A disaster in the making

Medecins Sans Frontieres warns that the free or regional trade agreements that are being negotiated, which seek to strengthen current patent regimes, are a potential threat to the developing world’s access to life-saving drugs, which it sources mostly from India.

Published : Aug 17, 2016 12:30 IST

At a rally MSF organised on April 27 in front of Pfizer’s headquarters in New York demanding a lower price for the drug major's life-saving pneumonia vaccine.

At a rally MSF organised on April 27 in front of Pfizer’s headquarters in New York demanding a lower price for the drug major's life-saving pneumonia vaccine.

WHEN NELSON MANDELA’S GOVERNMENT passed the Medicines and Related Substances Control Act in 1997 to make medicines more accessible to the poor, 39 big pharmaceutical companies filed law suits in the Pretoria High Court against the South African government on the grounds that their patents were being infringed upon. South Africa was grappling with the unprecedented spread of the human immunodeficiency virus/acquired immune deficiency syndrome (HIV/AIDS) and availability of affordable medicines was a top health priority. Medecins Sans Frontieres (MSF), or Doctors without Borders, supporting the government, ran an international campaign urging the companies to drop the case. MSF’s petition pointed out that during the pendency of the case about 400,000 South Africans had died of HIV/AIDS. This led to a public outcry against the companies, which were seen as putting profits above people. The companies withdrew the case in April 2001. It was hailed as a big victory for the cause of public health, where access to affordable treatment is of paramount importance. And shortly after that, in June the same year, the United States withdrew a complaint against Brazil, filed at the World Trade Organisation (WTO), challenging Article 68 of Brazil’s patent law. The complaint alleged that Article 68 was in contravention of provisions of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). Brazil, another country struggling to contain the spread of HIV/AIDS, had felt the need for the said article as it could, under special public health circumstances, grant companies compulsory licences to produce cheaper generic drugs even if it meant allowing exemptions to patents of foreign companies.

Both the South African and Brazilian governments held that their patent laws were consistent with flexibilities provided within the ambit of the WTO and other international laws. If the U.S.-Brazil settlement and South Africa’s emphatic victory signalled the retrieval of some of the ground public health had lost to the paradigm prioritising profits, there has been, ever since, a steady but firm and sustained effort to dislodge even this modest gain.

This has taken the form of free or regional trade agreements, such as the Trans-Pacific Partnership (TPP), the European Free Trade Association (EFTA), the Regional Comprehensive Economic Partnership (RCEP) and the Transatlantic Trade and Investment Partnership, seeking to strengthen the current patent regimes, which are loaded in favour of big pharma companies and ignore the health-care imperatives of the poor, globally.

In 1999, in the wake of the South Africa case, MSF launched the Access Campaign to ensure the availability of life-saving drugs in the developing world. The World Health Organisation (WHO) has these words enshrined in its constitution: “…the highest attainable standard of health as a fundamental right of every human being”. And with regard to the right to health, the WHO says that everyone should have access to “… timely, acceptable and affordable health care...”. MSF and other humanitarian organisations now have to contend with evermore resolute efforts and a firmer determination to secure profits at whatever costs. In the past year, MSF has done over eight million consultations and several hundred thousand hospitalisations in the course of treating HIV, tuberculosis (TB), malaria, etc., in nearly 70 countries, offering health care regardless of race, religion and linguistic differences. Its work has included relief in both natural and man-made disasters. Working in conflict zones has placed MSF and its personnel in harm’s way as was witnessed when its hospitals in Kunduz (Afghanistan) and Aleppo (Syria) were bombed. MSF has worked as an independent humanitarian organisation delivering medical aid for nearly four decades and is seeking to strengthen its Access Campaign like never before as it is anxious and alarmed that the availability of affordable medicines faces an unprecedented threat today. And India is central to MSF’s work.

