The health crisis in developing countries
There has been worldwide concern over the high prices of drugs and medicines. More than anything else, it is the current health crisis in the developing countries, which has aroused public interest in this issue.
by Cecilia Oh
ABOUT 14 million people die each year from infectious diseases, many of which are preventable or treatable, such as acute respiratory infections, diarrhoeal diseases, malaria and tuberculosis. Up to 45% of deaths in Africa and South-East Asia are thought to be due to an infectious disease.1 The death toll is unacceptably high in developing countries, even as health indicators show improvements in many countries of the world. This health crisis is caused by several interlinked factors - poverty, and lack of access to health services, water and sanitation being some of them. However, a vital factor in the promotion of public health - and very often a matter of life and death - is the supply of effective and affordable medicines and people’s access to such medicines and treatments.
In the case of HIV/AIDS, a human tragedy of mind-boggling dimensions is now at hand. Of the 36 million people with HIV/AIDS in the world, 25 million are in sub-Saharan Africa. In certain African countries, more than a quarter of the adult population are infected with HIV, and life expectancy is projected to decline dramatically in the next 10 years. For example, life expectancy in South Africa is projected to fall by 20 years by the year 2010 due to the spread of HIV/AIDS.
The HIV/AIDS epidemic has put the spotlight on the issue of affordability of essential medicines. In industrialised countries, AIDS deaths have been dramatically reduced partly because of the availability of life-saving medicines. However, the cost of a year’s worth of the standard treatment, a combination of three antiretroviral drugs, is estimated at US$10,000-15,000 (the Guardian, 12 February 2001). This price level puts such treatment out of reach of most people in the developing world, where 95% of the people with HIV are from.
Public interest worldwide has been aroused by the health crisis in the developing countries, caused by the exorbitant prices of drug treatments. HIV/AIDS medicines are a high-profile example, but there are also many cases of medicines for other life-threatening diseases being made unaffordable, simply because companies owning or controlling patents on the medicines have been able to block competition from other firms and other products. Prices of patented medicines are very much linked to the monopolies enjoyed by pharmaceutical companies, protected and maintained by patent rights.
The TRIPS Agreement and patents on drugs
Patent rights are being extended around the world through the provisions of the World Trade Organisation (WTO) Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). Proponents of the TRIPS Agreement argue that patents and other intellectual property rights (IPRs) are essential for promoting research and development (R&D) as well as stimulating innovation. Yet, there has been scant evidence that the introduction of TRIPS-compliant standards of IPRs protection has promoted transfer of technology, R&D or innovation in developing countries.
The intensive use of the patent system by corporations is intended to protect their competitive edge and markets by keeping out their competitors. This strategic use of the patent system has the effect of stifling R&D, preventing innovation and restricting information flows in the developing countries. Patent protection is sought to be justified on grounds that the negative effect of monopoly rights will be outweighed by the incentive for creative activity, innovation and R&D. This trade-off is beginning to be questioned because the price and competition costs of strict patent protection have been very high. In the health and pharmaceuticals sector, this trade-off often comes with life-or-death consequences.
The implementation of the TRIPS Agreement gives rise to factors that can put access to medicines out of reach for millions of people in the developing world. The TRIPS Agreement obliges WTO Member countries to adopt and enforce high standards of IPRs protection, which were derived from the standards used in developed countries. Prior to the Uruguay Round of multilateral trade negotiations which spawned the WTO, some 50 countries did not grant patent protection for pharmaceutical products.2 This number included certain developed countries such as Portugal and Spain, and many developing countries such as Brazil, India, Mexico and Egypt. Many developing countries regarded the absence of protection as necessary to promote access to drugs at competitive prices. Conforming to TRIPS Ð by recognising and strengthening protection of IPRs over pharmaceutical products and processes - will cause problems for developing countries. Implementation of the TRIPS Agreement may lead to high drug prices, low access to medicines and a weakening of pharmaceutical industries in the developing countries.
It is feared that patent protection for pharmaceutical products and processes will have the effect of reducing or eliminating competition from generic production of medicines. There are about 10 industrialised countries with the pharmaceutical industry and research base capable of developing new chemical entities or new medicines. The multinational drug companies in these countries own most of the pharmaceutical technologies and products through patents.3 The minimum term of 20-year patent protection required by TRIPS effectively grants a pharmaceutical company monopoly over the production, marketing and pricing of patent-protected medicines. It will, free from competition, be able to keep the price of the drug high during the protection period. By virtue of TRIPS protection, no generic equivalent can come into the market until expiry of the 20 years, thus denying patients cheaper alternatives.
