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The right to medicines, or the right to profit

The right to medicines, or the right to profit from medicines

Trade ministers sitting down for discussions in Sydney this week could play a key role in improving access to vital medicines for millions of people across the world.

The ministers, from 25 leading nations, will be looking at the critical issue of how to revise WTO patent rules so that poor countries can more easily import affordable generic drugs.

The outcome will affect the more than 15m people who die every year from infectious diseases and the 40m (and rising) people who are living with HIV/AIDS.

Exactly one year ago, in a landmark declaration, the WTO Ministerial Conference in Doha stated that public health should take precedence over the patent rules enshrined in the TRIPS agreement.

Ministers pledged to correct an absurd and damaging anomaly in the agreement that allows developing countries to import generic medicines, but restricts producer countries from exporting them (see note 2).

A deadline was set at Doha and ministers pledged to deliver the changes by the end of 2002.

But in the 12 months since Doha, no change has been achieved as rich countries, led by the US, are fighting a rearguard action to maintain the status quo.

Oxfam believes the rich countries, under the influence of giant pharmaceutical companies, are blocking the changes, despite the deep concerns of all developing countries. Ironically though, an impasse on TRIPS could end up derailing the entire Doha trade round, which rich countries would see as disastrous.

Oxfam spokesperson Michael Bailey, from the Make Trade Fair campaign team, says: "Thanks to worldwide public concern and the commitment of developing country governments, we can get a solution to the problem, but it's not in the bag.

"The big drug companies don't want to lose revenue from their patented products and are lobbying hard for a raft of limitations on any change to the rules. But this would render the 'solution' virtually worthless." (see note 3)

At Sydney, Oxfam is calling on rich countries to come into line with the position held by developing countries.

Any emerging consensus could then be discussed and approved by all member states at the WTO Council meeting, on December 10, in Geneva.

At the moment, TRIPS is highly discriminatory.

It allows rich countries to override medicine patents in the public interest and to commission generic equivalents from another manufacturer but effectively denies this right to poor countries, which are the ones that most need affordable medicines.

Almost all developing countries are caught in a Catch-22 situation. They don't have the technology or size of market to manufacture affordable generic versions of new medicines for themselves but TRIPS restricts any other country from supplying them.

The bottom line is that they have to either pay the high price of the patented products which they can ill-afford or go without.

Michael Bailey says: "The fact that rich countries can bargain effectively over prices but a developing country is at the mercy of Goliath-sized companies often bigger than its national economy, is yet one more double standard in WTO rules."

Oxfam, along with most developing-country governments and NGOs, believes there is a straight-forward way to honour Doha and grant developing countries the same rights to affordable medicines as those enjoyed by rich countries.

WTO should agree that countries can export generic versions of patented products to countries where there is no patent or where it has been legitimately suspended. This revison to TRIPS should be:

- fair, permanent and permit economically viable production

- beneficial to all developing countries and covers all diseases

- quick, simple and easy to operate

- free from extra WTO obligations on developing countries

Oxfam believes the best legal mechanism to achieve this is for WTO ministers to issue an authoritative interpretation of the existing TRIPS clause on exceptions to patent rights (Article 30).

The formal proposals of the industrialised countries may appear reasonable at first sight but are unacceptable.

The US calls for a 'waiver' on WTO trade disputes over the rule restricting exports. This is a fatally-flawed proposal, since the measure is temporary, easily reversed and tied to excessive restrictions on its use.

The EU appears better-intentioned, presenting itself as an honest broker seeking political compromise between the US, traditionally the fierce defender of corporate interests, and developing countries. But while it agrees to amend TRIPS, the EU attaches even more conditions making a mockery of declared fine intentions.

The EU proposal would exclude many killer diseases such as pneumonia and hepatitis and would deprive 92 developing countries including Peru, the Philippines and China, from the principal benefits.

Michael Bailey says: 'If the Europeans don't support the developing-country position, we will end up with essentially the same rules but rigged in a different way. The Europeans will trumpet success, but for the sick and poor, nothing will have changed."

Oxfam believes that rich countries should not make lifting any barriers to affordable medicines conditional upon developing-country concessions in other areas of trade policy. It would be grossly unfair for developing countries to have to pay twice to rectify this profoundly damaging agreement.

Michael Bailey says: "Poor people's health should not be a bargaining chip in the Doha Round."

As European trade officials and company lawyers have admitted to Oxfam, the real choices surrounding this change to TRIPS do not concern technical or legal mechanisms - they are essentially political in nature.


For more information or to arrange an interview with Michael Bailey call Federico Monsalve on +64 9 355 6500 or on +61 4 14 016052 (between 12-17 Novemeber)

Notes to editors:

1) Campaign action by NGOS

Oxfam has joined scores of NGOs from all over the globe to put pressure on key trade ministers between now and the WTO Council Meeting, on December 10 to bring about a solution that will allow developing countries to import affordable generic versions of vital new medicines.