‘Pharmacy of the developing world’

The generic drugs MSF sources from India are used in 60 countries. More than two-thirds of the drugs it delivers for the treatment of millions of patients suffering from HIV, TB and malaria come from India. A staggering 87 per cent of the HIV medicines MSF uses are made in India. MSF calls India the “pharmacy of the developing world”, and its home page prominently features its appeal to the Indian government to keep it that way. MSF’s fact sheets prominently state that because of the unique role Indian generic manufacturers play and the competition that has ensued, the cost of the HIV treatment cocktail has fallen by 99 per cent. The annual cost of drugs for treatment of HIV/AIDS was $10,000 in 2001; today it is $100! This has enabled 16 million people to have the treatment. But for Indian generics, most of these people would have been priced out of life-saving treatment.

Even though India is a signatory to the WTO, which has mandated that it issue patents to drugs from 2005, India, using flexibilities in provisions of TRIPS, has struck the right balance between its patenting obligations and the needs of public health. Millions of people have benefited from this mature balance. Early rumblings began when the Swiss pharma giant Novartis, one of the 39 pharma companies in the South Africa case, took the Indian government to court seeking to amend Indian patent laws over a case involving one of its patents. After seven years of legal wrangling, in April 2013, the Supreme Court ruled against Novartis. Today, a host of factors threaten to disrupt this mature balance.

The RCEP trade agreement is being negotiated by the 10 ASEAN (Association of Southeast Asian Nations) countries and Japan, India, China, South Korea, Australia and New Zealand. Jerome Oberreit, MSF’s secretary general, believes that if the clauses that are currently under discussion are implemented there will be far-reaching consequences relating to the availability of affordable generic drugs. It is understood that Japan and South Korea are bringing pressure to bear on Indian intellectual property negotiators. He points out that two clauses—one relating to data exclusivity and the other to patent term extension—are particularly worrisome. If implemented, the Drug Regulatory Authority of India would not be able to register an affordable variant of the drug as long as clinical trial data rights are in effect. This could include a slightly new version of an old drug as well. MSF believes that the period being proposed is five years. This is seen as a back-door way to award monopoly status to drugs. Patent term extension simply seeks to extend patents on medicines beyond the current legally agreed 20 years. These provisions would prevent or delay generic competition and ensure artificially high prices of crucial medicines. Oberreit points out that these provisions go beyond what is needed under international law.

It is not just the RCEP; a host of other players too—the European Union (E.U.), the U.S. and the Swiss-led EFTA—are bringing pressure to bear on India. In the case of the U.S., which is leading the TPP negotiation and seeking to set it as a standard for trade deals internationally, India is under pressure from Congress, the White House, pharma groups and bilateral commercial associations to lower its patenting norms. They are particularly against India issuing compulsory licences, which play a crucial part in India’s Patents Act to ensure access to vital drugs, prevent unnecessary monopolies and help bring down the cost of life-saving medicines in the interest of public health. These provisions have greatly helped the poor in India and elsewhere. All signatory countries of the Doha Round of the WTO have the right to issue compulsory licences. This right is established in the Doha “Declaration on the TRIPS agreement and public health”.

E.U.’s empty gestures

The E.U., a major player wishing to have a free trade agreement with India, is not only seeking amendments to the Indian patents regime, with the intention of making the production of generic drugs more and more difficult and securing the monopoly interests of the multinational corporations (MNCs), but is also planning to make the movement of legitimately produced Indian drugs difficult if they transit through Europe. MSF sees this threat as alarming because if an MNC complains that its patent rights have been infringed in the case of a drug that MSF has purchased from India, law enforcement agencies can seize those medicines on E.U. soil. These measures could get humanitarian organisations embroiled in lengthy litigation and cause unacceptable delays to populations who are badly in need of these drugs. In a special report brought out by MSF and Health Action International, they pointed out the empty gestures of the E.U. when it came to the commitment to safeguard access to medicines. Among other things, the E.U. has consistently put countries such as India that use TRIPS flexibilities on a priority country list where perceived intellectual property “deficiencies” need to be “remedied”.

MSF has strongly criticised the so-called TRIPS-plus provisions that are being included in free trade agreements, holding that they are unnecessary, unjust and ignore the public health goals sanctified in international trade laws and in millennium development goals programmes. MSF has pointed out that what is being done in these free trade agreements is to consistently seek to lower the standards of patentability.

