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Victory and betrayal: the third world takes on the rich countries in the struggle for access to medicines. (Patently Abusive).

WITH THE RAVAGES OF AIDS AND OTHER ILLNESSES wreaking untold misery in developing countries and high drug prices preventing sick people from receiving lifesaving treatments, pressure has mounted to remove some of the monopoly protections in developing nations that keep drug prices so high.

But the pharmaceutical companies do not easily let go of their privileges, no matter the costs.

Ninety-five percent of the world's 40 million people with HIV live in developing countries, mainly in sub-Saharan African countries. Treatable illnesses like tuberculosis, malaria and AIDS kill 17,000 people daily, despite the widespread availability of medicines that prolong lives in wealthy countries.

The World Trade Organization's (WTO's) Agreement on Trade-Related Aspects of Intellectual Property Rights, known as TRIPS, requires countries to adopt and enforce 20 years of patent protection for inventions, including medicines. These patent monopolies enable drug companies to maintain astronomical prices, with potentially disastrous effects for developing countries overburdened with massive rates of HIV infection and other diseases of poverty.

U.S.-based pharmaceutical companies were lead champions of TRIPS. Their lobbyists played a central role in drafting the sweeping trade agreement. And they stand out as the chief beneficiaries of the agreement: the bulk of patents are filed by companies based in the United States and other industrialized nations.

Soaring death tolls, and three years of AIDS and healthcare activists' sustained campaigning, has drawn attention to the public health consequences of strict patent protection.

Public health advocates have pointed to the critical importance of using the TRIPS Agreement's so-called safeguards -- measures designed to remedy undesirable potential outcomes from protection of intellectual property rights. An important TRIPS safeguard is "compulsory licensing," whereby a government can license the production of medicine to a third party (for example, a generic drug manufacturer) without the consent of the patent holder. Compulsory licensing breaks up a patent monopoly, and prices fall as a result. "Parallel importing," another safeguard, describes countries procuring patented medicines from a third party other than the patent holder.

Developing countries have been reluctant to employ these safeguards, largely because the U.S. government has a long history of working with the pharmaceutical industry to fight initiatives by countries like South Africa, Thailand and Brazil to prioritize low-cost generic versions of AIDS drugs and other medicines.

Through direct action and protest, AIDS activists and others forced the Clinton administration to abandon a policy of using bilateral pressure to demand countries provide patent protections in excess of that required by TRIPS [see "AIDS Drugs for Africa," Multinational Monitor, September 1999]. But many countries have remained fearful that efforts to undertake compulsory licensing will get them in hot water with the United States and other rich countries, at the WTO or in other fora.

In early 2001, South African AIDS activists fought a lawsuit lodged by 39 of the world's largest drug companies over their government's domestic medicines policies. People with AIDS claimed that the drug companies wanted to make profit in South Africa -- where one in five adults is living with HIV disease -- no matter the cost in human lives. Drug companies claimed the South African policy was unconstitutional and a violation of TRIPS. International protest-from a demonstration at the U.S. headquarters of Big Pharma to a massive rally through the streets of Johannesburg, focused worldwide attention on the lawsuit, which quickly became too politically costly for the industry to pursue. In April, a humiliated industry dropped the case.

Developing countries and AIDS activists sought to leverage the South African victory in order to demand resolution of issues relating to TRIPS and access to medicines.

The African Group -- 33 African countries in the WTO -- insisted on a special session of the TRIPS Council in June 2001 to address the subject of WTO patent rules and medicines access, especially medicines to treat HIV disease. The TRIPS Council is the TRIPS governing body, made up of WTO member countries.

In November 2001, when the WTO held its biennial Ministerial meeting, the African group initiative would lead to the "Doha Declaration on the TRIPS Agreement and Public Health."

Public health advocates warmly embraced the Doha Declaration as resolving any doubts about developing countries legal authority to do compulsory licensing. "We agree that the TRIPS Agreement does not and should not prevent members from taking measures to protect public health," the Declaration states in one of its key passages.