Campaigners are being asked to write to or e'mail ministers including Pascal Lamy, Trade Commissioner for the European Commission, and Robert Zoellick, chief US trade representative.

Other NGOs driving the campaign action include: ActionAid Alliance; Consumer Project On Technology, US; Health GAP, US; Health Action International; Lawyers Collective' HIV/AIDS Unit, India; Medecins Sans Frontieres; Oxfam International; Thai NGO Coalition on AIDS and Thai Network of People with HIV/AIDS; Third World Network; Treatment Action Campaign, South Africa.

2) The current anomaly in TRIPS

Under TRIPS, the US or UK government can override a patent on a medicine using a 'compulsory license' and commission a domestic company to produce a generic equivalent. This 'last resort' greatly enhances the government's ability to negotiate reasonable prices with the patent-holding manufacturer. Developing countries can also issue compulsory licenses but, with few exceptions, don't have the required domestic manufacturing capacity to produce a generic equivalent, or cannot produce at an economic price. They cannot import generics because TRIPS prevents any producer country where there is patent in force from exporting to them. The 49 least-developed countries, which thanks to a revision of TRIPS at Doha are not required to have pharmaceutical patenting at all before 2016, are also denied access to imported generics for the same reason.

Correcting this anomaly is a vital next step to improve access to affordable medicines. It is, however, a measure that limits the damage caused to poor countries by TRIPS - it does not avoid the need for a more substantial review of the agreement from a public health and broader development perspective.

3) The rigged rules that industrialised countries and big drug companies seek to impose

a) The 'solution' should only apply to AIDS, TB and malaria, and only to medicines

Oxfam objection: there is no rationale for restricting scope to these diseases. There are many other diseases that ravage developing countries, for which the treatments are, or will be, patented and expensive. For example, Hepatitis C, which can be fatal, affects 8-10 million people in Egypt alone. Drug-resistant diseases are spreading fast, with enormous human cost: pneumonia kills hundreds of thousands of children every year, while gonorrhoea causes immense suffering for millions of women. Half the victims of the major non-communicable diseases (cardiovascular diseases, cancer, diabetes, chronic respiratory diseases and hereditary disorders) are now from the developing world, often from poorer communities.

The solution should not only cover medicines but also vaccines, diagnostic kits and other health products, as these can be patented and expensive.

b) Beneficiary countries should only be the 49 least-developed countries or the low-income developing countries.

Oxfam objection: this condition denies equal rights of access to generic medicines for at least 92 developing countries that cannot, with the probable exception of China, produce these generic version of new drugs for themselves, or do so at a reasonable price. Tens of millions of needy people in countries with limited public health budgets, such as Brazil, Peru, the Dominican Republic, South Africa, Honduras and Namibia would be excluded from benefit.

Developing countries also argue that the mechanism should allow countries in a regional trade agreements to import generics as a group, or that one of the members should be able to supply the regional market with generics, which would permit economies of scale. In addition, Oxfam supports their complementary proposal that North should help to improve capacity in their pharmaceutical sectors by transferring know-how and technologies, since a thriving local industry is the best guarantee of improved access to medicines and overall 'health security'. In the longer term, prospects for such industries will be greatly enhanced by much more substantial reform of the patent rules.

c) The exporting-country government must issue a 'compulsory licence' to permit production and export of the generic version of the patented product, on a case-by-case basis.

Oxfam objection: It is totally unreasonable to expect the importing country to depend on the political will of another government for access to affordable medicines. Pakistan might need to commission a drug from a manufacturer in India, which is one of the very few developing countries with a sophisticated pharmaceutical industry. It should not have to depend on the Indian government's willingness to authorise such production. Moreover, the exporting country would be vulnerable to external pressure not to give its consent. Having to seek compulsory licences in both importing and exporting countries also adds to the administrative burden.

d) Developing countries must negotiate with the patent holder prior to using the mechanism, can only resort to it if the price offer is unsatisfactory, and must formally notify the WTO of their intention.

Oxfam objection: these conditions are unfair because they go beyond existing TRIPS obligations faced by a rich country if it decides to override a patent; they are designed to slow down and complicate the whole process for a developing country.

e) Only developing countries should be able to produce for export under this mechanism.

Oxfam objection: this condition sounds enlightened but is intended to reduce the number of potential suppliers of generic medicines, to the advantage of the big drug companies. Any country should be allowed to export under the mechanism.

f) Developing countries should undertake measures to prevent the flow of generic medicines back to the markets where the drug is under patent.

Oxfam objection: the main burden for this should rest with industrialised countries, which already have the means for enforcement (e.g. the recent European proposal to label reduced-price medicines destined for developing countries in order to police illegal re-imports back to Europe). Any measures required of developing countries should be proportionate to the problem, and to their capacity.

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