By Asaf Shamsi, B. Pharm., MBA
Director,
International Operations
TRIPs, the intellectual property component of the Uruguay
round GATT Treaty, gave rise to an acrimonious debate between the developed
countries and less developed countries (LDCs). On one side, business interests
in the developed world claimed large losses from the imitation and use of their
innovations in LDCs. They also asserted that establishing strong intellectual
property rights would actually benefit the developing countries by encouraging
foreign investment, the transfer of technology and greater domestic research
and development (R&D). On the other side, LDC governments adamantly opposed
this view, worrying about the higher prices that stronger intellectual property
rights would entail and about the harm that their introduction might cause to
infant high tech industries.
No country was more actively involved in opposing this
component of the GATT agreement
than India and no part of TRIPs was, and continues to be,
more sensitive than product patents for pharmaceutical innovations. The
national sentiment on this issue is well captured in an often quoted statement
made by Indira Gandhi at the World Health Assembly in 1982:
"The idea of a better-ordered world is one in which
medical discoveries will be free of patents and there will be no profiteering
from life and death."
What is striking about the original TRIPs debate and the
continuing discussions about Pharmaceutical product patents is the divergence
between the strength of the claims made by both sides.
Although
developing countries have succeeded in getting some concessions with respect to
implementation of TRIPs at the Doha Ministerial Meeting, a solution
seems to be extremely evasive, so far, even one year after the Doha
Declaration.
The World
Trade Organisation is hoping to secure an agreement to relax the rules on drug
patents as part of the current round of international talks. However, up to as
recently as November, 2002, trade ministers have so far failed to reach
agreement after almost a year of negotiations.
Numerous experts have warned that millions of people in the
developing world will miss out on life-saving drugs if governments fail to strike
a deal on cheap medicines.
According
to Dr Carlos Correa, a member of the UK government's independent commission on
intellectual property rights, there is no easy solution to the problem. He is
not really confident that there will be agreement on this before the end of the
year, and predicts that the issue will continue to be on the agenda causing
very measurable frustration for developing countries. He says that although the
simplest and most effective solution would be to allow any country to produce and
export generic drugs without restrictions, a clear legal framework is needed.
The
TRIPS Agreement allows those Members that did not provide patent protection
until January 1, 2005 to implement it. In the interim, under the so-called
“mailbox” rule, developing countries are required to establish mechanisms for
receiving and preserving priority in regard to pharmaceutical patent
applications, and to allowing for the grant of exclusive distribution rights
when prescribed conditions are satisfied.
The
Doha Declaration on the TRIPS Agreement and Public Health states:
“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.”
Paragraph 4 is stated in terms of an agreement among WTO
Ministers acting on behalf of Members. This agreement is most reasonably
considered a “decision” of WTO Members under Article IX:1 of the WTO Agreement,
and to be the substantive equivalent of an interpretation of the TRIPS
Agreement.
The Doha Declaration at paragraph 7 also directed the TRIPS
Council to authorize the extension until January 1, 2016 of the transition
period for least developed Members (hereinafter “LDCs”) to implement or enforce
pharmaceutical patent protection.
The Doha
Declaration on the TRIPS Agreement and Public Health mandates that the
agreement be interpreted in a manner that supports public health interests and
promotes access to medicines for all.
However, notwithstanding the political and legal success it represents
for developing WTO Members, the Doha Declaration did not address and resolve
many of the significant obstacles the TRIPS Agreement creates regarding access
to medicines and vaccines.
There are important lessons to be learnt from the
devastating events of September 11 in the United States and the subsequent
change in the tide of world affairs.
The fears of further terrorist acts all over the world with biological agents following the September 11 terrorist attacks in the United States have yet again brought under renewed scrutiny a number of vital issues concerning drug patents and regulations that have always been a subject of great concern and controversy, in developed and developing nations alike.
Despite having the capability to meet the
unprecedented emergency demand for antibacterial drugs at a fraction of the
costs being charged by the patent holders in the United States, pharmaceutical
firms in India are precluded from supplying these drugs, and indeed, many
others, to the United States and other developed and developing countries where
there are perceived threats of such terrorist attacks, as well as other
health-related emergency situations, such as the HIV/AIDS pandemic, which have
been prevalent for years.
The question is, should overall public interest be
compromised to safeguard the interests of patent holders?
Prior to the bioterrorism threat, Frederick Abbott,
Professor of International Law, Florida State University, had from time to time
asked public audiences to engage in a thought-experiment. What if the President
of the United States woke up one morning to find that 10% of the U.S. population
was infected with a deadly virus, and was told by advisers that while a
treatment existed, a patent on that treatment was held by a French company that
refused to make the drug available at prices affordable in the United States?
Do you think the President would say, “Well, I suppose we won’t have treatment
because we must respect the French patent holder’s interest”? The results to
this thought-experiment were self-evident prior to September 2001.
