PHA-Exchange> TRIPS + the Doha Declaration - what you need to know

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A Long Road to Travel: Declaration on TRIPS at Doha.

Dr.Amit Sen Gupta, Jana Swasthya Abhiyan (Peoples Health Movement),India.

The Doha meeting of the WTO adopted a "Declaration on the TRIPS Agreement
and Public Health". The declaration has been hailed as a landmark in the
negotiating history of the World Trade Organisation. In a way it is a
landmark because this is the first time, since the signing of the WTO
Agreement in 1994, that a portion of that agreement has been interpreted in
a manner that is favourable to developing countries. While there is a need
to recognise the significance of this, there is also the need to examine the
events which led to the adoption of the declaration. Also, we need to
understand how much has really been gained by the adoption of the
declaration.

History of the TRIPS Accord
The Trade Related Intellectual Property Rights (TRIPS) agreement, signed as
a part of the WTO agreement, was the most bitterly fought during the GATT
negotiations. Till 1989, countries like India, Brazil, Argentine, Thailand
and others had opposed even the inclusion of the issues of TRIPS in the
negotiating agenda. They did so based on the sound argument that
Intellectual Property Rights -- which includes patents over medicines -- is
a non trade issue. India and others had argued that rights provided in
domestic laws regarding intellectual property should not be linked with
trade. They had further argued that the history of IPRs shows that all
countries have evolved their domestic laws in consonance with the stage of
economic development and the development of thei science and rechnology
capabilities. Laws that provide strong patent protection limit the ability
of developing countries to enhance their S&T capabilities and retard
dissemination of knowledge. Japan, for example, was able to enhance its
domestic capabilities through the medium of weak patent protection for
decades -- well into the second half of the twentieth century. Italy changed
to a stronger protection regime only in 1978 and Canada as late as in 1992.
It was thus natural that many countries like India had domestic laws that
did not favour strong protection to patents before the WTO agreement was
signed. It was illogical to thrust a single patent structure on all
countries of the globe, irrespective of their
stage of development.

These arguments were however systematically subverted during the GATT
negotiations, leading to the signing of the TRIPS agreement. The TRIPS
agreement required countries like India to change over to a strong patent
protection regime, a regime that would no longer allow countries to continue
with domestic laws that enabled domestic companies to manufacture new drugs
invented elsewhere, at prices that were anything between one twentieth and
one hundredth of global prices. It may be recalled that it was the 1970
Patent Act which, by encouraging Indian companies to develop new processes
for patented drugs, also facilitated the development of world class
manufacturing facilities in a developing country like India. 

Today the campaign on access to drugs draws strength from Indian companies
like Cipla who are offering anti-AIDS drugs at one tenth to one fortieth of
the prices being charged by large pharmaceutical countries. It also draws
strength from the ability of Brazil to indigenously manufacture 8 out of the
12 anti-AIDS drugs and also to distribute them to all those who require
these drugs. Let us not forget that this could not have happened if the
TRIPS accord had been signed in 1975 and not in 1995! It is this that we
stand to lose as we move towards "harmonised" standards of strong patent
protection. 

Importance of the TRIPS Accord
Implications of a product patent regime are not limited only to the area of
technological self reliance. Technological dependence on MNCs is the
proverbial "thin edge" which will be used by the MNCs to establish their
sovereignty over the Indian Drug market once again (a position they had lost
after the mid seventies). They will then again start charging exorbitant
prices for drugs in the Indian market. Since the early eighties, the
categories of drugs which show the maximum rise in sales are categories
which include overwhelming majority of drugs still under Product Patent or
whose roduct patents have expired recently. In other words, if we had a
product patent regime today, the drugs showing fastest growth would have
been priced way beyond the capacity of the average consumer.

It must be understood that, notwithstanding the rhetoric, the TRIPS accord
was not pushed through just to access markets of developing countries. These
markets represent just a fraction of the global market - India, for example,
accounts for 0.8% of the market, in contrast to 33%, 24% and 20% for the US,
Europe and Japan respectively. Rather, the TRIPS agreement became a
necessity
to protect the markets of large pharmaceutical companies in the developing
world against competition from cheaper generic drugs manufactured in
countries like India and Brazil. TRIPS in other words is not about "free"
trade, but has to do with protection of markets in developed countries. In
order to safeguard this market, giant pharmaceutical companies railroaded
all
opposition and forced the signing of the TRIPS accord. The draft which
formed the bases of the accord was prepared by industry representatives from
the US, Europe and Japan.

There were other compelling reasons why developed Capitalist countries, led
by the US, exerted such enormous pressure during the GATT negotiations to
ensure that the TRIPS agreement was pushed through. In the mid-80's, the
United States was faced with waning industrial competitiveness which hurt
U.S. companies and U.S. trade internationally. As a consequence, it began
searching for new areas of commerce which would maintain U.S. dominance in
the world market. Around this time several intellectual property dependent
industries, namely information technology, entertainment (records, films and
books) and pharmaceuticals were becoming extremely important
contributors to the U.S. economy. All these sectors were heavily IPR
dependant as they dealt in products of which the development costs were
high, but the replication costs were small. These were sectors where, in
order to maintain high levels of returns, monopoly incomes had to be
protected through the mechanism of strong Intellectual Property Protection.

