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Date: Sat, 4 Sep 1999 10:28:48 -0500
From: APIC <[log in to unmask]>
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Subject: Africa: AIDS Drugs Policy
Africa: AIDS Drugs Policy
Date distributed (ymd): 990904
Document reposted by APIC
+++++++++++++++++++++Document Profile+++++++++++++++++++++
Region: Continent-Wide
Issue Areas: +economy/development+ +US policy focus+
Summary Contents:
This posting contains the text of a Foreign Policy Brief on
AIDS and Developing Countries from Foreign Policy In Focus, A
joint project of the Interhemispheric Resource Center and the
Institute for Policy Studies. The brief highlights the
dominance of pharamaceutical companies over U.S. policy on
compulsory licensing and parallel imports, two means by which
countries can make essential medicines more affordable.
The version of the brief on the Foreign Policy In Focus web
site also has sources for additional information and a
bibliography. Go to:
http://www.foreignpolicy-infocus.org/briefs/vol4/vol4n23aids.html
For updates on protests against U.S. pressure on South Africa
over this issue, and related issues, go to the HIVNET
discussion forum:
http://www.hivnet.ch:8000/topics/treatment-access
For a press release on activists occupying Vice-President
Gore's office on August 23 to protest elements of a reported
compromise agreement on this issue with South Africa, go to:
http://www.hivnet.ch:8000/topics/treatment-access/viewR?574
+++++++++++++++++end profile++++++++++++++++++++++++++++++
In Focus:
AIDS and Developing Countries:
Democratizing Access to Essential Medicines
Volume 4, Number 23, August 1999
Written by Robert Weissman
Editors: Martha Honey (IPS) and Tom Barry (IRC)
Key Points
* Africa and the developing world are facing an HIV/AIDS
crisis equated by the U.S. surgeon general to the plague that
decimated Europe in the fourteenth century.
* Combinations of available pharmaceuticals-too expensive for
nearly all of the infected people in the developing
world-could enable many afflicted with HIV/AIDS to live
relatively normal lives.
* Compulsory licensing and parallel importing policies could
help developing country governments make essential medicines
more affordable to their citizens.
One in eight South Africans, one in seven Kenyans, and one in
four Zimbabweans has HIV/AIDS. U.S. Surgeon General David
Satcher has likened the HIV/AIDS epidemic in Africa to the
plague that decimated Europe in the fourteenth century.
Existing treatments, which enable many people with HIV/AIDS in
the U.S. and other industrialized countries to live relatively
healthy lives, are unavailable to all but a few people in
Africa. Life-saving HIV/AIDS drug cocktails cost about $12,000
a year in many African countries-vastly out of reach of all
but a small handful of the growing African population with
HIV/AIDS.
Addressing the HIV/AIDS crisis in Africa and around the world
will require a massively accelerated prevention effort. It
will also require revitalizing the decimated public health
systems of developing countries and making quality health care
much more widely available. This, in turn, will require major
new investments in public health and the abandonment of
structural adjustment requirements to collect "user fees" from
people seeking health care. But for millions of people
infected with the HIV virus, there is also a crying need to
make life-saving drugs more available-and quickly.
Two ways to promote access to essential medicines involve
compulsory licensing and parallel imports. The more important
of these policy tools, compulsory licensing, enables any
government to instruct a patent holder to license the right to
use its patent to a company, government agency, or other
party. Zimbabwe, for example, could issue a license to a local
company for an HIV/AIDS drug manufactured by Bristol-Myers
Squibb. The Zimbabwean firm would then manufacture the drug
for sale in Zimbabwe under a generic name, and it would pay a
reasonable royalty to Bristol-Myers Squibb on each sale.
Compulsory licensing lowers prices to consumers by creating
competition in the market for the patented good. Its impact is
similar to the introduction of generic competition at the end
of a drug's patent term-prices come tumbling down. Compulsory
licensing can lower the price of medicines by 75% or more.
Parallel imports involve imports of a product from one country
and resale, without authorization of the original seller, in
another, thereby allowing the buyer to search for the lowest
world price. A Namibian company or government agency, for
example, might purchase HIV/AIDS drugs in France-assuming they
are sold for a lower price in France-and then resell them in
Namibia. Since the price of medicines is sometimes lower in
the United States and other industrialized countries, parallel
imports can be a tool to enable developing countries to lower
prices for consumers.
Both compulsory licensing and parallel imports are permitted
under the international trade rules established by the General
Agreement on Tariffs and Trade (GATT) and administered by the
World Trade Organization (WTO). They are regularly used in
industrialized countries, including the United States, Japan,
and the European Union. One of the GATT agreements, the
Agreement on Trade-Related Aspects of Intellectual Property
Rights (TRIPS), contains the international rules the WTO
enforces on intellectual property (patents, copyrights, and
trademarks). Industry, especially the pharmaceutical sector,
exercised heavy influence over the TRIPS agreement
negotiations, and many public interest advocates generally
believe the TRIPS agreement inappropriately favors
corporations.
