US PhRMA Bares its Fangs – South Africa Patent Law Reform and Access to Medicine at Risk Yet Again

By Professor Brook K. Baker

Senior Policy Analyst, Health GAP

January 17, 2014

PhRMA (Pharmaceutical Researchers and Manufacturers of America) is putting $350,000 on the table to stop proposed patent law reform in South Africa and instead to lobby for even more monopoly protections for medicines.  Why would a pharmaceutical association from the US be so interested in an African country that comprises only a tiny fraction of global pharmaceutical sales?  Why, after having faced universal public scorn for having sued the Nelson Mandela government 1998-2001 to stop earlier, completely lawful access-to-medicines reforms, would the industry once again risk humiliating publicity and an all-but-certain defeat?  More particularly, when every reform that South Africa is proposing is completely lawful under international intellectual property law, most particularly the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), why would PhRMA choose to a clandestine, public-relations and think-tank strategy not only to derail the propose reform, but advocate for even stronger monopoly protections?

The answer is simple – dirty lucre and precedent.

The current South African patent regime is a PhRMA dream.  Although South Africa has legislation mandating patent examination, an examination system has never been established.  This means that virtually every drug company patent filed in South Africa, so long as the applicant can fill out the form and pay the filing fee, will be and is granted.  No one – I mean no one – double checks whether a patent application has any merit whatsoever.  No one checks if alleged innovation is in fact new or well known under existing industry practice.  No one checks if the patent application impermissively makes numerous claims or duplicates claims made previously.  Pfizer could get a patent on a peanut butter and jelly sandwich tomorrow if it wanted to.

PhRMA also likes the South African patent regime because it doesn’t allow anyone to come in and oppose a patent application even if it has not merit.  PhRMA likes the SA patent regime because it’s so cumbersome to get a compulsory license that no such license has ever been issued.  Ditto with respect to parallel importation (buying a brand drug more cheaply in another country and importing it when excessive prices are imposed domestically.

What PhRMA doesn’t like about the proposed SA reform that SA Draft IP Policy recommends:  (1) tightening up patenting standards, (2) examining patent applications vigorously, (3) allowing other parties to oppose patent applications, (4) limiting patent terms to 20 years only, no extensions, (5) disallowing monopolies based on data/registration exclusivity and patent/registration linkage, and (6) adopting easier to use parallel importation and compulsory license mechanisms.  Each and every one of these provisions is lawful; each and every one is acknowledged by international bodies including WIPO, the WTO, UNDP, UNAIDS, WHO and others; each and every one is a wise exercise of public authority that – in accordance with the Doha Declaration on TRIPS and Public Health – prioritizes public health and access to medicine for all.

Instead of these commonsense, lawful, and indeed modest reforms, the united pharmaceutical industry wants to push for “stronger” and more “comprehensive” IP protections – IP that produces stronger, longer, and broader monopolies, monopolies that exclude competition and allow unfettered monopoly profits.Certainly PhRMA is interested in extra monopoly profits to be made in South Africa, but it is interested in monopoly profits in Africa more broadly and in so-called pharmemerging economies where the bulk of its future profit growth will come from.  In other words, PhRMA and the consulting firm it is hiring, Public Affairs Engagement, are worried about South Africa as a precedent:

If the principles in the draft [IP Policy] are adopted, not only will South Africa become less hospitable to the Life Sciences sector, it may also provide the model for other developing nations, inside and outside Africa, including such important aspiring economies such as India and Brazil.

South Africa is now ground zero for the debate on the value of strong IP protection.  If the battle is lost here, the effects will resonate.  … A robust public affairs program is necessary to create the environment for a sensible IP policy to be adopted by the Cabinet and implemented through legislative processes. … Without a vigorous campaign, opponents of strong IP will prevail – not just in South Africa but eventually in much of the rest of the developing world.

