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With the ravages of AIDS and other illnesses wreaking untold misery in
developing countries and high drug prices preventing sick people from
receiving life-saving treatments, pressure has mounted to remove some
of the monopoly protections in developing nations that keep drug prices
so high.
But the pharmaceutical companies do not easily let go of their privileges,
no matter the costs.
Ninety-five percent of the world's 40 million people with HIV live in
developing countries, mainly in sub-Saharan African countries. Treatable
illnesses like tuberculosis, malaria and AIDS kill 17,000 people daily,
despite the widespread availability of medicines that prolong lives in
wealthy countries.
The World Trade Organization's (WTO's) Agreement on Trade-Related Aspects
of Intellectual Property Rights, known as TRIPS, requires countries to
adopt and enforce 20 years of patent protection for inventions, including
medicines. These patent monopolies enable drug companies to maintain astronomical
prices, with potentially disastrous effects for developing countries overburdened
with massive rates of HIV infection and other diseases of poverty.
U.S.-based pharmaceutical companies were lead champions of TRIPS. Their
lobbyists played a central role in drafting the sweeping trade agreement.
And they stand out as the chief beneficiaries of the agreement: the bulk
of patents are filed by companies based in the United States and other
industrialized nations.
Soaring death tolls, and three years of AIDS and healthcare activists'
sustained campaigning, has drawn attention to the public health consequences
of strict patent protection.
Public health advocates have pointed to the critical importance of using
the TRIPS Agreement's so-called safeguards -- measures designed to remedy
undesirable potential outcomes from protection of intellectual property
rights. An important TRIPS safeguard is "compulsory licensing," whereby
a government can license the production of medicine to a third party (for
example, a generic drug manufacturer) without the consent of the patent
holder. Compulsory licensing breaks up a patent monopoly, and prices fall
as a result. "Parallel importing," another safeguard, describes countries
procuring patented medicines from a third party other than the patent
holder.
Developing countries have been reluctant to employ these safeguards,
largely because the U.S. government has a long history of working with
the pharmaceutical industry to fight initiatives by countries like South
Africa, Thailand and Brazil to prioritize low-cost generic versions of
AIDS drugs and other medicines.
Through direct action and protest, AIDS activists and others forced
the Clinton administration to abandon a policy of using bilateral pressure
to demand countries provide patent protections in excess of that required
by TRIPS [see "AIDS Drugs for Africa," Multinational Monitor, September
1999]. But many countries have remained fearful that efforts to undertake
compulsory licensing will get them in hot water with the United States
and other rich countries, at the WTO or in other fora.
In early 2001, South African AIDS activists fought a lawsuit lodged
by 39 of the world's largest drug companies over their government's domestic
medicines policies. People with AIDS claimed that the drug companies wanted
to make profit in South Africa -- where one in five adults is living with
HIV disease -- no matter the cost in human lives. Drug companies claimed
the South African policy was unconstitutional and a violation of TRIPS.
International protest--from a demonstration at the U.S. headquarters of
Big Pharma to a massive rally through the streets of Johannesburg, focused
worldwide attention on the lawsuit, which quickly became too politically
costly for the industry to pursue. In April, a humiliated industry dropped
the case.
Developing countries and AIDS activists sought to leverage the South
African victory in order to demand resolution of issues relating to TRIPS
and access to medicines.
The African Group -- 33 African countries in the WTO -- insisted on a
special session of the TRIPS Council in June 2001 to address the subject
of WTO patent rules and medicines access, especially medicines to treat
HIV disease. The TRIPS Council is the TRIPS governing body, made up of
WTO member countries.
In November 2001, when the WTO held its biennial Ministerial meeting,
the African group initiative would lead to the "Doha Declaration on the
TRIPS Agreement and Public Health."
Public health advocates warmly embraced the Doha Declaration as resolving
any doubts about developing countries' legal authority to do compulsory
licensing. "We agree that the TRIPS Agreement does not and should not
prevent members from taking measures to protect public health," the Declaration
states in one of its key passages.
But the Declaration failed to resolve one outstanding issue related
to effective use of compulsory licensing in poor countries: the terms
on which countries can export drugs as part of a compulsory licensing
scheme. However, the Declaration promised the WTO would address the issue
in 2002. Now international trade negotiators are intensely jockeying over
how this issue will be resolved, with the United States advocating the
most restrictive rules, but facing a determined opposition from developing
countries encouraged by their success at Doha.
