Patents and Pharmaceutical Access

The Oldest Soul, Jueves, Mayo 29, 2003 - 14:09

Sanjay Basu

The idea that generic competition will undermine the industry... ignores all available data ... both the R&D problem on diseases which affect primarily the poor, and the problem of access to drugs because of high price monopoles, are intimately tied to the current "free trade" agenda...

The 56th World Health Assembly--the annual health meeting at which the World Health Organization's (WHO) directives are set for the year--ended this week in Geneva after a long round of discussions on the continuing SARS saga. Press coverage of the Assembly also focused on the completion of a tobacco control resolution, which the U.S. delegation agreed to sign in exchange for deals that will secure a future pact on sugar imports. But the resolution receiving the longest debate among the delegates of the 192 member governments attending the WHO's Assembly received little attention outside of the business press (1, 2).

The controversy was over a resolution mandating the WHO to advise governments about patent rules and access to medicines. Patent laws in many developing countries are now set through a combination of World Trade Organization (WTO) directives, World Intellectual Property Organization (WIPO) advice, and U.S. bilateral trade pressure (3). But because the WTO's Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement requires developing countries to pass national legislation guaranteeing patent terms of two decades for pharmaceuticals, the prices of new drugs for both common and rare conditions is expected to double soon after January 2005 (2). The TRIPS Agreement, passed more than a decade ago under the aegis of the WTO, was described as a "free trade" measure by its key architect, Pfizer CEO (and Ronald Reagan trade advisor) Edmund Pratt (4). By definition, it is the complete opposite of competition-based trade: it grants pharmaceutical companies a monopoly on any new product they produce, and therefore allows drug prices to be set to the purchasing standards of the elite, to the obvious detriment of the poor.

After the anthrax scare over a year ago in Washington, Senators were threatening the Bayer pharmaceutical corporation if the company didn't come up with enough ciprofloxacin (Cipro, an antibiotic used to treat anthrax infection) to protect national public health (5). The threat was to produce generic versions of Cipro instead of contracting Bayer; generic contracting would have speeded the process of drug production and allowed multiple producers to compete for government contracts, lowering prices for the product as competition often does.

The irony of the event was not lost on developing country trade ministers. For years, trade ministers and their health ministry colleagues had been trying to contract generic AIDS drug producers under the very same premise--to make manufacturers compete with one another and therefore lower the price of antiretroviral drugs and expand their coverage to those most in need. Thailand, Brazil, and South Africa, among others, faced U.S. trade sanction threats when attempting such programs (6). But once the U.S. itself was faced with an "epidemic" of anthrax, the developing country trade ministers had a tool for bargaining.

At the November 2001 Doha ministerial conference of the WTO, developing country ministers (while bullied into signing a number of bad deals) managed to force through a consensus statement called the Doha Declaration on TRIPS and Public Health (7). The Agreement reaffirmed safety measures already present in the TRIPS Agreement--including measures that allowed countries like Thailand, South Africa and Brazil to produce drugs when the prices of patented medicines were out of reach (rendering the U.S. actions against those countries a violation of WTO rules). But in paragraph 6 of the Doha Declaration, the ministers also included a key statement that countries too poor to have their own drug manufacturing capacity (which includes most least developed countries, those with the highest burdens of disease) could import generics. TRIPS rules, ironically, prevent the exportation of generic drugs, so this paragraph of the Doha Declaration would allow for wealthier countries to produce generic drugs for least developed countries, not just for themselves.

The simple measure appeared to be quite straightforward at the time--but during the drafting of its implementing text in December 2002, the U.S. Trade Representative (USTR) Mr. Robert Zoellick became the only member of the WTO (reportedly under direct White House pressure) to prevent the execution of the deal in its stated form (8). Although he had already signed his name to the Doha Declaration, the USTR would only agree to allow the implementation if most developing countries with manufacturing capacity were excluded from exporting and if complex legal mechanisms were constructed that would effectively prevent any least developed country from actually being able to import generic medicines; it would also limit any sort of importation to a short list of diseases for which there are currently no drugs or only old medicines off patent (9). The revised deal would effectively secure the continuing global drug price monopoly for the U.S. industry. The industry ties were not covert--at the World Economic Forum in Davos, the Pfizer Corporation announced to the business press that it had taken over the negotiating seat from the USTR and was directly negotiating with the WTO council (10). The talks on implementation were deadlocked as Pfizer and other companies intervened--and the discussion may continue to be deadlocked until (and possibly beyond) the Cancun ministerial conference of the WTO this September.

