Avaniendra Chakravartty

The TRIPS Agreement represented the single greatest expansion of intellectual property protection in history.

The main proven mechanism to reduce the price of medicines is generic competition.

In 1994, negotiators for the USA and other rich countries scored a major victory by inserting a global intellectual property rights agreement into the newly formed World Trade Organization (WTO). The agreement, known as TRIPS (Trade-Related Aspects of Intellectual Property Rights), forced other countries to introduce a US-style intellectual property regime, including extending patent protection for medicines for 20 years.

In the tussle for and against TRIPS the poor are the worst sufferers

Essential medicines are not luxury goods, reserved for the wealthiest of the world…

…but are too often priced like them, causing preventable suffering and death.

Legitimate concerns about the negative effects of the implementation of some international trade agreements such as TRIPs will have on access to drugs. Enforcement of the WTO regulations will remove a

source of innovative quality drugs on which the poorer countries depend*.

Number of patented essential drugs will increase in the coming years.

Patents lead to higher drug prices which form a barrier to access.

A number of drugs considered essential from a health point of view are not on the WHO essential drug list for this exact reason.*

Should developing countries have to wait for 20 years before they can access innovations?

*(JAMA, January 1, 1999, vol 281, No 4). *Economic and Political weekly 2000.

How patent rules affected drug prices in Mexico In 1993, Mexico signed the North American Free Trade

Agreement (NAFTA) with the US and Canada. Under NAFTA, Mexico implemented intellectual property rules nearly identical to those rules subsequently introduced under the TRIPS Agreement. By 1999, the prices for medicines in Mexico were nearly the same as those in European countries, and actually exceeded the average price for drugs in France and Canada (P. M. Danzon and M. F. Furukawa, ‘Prices and Availabiltiy of Pharmaceuticals: Evidence

from Nine Countries’,Health Affairs, October 2003, http://content.healthaffairs.org)

There was ‘dramatically lower per capita consumption of [medicines] in Mexico’, which ‘confirms that these drugs are unaffordable to most people’. Danzon and Furukawa, op.cit.

Public opinion coerce WTO –

Responding to increased public outrage, developing-country governments demanded that the World Trade Organization (WTO) address this critical issue as part of the launch of a new global trade round negotiation.

As a result, WTO members unanimously enacted the ‘Doha Declaration on the TRIPS Agreement and Public Health’ on November 14, 2001, asserting that intellectual property rules should not prevent countries from protecting public health.

The Doha Declaration: patients over patents

The Declaration affirmed that developing countries could enforce public health safeguards to enable price reductions via generic competition. It also directed member countries to facilitate access to generic medicines by poor countries with insufficient drug manufacturing capacity, a measure known as the ‘Paragraph 6 Public Health Solution’.

Intellectual property rules should not prevent countries from protecting public health.

Some public health safeguards in the TRIPS Agreement Parallel importation (Article 6) allows countries to import a

patented product marketed in another country at a lower price.

Compulsory licensing and government use (Article 31) allows governments to temporarily override a patent and authorize production of generic equivalents of patented medicines in the public interest. This is broadly defined and at the discretion of each country.

The ‘C provision’ allows testing and regulatory approval of generic versions of drugs before the patent expires to ensure that generic copies can be introduced immediately upon patent expiry

Global pharmaceutical marketThe Major Drivers-

Pharmaceuticals are the most important health-related products that are traded, accounting for 55% of all health-related trade (the share of the next most substantially traded health-related goods—small devices and equipment—is 19%. Blouin C. Trade in health goods. WHO SEARO meeting on trade and health, New Dehli, March 6–7, 2007.

The pharmaceutical market is also characterized by substantial concentration within a few very large transnational corporations; the ten largest account for nearly 50% of the total market.

Smith RD, Chanda R, Tangcharoensathien V. Trade in health-related services. Lancet 2009; published

online Jan 22. DOI:10.1016/S0140-6736(08)61778-X.

The top 20 transnational corporations, based in the USA, the UK, Germany, Switzerland, and France, each have an average of more than 100 foreign affiliates in more than 40 countries (including 19 developing countries),with average sales of over $20 billion. UNCTAD 2005. Wood Mackenzie’s Product view. Pharmaceutical Documentation Ring. http://www.p-d-r.com/ranking/2006_Company_Sales.pdf (accessed June 14, 2008).

