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Dear e-druggers,
In the interest of all, Ralph Nader, James Love, and
and Robert Weissman's letter to Al Gore, the U.S. Vice
President follows. Thanks.
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Center for Study of Responsive Law
P.O. Box 19367
Washington, DC 20036
July 29, 1997
Vice President Albert Gore
The White House
Washington, DC
Dear Vice President Gore:
It has come to our attention that several large
pharmaceutical companies have asked United States trade
officials to put pressure on the South Africa government to
modify that country's policies with regard to the regulation
of pharmaceutical drugs. We request a meeting with
appropriate United States government officials to discuss
the nature of the disputes between the large pharmaceutical
companies and the South Africa government. In our view, the
South Africa government is pursuing policies that will
benefit all consumers in South Africa, including those who
live in poverty. The South African government is working
closely with the World Health Organization (WHO) to adopt
policies which may serve as a model for other developing
countries in Africa and elsewhere. We see no grounds for
U.S. government intervention on behalf of the international
pharmaceutical companies. Indeed, the U.S. should be
supportive of the South African government's thoughtful
initiatives, and use the opportunity to assert that U.S.
foreign economic policy with respect to pharmaceuticals will
subordinate commercial concerns to broader public health
interests.
Parallel Imports
One of the issues in dispute concerns the matter of
parallel imports for pharmaceutical drugs[1]. As you
undoubtedly know, the South African government is seeking to
lower regulatory barriers for the importation of registered
pharmaceutical drugs. As a country of less than 40 million
inhabitants, many of them extremely poor, South Africa does
not have a domestic market as large as the United States.
The South African government believes its consumers will
benefit if hospitals and other health care providers can
seek the procurement of pharmaceutical drugs in the broader
world market.
On May 20, 1997, Aldrage B. Cooper, Jr., a vice-
president of Johnson and Johnson (J&J) who is chairman of
the U.S. South African Business Council, wrote U.S.
Secretary of Commerce William Daley, asking that the U.S.
government oppose South African legislative provisions that
would permit parallel imports of pharmaceuticals. In an
attachment to a letter to Secretary Daley, he notes that
prices for medicines "vary greatly from country to country"
and that "parallel traders will buy goods in a low-price
country and re-sell at a higher price in the importing
country." Mr. Cooper asserts that this would violate patent
owners' intellectual property rights, although he concedes
that Article 6 of the GATT's agreement on Trade Related
Aspects of Intellectual Property (TRIPS), stipulates that
the issue of exhaustion of rights is not subject to action
before the World Trade Organization (WTO).[2]
As you may know, parallel imports are legal within the
European Community. It is our understanding that in recent
years parallel imports accounted for 8 percent of the UK
pharmaceutical drug market, and 5 to 10 percent of the
Netherlands market. A number of public health officials in
Europe and the United States are supportive of the South
African position on parallel imports. Indeed, by relying on
competition and market forces, parallel importation seems
consistent with aspects of the Clinton Administration's
early efforts to control costs of pharmaceutical drugs in
the United States.
If the U.S. government voices opposition to parallel
imports of pharmaceutical drugs solely on the basis of the
commercial interests on the large pharmaceutical companies,
and denies South Africa an important opportunity to reduce
the costs of pharmaceuticals, the consequence will be less
available to deter the spread of disease and misery among
the poor in South Africa. We urge you to rebuff the
lobbying by pharmaceutical companies on this issue.
Use of Generic Drugs
Several pharmaceutical companies are asking the U.S.
government to threaten trade sanctions if the South African
government adopts policies designed to achieve cost savings
through greater use of generic drugs. The South African
government has proposed that health care personnel in the
public sector use the generic names in prescriptions, and
that pharmacists substitute lower priced generic drugs for
brand name prescriptions, except in those cases where
doctors or patients specifically request a brand name drug,
or in certain other instances, including where there is no
safe and effective generic substitute. Public health
officials in South Africa are following the successful
examples of the U.S. and other countries which encouraged
use of generic drugs to lower prescription drug costs.
PhRMA and its member companies and affiliated trade
organizations are arguing that the South Africa proposals
would violate the trademark provisions of the GATT. Of
course, since the United States is among those countries
which use a variety of state statutes, government
procurement and managed care programs to promote the use of
generic drugs, it is hard to see what grounds the U.S. would
have for objecting to very similar programs in South Africa.
Moreover, as you know, the TRIPS permits nations to adopt
measures to protect the public's health. This is surely a
case where the South African efforts to promote generic
drugs are important for the public's health.
We were pleased when the Clinton Administration
announced that the U.S. government would no longer use
threats of trade sanctions to promote the sale of tobacco
products, on the grounds that regulatory measures to
discourage smoking were justified on public health grounds.
The South African generic drug measures should similarly be
examined in the context of their impact on public health,
rather than the commercial interests of a handful of large
pharmaceutical companies.
