There’s not often something to celebrate on World AIDS Day, December 1, but there might be this year: a small, much fought-over clause in a World Trade Organisation declaration may signify a turning of the tide, at least insofar as poor peoples’ access to needed medicines is concerned.
The clause is simple enough: it states that the set of WTO rules covering patents on drugs, the Agreement on Trade-Related Intellectual Property Rights (TRIPS), “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”.
But this little paragraph was the site of a long, bitter battle between the United States, acting for the big pharmaceutical companies, and Brazil, India and Africa, acting for the majority of the 36 million people with HIV/AIDS who are too poor to afford expensive, patented anti-HIV medicines.
The Third World wanted it made clear that the TRIPS agreement could not be used to prevent countries producing cheap, generic versions of these drugs. It wanted a statement that “Nothing in the TRIPS Agreement shall prevent Members from taking measures to protect public health”.
The drug companies were dead-set against such an outcome, which could lead to Third World countries producing their own versions of patented drugs and could lose them billions of dollars of revenue. Through the US Trade Representative, they countered with a weak declaration that WTO members can only “use, to the full, the provisions in the TRIPS Agreement which provide flexibility to address public health crises such as HIV/AIDS and other pandemics”.
This was a potential deal-breaker for the Third World and they threatened that, if the US didn’t concede, they’d torpedo rich countries’ much-cherished desires for a new round of trade liberalisation talks.
In the end, faced with a for-once united Third World, the US backed down at the WTO’s ministerial meeting in Qatar, which wound up on November 14. While the rich countries got pretty much everything else they wanted in Qatar, on TRIPS it was the Third World which got most of what it sought.
The reaction from the different parties speaks volumes.
“We would have liked to see stronger wording, but the declaration does have a clear political statement that public health concerns must override commercial interests,” said Oxfam’s Michael Bailey.
The NGOs attributed the success to the worldwide campaign to expose the drug companies’ efforts to prevent poor countries producing cheap, generic drugs.
“This would have been unthinkable two years ago, and it shows how far the world has come,” said Jamie Love, who heads the Consumer Project on Technology.
Growing publicity has certainly hurt the giant pharmaceutical firms. In April, they dropped a three-year-long lawsuit against South Africa, which had passed a law allowing its health minister to override drug patents so as to provide medicines to the country’s estimated 4.7 million people with HIV/AIDS.
Then in June, the US Trade Representative announced that he had dropped an official WTO complaint against Brazil, whose pharmaceutical industry produces generic versions of patented drugs.
Big Pharma’s representatives are no happier after Qatar. Harvey Bale, the director-general of the International Federation of Pharmaceutical Manufacturers Associations, argued that the language would have an adverse impact on research into life-saving medicine and warned darkly, “So if I’m [a research and development] director with $500 million that I’m thinking of investing on developing an AIDS drug or a cancer drug, I’m going to be careful.”
The TRIPS agreement is possibly the most controversial of all the WTO’s agreement. While the trade organisation is officially about “free trade”, for good or ill, TRIPS is blatant protectionism and for a super-rich industry whose operating profit rate, at 20-23% per annum, dwarfs most others.
Drug companies, and especially the powerful PhRMA, the Pharmaceutical Researchers and Manufacturers of America, were closely involved in drafting the agreement in the first place, which was signed in 1994, and it shows.
TRIPS creates a harmonised, global patent regime, replacing the pre-existing patchwork of many different sets of national rules.
Developing countries have until 2005, and least-developed countries now have until 2016, to enforce the uniform system, which includes 20 year protection for new patents with no exceptions. Failure to enforce can lead to the levying of trade sanctions against a country.
The gains for pharmaceutical companies in this are obvious: Northern transnationals hold 90% of all patents on pharmaceuticals and patented drugs enjoy monopoly rents, as companies can charge pretty much what they like. Patented anti-retrovirals, used to keep HIV in check, for example, typically cost between three and 15 times their generic equivalents.