Merging of Pharmaceutical companies- Ranbaxy—India’s largest pharmaceutical company

and ranked among the top ten generic companies worldwide—was sold to the Japanese company Daichi-Sankyo in June, 2008, raising concerns for generic manufacture and access to generic medicines, within India and several other countries in which Ranbaxy has operations.

Mergers of pharmaceutical companies have been common, and the number of major international manufacturers is predicted to fall from over 30 to around 12 in the next 10 years. (Gale E A ) Lancet 2002

Bill Haddad’s mission in shambles due to TRIP’s. (withholding the cure) Using NEVERAPINE to reduce risk of

transmitting HIVAIDS from an HIV+ve pregnant women to her unborn child.

90 PERCENT SUCCESS RATE SAYS HADDAD. (SO WHAT IS HADDAD COMPLAINING ABOUT?)

HADDAD SAY’S Because of alleged patent laws or

other political barriers, many countries such as Kenya, Ghana, South Africa and half the Latin American countries won’t let him distribute the medicine.

The US governments double standard on patent protection- US Govt threatens to override Bayer’s patent on

Cipro during the case of anthrax justifying the need on public health emergency grounds.

The US governments action on Cipro is in stark contrast to US trade pressure on less developed countries to limit compulsory licensing and parallel importing. (cases of Thailand(1998), Brazil).

Medical Globalization

Access to basic drugs is a critical aspect of public health, and yet this is where the emerging globalized pharmaceutical regime is going to hit the poor the hardest. Developing countries require to provide patent production on chemicals products and processes for 20 years.

THE REASON CONSUMER GROUPS AND HEALTH ACTIVISTS FIND THE 20 YEAR RULE SO PATENTLY UNFAIR IS THAT MODERN DRUGS HAVE SHORT LIFE SPANS BECAUSE OF CONSTANT AND ACCELERATING INOVATIONS IN PHARMACEUTICAL RESEARCH.

(ADD NOTE FROM PG 5)

PHARMACEUTICAL COMPANIES HOLDING HOSTAGE TO DEVELOPING COUNTRIES- THE WEAPON IS TRIPS

Developed countries hold 97% of the patents and MNC’s 90 percent of all technology and product patents.

Dr K Balasubramanium of Consumers International – (by severely reducing competition the United States and developed countries are pushing the globalization agenda)

In 2001, Cipla offered its version of the AIDS cocktail drug (Triomune) at less than a dollar a day which shook up the pharma industry, previously charging $10,000 to $15,000 per patient per year. Consequently, Dr. Hamied has been accused of being a "thief" and "pirate", but legally, India's current patent laws allow no monopoly in the area of health and food which has made it possible for him to manufacture and market almost any drug available.

The case with India The US pharmaceuticals lobby estimates that it

currently loses more $1.7 billion annually because of India’s insufficient intellectual property protection.*

Indian drug industry is a good example of what happens when companies are given the authority to produce drugs for the local market without paying daunting licensing fees. Under TRIPs, compulsory licences could be granted to produce essential medicines to treat life-threatening diseases, mimicking the currently unregulated system in India. Currently, Lariam, a treatment for malaria costs US$37 in the US and US$ 4 in India while the AIDS treatment AZT costs US$ 239 per month in the US and US$ 48 in India.

*See Pharmaceutical Research and Manufacturers of America, PhRMA 2002, ‘Special 301’ Submission (2002).

Stopping production of Anti Aids Drugs since 2004-

Third time since June that an Indian company has Third time since June that an Indian company has removed anti-AIDS drugsremoved anti-AIDS drugs..

Hyderabad-based pharmaceutical Hetero Drugs Limited in India, had voluntarily withdrawn all six of its generic Antiretroviral (ARV) drugs from the world body's list of approved drugs .

Ranbaxy pulled its AIDS drugs off Removal by India's pharmaceutical Cipla, of two HIV/AIDS

drugs.

*Cipla is the Indian company credited with introducing the 'dollar-a-day' treatment that dramatically transformed drug access for HIV-infected people around the world.  