Domestic manufacturing of pharmaceutical products in developing countries will come to a standstill. Developing countries are able to produce new medicines by a process of reverse engineering; that is, researchers in developing countries may develop a new process different from the process invented (and protected by patent) to manufacture the new medicine or chemical entity. Reverse engineering is thus possible only in countries where the patent law protects processes but not products. However, the TRIPS Agreement extends the scope of patent protection to both products and processes. It would therefore be possible to apply for patent rights over products for 20 years, and thereafter, further periods of 20 years each could be applied for products covered by patented processes. Some experts caution that the 20-year protection can also be abused to extend the monopoly through process patents as well as patents on usage form, dosage form and combination form. In the US, for example, patents have been taken out on new combinations of drugs even when the product patent on the basic drug - the active ingredient - has long expired. Monopoly protection would be extended through minor changes to the existing medicines where the product patents have expired.
Developing-country pharmaceutical producers will find themselves pushed out of the market, having to compete with the large multinational corporations (MNCs). For the smaller producers in the developing world which specialise in and depend on manufacturing cheaper generic alternatives, this would no longer be possible - at least not until the expiry of the 20-year period. In some developing countries, domestic production capacity may never be developed.
The TRIPS Agreement further requires patents to be granted regardless of whether the product is imported or locally produced. This means that patent holders can merely import their product, without having to ‘work’ the patent in the country granting patent protection. This will mean that an MNC can supply global markets under its patent monopoly by exporting the finished product instead of transferring technology or making foreign direct investment. This thus rubbishes the argument of TRIPS proponents that strict patent regimes will increase the flow of technology and investment into developing countries.
TRIPS proponents and the pharmaceutical industry argue that patent protection is essential to ensure R&D for new drugs, but there has been little evidence to demonstrate that the patent system will ensure investment in R&D for diseases that afflict mainly the poor. Of the 1,223 new chemical entities developed in the 21-year period between 1975-1996, only 11 were for the treatment of tropical diseases.4 The last major new tuberculosis drug was developed 30 years ago, but tuberculosis remains a major cause of death in many developing countries. There is concern that R&D in the pharmaceutical sector is concentrated on products intended for the lucrative developed-country markets, given the increased investments for R&D on drugs for impotence, obesity and baldness, instead of R&D on new and more effective drugs for life-threatening or poverty-related ‘Third World diseases’, including malaria and tuberculosis.
Civil society groups and non-governmental organisations (NGOs) have called for amendment of the TRIPS Agreement so as to ensure a proper balance between the protection of private rights and corporate interests, and the promotion of public interests in the socioeconomic and technological development of Member countries, including public health. Public criticism of the TRIPS regime is mounting, as are questions about the legitimacy of patents on life-saving drugs and the global monopolies provided to pharmaceutical companies by such patents. There is increasing public concern that the present model for IPRs protection advocated by TRIPS is too heavily tilted in favour of private right holders and against the public interest. The public outrage over HIV/AIDS medicines has added fuel to the negative public perception about the IPRs system and about the role of TRIPS.
All this is leading to a crisis of legitimacy for TRIPS. In the six years since its coming into force, there has been increasing evidence of many social and economic problems caused by the introduction of stricter IPRs as a result of the implementation of the TRIPS obligations.
1. World Health Organisation (2000), Communicable Diseases 2000 Ð Highlights of activities in 1999 and major challenges for the future, WHO, Geneva.
2. United Nations Conference on Trade and Development (1996), The TRIPS Agreement and Developing Countries, UNCTAD, Geneva and New York.
3. Balasubramaniam, K. (2001), Access to Medicines: Patents, Prices and Public Policy - Consumer Perspectives, paper presented at Oxfam International Seminar on Intellectual Property and Development: What Future for the WTO TRIPS Agreement?, Brussels, 20 March 2001.
4. World Health Organisation (2001), Globalisation, TRIPS and access to pharmaceuticals, WHO Policy Perspectives on Medicines, No. 3, March 2001, WHO, Geneva.
Cecilia Oh is a legal advisor and researcher with the Third World Network. The above is extracted from a TWN report entitled ‘TRIPS, Patents and Access to Medicines: Proposals for Clarification and Reform’ which she authored with assistance from Martin Khor and valuable contributions from Carlos Correa, Bhagirath Lal Das and Chakravarthi Raghavan. The full report is available on TWN’s website, www.twnside.org.sg.