Anthrax and Double Standards
The isolation of the United States began at the June 2001 TRIPS Council
meeting. More than 40 countries made substantive interventions arguing
that patent exclusivities restrict access to affordable drugs. Zimbabwe's
presentation on behalf of the Africa Group set out the reforms and clarifications
sought by the developing countries, girded by the principle that "nothing
in the TRIPS Agreement should prevent Members from talking measures to
protect public health" and that TRIPS must be implemented by poor countries
in a manner that prioritizes fundamental public health needs, especially
drug access.
Claude Burcky, deputy assistant U.S. Trade Representative for Intellectual
Property, insisted that TRIPS did not pose any problem -- now or in the
future -- to countries responding to health care crises such as HIV. He
refused to concede that intellectual property protection had an impact
on the price of medicines.
Burcky insisted that patent rules and access to medicines are peripheral
issues in the global response to HIV and other diseases: "We believe that
participants in our discussion today should keep in mind that the TRIPS
Agreement -- its obligations and flexibility -- is, at most, one element
of the equation. To deal with serious health problems, countries need
to stress education and prevention as well as care and treatment if health
crises are to be eliminated."
Every country except the United States had focused on matters relevant
to the forum of the TRIPS Council -- that is, the impact of implementing
intellectual property protection on access to medicines and public health,
as well as important technical disputes in the Agreement itself that impinge
on access to medicines. But the U.S. negotiators resisted detailed and
substantive analysis, emphasizing instead the areas in which they had
no expertise, such as developing country health policies.
For seven months after the first special meeting and during subsequent
TRIPS Councils addressing the topic, the Africa Group continued to elaborate
language toward a Ministerial Declaration at Doha, while the United States
continued to advocate vague draft language.
The ground shifted under the USTR when in October, after anthrax exposure
cases grabbed headlines in the United States, Health and Human Services
Secretary Tommy Thompson threatened to override Bayer's patent monopoly
on ciprofloxacin (Cipro) and obtain generic versions, in order to increase
domestic drug supply and to keep costs as low as possible.
In response to the threat, Bayer cut its price, and Thompson retreated
from his threat -- in fact, he revised his statement and refused to admit
he had ever threatened Bayer in the first place. But developing country
trade negotiators had heard Thompson loud and clear: the United States
wished to exercise its TRIPS-compliant authority to prioritize health
care when patent monopolies obstruct access to medicines. There was no
more compelling example for developing countries to argue they should
have the same right, free from threat of retaliation from their more wealthy,
powerful trading partners.
The Cipro example also dramatized another significant flaw in the U.S.
negotiating logic: developing countries had recognized that any disease-specific
guidelines for interpreting TRIPS was undesirable from a public health
standpoint. The United States urged that the statement on the public health
implications of TRIPS be limited only to "epidemic diseases," such as
HIV, tuberculosis and malaria. The anthrax scare showed the folly of limiting
governments to a short list of diseases that would enable application
of TRIPS safeguards -- public health problems rarely operate in such scripted
fashion.
But still the United States refused to concede anything before the Doha
Ministerial -- even backpedaling at one point and insisting that any declaration
be restricted to "access to medicines" and not mention the phrase "public
health."
As the Doha Ministerial neared, Zimbabwean Ambassador Boniface Chidyausiku
said negotiations were "hardening" and the European Commission called
the U.S. position "intransigent."
But the consensus among the developing countries was to remain strong
in the face of U.S. pressure.
The United States and other industrialized countries desperately wanted
to show that the WTO is not stacked against poor countries, and were eager
for evidence that they "did something" at the Qatar meeting on behalf
of developing countries. The poor countries leveraged this advantage until
the last moment of Ministerial negotiations.
Developing Country Victory
WTO Director-General Mike Moore opened the Ministerial by calling the
fray over TRIPS, public health and medicines access a "deal breaker" for
the Ministerial. In the initial days of the Doha meeting, it appeared
the United States would refuse any ground on the Declaration, with Japan,
the European Union and Switzerland joining in an opposition bloc. The
Africa Group was joined by Latin American and Asian countries, establishing
their Declaration draft as the majority position.
Throughout negotiations, the EU's lead trade negotiator, Pascal Lamy,
took on the role of "mediator," offering compromise proposals that appeared
to take into account concerns of the developing countries as well as the
United States. In fact, the EU compromises watered down the developing
country demands, and were rejected by the Africa Group. Health activist
organizations like Health GAP, Oxfam, Médecins Sans Frontiéres, Act Up-Paris,
and the Consumer Project on Technology singled out the EU as being a false
ally of developing countries.
