The US government and pharmaceutical industry are doing their best to prevent the compulsory licensing of essential drugs in the South, thereby safeguarding the profits of US pharmaceutical interests against the needs of poor people affected by diseases.

By Someshwar Singh

November 1999

Geneva: The United States government and the US pharmaceutical industry are fighting hard to prevent the compulsory licensing of essential drugs, particularly AIDS drugs, in the South, according to a recent publication.

In an article 'AIDS, Health, Trade and Compulsory Licensing', the October issue of the UK-based publication The Corner House recounts how pressure has been brought to bear on the governments of Thailand and South Africa to safeguard profits of US pharmaceutical interests against the needs of the affected people in Thailand and South Africa.

'The problem for developing countries is not whether compulsory licensing of pharmaceuticals is legal, because it clearly is legal,' says Jamie Love, of the US Consumer Project on Technology. 'It's the political problem whether they will face sanctions from the United States government, for doing things that they have a legal right to do, but which the United States government does not like.'

With the rate of HIV infection slowing in the United States and Western Europe, pharmaceutical and biotech companies with anti-HIV products may be expected to turn to the South to expand their markets, worth billions of dollars, the study notes.

Nearly two-thirds of the world's 33 million HIV-positive people live in sub-Saharan Africa. In nine southern African countries, between one-fifth and one-quarter of the population aged between 15 and 49 years old have HIV/AIDS.

Some 11.5 million people in sub-Saharan Africa have died of AIDS, accounting for 90% of all AIDS deaths. In Asia, there are about six million HIV-positive people. And 70% of new HIV infections occur in sub-Saharan Africa.

Certain combinations of two or three pharmaceutical drugs hinder the ability of HIV to multiply inside the body and thus help to keep HIV-positive people from developing full-blown AIDS. Sales of these anti-retroviral drugs total U$3 billion a year.

Several such drugs were developed by the US government (from public funds), which has given exclusive licences to various US companies to make and sell them. For instance, the US government's National Institute of Health financed, researched and patented didanosine (DDL), a drug used in triple-therapies, but gave an exclusive licence to US pharmaceutical company Bristol-Myers Squibb to manufacture and market DDL in return for a royalty of 5-6% of net sales.

Triple-therapy drugs cost about $1,000 a month per patient, while drugs to treat the chronic infections that can kill people with AIDS (TB, meningitis and fungal diseases) can cost $100 to $150 a month - a price that is well beyond the reach of most people in the South.

Less than 1% of AIDS drugs are sold in sub-Saharan African countries. In contrast, more people in the North are encouraged to be tested for HIV and more HIV-positive people are advised to take double- or triple-drug therapies.

To get over this price barrier, compulsory licensing could be the answer, says Jamie Love. The price of most AIDS-related drugs could be reduced 50-90% if countries in which AIDS has effectively become a national health emergency could produce generic or non-brand name versions of patented drugs via a compulsory licence, a well-established practice in the patent field.

A compulsory licence is given to one or more companies by a national government to use a patent, copyright, or other forms of intellectual property within the country, without the authorisation of the patent holder but in return for some compensation to the patent holder, usually 1-10% of sales.

Many compulsory licences are issued in the US for public interest reasons or to promote more competition in business. The US government has issued compulsory licences to the army on satellite technology and night-vision glasses; to various companies on technologies to reduce air-pollution; on nuclear technology; and in the biotech industry to other biotech and pharmaceutical companies. And in cases involving anti-competitive practices, courts award compulsory licences, without any compensation to the IPR holder.

The Trade-Related Intellectual Property Rights (TRIPs) agreement of the World Trade Organisation (WTO), which introduced pharmaceutical patents into international trade agreements for the first time, still allows compulsory licensing (under Article 31) if it is necessary to protect a nation's health.

However, says the study, the US government and the US pharmaceutical industry are fighting hard to prevent the compulsory licensing of essential drugs, particularly AIDS drugs, in the South.

For instance, after the Asian financial crisis, Thailand was in no position to afford AIDS drugs sold at US prices. Local health groups accordingly lobbied the Thai and US governments to license local companies to manufacture anti-HIV drugs and drugs to treat opportunistic AIDS infections.

They pointed out that many lives would be saved and that the patent holder, instead of receiving virtually nothing from the Thai market, would benefit from a steady if unspectacular stream of compensatory payments.

Commenting on DDL, NGOs pointed out: 'If Bristol-Myers Squibb, which has not paid for the research and development of the drug, is permitted to maintain its monopoly on DDL and permitted to charge high prices, we will be unable to purchase the drug and may die.'

In response, the US government persuaded the Thai government not only to drop its plans for compulsory licensing of DDL, but also to change its patent and trade laws to outlaw compulsory licensing altogether. It threatened to reduce Thailand's access to the US market for its jewellery exports, one of Thailand's major sources of foreign exchange, while at the same time offering to cut tariffs on Thai jewellery and wood products entering the US market.

This was in spite of the fact that the US government does not even have patent rights on DDL in Thailand.

The US government is employing a similar tactic, according to the study, in South Africa - pressured by the pharmaceutical lobby. More than three million people - 16% of the population - are HIV-positive in South Africa, including one-quarter of pregnant women in the poorest provinces.

Here, the price of anti-HIV drug treatment as set by companies such as Bristol-Myeres Squibb would amount to almost 40% of an average worker's salary.

In 1997, South Africa amended its national legislation to allow compulsory licensing of patented AIDS drugs so that local companies could make and sell cheaper generic versions.

Yet, implementation of the legislation has been suspended until a challenge lodged by some 40 drug companies with the South African courts is resolved. In the meantime, the US has put a wide range of trade sanctions on South Africa, including denying it tariff relief on certain exports.

The irony, says the study, is that lowering prices in the South would not be a serious threat to either the profits or the research and development funding of the large Northern pharmaceutical companies, given that it could only increase sales income from the South and that the bulk of income of drug transnationals will continue to come from the North.

The study adds that laboratories such as the Oregon Regional Primate Centre in the US are desperate to clone genetically identical sets of rhesus monkeys, which, unlike mice, can develop AIDS and could become genetically identical control test animals.

'We are working really hard to make it happen in any way we can,' says researcher Tana Domino.

However, even this determined effort to exploit genetic technologies for the public good is unlikely to benefit more than 5% of the world's HIV-positive people if current disputes are anything to go by, the study says.

It affirms that commercial interests, backed by US government bullying, may well prevent these benefits from reaching the rest of the people. - Third World Network Features