E-DRUG: UNDP Development Report Sees Green Light for Generic AIDS Drugs
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[crossposted from Healthgap with thanks. NN]
The UNDP Report is a much clearer message than what has come
from UNAIDS or the Secretary Generals' office on the critical
importance of sustainable technology transfer and the role of
generics in addresses the global AIDS catastrophe.
It is also the best researched piece I have seen on the routine use
of compulsory licenses by rich countries.
Please forward this news report and the UNDP link to any country
level decision makers and advocates.
--Paul Davis
Email: pdavis@critpath.org
Health GAP Coalition
ACT UP Philadelphia
+1.215.474.6886 direct tel.
+1.215.474.4793 fax
+1.215.731.1844 ACT UP
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The Human Development Report 2001: "Making new technologies
work for human development" can be downloaded at
http://www.undp.org/hdr2001/
UN Report Sees Green Light for Generic AIDS Drugs
By Marwaa n Macan-Markar
MEXICO CITY, Jul 10 (IPS) - In a direct challenge to the world's
pharmaceutical industry, the authors of a new UN report call on
developing countries to strengthen their national laws in order to
enable local production of cheaper, lifesaving AIDS drugs AIDS.
Such an option can be pursued legitimately under compulsory
licensing, a principle in international commerce that permits
countries to "use patents without permission of the patent holder in
return for a reasonable royalty on sale," says the Human
Development Report 2001, released Tuesday by the UN Development Programme.
The international agreement on Trade-Related Aspects of
Intellectual Property Rights (TRIPS) includes provisions for compulsory
licensing, the report notes, adding, "The agreement allows countries to
include in national legislation safeguards against patent monopolies that
might harm extraordinary cases of public interest."
What is more, the report argues, developing countries that opt to
produce AIDS drugs under compulsory licensing to combat the
deadly pandemic have a strong case against drug industry giants intent on
protecting their patents.
"In some circumstances, such as for national emergencies, public
non-commercial use and antitrust measures, the agreement allows
governments to issue compulsory licenses to domestic or overseas
produces of generic drugs," the report says.
There is a "popular misconception" that compulsory licensing
violates the rules of TRIPS, says Kate Raworth, co-author of the report. "It
is not so. Developing countries enjoy the right to enact such
measures through national strategies to help their people."
In fact, the report states that industrialised countries have been
enjoying this right for over a century, ever since intellectual
property legislation was introduced in Britain in 1883. Among the
countries that have benefited from the right of compulsory licensing
are Australia, Britain, Canada, Germany, Italy, New Zealand, and
the United States.
"Until joining the North American Free Trade Area (NAFTA) in 1992,
Canada routinely issued compulsory licenses for pharmaceuticals,
paying a 4 percent royalty rate on the net sales price," the report
states. "Between 1969 and 1992 such licenses were granted in 613
cases for importing or manufacturing generic medicines."
Consequently, Canadian consumers saved millions of dollars in
drug costs. In 1991-1992 alone, such savings were estimated at more
than 170 million dollars.
Moreover, according to the report, since the adoption of the TRIPS
agreement, compulsory licenses have been used in Britain,
Canada, Japan, and the United States for products ranging from drugs to
computers, tow trucks, software and biotechnology. The licenses
served as "antitrust measures to prevent reduced competition and
higher prices."
"In the United States, compulsory licensing has been used as a
remedy in more than 100 antitrust case settlements, including cases
involving antibiotics, synthetic steroids and several basic
biotechnology patents," the report adds.
On the other side of the ledger, however, the report reveals a
glaring discrepancy when it comes to compulsory licensing in the
developing world. "Not one compulsory license has been issued
south of the equator," it states.
The reason? "Pressure from Europe and the United States makes
many developing countries fear that they will lose foreign direct
investment if they legislate for or use compulsory licenses,"
according to the report.
In addition, developing countries have also faced the threat of
"long, expensive litigation" brought by pharmaceutical companies.
Such a reality does little to help those afflicted with HIV/AIDS in
poor countries, the report argues. The United Nations estimates
that, of the 36 million people living with HIV/AIDS, an estimated 70
percent are in sub-Saharan Africa, with countries like Botswana,
Zimbabwe, South Africa and Kenya the worst affected.
Even when leading pharmaceutical companies have intervened, by
offering drastically reduced prices of their anti-AIDS drugs to
select African countries, the results have not impressed the authors
of the report. In their view, it is a process that has fallen short
of its initial promise.
"Slow negotiations (between the drug companies and countries in
need) run counter to the urgency of the AIDS crisis and, with terms of
agreements kept a secret, some critics suspect that price cuts are
conditional on introducing even tighter intellectual property
legislation," the report says.
For Raworth, drug industry discounts on anti-AIDS drugs are
welcome but are no substitute for a strong policy to serve the afflicted in
the developing world. "We welcome price reductions, but we want
sound policies, not charity," she says.
James Love, director of the Consumer Project on Technology, a
Washington-based non-governmental organisation (NGO), says the
Human Development Report's strategy to enable easier access to anti-AIDS
drugs through compulsory licensing will give developing countries
"more bargaining power."
"It will create competition in the market once they push to
manufacture these drugs, and will also help them to bargain with
the pharmaceuticals on the price of the drugs," he adds.
The impact of competition, in fact, has been evident since
manufacturers of generic anti-AIDS drugs in Brazil, Cuba, India and
Thailand have offered their products at prices far lower than what
the drug industry was offering. "The price breakthrough made
possible by generics has dramatically opened up treatment possibilities in
the developing countries," says the report.
For the strategy to achieve optimum results, however, the report
underscores the need for legal structures to be created that best
suite developing countries.
These should include five features: "an administrative approach that
can be streamlined and procedural"; an option for governments to have
broad powers where "no developing country should have public use
provisions weaker than German, Irish, UK or US law on such practice";
laws that permit "production for export when the lack of competition
in a class of drugs has given the producer global market power that
impedes access for alternative drugs"; easy-to-administer rules on
compensation for royalties; and disputes settlement mechanisms
under which "the onus should fall on the patent holder to back up the
claims that the royalty rate is inadequate."
"This is a necessary intervention," says Tracy Swan, director of the
Access Project at the AIDS Treatment Data Network, a New York-
based NGO. "While we do not want pharmaceutical companies to stop
their research, we cannot let people die due to a lack of access to AIDS
drugs. Poverty is not equal to a death sentence."
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