Aware that much of the pressure on India comes from elsewhere, MSF and other actors have intensified their advocacy in the U.S. and in Europe against these free trade formats. MSF wrote to President Barack Obama and Congress and made an oral testimony to a U.S. House of Representatives committee pointing out the serious flaws in the TPP. MSF pointed out that the current U.S. President’s Emergency Plan for AIDS Relief drew 97 per cent of its drugs from generics. If these new patenting obligations are implemented, the poor in the U.S. too will suffer. This needless pushing up of prices of medicines can be and must be avoided. After all, some of the poorest peoples of the world live in the Pacific Rim. A uniform standard pricing and policy regime will be unresponsive to the needs and affordability criteria of the diverse peoples and governments that are included in the TPP. In its letter to the U.S. Congress dated April 12, 2016, MSF reminded its members of the dangers inherent in another abiding feature of these free trade agreements, the investor state dispute settlement mechanism. It pointed to the $500 million investor arbitration case where Eli Lilly, a U.S.-based pharma company, was proceeding against the Canadian government for its lawful invalidation of two of the company’s patents. MSF further pointed out that the savings made in the U.S. in the past decade on account of the use of generic medicines were to the order of $1.5 trillion and that 19 per cent of adults in the U.S. were not able to afford prescription drugs.

In its oral testimony to the U.S. House of Representatives committee, MSF drew attention to another significant dimension of the current flawed public-health situation. While emphasising the role of competition from generic drugs that helped lower the cost of medicines, MSF went on to point to the broken system of biomedical innovation today where the only ways to reward research were through high prices and monopoly protection. This broken system, MSF claimed, had not aligned biomedical innovation with public health needs. MSF has presented numerous critiques on the current paradigm and the woefully dysfunctional pricing mechanism that is a part of it. Going beyond critiquing, MSF set up a programme called the Drugs for Neglected Diseases Initiative (DNDI). The seed money for it came from the Nobel Peace Prize MSF won in 1999. The Indian Council for Medical Research is a founding member of this initiative, which took off in 2003.

Oberreit points out that in the last 12 years, the DNDI has developed six new therapies. On the basis of its experience, MSF estimates that the cost to develop a new chemical entity is estimated to be between 100 and 150 million euros. However, research has shown that big pharma companies spend anywhere between $802 million and $2.6 billion to develop a drug. Besides, secrecy over R&D costs makes it difficult for governments or regulators to gain insights into the pricing mechanism. Also, R&D is never conducted on cures that do not offer lucrative rewards. Ebola and Zika remain neglected. MSF points out that excessive financialisation of the pharma industry is in part responsible for the current state of affairs.

In its report titled “Lives on the Edge”, MSF showed, using figures compiled in 2013, that big pharma companies spent considerably more on sales and marketing than on R&D. And in some cases, they spent more money on share buy-backs and dividends than on R&D. It is imperative that a binding global consensus is arrived at to retain vital access to affordable medicines and treatments so that the poor of the world are not jettisoned out of health care. This means acting on two fronts: First, fixing the broken biomedical innovation system. The last 20 years of poor productivity by the pharmaceutical industry in terms of improved therapeutic options coincide with a period of unprecedented strengthening of the patent regime through the shackles of numerous trade agreements. Commenting on the dysfunctional nature of the current patent system, The Economist , in an article titled “Time to fix patents”, which appeared in its August 8, 2015, issue, observed: “...the system has created a parasitic ecology of trolls and defensive patent-holders, who aim to block innovation, or at least to stand in its way unless they can grab a share of the spoils”. It went on to observe that the current 20-year period for patents was too long and out of tune with a knowledge economy. This current paradigm has been inhibiting innovation, to say the least. Initiatives under the aegis of the WHO such as the Consultative Expert Working Group on Research and Development: Financing and Coordination and the Global Observatory on Health R&D need to be strengthened so that a balance can be found between access and innovation. Intergovernmental support is key here.

Secondly, a harmonised and humane international policy and trade regime on drugs and medicines is needed. It is naive to leave everything to market forces and believe that they will bring in the remedy to the maladies in the system. Political commitment is essential here.

A. Rangarajan is a freelance writer, researching and writing on a wide range of topics, including the environment and economics. He is a mechanical engineer by training.

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