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No mainstream U.S. ‘news’ site has published the news below (as far as I can tell from Google News searching ‘china’ ‘generic’ and ‘drugs’), but good for the Chinese! How can its government pass this law, one our corporate masters are so afraid of they don’t want us to know about it? China has a responsive and populist government on health care, the opposite of what we get with our elections here in the U.S. So, if we adopted China’s dictatorship form of government would our health care be run in the public interest? ;->
China changes patent law in fight for cheaper drugs
Tan Ee Lyn, Reuters, June 9, 2012, 12:59 am
China’s drug-law revamp rattles Big Pharma
By Tan Ee Lyn, Reuters, June 9, 2012
China to license copies of patented medicines
New law allows companies to produce generic versions during emergencies, unusual circumstances, or in public interest.
Last Modified: 09 Jun 2012 05:22
UPDATE: I did an expanded re-run of that Google news search and found CNBC and MSN Money reprints of Tan Ee Lyn’s Reuters piece. As ThingsComeUndone notes below, this news should have a major impact on Big Pharma stock prices, and it’s the main duty of the financial press to keep its investor readers informed on such things.
39 Comments
Interesting that China can do this and we can’t.
The amended Chinese patent law allows Beijing to issue compulsory licences to eligible companies to produce generic versions of patented drugs during state emergencies, or unusual circumstances, or in the interests of the public.
For “reasons of public health,” eligible drugmakers also can ask to export these medicines to other countries, including members of the World Trade Organization.
http://www.montrealgazette.com/health/China+drug+revamp+rattles+Pharma/6754855/story.html#ixzz1xNbkhUtj
The article mentions India is already doing this plus China now claims they can violate our patents and export the drugs even to WTO countries like America.
If we push a trade fight China can with their lower labor costs destroy big Pharma in America.
Obama will have to support tariffs to protect the drug companies right to charge Americans more than the rest of the world pays for drugs.
Since India and China are doing this can Brazil be far behind?
Everyone assumes that big Parma was going to try and get part of the Chinese market. This was factored in every American Pharma company’s future and in some cases outlook on international profits.
This news kills those dreams. I think the stock market might notice this story on Monday or sometime this week.
Why because of the internet people will buy these drugs from China online. Republicans in Texas and AZ will cross the Mexican border to get these drugs.
I am sure Mexico will import these drugs from China as will Canada.
China’s stable of generic drugmakers has been producing the key ingredients in medicines for years, exporting them to foreign drugmakers, which then sell the patented finished products back to China at prices that the average Chinese citizen often cannot afford.
In particular, the government is struggling to provide newer HIV drugs, such as Gilead’s tenofovir, known by its brand Viread and which had worldwide sales last year of $737.9 million.
http://www.montrealgazette.com/health/China+drug+revamp+rattles+Pharma/6754855/story.html#ixzz1xNbkhUtj
Big Pharma makes huge profit off of new drugs if China threatens that by competing with us then Pharma stocks will tank as soon as China actually produces a popular new drug that is not necessary for AIDs or similar plagues. I think even Obama can’t sell not letting China make a new AIDs or plague drug.
When China starts mass producing new drugs that have a huge potential market then the drug companies are in trouble.
Again I expect Obama to announce tariffs.
This means war!
So it will benefit U.S. Big Pharma victims: “people will buy these drugs from China online.” I hope so, but you know the Big Pharma cops will do whatever they can to stop or strongly discourage that. Throw some grannies in jail, publish scare stories about the poor quality of Chinese medicines (I already see that happening) and so on.
I am sure Thomas Friedman the cheerleader of Globalization will ignore any questions about how stupid it is to transfer manufacturing know how on an important product like drugs then price those drugs too high for the average Chinese person to afford.
Did Tom really think China a rising power would not violate our patents once they got the knowhow to make a needed product?
Next question how long before China decides to make I pods, GM cars etc all with tech we moved to their country?
Thomas Friedman in light of this news gets my dumbest person on the planet award.
I agree its good news for us:) But for the Pharma companies heck this could cause a run on the stock market. The kind of run that could set off a Depression.
Oh. We don’t have a depression now?
Wanker of the Decade Thomas Friedman? Priceless:
I agree that the financial press tends to ignore anything that might threaten profits…like reality.
But this story is to big to be ignored. Tell me what happens to Apple’s stock price if investor’s worry China will violate Apple’s patents?
I think we are headed for a trade war with China and things like patents much like song royalties tend to get forgotten when diplomatic relations go bad.
I am in favor of trade war by the way provided we get a Real Lefty to fight it.
I think so but the econ people claim its only a recession.
This is nonsense. The drug companies will meet the Chinese price and compete in the Chinese market. They will continues to sell drugs from one price in one market and a different (higher) price in the US.
The whole purpose of banning drug re-importation into the US was to prevent the consumer bypassing the price differentials between the same drug from the same company form the same factory the drug companies are using today.
It is Government supported price (and profit) protection, pure and simple. Another example of our predatory state.
I’m against ‘war’, but I think we MUST have a U.S. trade regime that protects good wages and good environmental and work safety laws. Pretty radical, huh? All countries should have such trade regimes: we’d all get along great and the world would be more prosperous too.
They won’t meet the Chinese price if it is not profitable to do so. In any case, whether they do or not is irrelevant. The low price, very close to the actual cost of production, is the good thing and the thing that matters.