At the WHO Assembly this past week, developing countries wanted to address the issue and allow the world's top health institution to discuss the health implications of the USTR's "revised" proposal. At the top of a long list of ironies is the fact that the USTR's list of diseases for which generic drugs can be produced excludes the severe acute respiratory syndrome (SARS)--which, of course, didn't exist publicly until after the USTR had produced his list. This highlights the importance of keeping the Doha Declaration in its original form--whereby country health ministries can tackle an epidemic as it occurs rather than waiting for their populations to die and spread the disease to wealthier nations which have the generic manufacturing capacity to actually control it (and this is particularly important in the case of SARS, for which genome components and potential therapeutic agents are already being patented, 11, 12). The USTR's revised proposal would also produce mechanisms that would prevent countries like Korea and the Philippines from producing drugs (let alone Canada and China, hit by SARS)--effectively preventing their industries from being able to build themselves to a level that would offer competition to the U.S. industry--because they supposedly have some form of manufacturing capacity. The problem is that public health authorities need the ability to produce drugs cheaply and quickly; neither Korean nor Pilipino production facilities are adequate to produce drugs for many syndromes, and as a result the hundreds of chronic myeloid leukemia patients in South Korea protesting for access to the drug Glivec (produced by Novartis and sold at OECD prices in that country) are simply being told to go home and die (13). Meanwhile, the USTR is circumventing the WTO altogether by proposing bilateral trade agreements with a number of countries who are bullied into producing strong patent laws in excess of those agreed to under the TRIPS Agreement, in exchange for bribing the wealthier sectors of those countries with tariff and export deals (see, for example, the recent controversy in Uganda, 14; a list of the bilateral and multilateral trade agreements that the U.S. is sponsoring, and their affect on access to medicines, is available online, 15).

Allowing the WHO to expose these problems and directly consult developing country governments would be crucial to preventing patents from further restricting access to medicines. A Doctors Without Borders report released at the Assembly revealed that many government ministries are simply granting invalid patents because their personnel are stretched too thinly to evaluate applications closely, let alone comb through the legal text of the TRIPS Agreement in order to determine what public health flexibilities are available to them (16). The resolution to allow WHO intervention was produced by Brazil early during the Assembly, but the U.S. delegation managed to push discussion on it into the second week of the agenda by extending talks on other issues and continuously delaying meetings (by, for example, wrongly pontificating during the discussion on AIDS that HIV poses such a strong threat of infection through breastmilk that breast milk substitutes should be re-considered for export to developing countries--a frightening repeat of earlier Nestle-sponsored actions that have resulted in severe nutritional deficiencies among babies in poor countries, 17). Because many of the poorest countries cannot afford to keep their delegates in the expensive Geneva facilities for more than one week, pushing an item into the second week of the Assembly agenda effectively prevents developing country delegates from being present at the voting session on the resolution.

The U.S. also proposed an alternative resolution, stating that extended patent protection would help enhance access to medicines in developing countries by motivating further research and development (R&D, 1). This statement employs a number of fallacies. It ignores, first of all, that the reason why research and development on diseases like sleeping sickness and river blindness is so weak is that the poor, who are the primary victims of these syndromes, lack purchasing power. They are poor, therefore pharmaceutical companies cannot make much profit from them. Patenting in poor countries would make no difference; rather, extending patents into poor countries would simply aid the U.S.-based pharmaceutical industry to monopolize the elite sectors of countries facing growing inequality. Brazil, during the 1970s, banned patents on pharmaceuticals altogether but medicine importation into the country increased five-fold because of the elite sector (18). Meanwhile, extending patent protection in the U.S. has rendered the pharmaceutical so profitable (they have been voted by Fortune Magazine as the most profitable industry in the world for the 11th year in a row, 19) that their research and development "motivation" has nearly dropped off the map. Pfizer, the world's largest company, developed only one drug from its laboratories over the past five years (Viagra), while purchasing smaller companies and marketing their products (for example, note the recent acquisition of Pharmacia, 20). Over half of the current U.S. market in new pharmaceuticals are "me-too" drugs, or reformulations of existing medicines, which are re-marketed after minor modifications (19).