The Reason behind the removal-

Following WHO inspections, which claimed that bioequivalence tests - meant to show the drugs have the same effect as the original patented brands - were faulty. And this has deeply upset those involved in fighting the global HIV/AIDS epidemic.  

The Fact is- Both Ranbaxy and Cipla were able to

prove to WHO, before the voluntary pull-off, that their ARVs met the global body's bioequivalence standards - though not before their world business had taken a knock that benefited the manufacturers of costlier patented drugs

So who is the culprit According to the internationally-

known drug policy expert, Mira Shiva, the actual culprit in the whole debacle involving Hetero, Ranbaxy and Cipla was actually the WTO and not WHO.

Compulsory licensing- “double faced’’. Compulsory licensing finds its legal basis in

Article 31 of the TRIPs agreement. The agreement says that member states may “use the subject of a patent without the authorisation of a right holder including use by the government or third parties authorised by the government” when justified by public interest.

BUT THERE IS ONE MORE THINGArticle 31 also says that “the right holder shall be

paid adequate remuneration taking into account the economic value of the authorisation”.

Generic Competition & Price [1]

Since 2001, generic competition has reduced the price of first line triple-therapy 99%!

Professor Brook Baker, “Drug Company Economics and the R&D Excuse”

How much good does it do to treat people's illnesses …only to send them back to the conditions that made them sick?

THAT’S IT FOR TODAY-

The US TRIPS-plus agendaPharmaceutical companies did not interpret the

Doha Declaration as a signal to stop pursuing stronger intellectual property rules in developing countries; instead, they saw it as a signal to change tactics.

The USA, with the influence of pharmaceutical companies, is uniquely guilty of imposing higher standards of intellectual property protection (TRIPS-plus rules). These rules violate US commitments under the Doha Declaration and prevent developing countries from using safeguards to protect public health.

The US TRIPS-plus agenda USA has vigorously represented the commercial

interests of pharmaceutical companies in trade negotiations with developing countries example-

The office of the United States Trade Representative (USTR) announced an internal reorganization to reflect ‘our efforts to better support vital US innovations, including those in the pharmaceutical industry’.

USA seeks worldwide harmonization of intellectual property rules on a level at or above US law, which is stricter than TRIPS. (go to foot note)

Does the USA Government criticize the actions for giving primacy to trade over health-

Recently, the Bush administration has sought to stop World Health Organization staff engaging in or publishing research or statements that critique the impact of US trade policy on public health. (press release from Senator Edward Kenney and Congressman Henry Waxman and their accompanying letter to the US Secretary of Health and Human Services, Michael Leavitt, 13 October 2006, http://www.democrats.reform.house.gov/story.asp?ID=1126. )

Bilateral and regional free trade agreements (FTAs)

Every FTA signed or currently under negotiation has disregarded the fundamental obligations of the Declaration by maintaining or imposing higher levels of intellectual property protection that further restrict generic competition. (foot note), though many US trading partners are developing countries with millions of poor people unable to afford expensive medicines.

The FTAs contain the following TRIPS-plus rules: Expanding the scope of pharmaceutical patents,

including to new indications (new therapeutic uses of existing medicines) and formulations .

Enhancing protections for clinical trial data by providing at least five years of marketing exclusivity for the data (also known as data exclusivity

Limiting the grounds for issuing compulsory licenses to emergencies, government non-commercial use, and competition cases;

TRIPS-plus rules Barring parallel trade of patented medicines sold

more cheaply elsewhere

Extending patent monopolies for administrative delays by patent offices and drug regulatory authorities;

Linking drug registration to patent status, thereby preventing registration and sale of generics during the patent term;

TRIPS-plus rules Enforcing patent violations and granting

pharmaceutical companies investor-based rights to sue, including for improvidently granted compulsory licences;

Prohibiting pre-grant patent oppositions, and making it more difficult to revoke invalid patents.

Public health consequences of TRIPS-plus FTAs

The FTAs signed between the USA and developing countries will have severe consequences on the health and welfare of people in those countries. Studies confirm that if FTAs with developing countries are enforced, the price of new medicines will increase and remain higher over time, with potentially devastating effects upon poor people.