Strong patent rights are the goose that lays the golden eggs for Big Pharma worldwide. For PhRMA, the movement for pro-health reform – the fox in the goose house – must be crushed.  The precedent must be defeat, not victory.However, PhRMA does not intend to argue its case on the merits.  It plans a disinformation and closed-door lobbying campaign full of lies and innuendos.  First and foremost, it plans to argue that IP reform will retard domestic and foreign investment and that stronger IP will open the doors to investment, growth and development.  However, if easy patents were good for South Africa, it should be awash in investment now, since it is virtually impossible not to get any patent you want in South Africa today.  Indeed, all available evidence shows that stronger IP has not positive correlation with increased investments in South Africa or any other African or lower-income country.  But, it isn’t evidence or logic that PhRMA wants to sell – it’s fear.

Second, PhRMA plans to sell fear of competition, most notably from Nigeria, Africa’s other economic powerhouse.  Somehow, according to the planned obfuscation game, Nigeria will leap ahead of South Africa if South Africa simply adopts internationally acknowledged IP standards, including fully lawful flexibilities allowing countries to bypass patents to respond to public health needs and to overcome monopoly abuses.  It doesn’t matter that Nigeria has poor infrastructure, under-developed human capacity, and the lack of a technological base – all it needs is for South Africa to adopt IP reform and its economic transformation will be complete.

Third, PhRMA wants to argue that “South Africa’s health problems are the result, not of lack of drug access, but of poor health infrastructure, improper management, and, ultimately, poverty.”  Here, PhRMA’s not lying per se, but it is guilty of implicature – the half truth that tells a lie.  Perhaps PhRMA can explain why excessive drug prices miraculously improve health systems and management.  Better yet, maybe it can explain how exorbitant prices cure poverty!

But PhRMA’s shill, the PAE, makes clear that “we do NOT want a debate over individual drug prices to become the focal point of the campaign.”  Well, one can certain understand that – just because high prices are the most fundamental feature of the IP regime, why would PhRMA want anyone to talk about that?

Although PhRMA plans to ally with local proxies like the Innovative Pharmaceutical Industry Association of South Africa, SA business groups, and compliant academics, the campaign will be run from Washington. Operating under a euphemism like “Forward South Africa” and ostensibly led by a “respected former government official, business leaders, or academic,” the publicity and intense lobbying campaign would be actually be run by US-based PAE, which promises that “any and all research, op-eds, blog posts, and other material” will be reviewed and commented upon by PhRMA.  PAE promises to consult with PhRMA every step of the way.

Big Pharma was shamed in front of the whole world over its 1998-2001 lawsuit against South Africa that used a phalanx of lawyers to try to defeat TRIPS-compliant parallel importation and generic substitution.  Tail between its legs, the 39 drug companies and pharmaceutical association that sued Mandela finally withdrew their case following a deluge of negative press in March of 2001.  PhRMA, on behalf of that same industry, is now bearing its fangs again, but will use misleading studies, op-eds, and threatening lobby visits to delay and even reverse pro-health reform.  Fortunately, the global press and treatment activists are lifting the curtain and shining a spotlight.  But it will take concerted effort to win this pro-health campaign against a US-dominated industry that over and over again cries crocodile tears about poor peoples’ health while gouging their governments for every last penny of monopoly profit.

Governance and transparency at PEPFAR

Originally printed in The Lancet: Global Health, January, 2014.

by Matthew Kavanagh and Brook K Baker, Health GAP Senior Policy Analysts

The US President's Emergency Plan for AIDS Relief (PEPFAR) has been one of the most effective foreign aid programmes in history. It reached 6·7 million people with antiretroviral therapy in 2013,1 and has also strengthened country health systems, provided billions of dollars in aid to biomedical and behavioural prevention programmes, and helped to drive declines in morbidity and mortality in many countries in sub-Saharan Africa.2 PEPFAR began as an emergency response, after relative inaction by wealthy nations, and rapidly built disease-response capacity by funding non-governmental organisations. Although PEPFAR, even in the early years, helped to strengthen health systems,34 it also faced criticism that it created parallel structures;5 criticism the programme has responded to in recent years by shifting much of its clinical funding to local partners. The programme has increasingly emphasised country ownership and has responded to aid effectiveness concerns, creating innovative shared governance structures, such as those in South Africa. Similarly, PEPFAR's recent structured coordination with the Global Fund to Fight AIDS, Tuberculosis, and Malaria is a laudable effort to harmonise bilateral and multilateral health programming.

