Health GAP Talking Paper
www.globaltreatmentaccess.org | www.healthgap.org

November. 13, 2002

At present, over 40 million people are living with HIV/AIDS, including nearly 30 million in Africa. Although nearly six million people in developing countries need immediate access to affordable, high quality anti-retroviral medicines, 95% of people with treatable AIDS in developing countries and 99% in Africa are living and dying without medicines that have dramatically extended lives in the U.S. and other industrialized countries.

It is against this backdrop of 8000 lives lost each and every day that we must judge the efforts of the United States to undermine public health accords reached at the WTO meeting exactly one year ago‹in its negotiations over the matter of production of medicines for export and in its negotiations of new free trade agreements in Africa, Latin America, and elsewhere.

While the U.S. government connives to guarantee bloated profits for the U.S. pharmaceutical industry, the body count rises through a vicious form of medical apartheid and death by patent.

At the WTO Ministerial meeting in Doha, Qatar, on November 14, 2001, the U.S. government signed a consensus document declaring that

"4. We agree that the TRIPS Agreement does not and should not prevent Members from taking measures to protect public health. Accordingly, while reiterating our commitment to the TRIPS Agreement, we affirm that the 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.

In this connection, we reaffirm the right of WTO Members to use, to the full, the provisions in the TRIPS Agreement, which provide flexibility for this purpose."

Among the flexibilities clarified at Doha, are:

"5(b) Each Member has the right to grant compulsory licenses and the freedom to determine the grounds upon which such licenses are granted.

5(d) The effect of the provisions in the TRIPS Agreement that are relevant to the exhaustion of intellectual property rights is to leave each Member free to establish its own regime for such exhaustion without challenge, subject to the MFN and national treatment provisions of Articles 3 and 4."

In addition to clarifying these key flexibilities within the TRIPS Agreement, the Doha Declaration also promised to resolve the so-called production-for-export problem:

"6. We recognize that WTO Members with insufficient or no manufacturing capacities in the pharmaceutical sector could face difficulties in making effective use of compulsory licensing under the TRIPS Agreement. We instruct the Council for TRIPS to find an expeditious solution to this problem and to report to the General Council before the end of 2002."

Contrary to the consensus reached at Doha by the U.S. and all other WTO members, contrary to the Executive Order 13155, issued by President William Clinton on May 10, 2000, contrary to the assurances of the U.S. Trade Representative that the Bush Administration would continue to enforce the Clinton Executive Order (statement issued Feb. 20, 2001), and contrary to the pro-Doha text of the recently enacted Trade Promotion Authority (Trade Act of 2002), the U.S. continues to pursue trade and intellectual property provisions which would dramatically reduce the capacity of developing countries to respond to the HIV/AIDS pandemic and to other serious public health problems.

The most dramatic and open obstructionism is occurring in the ongoing TRIPS Council negotiation involving paragraph 6 of the Doha Declaration that requires WTO members to find an expeditious solution permitting producer countries to manufacture and export medicines and other medical technologies to importing countries that otherwise lack a meaningful pharmaceutical capacity or sufficient economy of scale to efficiently produce necessary health care products. For countries with insufficient manufacturing capacity and/or insufficient market size, the only realistic sourcing mechanism is importation.

In ongoing TRIPS Council negotiations on paragraph 6, the U.S. continues to pursue conditionalities that would: (1) reduce eligible diseases to HIV/AIDS, TB, and malaria only, and to similar "severe" epidemics; (2) limit importing countries entitled to least developing countries and low-income developing countries only, excluding many other developing countries with significant unmet public health needs; (3) limit exporting countries to developing countries only, thereby excluding important alternative sources of supply which could further reduce the price of medicines; (4) limit covered products to medicines only and perhaps diagnostic kits; and (5) impose strict product diversions rules which would severely tax the impoverished enforcement regimes of poor countries and which would prevent pooled procurement by regional groups like the African Union.

In addition to imposing highly restrictive conditions, the U.S. also is seeking to enforce a procedural solution that is both needlessly burdensome (requiring numerous compulsory licenses, issued product by product and country by country in both exporting and importing countries) and temporary (favoring a short-term moratorium or waiver instead of a long-term, permanent solution). These restrictions and procedural impediments are designed to protect the interests of the proprietary drug industry rather than the interests of poor people in developing countries who desperately need access to affordable, high quality medical products.

Fortunately, the U.S. is facing intense opposition in the TRIPS Council from an emboldened and determined coalition of developing countries led by both producer countries, Brazil and India, and by Africa Group countries as well. In an extraordinarily cynical move, even by U.S. standards, the USTR has recently written to African countries urging them to support the U.S. position. The letter from Rosa Whitaker, Assistant USTR for Africa, argues that broadening the focus beyond HIV/AIDS, malaria and tuberculosis would "divert attention and resources away from these epidemics Š and risks trivializing the gravity of these serious epidemics."

To the contrary, by sourcing many medicines and medical products more cheaply for a broad range of public health needs, African governments would free up scarce resources and thus be more able to respond effectively to the big three pandemics. Moreover, public health is neither the jurisdiction of the USTR nor the WTO; African countries themselves must be allowed to exercise their autonomy and determine their own public health needs.

