February 02, 2014

People’s Democracy

(Weekly Organ of the Communist Party of
India (Marxist)


No. 05

February 02, 2014


African Patients Need our Solidarity



A few days back, the
health minister of South Africa,
Dr Motsoaledi, characterised an elaborate plot hatched by
large multinational
drug companies as “genocide” and a conspiracy of “satanic
magnitude”. He was referring to public disclosures of a
detailed plan to
derail proposed reforms of South Africa’s
patent system.




The attempt by drug
companies to sabotage the
reforms was made public by, among others, a US
based public interest
organisation – Knowledge Ecology International (KEI). KEI
revealed that they
had in their possession a ‘leaked’ email which detailed the
strategy that was
being pursued by the pharmaceutical industry. KEI’s revelation
comes in the wake
of a story published by the Mail and Guardian,
newspaper published from South Africa,
on January 17. In its story, the
paper alleged that the Innovative Pharmaceuticals Association
of South Africa
(IPASA) – a front organisation of MNCs in the pharma sector in
and the US-based industry body PhRMA (the Pharmaceutical
Researchers and
Manufacturers of America) engaged a consultancy firm to
subvert the South
African intellectual property law reform process. The leaked
email in question
was sent to IPASA members on January 10 by Michael Azrak, the
managing director
of Merck Southern and East Africa and Head of
IPASA’s Intellectual Property Committee.


The consultancy firm
hired by lobbyists for the
pharma industry in South Africa
and their counterparts is called
‘Public Affairs Engagement’ (PAE). PAE was asked to run a
campaign that would
undermine the ongoing process of reforming South Africa’s
patent laws. South Africa is
by far the largest market for pharmaceuticals in the African
continent. Industry
sources project that South Africa‘s
pharmaceutical market is expected
to increase at a compound annual growth rate (CAGR) of 5.8%
from 2011 to 2020,
when its value will have risen from US$2.5 billion to $4.2
billion, according
to new forecasts. This fast growth is expected to be driven by
the government’s
health care reforms, which include improving access to health
care services by
expanding National Health Insurance (NHI) coverage.




At present the size
of the medicines market in South
is about a quarter of that of India.
that South Africa’s
(approx. 52 million) is less than 5% of that of India, clearly per-capita
expenditure on
medicines in South Africa
is very high in the context of a developing country. The high
expenditure on
medicines in South Africa
driven by high prices of individual drugs, largely a
consequence of the
country’s dependence on MNCs for drug production (unlike India)
and a
Patent law that continues to allow MNCs to liberally patent
drugs and charge
monopoly prices.


It is the latter
concern – liberal patent grant
in South

– that is now sought to be fixed through reform of the
country’s intellectual
property laws. MNCs have traditionally milked the South
African patent law, in
order to charge excessively for life saving medicines. The
contrast is stark – South
’s Treatment Action Campaign says
that, in 2012, generic versions of popular cancer drugs in India were priced between 4
percent and 44
percent of the cost of the same medicines in South Africa.
Unlike India,
did not amend its
patent law to make full use of the flexibilities allowed by
the TRIPS agreement
(that both countries signed in 1995 as part of the WTO


Prof. Brook Baker of
Health Gap says that
current South African patent laws are in the nature of a
‘dream’ for
multinational pharmaceutical companies. While its law has
provisions that
require patent examination (i.e., examination to establish if
a patent claim
should be granted on the grounds that it is a truly novel
product), in practice
such examination does not take place as an examination system
has never been
established. Prof. Baker writes in infojustice.org: “This
means that
virtually every drug company patent filed in South Africa,
so long as the
applicant can fill out the form and pay the filing fee, will
be and is
granted”. And further that: “Pfizer could get a patent on a
peanut butter and
jelly sandwich tomorrow if it wanted to”.




In September 2013, South Africa’s Department of
Trade and Industry released
a draft national policy on intellectual
property that proposes
changing South
patent system. The draft policy, inter alia, proposes
the following:


1. Vigorous
examination of patent applications.
This would prevent the rampant practice of ‘evergreening’
whereby drug
companies make minor changes in an existing medicine to extend
their patent


2. Introducing
‘patent oppositions’ where
interested third parties (like public health and patients’
rights groups and
even domestic companies) can oppose the claim of a patent
before a patent is
granted (pre-grant opposition) as well as after a patent grant


3. Limiting patent
terms to 20 years only, and
not allowing extensions under any grounds.


4. Not allowing the
creation of monopolies based
on data exclusivity. Data exclusivity provisions protect
clinical trial data
submitted while marketing approval is sought. If this data is
protected then
generic companies need to duplicate expensive clinical trials
before they can
seek marketing approval of cheaper generic drugs.