However, transparency has declined rather than improved. A recent analysis in the Aid Transparency Index ranked PEPFAR as very poor—50th of 67 aid agencies worldwide.6 The report noted that, “PEPFAR does not disclose information on contracts to prime partners and sub-partners in a machine-readable and open format consistent with the US Open Data Policy.”

Just a few years ago, countries met after the Paris Declaration on Aid Effectiveness and agreed to an Accra Agenda for Action6 that put public transparency at the centre of the global aid effectiveness project:

“Donors will publicly disclose regular, detailed and timely information on volume, allocation and, when available, results of development expenditure to enable more accurate budget, accounting and audit by developing countries” (section 24).

It is striking that there is probably more data for the planning, spending, and outcomes of PEPFAR programmes than for any other aid programme in the world. PEPFAR undertakes a careful and detailed planning process every year for every country that receives aid—a process of creating Country Operational Plans that includes consultation with governments and detailed interagency priority setting. PEPFAR has also done expenditure analyses that show, in detail, what the provision of specific AIDS-related services cost in various geographical and implementation settings.

However, PEPFAR refuses to make data fully public in a timely manner. Country Operational Plans are published only many months after the year's programming has already finished, and then with unexplained redactions of nearly all relevant data. Programmatic goals and targets for each country are inexplicably missing, making the published plans largely useless to increase understanding of the successes or failures of the programme. In a departure from the early years of the programme, the most recent reports to the US Congress do not contain even the most basic data about how programme funds are allocated to programmatic areas.

It is time for PEPFAR to become a leader in transparency, to share its data in the service of its mission to end the AIDS crisis, and to expand real country ownership. If published as soon as they are approved for the coming year, with details about the interventions funded, geographic areas of activity, and specific goals and targets, then Country Operational Plans could be important instruments for partner governments and civil society. Knowledge of exactly what PEFPAR-funded non-governmental organisation are doing, what gaps they are filling, and what outcomes they are expected to achieve should be central to the planning of the AIDS response in these countries. Civil society in countries that receive PEPFAR funding could be mobilised to help to monitor the effectiveness of PEPFAR programmes, as well as their own government's efforts alongside donor-funded efforts. Meanwhile, PEPFAR costing studies could be crucial for national programme planners—how much the delivery of antiretroviral therapy costs in a given region should be essential information to be shared with the world. A bill recently passed by US Congress will require greater PEPFAR reporting,8 but is unlikely to change practice for the Country Operational Plans, which is a missed opportunity.

Even more importantly, PEPFAR can engage in a planning process that is itself transparent and consultative. Global health initiatives miss important opportunities to strengthen public health systems and civil society capacity when they do not structure governance mechanisms for substantive engagement with the organised end-users of their programmes.9 When PEPFAR supports a major portion of AIDS services in a country, lack of knowledge of and ability to affect allocation decisions results in a major democratic deficit. A recent diplomatic cable instructed PEPFAR teams to begin engaging civil society,10 but there is a danger it will be simply be a pro forma exercise. If, instead, engagement is substantive, and Country Operational Plans and costing studies are made public, PEPFAR could use its data and planning processes to drive not only AIDS objectives, but democracy-strengthening too.

We declare that we have no conflicts of interest.


1 The White House. Fact sheet: shared responsibility to strengthen results for an AIDS-free generation. Office of the Press Secretary, Dec 2, 2013 Dec 4, 2013).

2 US Department of StateBlueprint for Creating an AIDS-free GenerationAvailable from: Oct 28, 2013).

3 Kruk MEJakubowski ARabkin MElul BFriedman MEl-Sadr WPEPFAR programs linked to more deliveries in health facilities by African women who are not infected with HIVHealth Aff (Millwood) 2012; 311478-1488CrossRef | PubMed

4 Kiwanuka NStover BLim T, et alDid PEPFAR funding affect non-HIV health indicators? Longitudinal study of facility-based baby deliveries in Uganda, 2005—10Lancet 2013; 381S74Summary | PDF(42KB) | CrossRef | PubMed

5 Biesma RGBrugha RHarmer AWalsh ASpicer NWalt GThe effects of global health initiatives on country health systems: a review of the evidence from HIV/AIDS controlHealth Policy Plan 2009; 24239-252CrossRef | PubMed

6 Publish What You FundAid Transparency Index 2013 for PEPFAR Nov 24, 2013).

8 Menendez R. PEPFAR Stewardship and Oversight Act of 2013: 113th Congress, Sept 18, 2013.

9 Cohn JRussell ABaker BKayongo AWanjiku EDavis PUsing global health initiatives to strengthen health systems: a civil society perspectiveGlob Public Health 2011; 6687-702CrossRef | PubMed

10 US Department of StateUnclassified cable to all diplomatic and consular posts: involving civil society as part of country-level planning. Washington DC Oct 28, 2013).