But the Declaration failed to resolve one outstanding issue related to effective use of compulsory licensing in poor countries: the terms on which countries can export drugs as part of a compulsory licensing scheme. However, the Declaration promised the WTO would address the issue in 2002. Now international trade negotiators are intensely jockeying over how this issue will be resolved, with the United States advocating the most restrictive rules, but facing a determined opposition from developing countries encouraged by their success at Doha.


The isolation of the United States began at the June 2001 TRIPS Council meeting. More than 40 countries made substantive interventions arguing that patent exclusivities restrict access to affordable drugs. Zimbabwe's presentation on behalf of the Africa Group set out the reforms and clarifications sought by the developing countries, girded by the principle that "nothing in the TRIPS Agreement should prevent Members from talking measures to protect public health" and that TRIPS must be implemented by poor countries in a manner that prioritizes fundamental public health needs, especially drug access.

Claude Burcky, deputy assistant U.S. Trade Representative for Intellectual Property, insisted that TRIPS did not pose any problem -- now or in the future -- to countries responding to health care crises such as HIV. He refused to concede that intellectual property protection had an impact on the price of medicines.

Burcky insisted that patent rules and access to medicines are peripheral issues in the global response to HIV and other diseases: "We believe that participants in our discussion today should keep in mind that the TRIPS Agreement -- its obligations and flexibility -- is, at most, one element of the equation. To deal with serious health problems, countries need to stress education and prevention as well as care and treatment if health crises are to be eliminated."

Every country except the United States had focused on matters relevant to the forum of the TRIPS Council -- that is, the impact of implementing intellectual property protection on access to medicines and public health, as well as important technical disputes in the Agreement itself that impinge on access to medicines. But the U.S. negotiators resisted detailed and substantive analysis, emphasizing instead the areas in which they had no expertise, such as developing country health policies.

For seven months after the first special meeting and during subsequent TRIPS Councils addressing the topic, the Africa Group continued to elaborate language toward a Ministerial Declaration at Doha, while the United States continued to advocate vague draft language.

The ground shifted under the USTR when in October, after anthrax exposure cases grabbed headlines in the United States, Health and Human Services Secretary Tommy Thompson threatened to override Bayer's patent monopoly on ciprofloxacin (Cipro) and obtain generic versions, in order to increase domestic drug supply and to keep costs as low as possible.

In response to the threat, Bayer cut its price, and Thompson retreated from his threat -- in fact, he revised his statement and refused to admit he had ever threatened Bayer in the first place. But developing country trade negotiators had heard Thompson loud and clear: the United States wished to exercise its TRIPS-compliant authority to prioritize health care when patent monopolies obstruct access to medicines. There was no more compelling example for developing countries to argue they should have the same right, free from threat of retaliation from their more wealthy, powerful trading partners.

The Cipro example also dramatized another significant flaw in the U.S. negotiating logic: developing countries had recognized that any disease-specific guidelines for interpreting TRIPS was undesirable from a public health standpoint. The United States urged that the statement on the public health implications of TRIPS be limited only to "epidemic diseases," such as HIV, tuberculosis and malaria. The anthrax scare showed the folly of limiting governments to a short list of diseases that would enable application of TRIPS safeguards -- public health problems rarely operate in such scripted fashion.

But still the United States refused to concede anything before the Doha Ministerial -- even backpedaling at one point and insisting that any declaration be restricted to "access to medicines" and not mention the phrase "public health."

As the Doha Ministerial neared, Zimbabwean Ambassador Boniface Chidyausiku said negotiations were "hardening" and the European Commission called the U.S. position "intransigent."

But the consensus among the developing countries was to remain strong in the face of U.S. pressure.

The United States and other industrialized countries desperately wanted to show that the WTO is not stacked against poor countries, and were eager for evidence that they "did something" at the Qatar meeting on behalf of developing countries. The poor countries leveraged this advantage until the last moment of Ministerial negotiations.