The United States, meanwhile, floated interim drafts that included everything
from geographical limitations on a pro-public health interpretation of
TRIPS rules (applying to sub-Saharan Africa only), to irrational disease
restrictions ("epidemic" public health crises only, excluding diseases
such as cancer and pneumonia) to a moratorium on WTO actions one member
could take against another regarding access to pharmaceuticals.
The moratorium proposal especially rankled developing countries, who
in implementing TRIPS want assurance that WTO rules be interpreted to
protect public health. A moratorium implies countries would temporarily
be permitted to violate rules, without establishing a lasting public health
precedent in the rules themselves.
The developing countries refused these proposals, and, at the eleventh
hour, the United States blinked. While not containing the exact language
sought by developing countries, the final statement was a clear political
victory for poor countries. The Doha Declaration on TRIPS and Public Health
makes a clear statement on the fundamental issue at stake: "We affirm
that the [TRIPS Agreement] can and should be interpreted and implemented
in a manner supportive of WTO members' right to protect public health
and, in particular, to promote access to medicines for all."
The pharmaceutical industry reacted with horror to the final version.
At the negotiating round's conclusion, the International Federation of
Pharmaceutical Manufacturing Associations (IFPMA) urged the United States
to back out of the deal. IFPMA representatives complained that the deal
undid all of their progress in getting TRIPS adopted -- an exaggeration
by any measure, but a clear sign of their frustration.
When the deal was finally announced, however, IFPMA and the industry
put on a happy face.
Calling the Doha Declaration a "reaffirmation of the TRIPS Agreement,"
Alan Holmer, president of the Pharmaceutical Research and Manufacturers
of America (PhRMA), reiterated the claim that patent issues are marginal
to addressing poor country health needs. "We hope member countries will
now focus on and address the real barriers to access to medicines in developing
countries: poverty, too few trained doctors and adequately equipped facilities,
high tariffs on medicines in many developing countries, the need for more
developed country support, political will in developing and developed
countries alike. Only progress on these issues will ultimately ensure
long-term, sustainable progress toward better healthcare in the least
developed and developing countries."
Health activists said the industry was merely trying to downplay the
importance of the Doha Declaration, in an effort to preserve the status
quo, in which developing countries did not issue compulsory licenses.
With its specific and strong affirmation of countries' right to undertake
compulsory licensing, they said, the Doha Declaration could breathe life
into TRIPS safeguard provisions that developing countries have been afraid
to rely on.
The Declaration recognizes that intellectual property protection on
medicines can have negative, as well as positive, impacts on access to
medicines, rather than linking intellectual property protection only to
the benefit of new drug development and disregarding its potential drawbacks.
It sets out the right of WTO countries to use TRIPS flexibilities to the
fullest, declaring that WTO countries have the freedom to "grant compulsory
licenses and the freedom to determine the grounds upon which such licenses
are granted." And the Declaration instructs countries to interpret TRIPS
in accordance with the objectives and principles of the agreement -- important
because upholding public health is a principle of TRIPS, but one which
previously was neither operationalized nor emphasized.
Addressing the Export Quandary
The problem that went unresolved at Doha is how countries with little-to-no
domestic capacity for manufacturing medicines or small markets can efficiently
make use of the compulsory licensing.
Current TRIPS rules restrict countries producing medicines under compulsory
license to manufacture "predominantly for the supply of the domestic market."
Rigidly applied, this provision would particularly undermine small and
poor countries' ability to do effective compulsory licensing. Although
TRIPS rules permit a country to assign a license to import a drug to a
manufacturer outside the country, the licensee must have permission both
to produce the drug in the country where their factory is based and permission
to export from that country. Thus, even if Zambia were to issue a compulsory
license for a pharmaceutical to a manufacturer in Canada, the Canadian
manufacturer would be blocked from producing and exporting the drug if
a brand-name company had a patent in Canada.
Since the very countries in most dire need of affordable HIV medicines
are the same countries with little capacity for domestic drug manufacture,
finding a way to overcome this barrier is critical to implementation of
the pro-public health interpretation of TRIPS secured at Doha.
For now, the problem is not acute. Developing countries like India,
which have large generic drug industries and substantial manufacturing
capacity for local and export-oriented production, have until 2005 to
implement 20-year patents on medicines. Thus Indian manufacturers can
produce generic versions of AIDS or other drugs -- not afforded patent
protection in India -- and export them to Zimbabwe, say, or any country
issuing a compulsory license (or where the drugs are not patented).
After 2005, new products will be patented in India and other likely
exporters. Indian generic makers will not be able to produce on-patent
versions of these products unless they get a compulsory license in India;
they will have to sell a majority of the product in India; and they will
only be able to export to countries that also issue a compulsory license,
or where the product is not patented.