In her letter, Whitaker also argues that accessing the full range of health care products would divert attention from access to medicines. Once again, this logic is specious since Africa countries could use costs savings on diagnostics to purchase more medicines for treatment. In her third plea, Whitaker more openly and honestly addresses the interest of U.S. drug companies, arguing that lack of import-country restrictions would encourage "abuse" of compulsory licenses for commercial purposes. In particular, she argues that generic producers might focus on more advanced and lucrative developing country markets at the expense of Africa. However, the opposite is true ­ by gaining some access to market with meaningful purchasing power, generic producers could reach economies of scale that would allow them to sell to African countries even more cheaply. Finally, Whitaker argues that only developing countries should be permitted to produce medicines for export. Although this limitation would seem to facilitate technology transfer to African countries, the recent history is one of disinvestments by drug companies in Africa. Africans should be able to purchase high quality generics from any reputable producer especially in the short run where sources of generic supply are so impoverished.

Because it is unlikely to succeed in this transparently disingenuous letter campaign and because of its long-standing objective of increasing IP protections through bilateral and plurilateral trade agreements, the U.S. has just announced a regional trade initiative in Africa. Just like it is doing in negotiations to establish a Free Trade Area of America, the U.S. is trying to undermine its promises at Doha and its legal obligations under the Clinton Executive Order and trade objective language in the new Trade Act by seeking regional negotiations with African countries that would impose onerous intellectual property rules in exchange for illusory promises of increased access to U.S. markets.

Pursuing this end-run strategy, on November 4, 2002, United States Trade Representative Robert B. Zoellick formally notified Congressional leaders of the Administration's intent to initiate negotiations for a free trade agreement with the nations of the South African Customs Union: Botswana, Lesotho, Namibia, South Africa and Swaziland. With respect to intellectual property rights, the negotiations would:

To meet "standards of protection similar to that found in U.S. law," SACU nations would be required to limit compulsory licenses to national emergencies or to governmental, non-commercial use only. They would be required to bar parallel trade, to extend patent monopolies for administrative delays, and to link drug registration rights to patent status. Finally these nations would be required to enhance protections for clinical trial testing data and to adopt criminal enforcement for patent violations, including improvidently granted compulsory licenses. In sum, the proposed negotiation objectives would completely eviscerate the Doha flexibilities, dramatically increase IP protection, and shamefully reduce access to more affordable generic products.

These intellectual property negotiation objectives directly violate the principal negotiating objectives in the Trade Act of 2002 which requires the U.S. " to respect the Declaration on the TRIPS Agreement and Public Health, adopted by the World Trade Organization at the Fourth Ministerial Conference at Doha, Qatar on November 14, 2001." 19 U.S.C. § 3802(b)(4)(C). Similarly, by seeking TRIPS-plus provisions found in U.S. law, the U.S. Trade Representative is also directly violating Executive Order 13155, which in relevant part, reads: (a) In administering sections 301-310 of the Trade Act of 1974, the United States shall not seek, through negotiation or otherwise, the revocation or revision of any intellectual property law or policy of a beneficiary sub-Saharan African country, as determined by the President, that regulates HIV/AIDS pharmaceuticals or medical technologies if the law or policy of the country: (1) promotes access to HIV/AIDS pharmaceuticals or medical technologies for affected populations in that country; and (2) provides adequate and effective intellectual property protection consistent with the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement) referred to in section 101(d)(15) of the Uruguay Round Agreements Act (19 U.S.C. 3511(d)(15)).

NGOs, including Health GAP have proposed a simple and expeditious solution to the paragraph 6 production-for-export problem: namely limited exceptions to patent rights for the manufacture and export of medical products under Article 30 of the TRIPS Agreement. This is the solution expressly endorsed on September 20, 2002, by the World Health Organization:

[T]he limited exception under Article 30 is the most consistent with this public health principle. This solution will give WTO Members expeditious authorization, as requested by the Doha Declaration, to permit third parties to make, sell and export medicines and other health technologies to address public health needs.

It is also the solution implicitly endorsed by the UK Commission on Intellectual Property Rights which emphasized the importance of economies of scale in attracting generic producers. And, finally, it is the solution endorsed by the European Parliament which recently adopted the following amendment to its medicines regulation scheme:

Manufacturing shall be allowed if the medicinal product is intended for export to a third country that has issued a compulsory license for that product, or where a patent is not in force and if there is a request to that effect of the competent public health authorities of that third country.

Instead of fulfilling its promises at Doha and recognizing public health and human rights imperatives, the U.S. has adopted a multi-strategy approach of maximizing the objectives of the proprietary drug industry. By means of indirect trade threats, new regional negotiations, and behind-the-scenes attempts to narrow the Doha accord, the U.S. pursues drug company profits at the cost of millions of lives. Activists must continue to denounce and expose the U.S.¹s obstructionist approach to public health needs in developing country, most especially their need for sustained access to affordable generic medicines.