WTO Director-General Mike Moore opened the Ministerial by calling the fray over TRIPS, public health and medicines access a "deal breaker" for the Ministerial. In the initial days of the Doha meeting, it appeared the United States would refuse any ground on the Declaration, with Japan, the European Union and Switzerland joining in an opposition bloc. The Africa Group was joined by Latin American and Asian countries, establishing their Declaration draft as the majority position.

Throughout negotiations, the EU's lead trade negotiator, Pascal Lamy, took on the role of "mediator," offering compromise proposals that appeared to take into account concerns of the developing countries as well as the United States. In fact, the EU compromises watered down the developing country demands, and were rejected by the Africa Group. Health activist organizations like Health GAP, Oxfam, Medecins Sans Frontieres, Act Up-Paris, and the Consumer Project on Technology singled out the EU as being a false ally of developing countries.

The United States, meanwhile, floated interim drafts that included everything from geographical limitations on a pro-public health interpretation of TRIPS rules (applying to sub-Saharan Africa only), to irrational disease restrictions ("epidemic" public health crises only, excluding diseases such as cancer and pneumonia) to a moratorium on WTO actions one member could take against another regarding access to pharmaceuticals.

The moratorium proposal especially rankled developing countries, who in implementing TRIPS want assurance that WTO rules be interpreted to protect public health. A moratorium implies countries would temporarily be permitted to violate rules, without establishing a lasting public health precedent in the rules themselves.

The developing countries refused these proposals, and, at the eleventh hour, the United States blinked. While not containing the exact language sought by developing countries, the final statement was a clear political victory for poor countries. The Doha Declaration on TRIPS and Public Health makes a clear statement on the fundamental issue at stake: "We affirm that the [TRIPS 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."

The pharmaceutical industry reacted with horror to the final version. At the negotiating round's conclusion, the International Federation of Pharmaceutical Manufacturing Associations (IFPMA) urged the United States to back out of the deal. IFPMA representatives complained that the deal undid all of their progress in getting TRIPS adopted -- an exaggeration by any measure, but a clear sign of their frustration.

When the deal was finally announced, however, IFPMA and the industry put on a happy face.

Calling the Doha Declaration a "reaffirmation of the TRIPS Agreement," Alan Holmer, president of the Pharmaceutical Research and Manufacturers of America (PhRMA), reiterated the claim that patent issues are marginal to addressing poor country health needs. "We hope member countries will now focus on and address the real barriers to access to medicines in developing countries: poverty, too few trained doctors and adequately equipped facilities, high tariffs on medicines in many developing countries, the need for more developed country support, political will in developing and developed countries alike. Only progress on these issues will ultimately ensure long-term, sustainable progress toward better healthcare in the least developed and developing countries."

Health activists said the industry was merely trying to downplay the importance of the Doha Declaration, in an effort to preserve the status quo, in which developing countries did not issue compulsory licenses. With its specific and strong affirmation of countries' right to undertake compulsory licensing, they said, the Doha Declaration could breathe life into TRIPS safeguard provisions that developing countries have been afraid to rely on.

The Declaration recognizes that intellectual property protection on medicines can have negative, as well as positive, impacts on access to medicines, rather than linking intellectual property protection only to the benefit of new drug development and disregarding its potential drawbacks. It sets out the right of WTO countries to use TRIPS flexibilities to the fullest, declaring that WTO countries have the freedom to "grant compulsory licenses and the freedom to determine the grounds upon which such licenses are granted." And the Declaration instructs countries to interpret TRIPS in accordance with the objectives and principles of the agreement -- important because upholding public health is a principle of TRIPS, but one which previously was neither operationalized nor emphasized.


The problem that went unresolved at Doha is how countries with little-to-no domestic capacity for manufacturing medicines or small markets can efficiently make use of the compulsory licensing.