In general, the TRIPS agreement requires countries to adopt
U.S.-style patent systems, which apply both to products and
processes and last for 20 years. This has compelled many
developing countries-which had followed the lead of virtually
every industrialized country in enacting weak patent rules
while they were still industrializing (many European countries
did not recognize patents until the 1970s)-to refashion their
patent rules dramatically.
But whatever the TRIPS agreement's biases, and despite the
requirements it imposes on signatory countries, it permits
compulsory licensing and parallel imports. Yet, despite the
WTO-legality of these policy tools, multinational
pharmaceutical companies object to the practices, which they
perceive as curtailing corporate profits. The U.S. government
has adopted a similar view, strongly opposing developing
country efforts to undertake compulsory licensing, parallel
imports, or other similar measures to make HIV/AIDS drugs and
other essential medicines more available and affordable to
their people.
Problems With Current U.S. Policy
Key Problems
* Without access to existing HIV/AIDS treatments, millions of
people in developing countries are sentenced to preventable
deaths.
* Washington is pressuring developing countries not to adopt
compulsory licensing and other intellectual property policies
that could make HIV/AIDS drugs more affordable.
* U.S. government positions on intellectual property questions
are responsive to corporate greed, not public health needs.
Despite the legality of compulsory licensing and parallel
imports, and despite the public health emergency enveloping
much of the developing world, the U.S. has actively opposed
developing country efforts to implement compulsory licensing,
parallel imports, or other measures to make life-saving
HIV/AIDS drugs more affordable and available in their
countries. Although it frequently argues-incorrectly-that
compulsory licensing and the other measures are WTO-illegal,
the U.S. also takes the position that it has the right and
authority to demand that countries do even more to protect
intellectual property rights than is required by the TRIPS
agreement.
To justify this position, Washington echoes pharmaceutical
industry claims that compulsory licensing unfairly impinges on
corporate intellectual property rights. The companies'
unstated, overarching concern is that the United States and
other industrialized nations might follow developing countries
in pursuing compulsory licensing and parallel imports to lower
consumer prices. These industry claims, however, ignore the
fact that compulsory licensing is part of the intellectual
property system-it is one of the many limitations on patent
rights, and patent holders know this when they receive a
patent. In the United States, for example, compulsory licenses
are regularly issued on products ranging from pesticides to
pollution control devices to computer processing chips. And
under WTO compulsory licensing rules, companies receive
reasonable royalties when a patented invention is used.
The U.S. also champions the pharmaceutical industry's argument
that the high cost of research and development (R&D) requires
that companies be given freedom to charge whatever they want.
But it is unreasonable to give a blank check to anyone who
controls life-saving technologies. And several facts cast
doubt on industry claims about R&D and profits, especially in
the case of the developing world.
First, governments often finance the key R&D costs of
important drugs. In the case of HIV/AIDS, for example, the two
leading candidates for compulsory licensing are AZT and ddI,
both of which were developed at the National Institutes of
Health (NIH) at U.S. taxpayer expense. Both drugs have already
generated huge profits for drug companies. Second, the drug
companies routinely exaggerate the costs of developing new
drugs.
Third, since compulsory licensing will increase company sales
(as it lowers prices), this policy tool may not harm industry
earnings at all, or it may hurt earnings less than initially
appears to be the case. If compulsory licensing expands access
to AZT and ddI in Africa and the developing world without
undermining high prices in the U.S. and Europe, the companies
could come out ahead, since they are currently selling so
little in developing country markets.
Fourth, developing country markets are a paltry income source
for the multinational drug companies-representing only about
10 % of international sales, 1.6 % in the case of Africa.
Lower revenues from developing countries, should they occur,
would not affect company R&D efforts or profitability to any
significant extent. Application of the intellectual property
system in developing countries won't make much of a dent in
company profits one way or another, but it can make a huge
difference in people's access to medicines.
Finally, there is a moral issue: should people with HIV/AIDS
in poor countries be denied available treatments so that
companies can earn higher profits? Neither compulsory
licensing nor parallel imports involves companies selling
their products at a loss.
These are not just academic arguments. The U.S. has exerted
extraordinary pressure on developing countries to prevent them
from pursuing compulsory licensing and similar strategies to
make drugs widely available. Most notably, Washington has
undertaken a massive bullying effort to get South Africa to
repeal provisions of its Medicines Act that would help the
country make essential medicines more accessible and
affordable.