5. Adopting easier to
use parallel importation
and compulsory license mechanisms. The former allows countries
to import a drug
if a patented drug is available at a cheaper price in another
Compulsory license provisions allow generic companies to
produce patented drugs
if the drug is priced too high or, for other reasons, are not
accessible to a
bulk of patients who need these drugs.


What is important to
note is that all these
provisions are perfectly compatible with the TRIPS agreement.
The same has been
repeatedly pointed out at a number of international fora and
was also the
subject of a declaration made at Doha
during the
WTO Ministerial meeting in 2001 in Doha
(popularly known as the Doha Declaration). The Indian law for
incorporated all the above provisions (though not always
perfectly) and many
other countries too have these provisions in their country
laws. So what the
South African government is trying to adopt as its national
law is neither
unlawful, nor novel.




But the global
pharmaceutical lobby never gives
up, even if there is a whiff of opposition to their grand
design to harvest
super profits by maintaining and creating monopolies through
the global patent
system. We may recollect that 39 multinational drug companies
were involved in
suing the then South African president – the late Nelson
Mandela – for enacting
a Medicines Act that these companies saw as being detrimental
to their
interests. These companies were forced to take back their
lawsuit in the face
of a global uproar and huge public mobilisation in South Africa.
It was particularly
diabolical that the 39 companies were suing South Africa
in a situation where
the country was reeling under the impact of the HIV/AIDS
epidemic, and the
Medicines Act was an attempt to secure access to low cost
generic medicines for
millions of poor patients in the country. South Africa has
suddenly again
become a ‘test case’ for pharma MNCs, if the proposed reforms
can be contained,
it would become a precedent to be used to prevent other
developing countries
from following suit. They see South Africa as the ‘weak link’
among the so
called emerging economies, with countries such as Brazil and
India already seen
as rogue states that deny them monopoly power through the
medium of patents.




So what the industry
was planning was to derail
reforms in South
patent laws. The plan involved a $600 000 publicity campaign
to ‘mobilize local
and overseas voices’ to say the changes are a wrong turn for ‘Africa‘s
biggest economy’. From the now continuing expose in the media
it transpires
that the intent was to ensure reforms are delayed at least
until after
elections in South Africa – expected in early May 2014 – by
suggesting that the
changes would be ‘politically damaging for South Africa’s
leaders’. The leaked
email, we refer to earlier, was sent to a list that reads like
a ‘who’s who’ of
pharma MNCs, including companies such as Astrazeneca, Bayer,
Boehringer-Ingelheim, Johnson & Johnson, Lilly, Merck,
Novartis, Novo
Nordisk, Pfizer, Roche, Sanofi and Takeda.


The mail outlines
clearly the strategy that was
to be followed: “This mobilisation will occur through an
campaign, which will feel like a political campaign” …..
“Delay will
provide time to develop a third stage of the campaign”. The
email clearly
shows the support provided by American pharma
(PhRMA) to the South
African MNC lobby (IPASA). Another excerpt reads
as follows: “As
we agreed at the last Board meeting in December, we have
moved ahead in
identifying a high calibre consultancy group to work with
us. The group
selected is
Public Affairs Engagement (PAE)… The
final selection was
carried out in consultation with
PhRMA.. The total
investment for this
5 month campaign will be circa US$450K. PhRMA will
contribute $350K & IPASA
will contribute $100K”.


The leaked email
proceeds to elaborate on its
concerns: “If the principles in the draft (policy) are
adopted, not
only will South Africa become less hospitable to the life
sciences sector, it
may also provide the model for other developing nations,
inside and outside
Africa, including such important aspiring economies as India
and Brazil…South
Africa is now ground zero for the debate on the value of
strong intellectual
property protection. If the battle is lost here, the effects
will resonate…
Without a vigorous campaign, opponents of strong
intellectual property will
prevail – not just in South Africa,
but eventually in much of the rest
of the developing world.”
The cat, as the old
phrase goes, is well and
truly out of the bag!


Analysing the
contents of the leaked email and
other disclosures in the media, Prof. Baker says that the
entire idea was that
the campaign would be run from Washington.
Operating under a euphemism like “Forward South Africa” and
ostensibly led by a
“respected former government official, business leaders, or
academic,” the
publicity and intense lobbying campaign would actually be run
by US-based PAE,
which promises that “any and all research, op-eds, blog posts,
and other
material” will be reviewed and commented upon by PhRMA.


The South African
story, which many are calling
‘PharmaGate’ is not just about a single country. It once again
shows how
lobbyists of pharmaceutical companies remain ever ready to
subvert and
delegitimise policies enacted by sovereign countries. We in India have long been at the
receiving end of
such campaigns, given the strength of India’s
generic industry and the
relatively progressive nature of our own patent laws. When India’s patent legislation
was being savagely
attacked by the US
and its paid lobbyists, thousands marched on South African
streets in a show of
solidarity with poor Indian patients. The South African people
need our
solidarity now.