TRIPS Agreement under Attack13/01/2009
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 ant-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 U.S 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 Asian, S.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 U.S. (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 U.S. 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 U.S. version, the roles were reversed. The U.S. 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.
Campaign for Access to Cheap Drugs
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, are 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% in Switzerland from 1992 to 1998. This relative fall is greater than the 72% 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% 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 per person per year. At present rates, Zimbabwe, Uganda and Ivory Coast would require to spend 265%, 172% and 84% of their respective Gross National Products, just to buy drugs to treat all their AIDS patients! The situation in 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 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 unconditionally.
Indian Companies in the Forefront
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 per patient per year, and later announce that they could bring down costs to $350. 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 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 World Trade Organisation (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 favor, 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 particular.
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 World Trade Organisation, set up a dispute panel to examine a U.S. complaint that Brazilian patent law discriminates against imports. At the heart of the row – which could decide the fate of U.S. 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 “Weakest Link”
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.