The gains of the TRIPS agreement for everybody else are harder to discern.
Big Pharma claims that tight patent laws encourage innovation, by giving inventors a just (20 year long) reward for their efforts.
But Western pharmaceutical companies pay little attention to the diseases of the poor, who in any case rarely have the cash to buy their products.
Less than 10% of the US$60 billion spent each year on pharmaceutical research and development goes into medicines to treat the diseases of the poorest 90% of the world’s population. Derisory levels of research are put into tuberculosis, malaria, sleeping sickness or the sub-varieties of the HIV virus prevalent in the underdeveloped world.
Rather, the new global patent regime is clearly directed against those Third World countries, like India, Brazil and Egypt, which have managed to build up pharmaceutical industries of their own, using patent regimes which don’t favour Western companies.
Before 1970, India was almost entirely dependent on imported drugs. But since changing its laws to allow local companies to copy patented drugs, it has built up a strong drugs industry which now provides 70% of the country’s needs and at far lower prices. Some companies, such as Cipla, have even become large exporters of cut-price generic drugs and are deeply hated by the Northern industry for it.
The primary beneficiaries of these generic industries have been poor people in the countries concerned, able to buy drugs which in other developing countries are prohibitively expensive.
The cost of a course of fluconazole, used to treat cryptococcal meningitis, one of the opportunistic infections associated with HIV, costs only US$0.64 in India, but US$10.50 in Kenya and US$27 in Guatemala, both countries where the patent laws are tight and there are no generic competitors to the patent holders.
A course of AZT, an anti-retroviral effective in preventing AIDS transmission from pregnant mothers to their unborn babies, costs twice as much in patent-respecting South Africa as in Brazil, where a government programme allows it to be produced generically.
Ciprofloxacin, an anti-infective used to treat bloody diarrhoea in children, costs eight times as much in Pakistan, where the patent regime is tight, as in India.
Faced with the choice between the “rights” of patent-holders to monopoly rents and the rights of the citizens to life and health, poor countries have two main ways around the TRIPS regime.
First, they can use “parallel importing”, whereby they take advantage of the price differentials between patented drugs in various countries: buying, say, from continental Europe where prices are low(ish) rather than Britain, where prices are high.
But this requires good market information that many poor countries don’t have and even so drugs can still be dear. In any case, PhRMA and the US Trade Representative are pressuring governments to outlaw parallel importing and have even opposed moves by the World Health Organisation to set up a database of prices in different markets.
Second, poor countries can engage in “compulsory licensing”: they can declare that public health needs are such that a patent needs to be suppressed and give a licence to local manufacturers to produce generic versions of that drug.
This has been the crux of the battle: the US and the pharmaceutical industry have sought to limit and even eliminate this right, by highly restrictive language in the WTO agreement and by threats of legal action (as in companies’ suit against South Africa) or trade sanction (as in the US case against Brazil in the WTO).
As a result of this stern pressure, not a single compulsory licence has been issued south of the equator, not even to fight the AIDS pandemic.
It is in this crucial battle that the big companies have been beaten in Qatar.
The WTO ministerial statement by no means ends the war, that’s for certain. It is simply a statement, a “clarification”, and is not a change to the actual TRIPS agreement itself, giving it far-from-ironclad legal standing. Poor countries still have to implement TRIPS, if they haven’t already.
It also doesn’t deal with a crucial, presently ambiguous issue: whether poor countries without pharmaceutical industries of their own can issue compulsory licences to manufacturers in another country. Without this right, a nation like Uganda has little prospect of gaining access to cheap generics.
Yet the explicit recognition that TRIPS “does not and should not prevent Members from taking measures to protect public health” should give poor countries a way to fight off US demands and the courage to start issuing compulsory licences.
And it deals the drug companies themselves another public relations blow, of which they cannot suffer too many.
This is not a victory over the HIV virus itself, but it is a victory over the virus’ human allies, hopefully the first of many — and that’s worth celebrating.