Current TRIPS rules restrict countries producing medicines under compulsory license to manufacture "predominantly for the supply of the domestic market."

Rigidly applied, this provision would particularly undermine small and poor countries' ability to do effective compulsory licensing. Although TRIPS rules permit a country to assign a license to import a drug to a manufacturer outside the country, the licensee must have permission both to produce the drug in the country where their factory is based and permission to export from that country. Thus, even if Zambia were to issue a compulsory license for a pharmaceutical to a manufacturer in Canada, the Canadian manufacturer would be blocked from producing and exporting the drug if a brand-name company had a patent in Canada.

Since the very countries in most dire need of affordable HIV medicines are the same countries with little capacity for domestic drug manufacture, finding a way to overcome this barrier is critical to implementation of the pro-public health interpretation of TRIPS secured at Doha.

For now, the problem is not acute. Developing countries like India, which have large generic drug industries and substantial manufacturing capacity for local and export-oriented production, have until 2005 to implement 20-year patents on medicines. Thus Indian manufacturers can produce generic versions of AIDS or other drugs -- not afforded patent protection in India -- and export them to Zimbabwe, say, or any country issuing a compulsory license (or where the drugs are not patented).

After 2005, new products will be patented in India and other likely exporters. Indian generic makers will not be able to produce on-patent versions of these products unless they get a compulsory license in India; they will have to sell a majority of the product in India; and they will only be able to export to countries that also issue a compulsory license, or where the product is not patented.

For poor countries -- and even for rich countries, in the case of certain drugs -- failing to fix this irrationality in the TRIPS will undermine the flexibilities highlighted by the Doha Declaration, denying them access to medicines from low-cost suppliers.

"The problem of countries with insufficient or limited manufacturing capacity needs a long-term solution," says Cecilia Oh of the Third World Network. "The solution is to encourage, facilitate and promote the production and export of generic medicines to countries that need them, so as to have competition and bring prices down."

"Countries that are not able to produce to meet the demand should not be penalized for their lack of capacity, and their inability to use compulsory licensing effectively," says Oh, "they must be assisted. Generic producers, no matter where they are, should be allowed to produce and export to where there is a demand and a need."

At Doha, the United States implausibly argued that the production-for-export issue was not a legitimate concern. Although they did not win inclusion of a resolution, developing countries did insist on language in the Doha Declaration that both identified the situation as a problem and charged the WTO with finding an "expeditious solution" in 2002.

By late June, developing and developed countries will come before the TRIPS Council to present substantial position papers mapping out how to resolve the problem of medicines production for export to low- and no-capacity countries. The developing countries are seeking a solution that is not laden with conditions and will not require them to jump through endless hoops. They are seeking an interpretation of a TRIPS article that allows for "limited exceptions" to the rights of a patent holder. The developing countries want to use this provision to override the rights of a patent holder when a producing country needs to export to a no-capacity country.

The United States, for its part, is exploring several proposals, which are non-starters among many of the most engaged developing countries and health activists. The proposals include:

* a time-limited moratorium on WTO actions regarding production for export, or

* a change in the TRIPS provision restricting compulsory licensing for domestic markets, to permit export predominantly to non-domestic markets.

In their position paper on the issue of production of medicines for export, the USTR argues that a moratorium "would not require amendment of the TRIPS Agreement and application of the solution could be overseen by the TRIPS Council, including to insure that medicine being supplied to a member that lacks or has insufficient manufacturing capacity is not diverted into other markets, away from the people it is intended to help. It is worth considering whether such a solution would not in fact be the most expeditious and least prejudicial to the rights and obligations of members under the agreement."

Brook Baker, a law professor from Northeastern University, argues a moratorium and other restrictive proposals from the United States are an effort to undermine the gains of developing countries, post-Doha. "When a moratorium ends, the same conundrum about how to structure a workable solution will exist," says Baker. "Even worse, a moratorium, especially a short moratorium, does not give producing countries and generic manufacturers the legal security they need to pass enabling legislation or to invest in production for export ... Clear rules are preferable to vanishing moratoriums."

