It is a known fact that 25,000 people die each day from treatable diseases. It has been established that the principle cause of these deaths is the high price of medicines which make them unaffordable to those who suffer from these diseases. A number of national and international health organizations have come together as part of a campaign on World Trade Organization (WTO) issues related to medicine access. A declaration was made at the November 2001 WTO Ministerial Conference verifying the importance of public health in trade negotiations. The declaration affirmed the rights of governments to make full use of public health safeguards in legislation known as the Trade-Related Intellectual Property Rights (TRIPS) Agreement. These safeguards include allowing countries to produce generic versions of patented medicines (called 'compulsory licencing') or to import patented medicines from other countries (called 'parallel importing'). The WTO also agreed to find an “expeditious solution” to the problem faced by countries that are too poor to import patented medicines but also lack the pharmaceutical capacity to produce generic drugs.In February of 2003, the USTR (United States Trade Representative) effectively backed out of the November 2001 agreement. The U.S. is now pressuring other countries to go beyond WTO rules to prevent the global price monopoly held by U.S. pharmaceutical companies from being challenged. The USTR is working to pass several bilateral and regional trade deals that will almost totally obliterate the possibility of generic medicine competition.
What is TRIPS and how is it related to this?
The Trade-Related Intellectual Property Rights (TRIPS) Agreement is a WTO pact that calls for countries to respect patent rights, including those for pharmaceutical products. Most countries need to comply by this rule by January 2005, and until then a few countries like India are producing generic medications rather than using more expensive patented products.
TRIPS insists that countries buy medicines from pharmaceutical companies rather than from countries producing cheap generic versions of drugs. However, there are certain exceptions.
1. In countries where prices are very high or supples limited, and this is not just in a national emergency, TRIPS allows the manufacture of the required drugs by generic manufacturers, which is far more affordable for the afflicted. However, most poor countries just do not have the production capacity and are unable to take advantage of this provision. This is compulsory licencing and has worked very well in Brazil.
2. Countries could buy patented medicines second hand from countries that can afford to purchase them directly from pharmaceutical companies. So country A could buy the drugs in questions, at the price set by the pharmaceutical company and export it to country B (which is poorer) at a lower price. Note that the drug being exported to country B is NOT a generic version of a patented drug. This is known as parallel importing.
What is the Doha Declaration?
In November 2001 Trade Ministers at the WTO Ministerial Conference in Doha “The Declaration on TRIPS and Public Health,” which stated that intellectual property rights are secondary to public health interests, and that countries in public health crises can make use of compulsory licensing and parallel importing. This would then allow developing countries to increase access to essential medicines.
The Doha Declaration then goes on to say: “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.”
So what is the problem and where does the USTR come into all this?
In November 2002 and February 2003, the USTR blocked such this "expeditious solution" which would have allowed poor countries access to cheap generic medicines. Currently under TRIPS, the export of cheap generic drugs is prohibited even when the importing country does not have a patent for the drug in question. It was thus suggested that a simple solution would be to allow the export of such cheap generic drugs especially to countries which could not manufacture it themselves.
The USTR has not only prevented this from happening but is also pushing other countries into signing various regional and bilateral trade agreements. Some of these especially the highly controversial Free Trade Area of the Americas sets standards for setting a country’s patent term beyond 20 years without justification for extending already lengthy monopolies on medicines, allows drug companies to obstruct the rapid entry of quality generics to the market once a patent expires, and extraordinarily limits the rights of countries to use compulsory licensing well beyond what has been agreed to through the WTO.
What do the pharmaceutical companies argue?
The pharmaceutical industry claims that generics would undermine their capacity to pay for research and development by cutting into profits that rightfully belong to them. So the key arguments put forth by the industry centre around funding and the losses they would suffer as a result of generics.
But what do statistics show?
Here are some remarkable statistics:
1. According to Fortune 500 Magazine between 1991 and 2002, the drug industry was the most profitable industry in the world.
2. From Africa (where the access to medicines problem is particularly acute and countries lack the manufacturing capacity to take advantage of the compulsory licencing provisions), the profits of the drug companies are only 1.3% of their total revenues. This has been famously described as "about three days fluctuation in exchange rates," according to an industry analyst quoted in The Washington Post.
3. The bill for Research and Development is actually footed by the American public. Here are the names of some key drugs and who funded them:
a. Didanosine (ddl)- National Institute of Health (NIH)
b. Lamivudine (3TC)- Emory, Yale
c. Nevirapine (NVP)- NIH, National Institute of Allergy and Infectious Disease (NIAID)
d. Stavudine (d4T)- National Cancer Institute, Yale
e. Zidovudine (AZT)- NIH, NCI
4. Here are some statistics about the cost of production of some key drugs and their price in the market:
a. Ciprofloxacin- A 250mg tab costs $0.50 to produce but is sold at $3.40 which is a difference of 98%
b. Fluconazole- A 200mg tab costs $0.30 to produce but is sold $12.20 which is a difference of 98%.
c. 3TC- A 150mg tab is produced at $0.30 and sold at $4.50 which is a difference of 93%.
d. AZT- A 100mg tab is produced at $0.10 and sold at $1.70, the difference being 94%
d. d4T- A 40mg tab is produced at $0.20 and sold at $4.90, the difference is 96%.
Source: MSF, 2001
5. Tax information reveals that this year, Merck used 13% of its profits 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 according the Securities and Exchange Commission (Families USA, 2002).
52% of new drugs on the market aren't even the result of R&D, but are "me too" drugs that are simple reformulations of old products slapped with new stickers (Public Citizen, 2001).
So what is the solution?
1. Change trade rules to end the costs of these vital medicines. Developing countries should be allowed to market, import, export and produce generic versions of drugs that are essential and not just in case of 'national emergencies'.
2. Do not allow rich countries to use the WTO to bully poorer countries over patenting. Section 301 of the US Trade legislation should be repealed with immediate effect.
3. Pharmaceutical companies should make drugs affordable to those who need them, by cutting costs especially for Africa. There needs to pressure on companies such as Pfizer and GSK to achieve this.
4. The TRIPS guarantees on public health should be strengthened. There should be a greater emphasis on public health for developing countries. TRIPS should review the impact of strong patents on the poorest.
The sources for this are numerous. I am outlining a few of the key and interesting sources. Some of these websites will direct you to further reading:
1. www.geocities.com/medicinepolicy is a good source with comprehensive coverage of the key issues.
2. The Oxfam Cut the Cost campaign has a downloadable primer at www.oxfam.org.uk/cutthecost.
3. Oxfam also has a briefing paper on Pfizer which has been the target of those campaigning for access to essential medicines.
4. Human Rights Watch (www.hrw.org) has material on the access to essential medicines especially with regard to the FTAA. There is a good summary of the issues surrounding the FTAA, access to medicines and human rights.
5. The Students Global AIDS Campaign (SGAC) website www.fightglobalaids.org has material on the AIDS pandemic in its section on 'Tools'. It also has a useful handbook with the (relevant arguments and organizational tips) on its Coca Cola campaign in Africa.
6. www.zmag.org has been publishing a series of articles in its section on 'Global Economics' on the WTO, public health and the Bush AIDS plan.
7. The Guardian, UK has been publishing a series of reports on the AIDS pandemic and the access to medicines debate. Look at http://www.guardian.co.uk/aids/0,7368,405525,00.html.