Glad to see you’re still around Fairleft bringing interesting topics to the fore. My best, shergald.
Right because we know that big Pharma is so reasonable/s and the Chinese respect patents just ask the record industry about China’s copyright laws.
Current plans for big Pharma are to expand profitably into China not lower their prices any more than they already do their stock price factors in expected growth in China. This law takes much of the profit out of that growth.
The precedent this law sets could be applied to other areas of concern like genetically modified food for example starvation I am sure is a much bigger concern for China than AIDs.
On this we agree.
That quote says everything i ever though about Tom :)
Agreed
Good story.
FYI, One can also cross the border into Mexico to buy Rx cheaper and without a prescription.
The famed “Winter Texans”, 100,000′s of retirees who flock from north to south to escape the cold weather and stock up on cheap meds attest to this fact. Unfortunately, drug cartel shootouts in the Mex border towns of Matamoros and Reynosa have dampened this cross border traffic flow and even reversed it. Now, middle class Mexicans are receiving green cards if they agree to invest in business start-ups in the US.
South Texas is fluorishing as a result of this money moving in. But it also represents a further degradation of the small but growing Mexican middle class.
Rec’d.
What this law does is it tells big Pharma if you ever think about moving jobs to a lower wage country than China then China will suddenly find lots of “reasons of health”.
Also I suspect that they will be banned from the Chinese market. Also as far as profit goes its current profit levels and expectations of growth world wide in those profits that justify current stock prices in big pharma.
India and now China are demanding cheaper drugs will Brazil and South Africa be far behind?
Same to you shergald! Peace and justice!
I think that middle class, known as rich people to other Mexicans, is really a sign of the problem, a neoliberalized economy.
Tanks for duh rec!
The Drug Companies will move production to China, or a lower cost country, and sell below cost to maintain their monopoly.
The Drug companies will bribe their way to success, just as they have elsewhere.
Their whole business model is predicated on their monopoly. They will do anything to protect that revenue stream.
I believe South Africa already invoked the “national emergency” clauses in the WTO agreements for HIV/AIDS related drugs.
They do have a slight HIV problem in Africa.
They will maintain their monopoly and excess profits in the neoliberalized world, and won’t venture into markets where they have to make normal profits, a couple percentage points of costs. China and India have told them to f@#k off and, they will. Otherwise marginal profits will decrease radically and shareholders don’t like that.
What makes you think China does not want a piece of the action? Also China claims they can export these drugs for “reasons of Health ” which I assume is a legal term that can mean anything if the Chinese government defines the term.
Pharmaceuticals may be the biggest US industry in dollars, but the raw materials from which they are made cost nearly nothing. This is one thing that drives up healthcare costs and insurance costs.
Medical care, including medicine, is a basic Human Right. It is improper, unethical, immoral to withhold medicine from a person for lack of money. It’s worse than immoral: It’s violently insane.
It’s murder.
I think I will pass on any drugs prescription or otherwise, that are made in China.
Very good information. THanks Fairleft.
And for everhyone else joining in on the discussion.
China also bans any of the Monsanto GM crops. So the people there will not end up with the acid reflux diseases, and fibromyalgia. Or stomach cancers we are going to have here.
Why? I would be cautious, even more than I would be with Big Pharma drugs. But otoh if the Chinese seemed to be surviving their China-manufactured drugs, I’d take advantage of the non-monopolist pricing.
Thanks, and all good.
Not that either of us, I think, thinks China is a ‘nice capitalist’ state. But whatever the reasons — its particular capitalist development stage, the self-interest of its domestic manufacturers — China’s doing some good, healthy things for its people.
It appears as though no one reads this in the last link at the top: “”This is all a negotiation game; this offer from Gilead came about once the news that the Chinese was considering issuing a CL [compulsory license] came out. The end game is okay, you get a better deal or you use the CL, it’s a strategy that many countries use,” he said.”
And ,yes, India has already passed such a law.
And ,yes, Synoia is correct in stating “It is Government supported price (and profit) protection, pure and simple. Another example of our predatory state.”
It also points out the fallacy in the WTO agreements regards IP.
What did we say that made you think no one has read that?
BTW, the “This is …” you quote is not about the new generic drug law, but about the negotiations and back and forth over an anti-AIDS drug treatment that Gilead is attempting to sell at a monopoly price.
What Synoia doesn’t point out is that the “predatory state” is an immediate symptom of predatory corporations owning the state. Get rid of corporate ownership (through campaign donations and ownership of the media) of the state and you’ll likely get a much more people-oriented state.
This subject is out of my bailiwick (don’t do docs or meds,etc.), but I wanted to let you know that Yves Smith is discussing the subject here.
Rec’d. ;o)
its one thing to say you will break patents and supply your own people its very threatening to big Pharma if China starts exporting to other countries.
If China starts producing low cost drugs at minimal profit and exports them to the third world China will gain plenty of good will in the third world.
We know that China is buying up resources world wide selling cheap drugs will help protect China from third world nation complaints about owning the world and calls for nationalizing the industries, mines etc that China is buying.
Also it will make China not America look like the hero everyone turns to in the third world.
The Chinese are great diplomats they do think ahead. America just demands what they want and then tries to make deals but only when they want something.
China knows they might want things in the future and prepares ahead of time.
Hey, I beat Yves to the punch, that’s a first! Naked Capitalism for the name alone is one of my top 5 websites.