28 SOCIAL SCIENTIST 15 Shwartzman, op. cit., argues that ifR&D were capitalized, the rate of profit would be reduced significantly: however, this only occurs if the rate at which R&D is depreciated exceeds new R&D greatly, and it is not clear how justified this assumption is. Moreover, it clearly makes tax sense to treat R&D as a current expense, since this is how company accountants prefer to treat it. 16 Sec S Lall, "Transfer Pricing by Multinational Manufacturing Firms," Oxford Bulletin of Economics and Statistics, August 1973, and C V Vaitsos, Intercountry Income Distribution and Transnational Enterprises, Clarendon Press, Oxford, 1974. 17 SCRIP) 19 November 1977, p 2. The classic case of transfer pricing in Europe is in UK, by Hoffman La Roche, for diazepam and chlordiazepoxide; see the Monopolies Commission, Chlordiazepoxide and Diazepam, HMSO, London, 1973. 18 S Bibile, Pharmaceutical Policies in Sri Lanka, TD/B/C6/21, UNCTAD, Geneva, 1977; and Lall and Bibile, op. cit. 19 Slatter, op. cit. After a detailed analysis of product introductions, sales and promotion, he concludes that "the required levels of promotional expenditure act as significant barriers to market entry .'. . The mean of all ten classes (of drugs with high promotional expenditure) was {, 249,000, an increase of 111 percent over the mean level of 1968" (p 85). 20 On Latin America, see RJ Ledogar, Hungry for Profits, IDOC/North America, New York, 1975, and N Silverman, The Drugging of the Americas, University of California Press, Berkeley, 1976. The latter shows that there is far greater intensity of drug representatives per doctor in the poor countries of Latin America than in the US. 21 SCRIP, 5 November 1977, p 22. 22 Ibid., p 23. 23 India has reduced the life of drug patents to seven years. Italy and Brazil do not permit patents on drug products or processes. A number of LDCs, example Argentina, interpret the law liberally in order to favour domestic enterprises which infringe foreign patrons. In developed countries, on the other hand, the tendency is to strengthen patent protection; the UK. has extended patent coverage from 17 to 20 years. 24 SeeJ S G Cox, B V Millane and A EJ Styles, ^A Planning Mode of Pharmaceutical Research and Development," R&D Management, June 1975, pp 219-27. 26 Sec Slatter, op. cit. 23 For a discussion of these in the case of Sri Lanka see Lall and Bibile, op. cit. 27 This was noted for India by the Hathi Committee. See Report of the Committee on Drugs and Pharmaceuticals Industry, Ministry of Petroleum and "Chemicals, New Delhi, 1975. 28 Tests by the FDA found that 40-60 percent of ethical drugs, and, from a sample of 420 over-the-counter drugs, 75 percent of non - ethical drugs lacked evidence of effectiveness. Hundreds of drugs withdrawn from the US market continue to be sold in other countries. Ledogar, op. cit. and Silverman op. cit., find that several drugs in the high toxicity range were being sold in Latin America after being banned in the US and Europe. 29 Ledogar, op. cit., and Silverman, op. cit. t?o The Summit Meeting of th« Non-Aligned Nations in 1976 endorsed a programme of comprehensive reform of the pharmaceutical industry; this is now being explored by a joint task force of WHO, UNCTAD and UNIDO. In response, some major European TNC's have offered to provide 25 essential drugs at cost to the Third World via the WHO. 81 A lengthier discussion is provided in S Lall, The Gjowth of the Pharmaceutical Industry in Developing Countries, op. cit. 32 See M Segall, "Pharmaceuticals and Health Planning in Developing Countries," Communication No 119, Institute of Development Studies, Sussex, 1975, for a detailed explanation. ^ SCRIP, 12 November 1977, p 16. The International Federation of Pharmaceutical