The idea that generic competition will undermine the industry also ignores all available data. According to the industry's own tax records (obtained from the Securities and Exchange Commission), Merck this year spent 13% of its revenue on marketing and only 5% on R&D, Pfizer spent 35% on marketing and only 15% on R&D, and the industry overall spent 27% on marketing and 11% on R&D (See Appendix 1). Meanwhile, all of sub-Saharan Africa constitutes only 1.3% of the pharmaceutical market and the industry spends 0.2% of its R&D funds on African diseases, meaning that the R&D problem on "neglected diseases" (neglected by those not suffering from them, that is) will perpetuate until the market-based ideology is broken (21). While developed countries represent nearly 90 per cent of global drug sales, 90 per cent of the 14 million deaths due to infectious diseases are in developing nations (2). What is clear from these numbers is that both the R&D problem on diseases which affect primarily the poor, and the problem of access to drugs because of high price monopoles, are intimately tied to the current "free trade" agenda.

When Brazil proposed the beginnings of an alternative to this agenda at the Health Assembly, calling for the WHO to consult developing countries on the patent issue, the U.S. dropped its strong patent resolution, primarily because it had no support from other nations (2). But when the Brazilian resolution came to the floor this Wednesday, the U.S. delegation again attempted to undermine it. The delegation refused to agree to the resolution until all mention of the Doha Declaration was removed, until all mention of bilateral and multilateral trade agreements was removed (effectively preventing the WHO Secretariat from consulting governments on their trade deals, as Assembly resolutions have mandating power), and stripping the language of "public goods" from paragraphs on the R&D issue (22).

In spite of the weakening of the resolution, the text was finally passed, and provides reason for optimism. First of all, its adoption does allow the new, incoming Director-General of the WHO to take on the issue more strongly, and he has taken as a chief initiative the project of expanding access to antiretroviral medicines to 3 million HIV-positive persons over the course of five years (a modest project, given that it would reach only one-twentieth of those currently in need). But the Director-General is appointing Dr. Jim Yong Kim (Co-director of the progressive health service group Partners in Health, also run by Dr. Paul Farmer) to be chief advisor of the "scaling-up" project. Given Dr. Kim's consistent record of advocacy for and direct service to the poor, and his continuing and steady criticism of the effects of neoliberalism on public health, there is much reason for optimism (23). The other piece of good news is that the Brazilian resolution calls for a new panel that will construct a framework for the development of drugs for "neglected diseases" (2).

A new proposal for such a framework has already been created by James Love of the Consumer Project on Technology, who is widely considered the top international expert on this issue (see the copy available online: 24). For those who, due to the continuing elite nature of these proposals, are left far from the decision-making rooms in Geneva, there is also a new opportunity for action. Part of the problem with the current pharmaceutical regime, after all, is that most of the complex drug development work is not done through pharmaceutical company labs, but through government-funded (grant-based) university laboratories, most of which are funded by taxpayers through the National Institutes of Health. Many of these labs simply sell their products to companies at very low rates to complete the development and sometimes the clinical trials on a compound (although the latter are also often paid for through taxpayer funds). The top five selling drugs on the U.S. market, for example, had 85% of their R&D conducts through taxpayer funds (including clinical trials; 19). To change the nature of university complicity is therefore an essential building-block to creating an alternative framework for medicine development and distribution. Such a framework is being built through which universities can participate in an R&D process that leaves behind the market ideology and moves into a realm where medicines can once again be considered a public good. Students are leading the way, and anyone is welcome to join:

