Drug Wars: Patents, Profits and Poor Countries

Deadlock Sets In as Pharmaceutical Interests Conflict

NEW YORK, MARCH 15, 2003 (Zenit.org).- Early hopes for making lifesaving medicines more affordable in poor countries have proven overly optimistic. Despite international efforts last year to ease patents on pharmaceuticals, a recent ministerial meeting in Tokyo failed to make progress on the issue, BBC reported Feb. 16.

The matter has been under discussion since the World Trade Organization (WTO) meeting in Qatar in November 2001. The WTO agreement governing this area goes under the name of Trade-Related Aspects of Intellectual Property Rights (TRIPS). The agreement covers a wide range of subjects, from copyright and trademarks, to the design of products and trade secrets. Patents for pharmaceuticals are only part of the agreement, but this area has attracted the most attention due to the high prices on drugs used to treat AIDS.

The February meeting in Tokyo was itself a last-ditch attempt, following failure to reach agreement under a deadline that expired at the end of 2002. At that time, in a WTO press release Dec. 20, the organization’s director-general, Supachai Panitchpakdi, lamented the failure by WTO member governments to meet the deadline for agreement on special treatment for developing countries and especially for those nations that couldn’t manufacture crucial medicines themselves.

The idea is to allow such poor countries to import the pharmaceuticals from overseas generic producers. Current WTO rules allow developing countries to produce generic copies of patented drugs, for treatment of specified illnesses. Countries that lack the capacity to produce the cheaper drugs, however, are left empty-handed.

U.S. Trade Representative Robert Zoellick told Congress that an atmosphere of distrust has thwarted efforts to reach a deal to guarantee poor countries access to cheaper medicines, Reuters reported Feb. 26.

In testimony before the House of Representatives Ways and Means Committee, Zoellick said U.S. pharmaceutical firms fear the creation of a giant loophole for generic manufacturers in middle-income countries to produce and export some of the American companies’ most lucrative patented drugs.

Reuters noted that the United States accuses drug activists and countries such as Brazil and India with big generic manufacturing industries of trying to expand the list of eligible diseases and importing countries beyond those agreed in November 2001.

U.S. faulted

But many blame the United States for the problems. According to the Financial Times of Dec. 21, it was the United States that blocked a deal to grant poor countries access to cheap generic copies of patented medicines.

The United States was prepared to go slightly beyond its previous position on the draft accord. It originally wanted to limit the deal to drugs covering AIDS, tuberculosis, malaria and similar epidemics. But then it also agreed to cover other mainly tropical diseases of concern to the very poorest countries. All other WTO members, reported the Financial Times, said that they could accept a more vague formula based on a declaration by ministers in Qatar, which referred to the serious public health problems of developing countries.

Two members of the World Bank — managing director Mamphela Ramphele and chief economist Nicholas Stern — argued in favor of relaxing the rules on generic-drug production in developing nations. Easing the rules for selected diseases such as AIDS, malaria and tuberculosis is not enough, they said in a March 1 opinion article in the New York Times.

“Developing countries see them as a retreat from the rich countries’ promises that trade talks would address their needs,” they commented. Moreover, half the premature deaths in poor countries are from non-infectious causes such as heart attacks and cancer. “Does a child dying of leukemia have less right to low-cost medicine than a child with AIDS?” they asked.

John Sulston, founding director of the Wellcome Trust Sanger Institute and co-winner of the Nobel Prize in medicine in 2002, argued that most of the reasons given by companies against allowing generic production of their patented drugs are baseless. Writing in the British daily Guardian on Feb. 18, Sulston said that drug firms won’t lose profits since poor countries are such small markets anyway.

Regarding fears that Third World generics will end up being exported to rich countries, Sulston argued that the more-lucrative markets are highly regulated and thus harder to crack. Nor is there validity to the concerns that generics will mean lower profits and less research-and-development money for new drugs, he said. Research is expensive, Sulston acknowledged. But he pointed out that large pharmaceutical companies spend only about 15% of their budget on R & D.

The conflict between property rights and health was examined in an essay by Philippe Cullet, lecturer in law at the University of London. In an article in the January issue of the journal International Affairs, Cullet observed that the question of access to medicines is a central issue in any consideration of the human right to health.

He noted that about one-third of the world’s population does not have access to basic drugs, and up to one-half in parts of Asia and Africa. The positive results of limiting patents are evident in a place such as India, he contended. India in 1970 adopted legislation prohibiting patents for medicines. This law, by allowing for existing patents to be ignored and drugs to be copies, enabled the development of a local pharmaceutical industry. When the legislation first took effect, domestic production accounted for about 25% of the market. Now, it reaches 70% of bulk drugs.

The case for patents

Patents have their defenders, too. India’s limits on patents, for instance, attracted pointed criticism in a Sept. 26 article in the Wall Street Journal by two Indian commentators. Barun Mitra and Richard Tren argued that India, in fact, has hindered innovation by not allowing patents.

They noted that 60% to 80% of patients seek remedies from traditional medical practitioners or alternative medicines. In fact, they argued, the weak patents regime in India has contributed little to improving the quality of health service. Moreover, the wide availability of cheap look-alike and counterfeit products are defrauding the consumer of quality products.

They also observed that drug prices only constitute a small proportion of overall health care costs. Those who are truly concerned about patients and the quality of health-care systems should focus on delivery, and not exclusively on the price of drugs, they argued.

For his part, Stuart Eizenstat, who worked in the U.S. treasury, state and commerce departments during the Clinton administration, maintained that drug patents bring benefits.

In a Dec. 19 article published by the Financial Times, he cited the case of Jordan, which in 1999 joined the WTO and adopted strong intellectual-property rules. As a result, Eizenstat argued, Jordan’s pharmaceutical industry enjoyed an influx of investment and technology transfer. Moreover, the country’s exports of high-quality generic pharmaceuticals increased 25% between 1999 and 2001, and patent protection has not affected prices for products domestically.

The TRIPS agreement, explained law lecturer Cullet, is concerned mainly with protecting property rights. And up until recently the intellectual property system has not been occupied by socioeconomic concerns. But health as a human right has received increasing attention in recent years.

John Paul II, in a speech last April 11 to the members of the Pontifical Academy of Social Sciences, called for a globalization of solidarity. He argued in favor of a “social solidarity” that puts aside the pursuit of individual interests for the sake of the dignity and rights of people. Ensuring adequate access to medicines is surely one area that calls for an application of this solidarity.

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