A report from the State Department says, "All relevant
agencies of the U.S. government-the Department of State
together with the Department of Commerce, its U.S. Patent and
Trademark Office, the Office of the United States Trade
Representative, the National Security Council and the Office
of the Vice President-have been engaged in an assiduous,
concerted campaign to persuade the government of South Africa
to withdraw or modify" the Medicines Act provisions that give
the government the authority to pursue compulsory licensing
and parallel import policies. The State Department report
explains how "U.S. government agencies have been engaged in a
full court press with South African officials from the
departments of Trade and Industry, Foreign Affairs, and
Health" to pressure them to change the law. Vice President
Gore has raised the issue repeatedly with South Africa's
former Deputy President (now President) Thabo Mbeki.
The United States has withheld certain trade benefits from
South Africa and has threatened trade sanctions (by putting
South Africa on the "Special 301 Watch List" of countries
receiving heightened U.S. scrutiny regarding trading
practices) as punishment for Pretoria's refusal to repeal
those provisions of its Medicines Act that offend the
multinational drug companies. Washington has also enlisted the
French, Swiss, and German presidents to raise the issue with
top South African officials.
And South Africa is not alone. Washington has undertaken
similar actions against other countries-chiefly, Argentina,
Brazil, Thailand, and India-that have enacted or considered
intellectual property rules that would make essential
medicines more affordable to their citizens.
Toward a New Foreign Policy
Key Recommendations
* The U.S. should terminate all bilateral pressure on
countries for pursuing intellectual property policies designed
to make essential medicines more available to those in need.
* Aid and trade benefits for developing countries should not
be conditioned on their intellectual property rules, as the
African Growth and Opportunity Act would require.
* The U.S. government should license HIV/AIDS drugs that it
has played a substantial in developing to the World Health
Organization for widespread distribution in the developing
world.
In May 1999, the World Health Assembly, the policymaking body
of the World Health Organization (WHO), passed a resolution
that declared public health concerns "paramount" in
intellectual property issues related to pharmaceuticals.
Although Washington had vociferously opposed earlier efforts
to obtain passage of a similar resolution that said public
health concerns should take priority over commercial matters,
the U.S., after insisting on minor changes, voted in support
of the 1999 resolution. It is now time for Washington to bring
its foreign policy into compliance with the accepted notion
that public health protection is the most important goal in
shaping pharmaceutical patent policy.
First, the U.S. should announce that it will terminate all
bilateral pressure on South Africa, Thailand, Brazil,
Argentina, India, and other countries for pursuing compulsory
licensing policies, parallel imports, or any other WTO-legal
policy. Instead, Washington should formally declare that it
accepts the legitimacy of compulsory licensing and should
immediately lift all sanctions currently in place against
countries in retaliation for pursuing any intellectual
property policies designed to make vital medicines more
available to those in need.
Second, pending legislation should be altered. The African
Growth and Opportunity Act currently conditions new benefits
to developing countries on whether they enforce "appropriate
policies relating to protection of intellectual property
rights." Such provisions should either not be enacted into law
or should be revised to clarify that "appropriate policies"
include compulsory licensing and other measures that help to
make life-saving drugs more widely available.
Third, rather than using the millennial round of WTO
negotiations in Seattle this fall to tighten intellectual
property requirements related to pharmaceuticals, the U.S.
should lead the way in calling for a review of the existing
TRIPS agreement and its effect on access to HIV/AIDS and other
essential medicines. Among the pertinent questions: Have TRIPS
rules undermined the ability of developing countries to
maintain domestic pharmaceutical industries? If so, what
impact has this had on consumers? Have TRIPS rules promoted
new multinational corporate investment in research to treat
and prevent diseases of particular concern to developing
countries?
Fourth, the U.S. should immediately license to the WHO all of
the HIV/AIDS drugs that have been developed with government
funding and for which the U.S. government holds patent or
other intellectual property rights. Existing law permits
Washington to take such steps. With a license, the WHO could
contract with private generic makers to produce the medicines
and distribute them widely in the developing world. Since many
of the most important HIV/AIDS remedies-such as ddI-were
developed with significant U.S. government funding, the U.S.
government controls rights to many important HIV/AIDS
treatment pharmaceuticals.
Finally, it should be reiterated that although access to
essential medicines is of critical importance, much more must
also be done to prevent the spread of HIV/AIDS and to improve
treatment of those infected. An essential step in combating
the transmission of this disease is to cancel the foreign
debts of the poorest countries, since debt servicing siphons
off funds from investment in public health. World Bank and IMF
structural adjustment programs that impose policies-such as
requiring copayments from indigent patients-also make it more
difficult for those with HIV/AIDS to gain access to medical
care. And African governments must do more to support AIDS
education and prevention efforts and to destigmatize people
with the disease.
Robert Weissman is editor of Multinational Monitor magazine
and co-director of Essential Action, a corporate
accountability group. He is coauthor of Corporate Predators:
The Hunt for MegaProfits and the Attack on Democracy (Monroe,
ME: Common Courage Press, 1999; see
http://www.corporatepredators.org).
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