What the events of the World Health Assembly in Geneva demonstrate is that the fight for access to medicines is far from won at a political level, but that the U.S. is increasingly alienated from its data-denialist position. Even the EU appears hesitant to provide support, and so it is crucial that the progress made at the Assembly not be undermined at the September WTO Ministerial Conference in Cancun. Along with the agricultural issues currently being negotiated, the paragraph 6 negotiations must move past the "revised" USTR framework and refer back to the original Doha Declaration. It is primarily the task of U.S. citizens to push their government against its current stance, and the task of EU country citizens to prevent the European Trade Commissioner (DG-Trade) from propping the U.S. position. But also key to the process will be strong developing country ministers like those from South Africa and Mexico, which often support the U.S. but have the option of siding with Brazil and India at the paragraph 6 negotiations. The procedures at the next conference will almost certainly exclude poorer countries from gaining much of a voice. "Green-rooming" practices in particular include such procedures as placing one U.S. trade office representative after another in a negotiating room to delay negotiations for days; developing country ministries, of course, can only afford to send one or two ministers to the WTO meetings, and so those ministers must either brave a hundred-hour-long meeting, or leave and revoke their opportunity to vote (25). Such "consensus building" tactics will surely be deployed in Cancun; it's up to a global community of citizens to expose them and render them obsolete. The 24,000 lives lost to preventable and treatable infections everyday are certainly worth the effort, and the initiatives needed to produce change are already well underway.

For further information, see

References: 1) Williams, F. US move on drug patents under attack. Financial Times, 23 May 2003. 2) Williams, F. WHO to gain advisory role on pharmaceutical patents. Financial Times, 28 May 2003. 3) Drahos, P. Bilateralism in Intellectual Property. Oxfam Briefing Paper: 4) Oxfam UK. Formula for Fairness: patient rights before patent rights. Oxfam Briefing Paper: 5) Reuters. New York Senator Urges U.S. to Purchase Generic Cipro, 2001 October 16. 6) Mayne, R. US bullying on drug patents: one year after Doha. Oxfam Briefing Paper: 7) World Trade Organization. Declaration on the TRIPS Agreement and Public Health. 8) Elliott, L. & C. Denny. US wrecks cheap drugs deal. Guardian UK, 21 December 2002.,3604,864071,00.html 9) Doctors Without Borders. Reneging on Doha. Briefing Paper: 10) Forbes. Pfizer's McKinnell says drug patent talks progress. 28 January 2003. 11) McGee, B. Hong Kong, Canada, US scientists file SARS patents. Bloomberg News, 5 May 2003. 12) Elias, P. Race to Patent SARS Virus Renews Debate. AP, 5 May 2003. 13) 14) Mulumba, B. Three firms to supply cheap AIDS drugs. The Monitor (Kampala), 8 May 2003. 15) 16) Doctors Without Borders. Drug patents under the spotlight. Briefing Paper: 17) 18) Gereffi, G. The Pharmaceutical Industry and Dependency in the Third World. Princeton: Princeton University Press, 1983. 19) Public Citizen. (2001). Rx R&D Myths: The Case Against the Drug Industry's R&D "Scare Card". 20) Boseley, S. & N. Pratley. Guardian UK. 24 April 2003.,3858,4653957,00.html 21) Pharmaceutical Research and Manufacturers of America, PhRMA Annual Membership Survey, 2002. 22) 23) Kim, J-Y., Millen, J., Gershman, J. & Irwin, A. (2000). Dying for Growth: Global Inequality and the Health of the Poor. Boston: Common Courage Press. 24) 25) Oh, C. Power politics in the WTO. Focus on the Global South Paper:

Appendix 1: R&D versus marketing expenditures of the U.S. drug industry

% Revenue allocated to: Company Revenue (millions) Marketing R & D Profit Merck $47,716 13% 5% 15% Pfizer $32,259 35% 15% 24% Bristol-Myers Squibb $19,423 27% 12% 27% Abbott $16,285 23% 10% 10% Wyeth $14,129 37% 13% 16% Eli Lilly $11,543 30% 19% 24% Schering-Plough $9,802 36% 13% 20% Allergan $1,685 42% 15% 13% Total* $166,678 27% 11% 18% ($ millions) $45,413 $19,076 $30,599

Source: Securities & Exchange Commission, 2002 *total includes Pharmacia data not listed in separate row on table; Pharmacia was recently acquired by Pfizer Corp.

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