For affordable medicines

Print edition : June 23, 2001

A campaign to ensure access to essential drugs to the needy forces some international drug majors to make seemingly generous offers. But are these part of an overdue process of accountability for the profiteering of earlier years, or a bid to ensure that the social costs of patents do not come under the world's gaze?

WITH the international campaign on access to essential drugs to the needy acquiring an irresistible momentum, giant pharmaceutical companies are being convulsed by what can only be described as a religious experience. The latest to see the light is the American drug major Pfizer. The company announced on June 6 that it would be able to produce a patented anti-fungal drug, Diflucan - better known by its generic name of fluconazole - in "unlimited quantities" for distribution free of cost to the governments of 50 of the world's poorest countries.

A vital treatment tool for meningitis associated with HIV/AIDS infection, fluconazole was till recently sold by the company at $12 (about Rs.560) a tablet. At the same time, generic drug manufacturers in Thailand were offering an identical dosage at a price just in excess of 50 cents (about Rs.23). Pfizer fought a long process of attrition against this cut-rate offering, frequently threatening legal action for alleged infringements of its patent on the drug. It also lobbied successfully through the powerful industry organisation, the Pharmaceuticals Research and Manufacture America (PhRMA) to have Thailand notified under Section 301 of the U.S. Trade Act as a country that provided inadequate standards of protection for intellectual property.

If Pfizer was stopped in its tracks and deterred from following up on its threats, it was a tribute to the global mobilisation on access to essential medicines. The credibility of the drug majors has plummeted ever since the U.S. government intervened on their side in 1997, compelling South Africa to scrap plans to put in place an AIDS therapeutic system based on cheap generic medicines. A phase of virtual guerilla warfare followed, with activist groups coordinating their efforts to ensure that no major health conclave ended without a scathing censure of drug multinationals.

Beginning in 1999, the drug majors began coordinating their defence strategies. The outcome was the "accelerated access initiative" announced by a cartel of five firms which between them accounted for all the anti-retroviral drugs used in AIDS therapy. In May 2000, in an effort blessed by the United Nations, five companies - Pfizer, Glaxo SmithKline, Boehringer Ingelheim, Bristol Myers-Squibb and Hoffman-Laroche - announced a programme of subsidised drug supply to the countries worst affected by the AIDS pandemic.

Price cuts since then have come at a rapid clip, though Pfizer's "no cost" offer is by far the most dramatic. This seeming generosity could be interpreted as being part of a long overdue process of accountability for the rampant profiteering of earlier years. But there is another reading which is gaining credibility, cutting at the roots of the patents system that the drug companies have managed to enforce through the World Trade Organisation (WTO). The "accelerated access initiative", it is now widely recognised, was a concerted effort by the drug giants to ensure that the crisis in obtaining affordable medicines did not engender an examination of the social costs of patents. It was also meant to head off a challenge from manufacturers of cheap generic drugs in the developing countries - notably Brazil, India and Thailand - which were working their way around stringent patent rights enforced by the multinationals, and providing access at much more reasonable prices.

INDIA'S growing profile in the international campaign on access to medicines was in focus at a recent international symposium in New Delhi. Organised jointly by the international voluntary organisation of doctors, the Nobel Prize-winning Medecins Sans Frontieres (MSF), and the National Working Group on Patent Laws (NWGPL), the symposium was meant to pool the experiences of various countries and work out strategies to deal with the growing crisis in the availability of medicines. Though the principal focus was on the WTO agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) and its implications for the availability of drugs, there was a great deal of attention devoted to the more general question - of enhancing the research effort in neglected diseases.

Participants tended to frame their interventions between two kinds of postulates. One group believed that the TRIPS agreement itself was a factor that militated against the poor gaining access to drugs. The other group chose a more cautious tack: trying to use all the room for manoeuvre available within TRIPS, rather than frontally challenging it for fear that the outcome of a revision could be even more adverse for the developing countries.

Advocates of the first view argued that patent rights encouraged companies to price their products out of reach of the needy, in the confident belief that their monopoly could not be challenged for the duration of the patent. There is a basic contradiction in the concept of patents, pointed out Amit Sengupta of the NWGPL - "that the development of ideas is facilitated by restraining the social use of those ideas". And when technology is making the free exchange of ideas and information easier, patents sought to convert these into commodities that could only be transacted at a price.

