hammer1.gif (1140 bytes) People’s Democracy

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


No. 21

May 27,2001

TRIPS Agreement
under Attack

Amit Sen Gupta

THE global
Pharmaceutical Industry, for once, has become the villain rather than the darling of the
international media. Publications as diverse as the British Medical Journal, the Time
Magazine, the New York Times, and even the Wall Street Journal have, in recent issues,
lambasted the industry for blocking access to life saving drugs—especially anti-AIDS
drugs. It may be recalled that just six years back the pharmaceutical industry was able to
hammer down all opposition to its monopoly over drug production through the medium of the
Trade Related Aspects of Intellectual Property Rights (TRIPS) agreement in the World Trade
Organisation (WTO). Today, there is a growing public perception that the
pharmaceutical industry is using the TRIPS agreement under the WTO to force cheaper
medicines out of the global market.
This perception has crystallised in the past
few months due to a number of events that have taken place across the globe. Interestingly
the battering that the industry has received recently comes at a time when it was riding
the crest of an unprecedented rise in profitability.

During the run
up to the signing of the TRIPS Agreement in 1994 the developed capitalist
countries—US, Japan and the European Union—had projected the pharma industry as
the wronged party. In the 1980s a survey by the US International Trade Commission (ITC)
sought to “prove” that international “piracy” was costing American
industries billions of dollars per year. Countries singled out for action, as a result of
these findings, were largely developing countries in Asia, Latin America and Africa. The
moral high ground was sought to be occupied with the plea for protection of creative and
innovative work done by pharmaceutical companies. The US posed the whole issue as an
organized effort by foreign countries, especially those located in Asia (China, India,
Thailand, Malaysia, etc), to systematically usurp American creativity and technological
knowledge. The “innocent” victims were American companies, such as Microsoft, or
Walt Disney, or Merck. It was repeatedly alleged that the lack of strong international
intellectual property laws hindered international trade. By this virtual sleight of hand
the US (with the support of Europe and Japan) introduced Intellectual Property Rights
(IPRs) as an issue in trade negotiations in the Uruguay Round of GATT negotiations in 1986
— and this finally led to the signing of the TRIPS Agreement in 1994.

The success
achieved by the US in making IPR a trade issue and its subsequent incorporation in the WTO
agreement overturned the very basis of trade negotiations, where classically the
developing nations are considered victims and special considerations are taken to remedy
their problems. In the US version, the roles were reversed. The US became a victim and the
developing countries were the hostile aggressors who threatened the very foundation of
America — its creativity and ideas! But in six short years the TRIPS Agreement has been
exposed for what it really represents—the ugly face of the globalised economy, that
predates upon human misery to amass profits.


The widely
evocative issue of access to anti-retrovirals, i.e. drugs that are used to treat AIDS
patients, has played a major role in the way the international community today sees the
pharmaceutical industry. The availability of anti-retroviral drugs have transformed AIDS
from a death sentence to a chronic disease for those who can pay. These drugs are however
priced beyond the means of most people. Treatment of AIDS with a combination of
drugs— called Highly Active Anti-retroviral Treatment (HAART) — has decreased
mortality from AIDS by 84 per cent in Switzerland from 1992 to 1998. This relative fall is
greater than the 72 per cent fall produced by penicillin in the treatment of severe
pneumonia between 1930 and 1965, and of course occurred in a much shorter period of time.
Unfortunately less than 5 per cent of AIDS infected people across the globe have access to
such treatment currently, because the estimated cost of treatment by HAART is about 12,000
dollars per person per year. At present rates, Zimbabwe, Uganda and Ivory Coast would
require to spend 265 per cent, 172 per cent and 84 per cent of their respective Gross
National Products, just to buy drugs to treat all their AIDS patients! The situation is
similar in many other Asian, African and Latin American countries.

The tragedy for
millions of AIDS patients lies in the fact that these drugs can be manufactured quite
cheaply—at less than 300 dollars per person, per year. But multinational
corporations, who hold the Patents for these drugs, are overpricing their drugs to the
tune of forty times their actual costs, in the name of recovering research costs. What is
worse is that many of these medicines have not been developed by the companies which hold
the Patents. These companies just happened to be the first to patent these drugs, not the
first to develop them. For example, the first anti-AIDS drug—AZT—was
first introduced into the market over two decades ago and was being experimented upon for
entirely different applications. Even its application in treatment of AIDS was researched
at the NIH in the United States, using public funds. Yet Merck holds the patent for AZT
and denies access to it to millions of people across the globe.

Condemnation of
the role of pharmaceutical companies reached a crescendo due to the lawsuit brought
against the South African government in Pretoria’s High Court by 39 pharmaceutical
companies. The lawsuit targeted a legislation by South Africa—the Medicines and
Related Substances Control Amendment Act, No. 90 of 1997 — that allowed the country
access to cheaper anti-AIDS drugs. The 1998 lawsuit was supported by the US government,
which placed South Africa on the Special 301 Watch List, and the European Union, which
wrote to then vice president of South Africa, Mbeki, to express its concern about the
legislation. This move by the pharma majors evoked a massive counter-response across the
globe. Led by the Nobel prize winning global organisation called Medecins Sans Frontieres
(Doctors Without Borders), a global coalition mounted solidarity actions across the globe.
The companies suffered a major defeat when, in April, 2001 the companies capitulated to
mounting anger and disgust over their conduct and agreed to withdraw the case