Long-term public health burden of FTAs on access to affordable medicines in Colombia, Peru, and Thailand

Relevant FTA Source Public Health Impacts

US–Colombia FTA Pan American Health Organization!

(2005) 1

By 2020, the Colombian health system would pay an additional $940m per year to cover the cost of medicines, and approximately 6 million users would have no access to medicines through the health system.

US–Peru FTA Peruvian Ministry of Health3 (2005)

Prices for medicines would rise 9.6 per cent on average in the first year, 100 per cent in 10 years and 162 per cent in 18 years. In 10 years, Peru would incur additional medicine expenses of $199.3m – of which $110m would have to be met by Peruvian households.

US–Thailand FTA World Bank3(2006 Compulsory licensing, which is threatened by an FTA, could otherwise reduce the cost of 2nd line ARVs – which most patients will eventually need – by 90 per cent. This would represent a saving of $3.2bn34 for the Thai national health budget over 20 years

Different forms of US pressure-

In addition to FTAs, the USA exerts other forms of pressure on developing countries to implement higher levels of intellectual property protection. This includes monitoring other countries’ intellectual property rules in relation to US standards (Special 301 reports) and introducing TRIPS-plus rules during the WTO accession process.

A- Special 301 reports B- WTO Accessions

Special 301 reports The USA continues to exert unilateral pressure

upon poor countries through the Special 301 process, an annual report that evaluates intellectual property protection in other countries. If a country does not comply with US standards, it can be placed on the ‘Priority Watch List’, meaning the country could face unilateral trade sanctions. Armed with FTAs that legally bind countries to TRIPS-plus provisions, the USA and pharmaceutical companies can now use the Special 301 process as an additional tool to enforce strict TRIPS-plus rules.

WTO Accessions Countries acceding to the WTO must abide by

WTO rules. In addition, existing WTO members may ask for additional concessions, often exceeding their own WTO commitments. Without the support of countries like the USA, entry is impossible since it requires consensus among all WTO members. The process of accession includes confidential bilateral negotiations with rich countries, during which aspiring members are pressured into accepting WTO-plus commitments in many areas, including intellectual property

Since passage of the Doha Declaration, the USA has used the accession process to force poor acceding countries to forego their rights under the TRIPS Agreement. In particular, the USA used the process to pressure Cambodia and Nepal to forego the transition period allowing least-developed countries to wait until 2016 to provide intellectual property protection for medicines.

Medicine prices in Jordan have increased 20 per cent since 2001. Higher medicine prices are now threatening the financial sustainability of government public health programmes(1).

In particular, data exclusivity has delayed generic competition for 79 per cent of medicines newly launched by 21 multinational pharmaceutical companies between 2002 and mid-2006, that otherwise would have been available in an inexpensive, generic form.

Numerous studies forecast that TRIPS-plus rules will result in increases in medicine prices over time, putting a strain on health budgets and leaving poor people with catastrophic out-of pocket expenses for medicines.(2)

(1)According to the 2005 National Health Strategy, the “rise in the pharmaceuticals bill” represents one of the main “challenges that face….continuation of health programmes… and sustainability of funding for those programmes.”

(2)-(go to notes page)

How TRIPS-plus intellectual property rules in the US-Jordan FTA affect access to medicines

Relative prices between medicines with no generic competition in Jordan (due to enforcement of data xclusivity) and the price of the lowest-priced generic equivalent in Egypt

An unrelenting campaign: the record of pharmaceutical companies

The drug industry in India spends 20% of its annual sale amounting to Rs.4,000 crores in advertising. This works out to about Rs.50,000 per doctor per annum and each doctor prescribes drugs worth Rs.250,000 per annum.

Artificial Price Inflation: The R&D Excuse

Why are Drug Costs so High When drug manufacture costs are actually low:

Celebrex 100 mg Consumer price (100 tablets): $130.27 Cost of general active ingredients: $0.60 Percent markup: 21,712%

Lipitor 20 mg Consumer Price (100 tablets): $272.37 Cost of general active ingredients: $5.80 Percent markup: 4,696%

• Why don’t pharmaceutical companies sell to more patients at a lower cost? Doesn’t economics teach us that maximizing market share lead to greater profits?

