In
Friday`s Fixes column, I
wrote about the Medicines Patent Pool, a new organization trying to make
AIDS drugs better, cheaper and available sooner to people who need them in poor
countries. It relies on voluntary donations of rights by patent
holders, most of them pharmaceutical companies. Its success is
crucial; new research shows that if we can dramatically increase the
number of people on antiretroviral medicines, we can not only save millions of
lives, but potentially cause the epidemic to die away.
Earlier
this month, the patent pool received its first donation of rights from a
pharmaceutical manufacturer, Gilead Sciences. It is an important
step — but the terms Gilead negotiated are also confirmation of a
dangerous new trend: middle income countries as a target market for drug
makers. In the past, pharmaceutical companies have lowered prices in
these countries to increase sales. The new strategy is to treat people in
Egypt, Paraguay, Turkmenistan or China — middle-income countries, all — as if
they or their governments could pay hundreds or even thousands of dollars a
year each for AIDS drugs. This low-volume high-profit strategy
might make business sense. But in terms of the war against AIDS,
it means surrender.
In the world`s most impoverished countries, AIDS drugs are cheap.
It wasn`t always that way. Until well into the Clinton administration,
the United States government pressured even the poorest countries shamelessly
if they tried to bring down the prices of medicine. Even newly
democratic, AIDS-ravaged South Africa became the object of an all-out assault
by the Clinton administration to get the country to repeal a law allowing it to
break medical patents, a step that was perfectly legal under world trade rules.
Washington was not interested in the health consequences. (A U.S.
trade negotiator who worked on South Africa at the time told me that he had
been unaware that AIDS was a major problem there.) Public
outrage over South Africa ended Washington`s pressure on poor
countries. In 2000, President Clinton issued an executive order
pledging that sub-Saharan African countries would not face trade sanctions for
laws promoting access to AIDS medicines.
The
order continues to be largely respected, and the group of countries who are
generally able to get access to the cheapest drugs has grown to include the
poorest countries from around the world — Afghanistan, Tajikistan, Bangladesh,
Burma. Gilead`s agreement with the Medicines Patent Pool
covers these countries.
But
countries just above this cutoff line are on their own. “There are
countries that are considered to be “middle income” that will never be able to
afford the high prices charged by innovative pharma companies,” said reader A.
Grant of New York (13).
These nations are also losing the discounts that major manufacturers of AIDS
drugs used to offer them. According to Médecins Sans Frontières, which
tracks drug prices, prominent manufacturers of AIDS drugs have stopped offering
discounts to middle-income countries, or now require that countries negotiate
those discounts one by one.
Yet
another assault on middle-income countries` ability to buy drugs comes in the
form of trade deals. The ongoing negotiations for a free trade
agreement between the European Union and India is particularly crucial, as
India is drug maker to the world — 92 percent of people taking antiretroviral
medicines in developing countries use generic medicines made in India;
U.S. programs to provide AIDS medicines overseas rely on Indian generics as
well. The European Union is pushing India to adopt laws that will undermine generic
production.
India
is fighting back — in part because the generic drug industry is so
strong. But this is a rare case of power being on the side of public
health. The wealthy countries are largely doing the bidding of the
pharmaceutical industry that seeks to keep prices high. Even In
developing countries, health concerns are underrepresented in these negotiations.
Trade agreements are not negotiated by health ministers, but by trade
ministers, advised by powerful commercial interests. Their goal is
access to foreign markets. They are often quite content to trade away
health considerations.
The
United States was supposed to have abandoned this approach. President-elect
Barack Obama made a strong statement backing countries` rights to buy
affordable generics and promised to “break the stranglehold that a few big drug
and insurance companies have on these life-saving drugs.” In addition, on
May 10, 2007, Congress and President Bush agreed to standards for trade
agreements that, among other things, protect the right to access to medicines.
But the
Office of the United States Trade Representative does not see it that
way. The office is now negotiating a new free trade agreement, the
Trans-Pacific Partnership Agreement, with eight other countries.Inside U.S.
Trade reported that at a briefing this May, a U.S. trade official said that the
office does not intend to respect the May 10 agreement. “2007 is
2007 and 2011 is 2011,” the official reportedly said.
“Companies
are finding new ways to be aggressive about protecting pharmaceutical
monopolies that haven`t been in past free trade agreements,” said Peter
Maybarduk, the global access to medicines program director at Public
Citizen. Leaked drafts of the trade office`s negotiating proposals
for the Trans-Pacific agreement show that Washington has proposed eliminating
formal ways that patents can be challenged before their registration and
proposed measures to lower the standards for what can be patented — for
example, allowing companies to extend their monopolies by making minor
modifications in a product, whether or not they lead to improved
results. According to Inside U.S. Trade, trade office officials
have said they would likely follow what the pharmaceutical industry wants on
the extremely controversial issue of data exclusivity — rules that discourage
generic production by keeping data proprietary, requiring generic manufacturers
to re-do clinical trials. (Reader Edward Low of Kuala Lampur (20)
noted that one medicine became 845,600 percent more expensive in Guatemala
after the country signed a free trade agreement with the United
States. This
is, bizarrely enough, true — data exclusivity was the culprit.)
A U.S.
trade official told me that its proposals on data exclusivity are not yet set,
but that Washington`s goals in the agreement are “predictability and
transparency” on drug prices.
Countries
that take measures to lower drug prices also often find themselves on the trade
office`s Special
301 Watch List, a precursor to sanctions. Brazil, India and Thailand,
among other countries, are on the lists for insufficient protection for
intellectual property — even though their measures are fully within
international trade law.
The
list of people worried about the terms of U.S. trade agreements contains some
unusual suspects. Last year, the then-governors of Vermont and Maine
wrote to the Obama administration protesting what they saw as a particularly
dangerous part of past free trade agreements: language that restricts
government-run pharmaceutical pricing programs. Trade agreements
with Australia and Korea contain these clauses. If Washington proposes
the same thing in the Trans-Pacific agreement, it will be applying this policy
to countries that are much poorer, including Vietnam, Malaysia, Chile and Peru.
In addition, the introduction to the Watch List cites several countries for
using a government`s negotiating power to buy cheaper medicine.
Why
would this bother these governors? Because this is exactly what states
and the federal government do in America. They negotiate big discounts on
the medicines they buy for Medicare Part B and Medicaid. Without
those discounts, those programs could not survive. The Veterans
Administration and the Pentagon, among other agencies, do the same thing.
“Trade agreements, are, of course, reciprocal by nature,” wrote the governors,
John Baldacci of Maine and James Douglas of Vermont. Washington
argues that the fine print exempts U.S. programs — in the Korea agreement, this
argument was explicit. It is difficult to decide what`s worse: the
chutzpah of telling a poorer country that it can`t negotiate lower prices while
the United States can, or allowing pharmaceutical company lobbying to result in
the destruction of a substantial slice of American health care.
The pharmaceutical
industry is seeking to take this a step further. The chief executive of
Pfizer, Jeff Kindler, and the late John Barton, a Stanford University Law
professor, proposed a global agreement on pharmaceutical prices that would,
among other things, severely restrict the ability of wealthy and middle income
countries anywhere to use such pharmaceutical pricing programs.
Ambassador Ron Kirk, the U.S. Trade Representative, has said the idea
deserves consideration.
Correction: An earlier version of
this article misstated the groups briefed by the Office of the United States
Trade Representative in May. They were public health groups, not corporations
with stakes in the deal. The article also erroneously reported about briefings
held by the trade office. Public health groups do attend private briefings with
the office, though some groups say that their letters to the office go
unanswered.