TWN Info Service on Free Trade Agreements

25 August 2006


Financial Times Editorial

*Medicine and markets*
Published: August 24 2006 03:00
Source: http://www.ft.com/cms/s/77e9d28c-330c-11db-87ac-0000779e2340.html

Like a recurring nightmare, the conflict between pharmaceuticals industry profits and poor countries' desperate need to treat diseases such as Aids and malaria just will not go away. After bitterly dividing the World Trade Organisation, it is now threatening to break out all over again in the World Health Organisation.

The reason this time is US insistence, in bilateral trade talks, that developing nations agree to stiffer patent protection rules. As well as restricting competition by generic drug makers, the rules would, most crucially, set tighter conditions on poor countries' freedom to use compulsory licences to override patents and import essential medicines they cannot produce locally.

A hard US line on that issue also provoked a furore in the WTO, which was eventually settled by a compromise that protected poor countries' compulsory licensing rights. Although Washington claims its bilateral provisions are consistent with the WTO agreement, they look suspiciously like a backdoor way to circumscribe it, at the urging of US drug companies and their powerful allies in Congress.

The use of American political and industrial might to impose demands roughshod on weaker partners is an unedifying spectacle - the more so because the US itself toyed with compulsory licensing after its 2001 anthrax scare and has recently begun approving imported generic copies of Aids treatments. Given the rarity of compulsory licensing worldwide, the US campaign also looks like an overreaction.

That said, there is a genuine problem at the heart of the dispute. The industry's incentive to innovate would be weakened if widespread erosion of patent protection enabled generic drug makers to eat away its profits. However, the moral and practical case for providing poor countries with access to essential medicines, at a price they can afford
to pay, is equally compelling.

Public criticism has shamed some western drugs companies into stepping up research into diseases found mainly in very poor countries and selling them medicines at discounted prices. But the results so far have barely dented the problem. Other solutions are needed. Some can come from more innovative co-operation between business, aid organisations
and community groups, notably to improve health systems and medicines supply. Philanthropic bodies, such as the Bill & Melinda Gates Foundation, can contribute towards the cost. But the scale of market failure also calls for a much greater commitment of public resources, to promote the development of treatments for diseases that are particularly common in poor countries and help pay for them.

United Nations members have pledged to ensure poor countries' access to affordable essential medicines, in partnership with industry. Better ways to honour that pledge must be found. Trade bullying of the weak by the strong is not one of them.