Ciprofloxacin and TRIPS
Those who have been involved in the controversy surrounding
the TRIPS Agreement and access to medicines in developing countries found the
reaction in the United States and Canada to the recent and ongoing threat of
bioterrorism of particular interest. Both the United States and Canada negotiated
very substantial discounts off the patent holder’s normal price for a patented
essential medicine (ciprofloxacin) under an explicit threat of granting
compulsory licenses in the event that satisfactory pricing arrangements were
not achieved. In both cases, the government acted promptly following the
emergence of a medical threat.
As has already been widely noted, the anthrax threat in the
United States, while extremely serious from a public health standpoint, was
nonetheless fairly speculative at the time the Secretary of Health and Human
Services threatened to grant a compulsory license on the Bayer patent.
TRIPS and HIV/AIDS
The HIV/AIDS pandemic is a present reality, and literally
thousands are dying from HIV/AIDS in Africa each day.
Pharmaceutical
industry pressure on the government of South Africa, including instigation of
pressure from the US Trade Representative and the EU Commission, may have
indelibly altered the way in which the HIV/AIDS pandemic in that country has
been addressed. The way that the TRIPS Agreement is implemented, and the manner
in which it is used by private operators, are critical aspects of reviewing its
impact on developing countries.
The case
of South Africa
More than two
thirds of all HIV/AIDS patients, i.e. 28 million out of 40 million, live in
Africa south of the Sahara. On this continent, AIDS has already replaced wars
and malaria as the most frequent cause of premature death. The World Health
Organisation (WHO) expects that average life expectancy in Southern Africa
will, in the next decade, decrease by 17 years to the age of 43 years, instead
of increasing to 64 years. This is why AIDS in Africa is more than a health
problem. AIDS signals a real social and developmental crisis.
In
addition to preventative measures, South Africa wanted to facilitate the import
of reasonably priced, good quality AIDS drugs and to stimulate production of
AIDS drugs inside the country. The draft 1997 Medicines Act was intended to
enable the government to grant compulsory licences for the production of vital
medication. A joint company called Cipla-Medpro, consisting of Cipla and a
local firm, submitted an application in South Africa .
The
US pharma industry did not like this project. That is why in 1999 the US
Government intervened several times against the new patent law in South Africa
and threatened massive trade sanctions, a plan which they were eventually
forced to abandon when the media reported less about Al Gore’s election
campaign, and more about the AIDS conflict with South Africa and Gore’s role in
it.
In a
parallel move, 39 pharmaceutical multinational companies accused the Government
of South Africa to override its patents. The dispute developed to a global
debate on fundamental priorities of patents and public health.
On 18
April 2001 the pharmaceutical companies dropped their lawsuit against these
provisions. The South African Government acknowledged the TRIPs regime but
maintained its legislative proposal and promised to seek the dialogue with
industry before issuing compulsory licenses or proceeding to parallel imports.
Cipla is about to get the first products registered in South Africa.
The case of HIV/AIDS in India
India, with officially 3.86 million HIV -positive
people in the world, is second only to South Africa, which has the highest
incidence of the deadly disease.
Cipla
Chairman, Dr. Y.K. Hamied, says: “We should face the reality that India adds
3’500 HIV-positive cases every day, and a recent World Bank report says there
will be 35 million cases by 2005 in India. This makes something like the recent
earthquake in Gujarat look like a tea party.”
Ignorance and
poverty are the most important causes of the rapid spread of the virus. There
is no cure (yet) for HIV/AIDS. The number of HIV/AIDS deaths has, however, dramatically
decreased in the USA and in Europe. For example, in Switzerland, the number of AIDS deaths annually has dropped from
a peak of 686 (1994) to 42 (2000). This must be attributed in the first place
to the revolutionary drug combination therapy, which disturbs the life cycle of
the HI-Virus, and can prevent the outbreak of AIDS or at least delay it for
years. In particular, the transmission of the virus from a mother to her unborn
child can be prevented with suitable medication.
However, in
India, only 500 of 100 000 HIV/AIDS patients at most are getting medical
treatment. Combined with the taboos on discussing sexuality and AIDS, there is
a widespread lack of hospitals and clinics, of personnel, of medical equipment,
and of drugs. AIDS is particularly common in the lower income groups. A monthly
income of less than US$ 100 has to cover the basic necessities of life. There
are often two infected persons per family but the savings are hardly sufficient
for the treatment of one.
A few years
ago, the costs of an individual AIDS-combination therapy in India were, at US$
8500 per year, prohibitively high. In 1993, Cipla introduced the AIDS drug
Zidovudine. Stavudine, Lamivudine and Nevirapine followed. Cipla offered the
AIDS drugs significantly cheaper than other companies. This in turn provoked
the lowering of prices by the international competitors on the Indian market.
