Fatal Side Effects: Medicine Patents under the Microscope 1st February 2001 Oxfam GB is a member of Oxfam International. Registered charity no. 202918 2 Contents Acknowledgements iii Oxfam GB's Health Programme iv Summary 1 Introduction 1 The health crisis 2 How much will the new patent rules increase prices? 2 Is TRIPS 'flexible' enough, and are the public-health safeguards adequate? 3 Will patenting in developing countries stimulate research into the diseases of poverty? 5 Is TRIPS good for development and poverty reduction? 6 The IP that TRIPS does not protect 6 Corporate social responsibility 7 Oxfam's principal recommendations 7 1. Background 9 Introduction 9 What is a patent, and what do World Trade Organisation (WTO) patent rules do? 9 Why are patents a health issue? 10 The development damage of excessive IP protection 12 Trade rules are loaded against the poor 13 2. The health crisis in developing countries 14 The burden of disease 14 Who pays for the medicines? 15 3. The impact of WTO patent rules on access, prices, and local industry 16 The new generation of medicines 17 Effective patent duration under TRIPS 17 Price differences 18 TNC views on the relation between prices and patents 19 The effect of patent systems on industry as a whole 20 4. The small print of WTO rules, and the political realities 21 What are the safeguards in TRIPS to protect public health? 22 Compulsory licensing 23 Parallel importing 24 Does this worsen the problem of sub-standard and counterfeit drugs? 24 How will the 'grey areas' be defined? 25 TRIPS plus: at the mercy of monopoly 25 Are transition periods the answer? 27 Can price controls and bulk purchasing help? 27 5. The relationship between patents and pharmaceutical R&D 28 What is not researched by pharmaceutical TNCs … 29 How patents can discourage socially useful research 29 How strong patenting can block research 30 Who really pays for research? 31 Technology transfer 31 i Contents 6. Medical bio-piracy in developing countries 32 7. The need for government action on health needs 34 Invest heavily in research 34 Who should do the research? 35 Complementary policies 35 8. The need for company action 36 Corporate philanthropy 36 Tiered, or differential, pricing 36 Policy influencing 37 9. Patent politics 38 Who makes the rules? 38 Who polices the rules? 38 Which governments want to change the rules … 39 … and which do not? 40 Public opinion 41 Who is responsible in London, Brussels, Geneva, and Washington, and in the boardrooms? 41 10. Policy recommendations 42 At the WTO 42 Patent rules at the national level 44 International action to develop new medicines, and improve procurement and delivery 44 At the WHO 45 The role of industry 45 Annexe: Selected articles of the 1994 WTO Agreement on Trade-Related Aspects of Intellectual Property (TRIPS) 46 Bibliography 50 Endnotes 54 ii Acknowledgements This report was produced by the Policy Department of Oxfam (Great Britain) as part of the ‘Cut the Cost of Medicines’ Campaign. The principal authors were Michael Bailey, Ruth Mayne, and Dr Mohga Smith. Oxfam gratefully acknowledges comments on drafts from Francisco Cannabrava (Brazil Mission in Geneva), Prof. Carlos Correa (University of Buenos Aires), Dr Peter Drahos (Queen Mary College, London), Nathan Ford (Médecins Sans Frontières - MSF), Daphne Fresle (World Health Organisation/Essential Drugs and other Medicines - WHO/EDM), David Grogan (industry analyst), Andrew Herxheimer (past Chairman of the International Society of Drug Bulletins), Rashid Kaukab (South Centre), Derek King (London School of Economics), Patrick Krappie (Mission of the Republic of South Africa in Geneva), Sol Picciotto (Lancaster University), Dr Peter Poore (public health consultant), Dr Jonathan Quick (WHO/EDM), Philippa Saunders (Essential Drugs Project), Matthew Stilwell (Centre for International Environmental Law), Alan Story (Kent University Law School), Sir John Sulston (co-founder of the Human Genome Project), Ellen T’Hoen (MSF), Anna Thomas (Voluntary Service Overseas - VSO), Bas van der Heide (Health Action International - HAI Europe), German Velasquez (WHO/EDM), Dr Gill Walt (London School of Hygiene and Tropical Medicine). Oxfam is also grateful to industry representatives and officials of the UK government, the European Commission and the World Trade Organisation for information and observations. Commentators do not necessarily share the views expressed in the paper. Oxfam has simultaneously issued two other publications as part of this Campaign: a shorter report entitled ‘Patent Injustice: How World Trade Rules Threaten the Health of the Poor’; and 'Dare to Lead', an analysis of the responsibilities towards the developing world of GlaxoSmithKline, the UK-based pharmaceuticals company. All three publications and further information on the Campaign are available from Oxfam’s website (www.oxfam.org.uk/cutthecost) or from Anni Long ([email protected]), tel no: +44 (0)1865 312127, fax no: +44 (0)1865 312245. iii Oxfam GB’s health programme Oxfam GB’s health programme