government of spearheading efforts aimed at undermining the global pharmaceutical protection system, which goes a long way in supporting the development of innovative life-saving therapeutic agents. From the perspective of the government, it has been important to pass a law that would enable the nation to deal with the AIDS crisis. More than half a million persons are infected with AIDS. Thus, it is clear that the leadership is committed to adopting approaches that would help to reduce the burden of the health crisis.
Analysis
It is worth to note that Merc has already slashed the prices of two drugs used to treat AIDS. The management of the firm is aware of the intention of the law in the country. In fact, from an analytical perspective, the law would be instrumental in permitting the importation of relatively cheap drugs, which would imply that some pharmaceutical companies that have already lowered the prices of their products would most likely make losses.
Drug pricing is an important aspect for the reason that it helps business establishments to recoup their investments (Borrell 510; Roin 513). Another critical aspect in the healthcare sector is obtaining patents for drugs, which go a long way in protecting the intellectual rights of companies (Boldrin and Levine 23). Without effective patenting laws, pharmaceutical organizations can make huge losses because their competitors in the market would produce their drugs cheaply (Roin 530).
When analyzing the problem highlighted in the case study, it is important to understand that AIDS in sub-Saharan Africa is remarkably different in comparison with other healthcare conditions. The remarkable variations can be explained using three reasons. First, a significant number of Africans utilizes recent discoveries for the management of HIV/AIDS (Borrell 509). Consequently, many people have no choice of drugs due to the fact that the market is not typified by alternative therapies.
Second, most HIV/AIDS patients in sub-Saharan Africa cannot benefit from even relatively cheap medications because they can rarely afford any form of treatment (Borrell 506). Third, it is worrying that AIDS affects more than a quarter of the nation’s population. It was reported that about 250,000 persons died from the disease in 2000.
It appears that the health minister is under pressure from multinational firms to permit the manufacture of generic HIV/AIDS medications. For example, it is notable that Cipla, an Indian firm, has requested the government official to allow it to produce eight generic medications for treating the infection. However, Merc is aware of the fact that competition will increase significantly in the market. Already, drugs in Africa are sold at lower prices in comparison with prices in developed nations, such as the US and the UK.
The management teams of many firms think that the generic drugs sold in this part of sub-Saharan Africa could be taken to other nations that are relatively developed, which could culminate in significant dynamics in sales volumes and returns on investments. In conclusion, all the interested parties in the legal case should take into account several factors, most of which might lead to both short-term and long-term impacts.
Works Cited
Boldrin, Michele, and David Levine. Against intellectual monopoly. Cambridge, United Kingdom: Cambridge University Press, 2008. Print.
Borrell, Joan-Ramon. “Pricing and patents of HIV/AIDS drugs in developing countries.” Applied Economics 39.4 (2007): 505-518. Print.
Roin, Benjamin. “Unpatentable drugs and the standards of patentability.” Tex. L. Rev. 87 (2008): 503-570. Print.