TWN Info Service on Intellectual Property Issues (November 06/6)

20 November 2006

DOHA DECLARATION IGNORED BY THE RICH COUNTRIES

Five years after the Doha Declaration on the TRIPS Agreement and Public Health, rich members of the World Trade Organisation have done nothing to fulfill their commitments to facilitate access of affordable generic medicines to poor countries with insufficient or drug manufacturing capacity. This finding is made by Oxfam in a report ‘Patents vs. Patients: Five Years After the Doha Declaration’ (http://www.oxfam.org/en/policy/briefingpapers/bp95_patentsvspatients_061114).

The article below which highlights the Oxfam report is reproduced with the permission of South-North Development Monitor (SUNS) # 6141, 15 November 2006.

With best wishes
Evelyne Hong
TWN

Trade: Little change, five years after Doha, on TRIPS and Public Health

By Kanaga Raja, Geneva, 14 November 2006

Poor people in developing countries are still being denied cheaper life-saving medicines five years after members of the World Trade Organization (WTO) signed the Doha Declaration on the TRIPS Agreement and Public Health, according to the international aid agency Oxfam.

In a report published on the fifth anniversary of the Doha Declaration, Oxfam said that rich countries are taking little or no action towards their obligations and are in some cases actually undermining the declaration.

The report, ''Patents vs. Patients: Five Years After the Doha Declaration'', calls for a renewed commitment to defend public health rights outlined in the Doha Declaration and recommends urgent actions by donors, developing countries, and pharmaceutical companies.

''Rich countries have broken the spirit of the Doha Declaration,'' said Celine Chaveriat, head of Oxfam's Make Trade Fair campaign. ''The declaration said the right things but needed political action to work. That hasn't happened. We've gone backwards. People are still suffering or dying needlessly.''

On 14 November 2001, WTO members adopted the Doha Declaration on the TRIPS Agreement and Public Health. The Declaration affirmed that developing countries could enforce public health safeguards to enable price reductions via generic competition. It also directed member countries to facilitate access to generic medicines by poor countries with insufficient drug manufacturing capacity, a measure known as the 'Paragraph 6 Public Health Solution'.

Oxfam however says that the 'Paragraph 6 Public Health Solution' has not facilitated delivery of affordable generic medicines to poor countries with insufficient or no drug manufacturing capacity. It charges that rich-country intransigence during negotiations has created barriers that made the solution almost unworkable, and these countries are in no hurry to make the solution work.

According to a recent WTO TRIPS Council report, no qualifying member has notified the WTO to use the system created to implement the solution. The inability of the Paragraph 6 solution to deliver medicines is a serious threat to the legitimacy of the WTO, says Oxfam. By October 2006, only three countries - the US, Switzerland, and El Salvador - had formally accepted the solution. The US however has not enacted legislation to implement the solution.

Over the last five years, the health crises that prompted passage of the Declaration have worsened. Yet instead of enabling developing countries to implement the Doha Declaration, rich countries, particularly the US, have willfully ignored their prior commitments. This is restricting generic competition and keeping drug prices high, says Oxfam.

According to Oxfam, more than 4 million people were newly infected by HIV in 2005; cancer is increasingly affecting people in developing countries, with the rate of disease due to double by 2020 and 60% of new cases occurring in the developing world; and diabetes has risen from 30 million to 230 million people in the past 20 years with most new cases now reported in poorer countries.

Since the adoption of the Doha Declaration in November 2001, more than 20 million people have been infected with HIV, bringing the total number of people living with HIV/AIDS to 38.6 million people.

The Oxfam report says that the United States, at the behest of the pharmaceutical industry, is uniquely guilty of seeking ever-higher levels of intellectual property protection in developing countries. Other rich countries, particularly those among the European Union, have quietly consented to US actions.

The US has negotiated numerous bilateral and regional free trade agreements (FTAs) that impose what are known as 'TRIPS-plus' intellectual property rules, weakening or eliminating the public health safeguards allowed under TRIPS. Patented medicines thus have even higher levels of intellectual property protection than required under TRIPS, delaying the availability of affordable generics. The US has also pressured countries for greater patent protection through threats of trade sanctions and through the WTO accession process.

The pharmaceutical industry has significantly benefited from the US trade agenda, as the US agenda reflects the industry's priorities by aiming to eliminate or weaken the TRIPS safeguards in order to extend its monopolies over medicines, says the report. The industry has also pursued TRIPS-plus rules in developing countries that have no obligation to implement higher levels of intellectual property protection.

Among the TRIPS-plus rules in FTAs cited by the report are expanding the scope of pharmaceutical patents, including to new indications (new therapeutic uses of existing medicines) and formulations; enhancing protections for clinical trial data by providing at least five years' of marketing exclusivity for the data; limiting the grounds for issuing compulsory licences to emergencies, government non-commercial use, and competition cases; and barring parallel trade of patented medicines sold more cheaply elsewhere.

The FTAs signed between the US and developing countries will have severe consequences on the health and welfare of people in those countries, says Oxfam. Studies confirm that if FTAs with developing countries are enforced, the price of new medicines will increase and remain higher over time, with potentially devastating effects upon poor people.

''Global health statistics are grim but the US continues to negotiate trade deals with even stricter rules that limit how a country can use public health safeguards,'' said Charveriat.

If implemented, she added, these deals will result in Colombia having to pay an additional $940 million per year by 2020 to cover the increased cost of medicines, affecting nearly 6 million patients. In Peru, the price of medicines could increase by 100% in 10 years and 162% in 18 years.

The report says that higher drug prices also threaten the financial viability of public-sector health programmes. A recent World Bank study predicts that a potential US-Thailand FTA would severely undermine the Thai government's national HIV/AIDS treatment programme, which provides HIV-related services (including anti-retrovirals, ARVs) to 80,000 Thais, with an aim to achieve universal coverage.