Both of the U.S. proposals contain built-in restrictions that render them useless as possible solutions to a critical problem. For example: the United States is urging countries to consider restricting compulsory licensing for export to governments and non-profits, potentially excluding access among people with unmet health needs covered by the private sector. (This restriction echoes the USTR agenda in the regional forum of the Free Trade Area of the Americas, where the United States is pushing for restrictions on compulsory licensing only for public, non-commercial use.) In addition, the U.S. proposal may rule out access to medicines for diseases that are not included among "pandemics" the USTR feels warrant a public health interpretation of TRIPS rules. Finally, the United States would also like to see the process of compulsory licensing for export be as administratively burdensome as possible.

"Once again, the United States seems to have forgotten that lives -- millions of lives -- hang in the balance. The United States, the EU and the rest of the world made a promise at Doha, that the WTO would find an expeditious solution to the production-for-export issue left open on November 14,2001. Now the United States [is] threatening to renege on that promise and to conditionalize the Doha Declaration to death," says Baker.

As in 2001, there is again not much common ground between the position of the developing countries and the United States on the subject of getting medicines to countries with no manufacturing capacity. Healthcare and AIDS activist groups are monitoring the situation, while lobbying delegations on both sides, demanding that they prioritize the public health needs of millions who are faced with needless death as a result of the unavailability of low cost, quality, sustainable supplies of life-extending medicines.

"To get to the right solutions, we need good faith on the part of the developed countries," says Cecelia Oh. "It is unacceptable for the developed countries to claim that they have fought for access to medicines but behind the scenes, attempt to narrow the scope of the political agreement, and whittle away the flexibilities."



Faced with an unfolding disaster in terms of infections and deaths, political figures and public health officials speak of the global AIDS crisis as a calamity that cries out for action. Meetings are held, speeches are made, interviews granted, and photo opportunities organized, and the public is given the impression that world leaders are focused on doing what is feasible to relieve at least some of the massive suffering.

There are a huge number of problems in dealing with AIDS crisis, particularly in the poorest countries, where the underfunded health care system cannot address even routine health care problems, let alone the difficult demands of the AIDS crisis.

Given all of the other barriers to treating the poor, it is appalling that government policies would be designed to drive up the prices of essential medicines or other important inventions, such as viral load testing technologies. Inefficient distribution systems and patents create problems that could and should be overcome.

Unfortunately, the most economically powerful countries continue to lobby against solutions. The United States, Japan, Canada, and the European Union, on behalf of member states like Germany, the UK and Sweden (countries with strong pharmaceutical export industries), continue to oppose many of the most obvious steps to lower the prices for essential health care technologies.

It doesn't have to be this way. The wealthy and the poor countries could work together to bring down the prices of medicines in poor countries. To illustrate what a real effort might look like, it is useful to review what the U.S. government did in 1917, when, spurred by a war mobilization effort, it overcame barriers to building a modern aircraft industry.

Franklin Delanor Roosevelt (FOR), then an under secretary in the Navy, headed up an effort to address the patent barriers that had blocked the development of a competitive aircraft industry. The Wright Brothers and the Curtiss Brothers held key patents that effectively blocked the manufacture of aircraft. The U.S. Congress passed legislation that gave the federal government the authority to buy or take the patents, and forced the Wright Brothers and the Curtis Brothers to license their patents to the Manufacturers Aircraft Association (MM), which created a pool for aircraft patents.

The speed of the government intervention to fix the aircraft problem was astounding, when compared to the slothful response to the HIV crisis. Congress created a National Advisory Committee for Aeronautics to consider and advise the president on aeronautical problems. On January 13, 1917, the Secretary of the Navy reported various companies were threatening all other airplane and seaplane manufacturing companies with suits for infringements of patents." These litigation threats made it difficult for the government to fulfill orders. 'To protect themselves in case they were forced to pay large license fees, the companies had greatly increased the sales prices of their products," the Secretary stated. 'Some companies would not expend any money on their plants for fear that suits brought against them would force them out of business."