The reaction in
India to the rising opposition to TRIPS has been curiously ambiguous. On one hand
countries in Africa, Latin America and Asia, as well as organisations campaigning for
access to cheap anti-AIDS drugs see India as a potential source of cheap drugs. In March
2001, an Indian company, Cipla, announced that it would offer the combination of anti-AIDS
drugs at a cost of 600 dollars per patient per year, and later announce that they could
bring down costs to 350 dollars. Cipla’s offer was matched within weeks by two other
companies, Hetero Drugs and Ranbaxy. These offers are, till date, by far the cheapest that
have been made anywhere in the world. In other words, Indian companies are now offering
drugs to treat AIDS at prices that are one fortieth of global prices! Such a precipitous
fall in prices can revolutionise AIDS treatment in developing countries, and save millions
of lives. In April, 2001 in the first substantial purchase of the AIDS cocktails by an
African nation, Nigeria announced a deal with Cipla to buy enough drugs to treat 10,000
people a year. While the 3.5 million dollars deal for Nigeria is just a small step toward
addressing treatment for an estimated 2.6 million Nigerians infected with AIDS, the
floodgates are just starting to open. Cipla and the other companies who have made the
offer to manufacture cheap anti-AIDS drugs have been branded as saviours in the
international media and by numerous activist groups. In fact it is difficult to even gauge
the tremendous impact that the announcement by the Indian companies has made across the
world. In contrast, the issue has gone virtually unnoticed in India.

The Indian
government has reacted by maintaining a studied silence on the issue. While countries like
Brazil and Thailand have shown the courage to risk the wrath of the WTO in order to ensure
access to essential drugs, India has been busy cosying up to the United States.
Recently, a group of African trade ambassadors have called for opening a debate within the
WTO on the impacts of intellectual property rights and pharmaceutical patents on poor
countries’ access to low-cost medications. Just a month back Brazil moved a
resolution at the UN Human Rights Commission, that was approved by 52 votes in favour, 0
against and 1 abstention (USA). The resolution, among other things, called upon States, at
the international level, to ensure that “the application of international agreements
is supportive of public health policies which promote broad access to safe, efficient and
affordable preventive, curative or palliative pharmaceuticals and medical
technologies…” Moreover, national governments in many third world countries are
backing protests and demonstrations against the WTO in general and the TRIPS regime in

The defeat for
the 39 pharmaceutical companies in South Africa is not the end of the battle. Every
country that has tried to interpret the TRIPS Agreement in a manner that allows access to
cheaper drugs for its people is faced with a hostile reaction from the US. The US has
dragged Brazil to the WTO court for trying to offer cheap anti-AIDS drugs to its people.
Brazil’s acclaimed generic AIDS drug programme is now under threat in the WTO. The
Brazilian government now provides free anti-AIDS medicine to every region of Brazil,
including newly constructed clinics in very remote areas. Sustainable access to affordable
medicine in Brazil resulted in plummeting rates of death due to AIDS and new infection. In
February this year the WTO, set up a dispute panel to examine a US complaint that
Brazilian patent law discriminates against imports. At the heart of the row – which could
decide the fate of US pharmaceutical firms in Brazil – is Brazil’s 1997 patent law
that obliges products to be manufactured domestically. If they are not, then after three
years a local company can win the legal right to produce another firm’s patented
product. Thailand has similarly been dragged to the WTO dispute settlement board for
trying to ensure access to cheaper versions of a drug called fluconazole that is used to
treat infections in AIDS patients.


The issue of
access to AIDS drugs is, arguably, the weakest link in the TRIPS accord and the global
patenting system. Given the tremendous evocative appeal that the “Access Campaign to
AIDS Drugs” has, it has the potential to undermine the TRIPS agreement and possibly
even the whole foundation of the WTO agreement, premised as it is on the use of global
trade to place the resources of the global South in the service of a market that is
controlled by international finance capital.

However, to
effectively strike at the “weakest link” the campaign for access to cheap
medicines has to look beyond AIDS and beyond the TRIPS framework. While, tactically, the
foregrounding of the AIDS issue is correct, there is the danger that the pharma industry
might try a damage limitation exercise and agree to view the issue as an exception. They
would, then, still succeed in retaining the stringent provisions of the TRIPS accord and
ensure that the agreement continues to hold in the case of all other therapeutic groups.
In most countries in the developing world, AIDS is by no means the biggest killer disease.
Tuberculosis, for example, kills over half a million people every year in India—i.e.
more people die from TB in India in 6 years than the total number of AIDS infected people
in the country. The tactics of the access to AIDS drugs campaign, must logically extend
itself to cover access to all essential medication. The second potential pitfall would be
to set too much store by the ability to work within the TRIPS framework. While arguing for
a more “liberal” interpretation of the TRIPS language to ensure better access,
it is also necessary to understand that the TRIPS agreement was arrived at on the basis of
submissions of the pharma industry. It is an agreement designed to promote monopolies and
hinder competition. The campaign needs to look beyond TRIPS, to use the present momentum
to force its renegotiation.

India should,
logically, be the leader of such a campaign if only we can shed our blinkers and realise
where our interests lie. The Indian government’s silence is especially of
significance given that India has possibly the most to lose, among all developing
countries, once Indian laws are harmonised with the TRIPS agreement. Today Cipla is able
to offer anti-AIDS drugs at globally competitive prices because Indian laws allowed
domestic manufacture of drugs patented outside the country, and because these laws
encouraged the development of a vibrant domestic industry. The sheer magnitude of what
India is about to lose has not even started to sink in. For, it is precisely these laws
that are going to be amended by the Patents Amendment Bill, that is on the anvil.
Unfortunately, in the last few years when the real possibility to challenge the
TRIPS regime has arisen, the BJP led NDA government has shown no inclination to lend even
a muted whimper of solidarity to the roar of protests against the TRIPS regime. If the
Indian government is not prepared to support its own industry that is prepared to battle
it out with global MNCs, it is a matter of time before companies like Cipla are swamped by
these global predators.

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