addresses five broad themes: access to basic health services (including the issue of financing), access to essential medicines, access to water and sanitation, responding to HIV/AIDS, and health programmes in schools. This work focuses on reducing inequities, including those based on gender, and improving the appropriateness and quality of services. The programme spreads across more than 25 countries. Local projects support some of the most marginalised and impoverished groups. Others address the health needs of communities affected by conflict or natural disasters. Drawing on this experience and on research findings, Oxfam seeks to work with others to change policies, practices, ideas, and beliefs that affect poor people’s health. In India, Oxfam’s HIV/AIDS programme aims to increase treatment, care, and support for those infected and affected, as well as raising public awareness about the disease, while in Southern Africa we are piloting programmes to integrate responses to HIV/AIDS into development work. In Bangladesh, Sri Lanka, Ethiopia, Somaliland, South Sudan, and Liberia, Oxfam supports the rehabilitation of community health centres and the development of basic services, including medicine supply. In the Caucasus, the programme involves training health workers, improving access to essential drugs, and the development of community health insurance schemes. The Network for Consumer Protection, an Oxfam partner in Pakistan, promotes people’s access to, and the rational use of, essential drugs. In Afghanistan, Oxfam has ensured that basic health services have been made available to remote communities in the highlands. Oxfam GB is widely known for its public health work in emergencies. The rapid supply of clean water to populations displaced from their own homes is vital, and Oxfam GB has particular expertise in this area. In recent years, major programmes have been established in the Great Lakes Region of Central Africa, in the Balkans, in Angola, and in the State of Orissa in India. iv Fatal Side Effects: Medicine Patents under the Microscope Summary Introduction Every week, 200,000 people die of infectious diseases, the great majority of them women, men, and children living in poverty in the developing world. Global patent rules agreed at the World Trade Organisation (WTO) in 1994 are deepening this public-health crisis by increasing the cost of medicines. In this report, Oxfam argues that governments must amend the rules now to ensure that impoverished people have access to the medicines they so desperately need, at prices they can afford. This demand is at the centre of a public campaign launched by Oxfam in February 2001. The WTO rules, laid down in the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), were introduced after sustained lobbying by transnational corporations (TNCs). The Agreement obliges the member countries to grant at least 20-year patent protection in all fields of technology, including medicines. This enables already powerful Northern pharmaceutical TNCs to consolidate their market domination on a global scale. Longer patent periods will delay the appearance of the low-cost generic equivalents that traditionally supply developing-country needs – only the expensive, patented version of a new medicine will be available. At a time when millions of people are already unable to afford essential medicines, and when public health is threatened by a combination of new diseases and drug-resistant variants of old killers, WTO rules will further reduce access to modern medicines for poor people, and lead to unnecessary death and suffering. The controversy surrounding the price of patented HIV/AIDS drugs in Southern Africa has already drawn public attention to this issue. This report is structured as follows. Section 1 explains briefly how the WTO patent rules work and how they will affect the price of medicines in developing countries. It also sets out Oxfam’s concerns about the wider negative effects of the rules, and the way in which management of the international trading system puts corporate interests before poverty reduction. Section 2 describes the health crisis in developing countries. Section 3 examines the likely effect of WTO patent rules on the price of medicines and on local pharmaceutical industries. Section 4 looks in more detail at WTO rules and their implementation in developing countries, giving Oxfam’s assessment of the ‘flexibility’ that supposedly enables governments to ensure access to affordable medicines, and examining the problem of ‘TRIPS plus’ systems. The issue of whether high levels of patent protection will stimulate pharmaceutical research and development (R&D) relevant to developing countries is considered in Section 5. The relationship between TRIPS and the problem of bio-piracy in the pharmaceutical field is addressed in Section 6. Section 7 deals with the need for governments to fill the gaps in pharmaceutical research and increase health-sector support, while Section 8 looks at what companies could do to make drugs more affordable.