Keep prices down
By Robert Weissman
8 May 2008
WASHINGTON: In a recent opinion piece (‘In defence of patents‘, Apr 28), Tim Wilson implies that patent monopolies do not drive up drug prices. He misstates international patent rules. And he equates patents with innovation, confusing a means with an end.
Wilson suggests that public health advocates’ concerns that patents “increase the cost of medicines for the world’s poor” is misplaced. This is a strange argument. Patents confer marketing monopolies and are intended to enable patent holders to raise prices. This the brand-name drug companies do quite well.
India has enjoyed among the lowest prices for medicines in the world, precisely because the country has not, until recently, adopted product patent rules. On a global basis, the case of HIV/AIDS drugs is illustrative of the impact of patent mono-polies, but not exceptional. Less than 10 years ago, the price of HIV/AIDS medicines in most of the developing world was $10,000 a year per person, or more. Today, thanks to generic competition, the price is as low as less than $100 a year. Before the price reductions, an HIV/AIDS diagnosis was a death sentence in the developing world. Now three million people in developing countries are receiving life-saving treatment.
Wilson condemns Thailand for issuing compulsory licences for a heart disease drug (as well as for cancer and HIV/AIDS drugs). He untruthfully says this move abused world trade rules, claiming compulsory licences may only be issued in cases of emergency. The World Trade Organisation says that belief that an emergency is required for a compulsory licence “is a common misunderstanding”. In fact, the WTO says, “countries are free to determine the grounds for granting compulsory licences”.
Thailand’s action is a model for the world. The generic version of the heart-disease drug Thailand compulsorily licensed is 1/70th the cost of the brand-name product, enabling the government to offer the drug in the public health system. Previously, it was unavailable. Other countries, including India, should follow Thailand’s example.
Wilson also bemoans ongoing negotiations at the World Health Organisation (WHO), designed to identify means both to develop medicines that meet priority health needs in developing countries and to make those products available on an affordable basis. Underlying the WHO talks is a recognition that patents are only one mechanism to promote research and development and one that is not working for developing countries. Patents are not worth much if they offer monopolies on sales to a population that has little buying power.
Developing countries comprise 80 per cent of the world’s population but amount to only 13 per cent of the global market for medical products. As a result, there is little corporate sector R&D devoted to the needs of developing countries. A review by Doctors Without Borders of new drugs introduced between 1975 and 2004 found that of 1,556 new drugs put on the market, only 21 were for “neglected diseases” – diseases endemic to developing countries.
The WHO negotiations are looking at an array of innovative proposals to generate more R&D; direct R&D to respond to health needs, not just market demand; and ensure that new medicines and health technologies are accessible to people regardless of wealth. Wilson has every right to oppose such laudable objectives if he desires. But he should not mislead readers with distorted descriptions of policy debates about medical innovation and pharmaceutical affordability.
Those who prioritise the narrow commercial interests of big pharma over public health objectives have reason to defend a patent monopoly-based R&D system that is not working for the developing world. For everyone else, the rising interest in new institutional arrangements to promote the complementary public health objectives of innovation and access is something to embrace. The robust debate at the WHO – and the experimentation of many developing countries, including India – with diverse mechanisms to promote R&D offers the prospect of dramatic public health benefits in the years ahead.
The writer is director of Essential Action, a public health advocacy group.
This op-ed responds to a previously published op-ed by Tim Wilson. Here is the text of that piece:
Times of India
In defence of patents
28 Apr 2008
Intellectual Property (IP) has always been a niche public policy area understood best by policy wonks and lawyers. Unless there is a major controversy, IP tends to escape public consciousness. But that is changing. Over the past few years campaigns to undermine IP have increased and are now reaching a fever pitch.
IP is essential because it provides the property rights needed for research and development to attract investment with the prospect of a long-term dividend. Undermining IP is equivalent to the traditional socialist ethos — divvy the spoils of today’s research and development, rather than focusing on expanding it. And a lot is at stake — according to the most recent figures from the United Nations, the Indian patent registry receives more than 90,000 applications for patentable inven-tions each year. In spite of this significant contribution, there has been a global campaign to undermine IP rights by a group of anti-market activists, self-interested politicians, vested interests, and more recently, the infiltrated World Health Organisation (WHO).
Innovative medicines have been one of the big targets. These activists have argued that IP rights increase the cost of medicines for the world’s poor. Yet they ignore that one of the biggest contributors to increasing costs is actually government-imposed taxes and tariffs that raise the price of life-saving medicines. For instance, in India the combined taxes and tariffs on imported medicines are 55 per cent; in China, they are 28 per cent.
But this reality has not stopped govern-ments acting to undermine IP. In early 2007, the then Thai military government waived the patents of three patented medicines through a process called “compulsory licensing”. Compulsory licensing is an instrument recognised under the World Trade Organisation’s Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement, and grants governments the ability to licence the production of patented products “in the case of a national emergency or other circumstances of extreme urgency or in cases of public non-commercial use”.
Now the WHO has waded into the debate. Last year, a WHO-designated team assessed the Junta’s actions and later issued a brief report legitimising the government’s actions, which was followed by a how-to guide for countries to waive their international obligations and issue compulsory licences.
This report is feeding into a WHO-initiated Intergovernmental Working Group (IGWG) on Public Health, Innovation and IP formed in 2006. From its inception the IGWG has been an attempt for health bureaucrats and the activists that advise them to rewrite — and under-mine — global IP rules. The activists are now using their campaign against IP on medicines as a precedent to continue their assault on IP; and global warming has become the new battleground.
In a joint statement at the 2007 G8 summit, the governments of Brazil, China, India, Mexico and South Africa called for an agreement to assist in compulsory licensing the IP related to carbon dioxide emission-mitigating technology being developed in wealthy countries.
In subsequent media reports the officials argued an agreement is needed “paralleling the successful agreement on compulsory licensing of pharmaceuticals”. Similar themes appeared in a resolution passed by the European Parliament in November last year recommending a study to assess amending TRIPS “to allow for the compulsory licensing of environmentally necessary technologies”.
And the tragedy is that those who are likely to suffer most are the world’s poor. Technology transfer is also vital for developing countries to grow their economies and improve their standards of health and the environment. A 2006 World Bank study and a 1998 Inter-national Energy Agency/UNEP study have identified that strengthening IP rights assists in technology transfer.
The World Intellectual Property Organisation has designated 2008 as the year for “celebrating innovation and promoting respect for IP”. With the IGWG convening in Geneva in a few days’ time and the assault on IP on climate-friendly technologies, World IP Day — which was on Saturday — increasingly seems to be an occasion to reflect on IP’s demise.
The writer is director of the IP and Free Trade Unit at the Institute of Public Affairs in Melbourne.