Uncited Reference

7 Accra Agenda for Action. Accra: Organisation for Economic Co-operation and Development, 2008.

a University of Pennsylvania and Health Global Access Project, Philadelphia, PA 19104, USA

b Northeastern University School of Law and Health Global Access Project, Boston, MA, USA

Access this article on ScienceDirect


Health GAP Statement on BMS Patent Pool Licenses for ATV Access

Contact:            Brook Baker: +1 617 259 0760 *
Paul Davis: +1 215 833 4102 *
Medicines Patent Pool agreement with Bristol-Myers Squibb expands access to critical second-line AIDS medicine, even while BMS excludes some middle-income countries. More companies should join the Pool and offer expanded geographic coverage.

Health GAP applauds the announcement of a new licensing agreement negotiated by the Medicines Patent Pool with Bristol-Myers Squibb (BMS) for a key second-line protease inhibitor, atazanavir (ATV). Although the official territory is comprised of 110 low- and middle-income countries, a key clause allows generic licensees to sell without obstacles in another 34 countries where no ATV patent is in force. In addition, generic licensees will be able to supply countries that issue compulsory licenses. The new agreement effectively extends coverage to many more people with HIV than the prior 49-country deal BMS had previously confidentially negotiated with three generic licensees.

The scope of the license covers nearly 90% of people living with HIV in low- and middle-income countries, but the remaining 10%, who live in middle-income countries, are still not covered. Some of the excluded 10% are left without coverage because they fall under a separate bilateral agreement made between BMS and the Brazilian Government. People living with HIV need 100% coverage and thus urge the MPP, BMS, and other MPP licensors like Gilead to expand geographic coverage.

“Companies with existing MPP agreements should commit to expanding coverage,” said Professor Brook Baker, Senior Policy Analyst for Health GAP. “But it is also essential that other companies with critical new medications enter into open-access licenses with the Pool and ensure coverage for all low- and middle-income countries. This is particularly urgent for ViiV, whose majority shareholder, GlaxoSmithKline is demanding extremely narrow coverage for dolutegravir. Abbvie should open access to lopinavir and ritonavir separately so that ritonavir can be used as a booster with ATV and other protease inhibitors. Also, Merck and Johnson & Johnson, the last two hold-outs, must speedily license their HIV drugs,” said Baker.

“Achieving an AIDS-Free Generation requires expanding access to better ARV treatment regimens, and that depends on a critical mass of companies joining the Medicine Patent Pool with overlapping territories. There is urgency with respect to existing WHO-recommended regimens, but we also demand rapid access to critical new, improved ARVs like dolutegravir and tenofovir pro-drug," said Paul Davis of Health GAP.

“People with HIV in low- and middle-income countries have a right to expedited access to the latest treatments that are more effective, longer lasting, and have fewer side effects. Many of the ground-breaking new medications will be much, much cheaper to produce because they contain simpler molecular structures and lower amounts of active ingredients,” said Health GAP’s Maureen Milanga in Nairobi. “We need GSK and Merck to speed up talks with the Patent Pool for game-changing new products like TAF and DTG.”

“Governments that aren't included in MPP licenses should issue compulsory licenses and use all other public health flexibilities that are part of the WTO’s TRIPS Agreement,” stated Health GAP’s Asia Russell. “Such options will have a much more positive impact on affordability and access than industry-oriented proposals such as tiered-pricing initiatives.”

