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Issue #1755      November 2, 2016

Corporate dictatorship

Corporate profits over public health

With the obligations it has imposed on member countries of the trade body to recognise and strengthen patent protection on pharmaceuticals, the World Trade Organisation’s Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS implemented more than 16 years ago) is denying patients in the developing world access to life-saving essential medicines. The countries of the South now find themselves ranged against Northern governments and powerful pharmaceutical lobbies in their fight, at the WTO and beyond, to ensure public health takes precedence over corporate profits.

Of the 50 percent of the patients in developing countries who lack access to essential drugs, many die because the drugs are patented and therefore too expensive. These patented drugs include treatment for tuberculosis and AIDS as well as the Hepatitis-B vaccine.

The problem with TRIPS

The TRIPS Agreement requires all WTO members to adapt their laws to the minimum standards of Intellectual Property Rights (IPRs) protection.

During the 1980s, the gradual erosion of the developed countries’ supremacy in manufacturing and technology, due to the rise of the Asian countries as competitors, was a cause for concern.

The industrial lobbies convinced developed-country governments on the need to link trade with IPRs, in order to prevent imitation and to increase returns on research and development.

Monopoly rights granted by IPRs were regarded as crucial to prevent the developing countries from further undergoing the “catching-up” process towards industrialisation based on imitating and copying technologies, as the developed countries themselves had done.

In other words, IPR protection was a tool to guarantee the comparative advantage that had so far ensured the developed countries’ technological supremacy.

Prior to the negotiation of the TRIPS Agreement, over 50 countries (including developed countries) did not confer patent protection on pharmaceuticals.

Many developing countries regarded the absence of protection as necessary to promote access to drugs at competitive prices. Implementation of the TRIPS Agreement has led to high drug prices, low access and a weakening of national pharmaceutical industries.

Twenty-year protection

The minimum term of 20-year patent protection required by the TRIPS Agreement has effectively allowed pharmaceutical companies a monopoly over its patented drug.

Free from competition, the company will 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, denying patients cheaper alternatives.

The TRIPS Agreement extends the scope of patent protection to both products and processes. Product patents provide for absolute protection of the product, whereas process patents provide protection in respect of the technology and method of manufacture.

Monopoly protection would be extended through minor changes to the existing medicines where the product patents have expired.

Threat to domestic industry

Developing-country pharmaceutical producers will find themselves pushed out of the market, having to compete with the large transnational corporations (TNCs).

For the smaller producers in the developing world which specialise in and depend on manufacturing cheaper generic alternatives, this would no longer be possible (until the expiry of the 20-year period).

The TRIPS Agreement further requires patents to be granted regardless whether the products are imported or locally produced.

This rubbishes TRIPS supporters’ argument that strict patent regimes will increase the flow of technology and investment into developing countries.

Overriding patent rights

Notwithstanding the above, some provisions in the TRIPS Agreement do provide certain exceptions to patent protection of pharmaceuticals.

Parallel imports: Parallel importing is a means by which developing countries could lower drug prices. Where there are price differences for the same product in different markets, it is possible to import the product from the cheaper market for resale.

Compulsory licensing: The government or court of law may grant a licence to a third party to use a patent, without the patent holder’s consent, under specified conditions, such as in cases of national emergency or extreme urgency, or to remedy anti-competitive practices.

Experts consider compulsory licensing a crucial element in increasing the affordability and availability of drugs, while ensuring that the patent holder is compensated for the use of the patent.

Battle lines drawn

But some developing countries were reluctant to use these options for fear of trade sanctions by the developed countries.

Health experts and AIDS activists have insisted that one crucial method of improving access to drugs is compulsory licensing, and have condemned the US government’s policy of protecting big business over people’s lives.

For example, when the South African government sought to enact its Medicines and Related Substances Control Bill, the US government accused it of failing to adequately protect American drug patents.

The US objection was directed at provisions in the law which would allow for compulsory licences and parallel importing.

Despite the considerable pressure exerted on the government and Parliament of South Africa, the bill was passed in 1997.

The pharmaceutical industry in South Africa, backed by the TNCs and the pharmaceutical lobby in the US, filed a legal challenge to the new law.

The US government, taking its cue from its pharmaceutical lobby, began a process of negotiations and threats to get the South African government to change its stance.

It was only after intense campaigning by AIDS and health activists – successfully embarrassing the Presidential candidate at the time, Al Gore, and marring his campaign efforts – that the US retreated from its position and eventually reached a resolution of the matter.

World Summit for Social Development

The North-South battle lines were clearly drawn during the UN World Summit for Social Development, held in Geneva in 2000.

The G77 group of developing countries had proposed to exclude essential and life-saving medicines from patentability, in order to ensure access to such medicines.

The developed countries – including the US, the EU, Canada and Japan – vehemently rejected this proposal, citing the need for patents to stimulate research and development.

In response to Canada’s call to delete the proposal, the South African delegate said: “When you are going to lose 25 percent of your productive work force due to HIV/AIDS, you cannot be so blasé with your comments”.

It is a legitimate concern that the TRIPS Agreement does not take into account public health needs. The agreement has from it inception instead been described as a “charter of rights for patent holders”.

Third World Network

Next article – Dingo

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