• Let’s look at the Price vs. Quantity Demand Curve

Drug Price & Profit Maximization

Highly convex demand curve where high income inequity exists. Profits can be maximized by high prices.

Professor Brook Baker, “Drug Company Economics and the R&D Excuse”

Generic Competition & Price [2]

Cost of Statins: Simva prices drop from $1155/year to $40/year!

Past and Present Cost of Statins (US $)Year 2002Statin Route Dosage Cost/yearAtorvastatin (Lipitor) Oral 20mg once 1,155.60Fluvastatin (Lescol) Oral 40mg once 583.20Fluvastatin XR (Lescol XL) Oral 80mg once 730.80Lovastatin (generic) Oral 40mg once 664.00Lovastatin XR (Altocor) Oral 40mg hs 1,076.40Pravastatin (Pravachol) Oral 40mg once 1,468.40Simvastatin (Zocor) Oral 20mg once 1,155.60Table 5A: Yearly Wholeslae Cost Feb 2002 - 2003 (Scott-Levin's Source Prescription Audit) in USwww.drugstore.com

Fall 2006Statin Route Dosage Cost/package Cost/unit Cost/yearAtorvastatin Oral 20mg 22.08 (30) 1.1041 264.96Fluvastatin Oral 20mg 20.10 (28) 0.7146 240.12Lovastatin (generic) Oral 20mg 1.23 (100) 0.0123 4.49

2.75 (30) 0.0916 33.00Pravastatin (generic) Oral 20-40mg 10.00 (90) 0.11 40.15Rousuvastatin n/aSimvastatin (Zocor) Oral 20mg 24.84 (30) 0.828 298.08 (generic) Oral 20-40mg 10.00 (90) 0.11 40.15Table 5B*: Management Sciences for Health (MSH) International Drug Price Indicator GuideReference: http://erc.msh.org/mainpage.cfm?file=1.0.htm&module=DMP&language=english

TRIPS and AGRICULTURE Forcing developing countries to extend

IPR to plant verities and seedsity with impact on agriculture.

Six multinationals control around 70% of the patents held on staple food crops.

Food security under threat- farmers suicide

Increased costs for small farmers

In Andhra Pradesh farmers paid upto Rs 1600 for a 450gm of Bt cotton( of which the royalty component was 1200) as against 450-500 for normal varities.

Farmers using Bt cotton seeds experienced an average net loss of 1295 rupees per acre while those using traditional methods earned an average profit of 5368 Rupees per acre (Action Aid)

TOWARDS A SUSTAINABLE SOLUTIONSOCIAL AND ECONOMIC JUSTICE

“Some observers attribute the rapid spread of HIV in Africa at least in part to Structural Adjustments Programs, which increased migration and urbanization, drove more people into poverty, forced women into prostitution, while at the same time depriving health ministries of enough money to provide health care and prevention”

- The Lancet, Vol 344, Nov. 19, 1994

Market Access (protectionism, competitiveness) Technical

Barriers to Trade

Especially, Labeling, IPR

Southern Apprehensions – Southern Apprehensions – 1:1:Fears of Environmental Fears of Environmental

ProtectionismProtectionism

Which isses are trade related

Health issues

Environmental Goods & Services

Agricultural issues Environmental Measures

Southern Apprehensions – Southern Apprehensions – 2:2:Nervousness about Doha’s Nervousness about Doha’s

Unclear MandateUnclear Mandate

Getting from Apprehension to Opportunity

Challenges for usMoving to a Proactive Agenda is

going to be neither easy,

nor automatic.

The responsibility as well as

the incentive to do so lies

squarely with us.

Defining the problem:“The people with HIV are where the drugs are not.”

Compare and contrast

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Rwanda gives $1 million to Global Fund

US gives $200 million to Global Fund

Making Rwanda more ten times more generous, proportionately

Identifying Identifying Our Own Our Own PrioritiesPriorities

#1

Creating Creating Options & Options &

AlternativesAlternatives

#2

Envisioning Envisioning a New a New

AgendaAgenda

#3

Where do we go from here?Taking the Next Step:

Imagining a Southern Agenda

What can we do?

“These are all human institutions, they are subject to human will, and they can be eliminated like other tyrannical institutions have been.”

- Noam Chomsky