Health GAP
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Brook K. Baker, Health GAP

With the new Chairman's Statement on Paragraph 6, dated August 21, 2003, it is easy to discern the U.S.'s latest plan to shrink the Doha Declaration to a totally ineffectual platitude with no real capacity to deliver cheaper, standard-quality generic medicines to countries that lack the same capacity to produce medicines efficiently as the U.S. does. In essence, the U.S. has engaged in a two-part squeeze play creating "the incredible shrinking Doha Declaration."

On one end of the vise, the U.S. has tried to limit countries that are permitted to import generic medicines pursuant to a compulsory license to address a public health need in four ways. First, the U.S. brokered an absolute agreement from 23 relatively rich countries that they would not issue compulsory licenses for importation under any circumstances. Obviously, many of these countries are large enough and have sufficiently robust generic industries to issue a compulsory license for domestic production. But still the U.S. has succeeded in shrinking the richest part of the international market, essentially engaging in protectionism at a historic level. Second, the U.S. convinced some other, generally smaller or poorer countries (12 in all [note: China was listed twice!]) to agree to issue compulsory licenses for import only in order to address national emergencies or other circumstances of extreme urgency. Another piece of the potential market for generic medicines was thereby lopped off, certainly including some countries that don't need to import (China) but also including countries that have no domestic capacity whatsoever (Qatar). Third, the U.S., and presumably the E.U., forced the E.U. accession countries, 10 in all, to import only on an emergency or urgency basis and to relinquish even this right upon accession into the E.U. This will certainly have a devastating impact on the costs of medicines in some very poor Eastern European countries, including some that are facing an escalating HIV/AIDS crisis.

To this total of 45 countries that have expressly relinquished their sovereign right to import generic medicines for public health purposes pursuant to a compulsory license, the U.S. has imposed a fourth condition that threatens importation for many other middle-income developing countries. Basically, the U.S. has set up a notification-and-review process whereby countries that say that they need to import generics because of incapacity in their pharmaceutical sector will be forced to prove and then defend such determinations. The standard for proving "insufficient capacity" is already terribly uncertain. Accordingly, the reporting-and-review process will, as a practical matter, deter countries from risking involvement in a damaging and costly WTO dispute resolution process simply because they could import generic medicines much more cheaply than they could produce them at home. This prove-and-review standard doesn't name countries, but it will certainly have a deterrent effect on countries which might try to import cheaper generics.

Accordingly, this demand-end of the vise is designed to dramatically shrink the potential market for generic drugs and to exclude virtually all markets with meaningful and stable purchasing power.

At the other end of the vise, the supply end, the U.S. is trying to dramatically increase the risks and costs of producing generic medicines for export. In part, the risk factors for generic producers include the shrinking markets mentioned above. In particular, generic producers will be uncertain whether a particular country has properly determined that it lacks sufficient pharmaceutical capacity or that there is a public health emergency - a decision that can not only be reviewed in the WTO, but a decision that might prompt a lawsuit by a patent-holder.

Moreover, the U.S. is also adding to the direct costs of manufacturing generic medicines by its overly stringent anti-diversion standards, which should more accurately be called bloated-pricing standards. As amply described by DG Shah's Comments on the draft Chairman Statement, varying pill size, shape, and color is not cost-free, particularly when moving from round, white tablets or capsules. Although there may well be some sense in not using a proprietary name (a trade mark infringement) or the same packaging, there is virtually no sense in adding dramatically to costs (and potential bio-availablity) by changing size and shape. This added and unnecessary cost burden is especially eggregious, as DG Shah points out, when you might have to change trade dress, size and shape for multiple small markets.

Shrink the market, increase costs, and add burdensome procedural requirements - is that the simple and efficient solution promised at Doha? The answer is obviously no. And the answer is no because the U.S. remains more committed to maximizing profits for the most profitable industry in the world, Big Pharma, than it is to the million of lives at stake.

Activists are accused of rhetorical excess when we talk about trade barriers, intellectual property barriers, and lives hanging in the balance. To bureaucrats in the USTR these lives are literally and casually traded for profit - profit for the pharmaceutical puppet masters who hide behind the scene and pull the strings. Unfortunately, for reasons that cannot be fathomed, certain developing countries, including some in leadership postions and that face escalting public health dilemms, are content to trade their citizens' health for minor reductions in farm export subsidizies or for temporary access to textile markets (before an even cheaper producer arrives on the scene). In other words, the responsibility for the incredible shrinking Doha Declaration certainly rests primarily with the U.S. (and secondarily with the E.U. and Japan), but developing countries are becoming complicit in their own destruction. When unified in the aftermath of the Anthrax scare, developing countries succeeded in overpowering the U.S. bully-boys and producing the Doha Declaration. Now, they are letting the world's biggest bully talk them and conditionalize them to death. Not only should they reject the Chairman's draft statement, they should reject the Motta text of December 2002. It too contained too many compromises of vital interests. Developing countries would do better to rely on the text of the Doha Declaration and the flexibilities of the TRIPS Agreement. Then willing generic producers could export under Article 30 (permitting limited exceptions to patent rights) to willing importers that have issued compulsory licenses. People living with diseases need a full-size, fully operational Doha Declaration, not a shrunken pale imitation ghost-written by the U.S. pharmaceutical industry.

Professor Brook K. Baker, Health GAP