For poor countries -- and even for rich countries, in the case of certain
drugs -- failing to fix this irrationality in the TRIPS will undermine
the flexibilities highlighted by the Doha Declaration, denying them access
to medicines from low-cost suppliers.
"The problem of countries with insufficient or limited manufacturing
capacity needs a long-term solution," says Cecilia Oh of the Third World
Network. "The solution is to encourage, facilitate and promote the production
and export of generic medicines to countries that need them, so as to
have competition and bring prices down."
"Countries that are not able to produce to meet the demand should not
be penalized for their lack of capacity, and their inability to use compulsory
licensing effectively," says Oh, "they must be assisted. Generic producers,
no matter where they are, should be allowed to produce and export to where
there is a demand and a need."
At Doha, the United States implausibly argued that the production-for-export
issue was not a legitimate concern. Although they did not win inclusion
of a resolution, developing countries did insist on language in the Doha
Declaration that both identified the situation as a problem and charged
the WTO with finding an "expeditious solution" in 2002.
By late June, developing and developed countries will come before the
TRIPS Council to present substantial position papers mapping out how to
resolve the problem of medicines production for export to low- and no-capacity
countries. The developing countries are seeking a solution that is not
laden with conditions and will not require them to jump through endless
hoops. They are seeking an interpretation of a TRIPS article that allows
for "limited exceptions" to the rights of a patent holder. The developing
countries want to use this provision to override the rights of a patent
holder when a producing country needs to export to a no-capacity country.
The United States, for its part, is exploring several proposals, which
are non-starters among many of the most engaged developing countries and
health activists. The proposals include:
- a time-limited moratorium on WTO actions regarding production for
export, or
- a change in the TRIPS provision restricting compulsory licensing
for domestic markets, to permit export predominantly to non-domestic
markets.
In their position paper on the issue of production of medicines for
export, the USTR argues that a moratorium "would not require amendment
of the TRIPS Agreement and application of the solution could be overseen
by the TRIPS Council, including to insure that medicine being supplied
to a member that lacks or has insufficient manufacturing capacity is not
diverted into other markets, away from the people it is intended to help.
It is worth considering whether such a solution would not in fact be the
most expeditious and least prejudicial to the rights and obligations of
members under the agreement."
Brook Baker, a law professor from Northeastern University, argues a
moratorium and other restrictive proposals from the United States are
an effort to undermine the gains of developing countries, post-Doha. "When
a moratorium ends, the same conundrum about how to structure a workable
solution will exist," says Baker. "Even worse, a moratorium, especially
a short moratorium, does not give producing countries and generic manufacturers
the legal security they need to pass enabling legislation or to invest
in production for export Ö Clear rules are preferable to vanishing moratoriums."
Both of the U.S. proposals contain built-in restrictions that render
them useless as possible solutions to a critical problem. For example:
the United States is urging countries to consider restricting compulsory
licensing for export to governments and non-profits, potentially excluding
access among people with unmet health needs covered by the private sector.
(This restriction echoes the USTR agenda in the regional forum of the
Free Trade Area of the Americas, where the United States is pushing for
restrictions on compulsory licensing only for public, non-commercial use.)
In addition, the U.S. proposal may rule out access to medicines for diseases
that are not included among "pandemics" the USTR feels warrant a public
health interpretation of TRIPS rules. Finally, the United States would
also like to see the process of compulsory licensing for export be as
administratively burdensome as possible.
"Once again, the United States seems to have forgotten that lives --
millions of lives -- hang in the balance. The United States, the EU and
the rest of the world made a promise at Doha, that the WTO would find
an expeditious solution to the production-for-export issue left open on
November 14, 2001. Now the United States [is] threatening to renege on
that promise and to conditionalize the Doha Declaration to death," says
Baker.
As in 2001, there is again not much common ground between the position
of the developing countries and the United States on the subject of getting
medicines to countries with no manufacturing capacity. Healthcare and
AIDS activist groups are monitoring the situation, while lobbying delegations
on both sides, demanding that they prioritize the public health needs
of millions who are faced with needless death as a result of the unavailability
of low cost, quality, sustainable supplies of life-extending medicines.
"To get to the right solutions, we need good faith on the part of the
developed countries," says Cecelia Oh. "It is unacceptable for the developed
countries to claim that they have fought for access to medicines but behind
the scenes, attempt to narrow the scope of the political agreement, and
whittle away the flexibilities."
Asia Russell works with Health GAP, which campaigns
for access to life-sustaining medicines for people with HIV/AIDS worldwide.
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