The baneful effects of patent protection in pharmaceuticals were evident in the financial results of the main companies. Cumulatively, the drug companies that figure in the Fortune 500 list had net profits in the last accounting year that were 18.3 per cent of revenues. This was by far the highest of any industry group. If the profit margins of the 14 top pharmaceutical manufacturers had been one-third lower, pointed out Sengupta, that would set free a surplus of $11 billion - more than sufficient to provide therapy to all the AIDS sufferers in the world.

The contributions made by the Indian and Brazilian generic drug manufacturers in challenging patent monopolies have recently drawn much attention. But this industrial capability was built on a regime of weak intellectual property protection - one that denied product patents on drugs and confined the protection to the process of manufacture. If the TRIPS agreement had been applied two decades prior to when it came into force, then even this modest capability would have been absent, argued Sengupta. This meant that the future of health care required that the TRIPS framework be delegitimised. The campaign on access to AIDS therapy had shaken the foundations of the TRIPS regime. The issue now needed to be clinched by broadening the offensive to cover the entire range of diseases of concern to the developing countries.

Legal experts from the U.S. urged a more cautious course. TRIPS required a harmonised system of law across countries, said Professor Jerome Reichman of Duke University. But it was a long way from here to saying that it imposed the need for a uniform law. Developed countries themselves have not managed to agree on more than 50 per cent of the patent standards that should be applicable. This provided the opportunity for the developing countries to utilise the "public interest" provisions inscribed into the TRIPS agreement, to enact strong legislation that would ensure access to essential drugs.

THE ongoing dispute between the U.S. and Brazil, which is now before a WTO panel, was in Reichman's assessment a test case for the degree of flexibility allowed under TRIPS. This view was underlined by Frederick Abott of Florida State University. The contentious point in Brazilian law was a clause requiring the patent-holder to manufacture locally to qualify for protection. The outcome of the dispute could depend upon whether this is a mandatory requirement or an enabling clause that permitted the public authority to license local production in the event of a serious health crisis.

James Love of the Washington-based Consumer Project on Technology is convinced that if the Brazilian law is rewritten to allow for compulsory licensing in a broadly defined "public interest", it would be fully compliant with TRIPS. A "draft model law" that he has prepared for the use of a patent without the prior authorisation of the patent-holder empowers the public authority to determine when under a broad range of conditions compulsory licensing of production would be appropriate. These circumstances include the failure of the patent-holder to take "effective steps to achieve the practical application of the subject invention", the lack of "availability" of the invention to patients who should have access for public health reasons, and "anti-competitive behaviour" as reflected in the prices charged relative to a "reasonable standard".

This effort to widen the scope of application of the "public interest" clause is evident in an African initiative at the TRIPS Council. MSF has urged the European Union to endorse fully these proposals which would provide a higher priority for research and development in neglected diseases. The dimensions of the crisis are acute, as James Orbinski of MSF pointed out. Drug resistant tuberculosis, malaria and African sleeping sickness, to name only three diseases, take a heavy toll of human life in the developing countries. Yet there is little or no research work in these diseases. Of 1,300 chemical molecules that were patented in the last 15 years, no more than 11 were applicable in the treatment of tropical diseases, and of these in turn six were discovered in the course of veterinary research and were later found to have human applications.

MSF has conceived of a major global campaign to stimulate research in these areas, as also to recruit available pharmaceutical manufacturing capacity in the developing countries to the cause of tackling rampant tropical diseases. A case that has won worldwide attention is MSF's recent partnership with Cipla Ltd, one of the largest Indian-owned drug manufacturers, to supply anti-AIDS drugs at a fraction of the price charged by the multinationals.

To broaden the reach of this approach, the Indian government was urged at the Delhi symposium to enact legislation with strong compulsory licensing provisions which would enable India to export generic life-saving drugs for neglected diseases. B.K. Keayla of the NWGPL points out that the draft amendment to the Indian Patents Act, due to be passed into law soon to ensure full compliance with TRIPS, is very weak in its compulsory licensing provisions. Keayla proposes to begin an active advocacy effort with the Indian government to ensure that there is no dilution of the full scope of powers granted to the public authority to act in the public interest. A provision that allows compulsory licensing for exports would inevitably attract the ire of PhRMA and trigger off another round of activism from the U.S. government under Section 301 of the Trade Act. It remains to be seen whether the Indian government has the resources to weather the storm that could follow.

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