Over time, some patients on 1st-line ARVs develop drug resistance or suffer from side effects and must switch to patented 2nd-line ARVs, which are approximately 15 times the cost of generic 1st-line medicines ($6,737 compared to $482). Compulsory licensing allows the Thai government to manufacture generic 2nd-line ARVs or negotiate lower prices. An FTA would severely restrict the use of compulsory licensing and threaten the programme's sustainability, says the report.

In addition to FTAs, the US exerts other forms of pressure on developing countries to implement higher levels of intellectual property protection. This includes monitoring other countries' intellectual property rules in relation to US standards (Special 301 reports). In 2006, the US placed India on the Special 301 Priority Watch List for not granting monopoly rights for clinical trial data (data exclusivity) that would give the patent holder five years of marketing exclusivity.

Implementing data exclusivity would reduce generic competition and devastate the ability of poor Indians to access affordable medicines, says the report. Recent studies have noted that generic production of ARVs such as atazanavir and heat-stable ritonavir could be precluded by implementing a data exclusivity regime. Indian companies remain an essential source of affordable ARVs - even the US global HIV/AIDS treatment programme, PEPFAR (President's Emergency Plan for AIDS Relief), purchases and distributes ARVs manufactured by Indian generic companies.

On the whole, according to Oxfam, rich countries have quietly consented to US action, leaving poor countries without support or leverage to resist stronger intellectual property protection. Other rich countries may choose not to interfere with the US trade agenda because their pharmaceutical companies reap the benefits of TRIPS-plus rules. Although PhRMA is a US industry group, its members include US subsidiaries of European drug companies, including Glaxo-Smith Kline (UK), Sanofi-Aventis (France), and Bayer (Germany).

Having successfully lobbied the US government to impose more stringent rules in developing countries, the industry is now actively pushing for their enforcement, including through the threat of trade sanctions, says Oxfam, citing cases in the Philippines and India.

In 2005, cancer patient groups in India used Indian intellectual property law to stop a patent application by the Swiss company Novartis for its anti-cancer drug Glivec. This allowed Indian companies to continue making generic versions at $2,700 per patient a year, as opposed to Novartis having a monopoly-priced version for sale at $27,000 per patient a year.

However, Novartis recently appealed the court's decision in a direct challenge to India's right to interpret the TRIPS Agreement to protect public health. Oxfam says that if Novartis is successful, it could jeopardize India's generic export industry. India is the world's leading exporter of generic medicines, with 67% of its exports going to developing countries.

In the Philippines, the government has conducted tests and issued a regulatory approval for a cheaper patented version of Novarsc, a heart disease drug now under patent to the US company Pfizer. The government is doing this to ensure that a cheaper patented version of Novarsc that costs almost 90% less will be available immediately from when the patent expires in June 2007. However, Pfizer is now suing the government. If Pfizer is successful, it will severely limit the government's ability to access cheaper medicines and assert its right to enforce TRIPS safeguards.

Despite pressure from industry and rich-country governments, many developing countries - bolstered by effective civil-society groups and political will - are succeeding in introducing and enforcing TRIPS safeguards, notes the report.

In Kenya, civil-society pressure succeeded in introducing an IP law with TRIPS safeguards in 2001. This law permits imports of generic versions of medicines presently patented in Kenya, but which are produced legally as a generic elsewhere. As a result, generic competition reduced the prices of 1st-line ARVs to one-third of the price of the patented version, a huge gain for a country with nearly 3.1 million people living with HIV and 200,000 under treatment.

Brazil has been at the forefront of using safeguards to reduce ARV prices since guaranteeing universal access to treatment in 1996. Brazil repeatedly threatened to use compulsory licences to override patents on ARVs. Rather than lose such a large market, major pharmaceutical companies agreed to price reductions, lowering the average price of ARV therapy from $6,240 to $1,336 per patient per year.

According to Oxfam, Brazil's programme has been one of the few successes worldwide to combat HIV/AIDS. Experts estimated that Brazil would have 1.2 million infected people by 2000.

However, the price of new ARVs has steadily increased, so that Brazil now pays, on average, $2,500 per patient per year. As more patients develop intolerance or resistance to 1st-line therapies, Brazil must use new and 2nd-line medicines that are under patent. Brazil's Ministry of Health estimates that of its $445 million budget for HIV treatment, over 80% will be spent on imported ARVs, with more than half on only three medicines: efavirenz, Lopinavir/Ritonavir (Kaletra), and tenofovir.

Besides strict intellectual property protection, other mechanisms, such as public finance and prize money, can play an important role in promoting innovation, says the report. In 2006, the World Health Assembly passed a resolution, introduced by Brazil and Kenya, instructing the World Health Organisation to establish an inter-governmental working group to examine mechanisms to bolster Research & Development for diseases primarily affecting the developing world.

Oxfam says that on the five-year anniversary of the Doha Declaration, there is an urgent need to reinvigorate the spirit that produced the Declaration.

In order to make the Doha Declaration work, Oxfam is calling amongst others for: The WTO to review the impact of the TRIPS Agreement to ensure that all members can protect public health; the US to stop pressuring countries to adopt stricter intellectual property rules, especially through its FTA negotiations; rich countries to give political and technical support to developing countries to use the safeguards under TRIPS to ensure access to affordable medicines; and pharmaceutical companies to stop lobbying rich-country governments to promote stricter intellectual property rules worldwide, and stop pressuring poor countries to accept stronger intellectual property rules that undermine public health.

''Rich countries must live up to their commitments and stop undermining the Doha Declaration with their selfish actions,'' Oxfam's Charveriat said.

''Now more than ever we need a global trading system that puts health before profit and makes medicines affordable for all.''