Analysis of Territorial Access Issues in the MPP/BMS Atazanavir License

By Brook Baker, Health GAP Senior Policy Analyst

On December 11, the Medicines Patent Pool announced a new licensing agreement for a 2013 WHO recommended second-line antiretroviral, atazanavir (ATV).  At this point, it is important for IP activists, generic companies, and countries to understand both the express territorial coverage of the license (110 countries) and its “effective” territorial coverage as well (144 countries plus the possibility of compulsory licensing expansion).  Because royalty payments are actually limited to situations where granted patents are in effect – and with some exceptions even then, it is also important to identify the limited circumstances where royalties will be imposed.  Finally, it is important to analyze some of the licensed or patent-free availability or ritonavir or cobicistat for co-formulated boosting. Download the full analysis here.

US's Proposed TPP Transition Period for Middle-Income Parties is Fools Gold

Nov. 27, 2013, By Brook Baker

Inside US Trade[1] and the USTR[2] have announced that the U.S. is floating new proposals on IP in its marathon Trans-Pacific Partnership Agreement negotiations. Although the U.S. touts its new proposals as being balanced, as prioritizing access to medicines, and as recognizing the interests of developing country negotiating partners, particularly, Peru, Vietnam, Mexico, and Malaysia, its actual proposals offer modest temporary respite at best from only a small fraction of U.S. demands.

The U.S. is essentially sticking by all of the demands revealed in the latest Wikileak disclosures, except with respect to its grudging acceptance of pre-grant oppositions (it had previously given up demands for mandatory patents on new forms of existing medicines). Required patents for new uses, required granting of patents on medicines even in the absence of improved therapeutic effects, data/regulatory monopolies on clinical trial data (data exclusivity), mandatory patents on virtually all medical, surgical, and diagnostic procedures, enhanced damages for patent infringement, mandatory injunctions, and stronger border measures will all be mandatory the minute the TPP is signed. Even more ominously, IP will remain in the investment chapter, meaning that drug companies will immediately be able to sue TPP members if the companies' expectations of IP-based profits are thwarted by fully lawful legislative, regulatory, or judicial decisions.

Even more ominously, as soon as countries cross a threshold of $12,616 GNI per capita - roughly fourth of the U.S. figure, they will be required to grant patent term extensions to compensate for regulatory delays, to allow ever-greening of data exclusivity without any explicit public health safeguards, and to require drug regulatory authorities to act as patent police through registration-patent linkage. Malaysia and Mexico are already nearing the upper-income thresholds with GNIs per capita of $9810 and $9740 respectively in 2012. Peru is half-way there with a per capita GNI of $5880. Only Vietnam will achieve any real temporal breathing room with a per capita GNI of $1400, barely lower middle-income. Accordingly, current middle-income country partners - as soon as they cross that World Bank threshold and become "upper-income" - will be bound by the highest level of patent and data monopolies ever proposed in trade negotiations.

In terms of actual "concessions", the U.S. has given very little except what was already on the books in the May 10, 2007 New Trade Policy that had been retrofitted into trade agreements with Peru and Columbia six years ago. Patent term extensions will not be mandatory nor will patent-registration linkage. Data/regulatory exclusivity will potentially have some clear public health safeguards. But each of these provision will loom on a fast-approaching horizon.

In exchange for these temporary concessions, the U.S. is proposing a ridiculously long period of biologic exclusivity - 12 years - far in excess of what other countries currently offer, if they offer biologic data exclusivity at all. Biologics are a growing element of total pharmaceutical expenditures and are particularly important with respect to certain chronic, non-communicable diseases such as diabetes and cancer that are of growing concern in low- and middle-income countries. The evidence justifying extended periods of biologic exclusivity is contested, even in the U.S., but the biotech industry has pushed its lobbying efforts at the USTR to historic levels to tie all TPP parties, even the U.S., to this unjustified period of monopoly control.

Don't be fooled. The U.S. is continuing to demand an IP straightjacket for all TPP members with respect to the IP terms that will become immediately effective to all parties. Moreover, the U.S. is fitting TPP middle-income countries for their future IP leg-irons. IP restraints will be a little looser in the short term, but highly constricting shortly thereafter. Monopolies on medicines will be longer, broader, and stronger. Generic competition and lower prices will be delayed. Patients will suffer and governments will face mounting costs for new medical technologies. The U.S.'s TPP transition period is fools gold.





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