In 2001, Cipla offered the anti-retroviral package at US$ 600 per year and
patient to all African governments, and at US$ 350 or US$ 1 a day to the
non-governmental charity “Doctors without Borders”, as compared with annual
costs of more than US$ 10 000 in Europe and the US.
Even at the
low price level, purchasing of anti-retrovirals is beyond the budget of most of
the developing countries. Indeed, the cost of giving anti-retrovirals to 10% of
India’s HIV/AIDS affected would effectively mean spending more than the total
health budget of the country.
The dispute in
South Africa led to a world wide debate on the balancing of private profits and
public health, which culminated in an extension for the least developed
countries (LDC) up to 2016 to comply with TRIPs. Non-LDC developing countries
like South Africa, Brazil or India will, however, have to comply with TRIPs
from 1 January 2005 onwards.
Few LDCs have
capabilities to manufacture these drugs for the treatment of epidemic/pandemic
diseases like AIDS. But the deal also does not allow them to import these drugs
from the few developing countries that can manufacture generic drugs like India
and Brazil.
There has also
been a lot of controversy and debate with respect to the definition of LDCs.
Going by the
Human Development Report of 2002, India ranks 124th on the Human
Development Index. It has been repeatedly questioned as to how such an anomaly
can exist with respect to India’s classification being so low in terms of its
Human Development Index (HDI), and the fact that it is not treated as a Least
Developed Country with respect to implementation of the TRIPs Agreement.
Given the
magnitude of the healthcare problems facing India, many have advocated that the
rationale for determining the criteria for a country to qualify as a LDC should
be re-examined.
"One shoe
size cannot fit everybody. We therefore need TRIPs-North and TRIPs-South”, says
Cipla's Dr. Y.K. Hamied.
The Doha
Declaration, however, does not identify a need to change the TRIPs agreement.
In actual practice, the multinational companies have been very quick to
challenge the application of the flexibilities built into TRIPs in favour of
public health concerns.
Developing countries and LDCs should consider revisiting
the position many of them advocated during the GATT Uruguay Round, and propose
amendment of Article 27:3(a) of the TRIPS Agreement to allow exception from
patenting of public health related inventions, including medicines and
vaccines.
Notwithstanding
this, developing countries should implement the TRIPS Agreement recognizing
that its provisions do not demand excessive levels of protection promoted by
only a few OECD countries.
It is very important to keep in mind that the TRIPs Agreement is flexible and there is room for maneuvering in several important areas such as:
- Definition
of invention;
- Scope of
patentability;
- Exception
of patentability
- The
principle of exhaustion of rights (parallel imports).
From a technical legal standpoint, the actions by the
governments of the United States and Canada after the September 11 attacks can
be justified under the terms of the TRIPS Agreement.
However, when developing country governments have proposed
to use compulsory licensing legislation to provide more affordable access to
medicines to address public health crises within their borders, they have come
under intense diplomatic and economic pressure from the government of the United
States.
Why was the U.S. government willing to threaten to grant a
compulsory license for Bayer’s ciprofloxacin patent when it has so steadfastly
opposed similar measures by developing country governments?
The WHO has consistently given five messages to highlight public health concerns in using patents for pharmaceuticals:
- Patent protection stimulates development of needed new drugs, but countries must ensure a balance between the interests of the patent holders and the needs of society.
- The Research & Development priority setting for pharmaceuticals and vaccines does not respond to the needs of the majority of people, therefore public involvement is needed to ensure development of new drugs for certain priority health problems.
- Generic competition should begin promptly upon patent expiration.
- Preferential pricing is necessary for lower-income countries and should be actively pursued.
- Health regulations should not create technical barriers to trade.
However, the TRIPs agreements have resulted in a
regime that mirrors, and even extends beyond the provisions of the Paris
Convention.
Since the time of implementation of TRIPs, various
NGOs and other public interest groups in the United States, Canada, and Europe,
have been trying to muster support against TRIPs in its present form. Over a
period of time, this support has slowly been growing, as was evident from the
failed WTO meet at Seattle. The movement has assumed significant proportions,
and is now emerging as a powerful lobby in its own right in these countries.
In the interests of the public at large, all over
the world, and also in the interests of the Indian pharmaceutical industry,
perhaps the time has come to seriously question the implementation of the TRIPs
agreements as envisaged by the powerful lobby groups in the United States, and
take proactive action, which may possibly result in opening up of these large
and profitable markets to Indian pharmaceutical companies, and, at the same
time, also result in protecting the interests of Indian companies in the
domestic market.
The Doha Declaration has set the stage for raising the issue of access
to affordable therapies for LDCs.
There is also a lot to be gained if Indian Industry joins hands with
many of the international NGOs and special interest groups in their campaign
for building a case for making drugs available at cheaper prices not only in
the LDCs, but also in the “regulated” markets of the United States, Canada, and
the European Union, and perhaps even lobby for the implementation of an international
Compulsory Licensing Law.
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