Taxol and Health Registration Data
Bristol-Myers Squibb (BMS) is asking the U.S.
government to bring pressure against South Africa, as well
as Canada, the Netherlands, Australia, Indonesia, Pakistan,
Taiwan, China, Turkey, Argentina, Thailand and other
countries, to protect the BMS monopoly on the sale of Taxol.
In each case, BMS is seeking to establish an international
norm that nations should provide at least 5 years of
exclusivity for clinical trial data used for regulatory
approval of pharmaceutical drugs, with the period of
exclusivity beginning with the date of drug approval.[3]
In our view, generic versions of Taxol should be
available now to consumers worldwide. Taxol is a drug
developed by the U.S. government. BMS's sole role in the
development of the drug was to provide the U.S. government
with 17 kilos of Taxol, which BMS acquired in bulk from
Hauser Chemical (a firm that manufactured Taxol for NIH) at
a cost to BMS of about $5 million. For its very modest
support to the NIH's Taxol development effort, BMS has
earned billions of dollars. Indeed, BMS will register more
than $1 billion this year alone from Taxol sales.
The high price of Taxol is a hardship for consumers
worldwide. We are attaching a bill received by an uninsured
U.S. cancer patient that includes $2,324.70 to purchase
enough Taxol for a single injection. This woman, who
suffers from breast cancer, needs a number of these
injections. Consider also that the cost of Taxol to the
patient was $8.61 per milligram, while BMS was able to
acquire Taxol in bulk from a contractor for only $.25 per
milligram.[4]
The United States currently gives companies who
register new drugs with the FDA five years of exclusive
rights to use the data for regulatory approval.[5] That is to
say, even though Taxol's cancer fighting properties are well
know, and Taxol isn't protected by patent, the FDA agrees to
prevent companies from seeking to sell generic versions of
the drug for 5 years. This is the basis of the BMS monopoly
on Taxol.
Generally, this is an issue only in those cases where
the drug is not protected by patent. That is, when the
pharmaceutical company has a claim of invention which would
lead to the award of a patent, it would have 20 years of
market exclusivity in most cases. For Taxol, BMS did not
have a patent because BMS did not invent Taxol, nor did BMS
discover Taxol's cancer fighting properties. Why then
should the United States government use the threat of trade
sanctions to prevent consumers world wide from benefiting
from competition from generic versions of Taxol? Why
support policies which will predictably lead to high prices
for this life saving therapy that was developed with more
than $30 million in taxpayer money?
While it is not surprising that BMS would want the
United States to impose the FDA's five year exclusivity rule
on the rest of the world, you should consider alternative
approaches, particularly as they apply to less developed
nations. After all, in South Africa about 80 percent of the
population is poor.
Rather than arbitrarily imposing the FDA rule for the
rest of the world, you should support a modification of the
rule in the United States itself. We have serious doubts
that any market exclusivity for health registration data is
needed, given the fact that firms can receive patents for
inventions, and drugs with limited client populations are
also protected by the Orphan Drug Act. However, at the very
minimum, you should consider a shorter period of
exclusivity, combined with regular compulsory licensing of
the clinical trial data used for drug registration.[6]
Consider the cost of the FDA's present 5 year market
exclusivity on U.S. consumers and taxpayers. We are
attaching a report by the National Economic Research
Associates[7] which examined the economic consequences of a
two year extension of the current FDA market exclusivity for
Taxol health registration data. According to Dr. Rozek, if
the US delays the introduction of generic versions of Taxol
for two additional years, the lack of competition will cost
U.S. Taxol consumers $1.27 billion, including $288 million
paid by Medicare. It is a national scandal that BMS has
been permitted to overcharge consumers for Taxol, and the
policies which have permitted this to take place should not
be held out as international norms.
Concluding Comments
The United States has a stake in sound public health
policies, not only in the United States, but throughout the
world. The widespread availability of pharmaceuticals and
other health care inventions will be increasingly important
as the United States seeks to combat infectious diseases and
promote development and economic growth. The international
rules for intellectual property in the health care sector
are extremely important, and will bind policy makers in the
United States and elsewhere. These rules are simply too
important to be left up to the imagination of the
pharmaceutical and biotechnology industry. A balanced
dialogue must include stakeholders who represent consumers
and public health officials.
The USTR should expand the membership of IFAC-3 to
include consumer interests. The WTO will soon begin a
review of the TRIPS. We ask that the United States propose
that the WTO working group which reviews the TRIPS include
representation from the public health community. We ask
also to meet with U.S. trade officials who are engaged in a
critique of the South Africa initiatives to enhance public
access to pharmaceutical drugs. In each of these matters,
we ask that consumers and public health advocates be treated
as important stakeholders.
Sincerely,
Ralph Nader
James Love
Robert Weissman