The Committee, the War and the Navy Departments and the aeronautical industry met jointly on March 22, 1917, to discuss "various means by which the basic airplane patents could be acquired by the Government for the development of the industry," while providing "just recognition ... to the owners of the more important or basic patents in the form of reasonable royalties to be paid by the purchasers of planes whether for military or civil use." The next day, on March 23,1917, the patent committee of the National Advisory Committee rendered a report recommending the formation of the Aircraft Manufacturers Association among all aircraft manufacturers and suggesting the details of a cross-license agreement among its members."

On June 14, 1917, the executive committee of the National Advisory Committee for Aeronautics authorized the patent committee to take such steps as appeared necessary to effect a solution of the patent question." It recommended that royalties to be paid by the Manufacturers Aircraft Association to the "Wright and Curtiss Companies, who owned the principal airplane patents, be limited to two million dollars each."

Four days later, on June 18, 1917, the subcommittee on patents met with the Wright-Martin and Curtiss-Burgess interests, and on July 10, 1917 a meeting was held with competitive airplane manufacturers and the Wright and Curtiss patent owners. The Manufacturers Aircraft Association was incorporated in New York on July 16, 1917, and its first meeting was held on July 24, 1917, where the patent pool was formally created.

Prior to the creation of the patent pool, the Wright Brothers asked $1,000 per aircraft as a royalty (about 5 percent of the cost of a plane then) for a single patent. The federal government forced patent owners to accept a $200 flat fee for each airplane that was manufactured, and later lowered this to $100 per plane. The royalties were divided 67.5 percent to the Wright Brothers, and 20 percent to the Curtiss-Burgess company, with the remainder used to support the MAA. The royalties to both the Wright and Curtiss patent owners were reduced once they accumulated $2 million in royalty payments, to $25 per airplane.

In less than seven months, the federal government "solved" the patent problem. The companies that grew out the MAA included Boeing, McDonald-Douglass and virtually the entire modern U.S. aircraft industry. The MAA expanded its pool of patents, created an international system for evaluating the value of patents, and lasted until 1975, when it was dismantled at the request of the federal government.

Today the world faces a terrible crisis, and severe patent barriers in even the poorest countries contribute to the problem. Thirty-seven African countries have patents on combivir, a fixed-dose combination of AZT and 3TC, probably the most important Nucleoside Analogue Reverse Transcriptase Inhibitor combination, and two dozen African countries have patents on Nevirapme, the cheapest to manufacture Non-Nucleoside Reverse Transcriptase Inhibitor. In most African countries, because of patent barriers, and because no single brand-name company has rights to all of the needed drugs, it is illegal to sell three-in-one pill fixed-dose anti-retroviral combinations that are only manufactured by generic producers. (Triple-drug combinations are the most effective treatment for HIV/AIDS. Combining these drugs into a single pill makes it much easier to maintain the prescribed regimen, as anyone who takes multiple medications knows.)

Developing countries are baffled and intimidated by the colonial legacy of complex legal arrangements to use compulsory licensing to authorize generic production of on-patent medicines. So far only Zimbabwe has acted to override patent rights to make medicines more cheaply available.

If the Europeans and the U.S. government will let them, UNAIDS or some other global body could do for Africa and other developing countries what needs to be done -- create a patent pool for essential medical inventions to be used in poor countries. Maybe they should name it after FOR. He knew how to get things done.

-- James Love

James Love is the director of the Consumer Project on Technology.

Asia Russell works with Health GAP, which campaigns for access to life-sustaining medicines for people with HIV/AIDS worldwide.
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Author:Russell, Asia
Publication:Multinational Monitor
Geographic Code:1USA
Date:Jun 1, 2002
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