The importance of the knowledge-based sectors to the US (and global) economy
can be gauged from the performance of large companies today. Among the top
fifteen companies with the highest profits, six are pharmaceutical companies
- Microsoft, Cable and Wireless, DuPont, Eli Lilly, Glaxo Wellcome, the
Roche Group, Bristol-Myers, Squibb, Novartis and Pfizer. Five are from the
information technology sector, Microsoft, Cable and Wireless, Telefonos de
Mexico, Intel and Textron. Yet, none of these figure anywhere among the top
100 in terms of turnover.
Microsoft is 216th in the list in terms of turnover, but has the highest
return on revenues (39.4%). Clearly rent incomes, today, are one of the
major driving forces of the economies of the developed countries.

Setback to Pharmaceutical Companies
In 1995, the pharmaceutical MNCs seemed to be sitting on top of the world.
Unanticipated by them, a major development in the field of health care set
in motion a chain of events. The AIDS epidemic was fast gripping the
imagination of the global community. In the nineties, almost all of Africa
was under the grip of this epidemic. In some countries, an estimated third
of the adult population are infected by AIDS! The tragedy was compounded
when drugs to contain AIDS started being developed. These drugs allowed AIDS
patients the opportunity to live normal lives even
if they were infected. But there was a catch. Because of patent protection,
these drugs were priced beyond the reach of patients in developing
countries. The ridiculous effect of patent protection was evident when one
found that the cost of treating AIDS patients in some African countries was
many times their total GNP! Even more ridiculous, and tragic, when we know
that these drugs can be produced at one fortieth of prices being charged by
MNCs.

AIDS became a rallying point for activists from all parts of the world and
developing country governments alike. In a few years, one saw the forging of
an unparalleled global coalition. Countries like Brazil and Thailand defied
the TRIPS agreement and allowed domestic companies to produce cheap
anti-AIDS drugs. South Africa changed its laws to allow imports of cheap
anti-AIDS drugs. The MNCs and the developed countries struck back. 39
pharmaceutical companies challenged the South African law in the country's
court of law. Brazil was dragged by the US to the WTO appellate body for
infringement of TRIPS. But the tide was clearly turning. In the face of
mounting criticism and hostile reactions towards the pharmaceutical
industry, the industry and its sponsors were forced to step back. The
companies were forced to withdraw their case in South Africa and the US did
not proceed with its dispute with Brazil in the WTO.

The coalition that was built around the AIDS issue then pressed for
clarifications from the WTO that the TRIPS accord did not prevent country
governments from legislating in favour of protection of public health. In
this they were supported by almost the entire community of developing
nations. The industry fought to the last to prevent this. In the draft
declaration circulated in September, the US and other developed countries
tried to limit any clarification to just measures related to AIDS. But the
momentum of the global movement was able to increase the scope of the
declaration to include public health crises not limited only to AIDS.

What has Been Achieved
Let us now turn to what has been achieved by the declaration. Contrary to
popular perception, the declaration in no way changes the TRIPS accord. It
does not even say that the accord needs to be renegotiated. In that sense,
it is really in the nature of a clarification, stating what can be done by
countries to safeguard public health while not at the same time infringing
the TRIPS accord. Thus the declaration says: "Accordingly, while reiterating
our commitment to the TRIPS Agreement, we affirm that the Agreement can and
should be interpreted and implemented in a manner supportive of WTO Members'
right to protect public health and, in particular, to promote access to
medicines for all". Clearly, the intent is still to maintain that the TRIPS
accord is inviolable and at the same time say that the accord allows certain
measures to safeguard public health. Specifically, the declaration clarifies
that countries can issue compulsory licenses when faced with a health crises
or emergencies. It further states that: "Each Member has the right to grant
compulsory licences and the freedom to determine the grounds upon which such
licences are granted". It must be understood that such clarifications do
constitute an advance because, in the past, the US has tried to prevent
countries like Brazil and Thailand from doing exactly what the
clarifications now says is perfectly compatible with TRIPS.

In concrete terms, this means that countries can provide a license to
produce life saving drugs to domestic companies, even if patents for these
drugs are held by foreign patent holders. But this is still far short of
what the 1970 Patents Act of India allowed. Our Patents Act did not allow
patents to be held for any product, irrespective of whether they were
required to address
any health crisis or not. It is this provision that allowed the development
of a domestic drug industry and also the development of an R&D base in the
pharmaceutical sector. It needs to be realised that what may be construed to
be drugs "that are required to address emergencies" will always constitute a
small fraction of the total number of drugs manufactured. Hence MNCs will be
able to control the production and distribution of a majority of drugs. This
means that Indian companies will not have the unhindered freedom that the
1970 Patents Act provided. In the long run, this will have an impact on the
balance in the pharmaceutical sector, allowing the MNCs to once again assume
a dominant position. Moreover R&D and manufacturing capabilities are built
over a period, and cannot be suddenly switched on when "emergencies" arise.
Restricting the space in which domestic companies can operate to produce
newer drugs will have an adverse impact on their manufacturing and R&D
capabilities, as well as R&D capabilities built up in the public sector.

The declaration falls short of requirements in another key area. It says
that: "We recognize that WTO Members with insufficient or no manufacturing
capacities in the pharmaceutical sector could face difficulties in making
effective use of compulsory licensing under the TRIPS Agreement.  We
instruct the Council for TRIPS to find an expeditious solution to this
problem and to report to the General Council before the end of 2002". Most
developing countries, unlike India, have no manufacturing capability. So the
declaration does not enable them to access cheaper drugs because they cannot
get these drugs produced cheaply in their country. The declaration does not
explicitly allow them to import cheaper drugs from countries like India.

A Long Road to Travel
There is a long road to travel before it can be claimed that the TRIPS
accord has been successfully undermined. What we see today is a small
corporate retreat in the face of hostile global reaction. The issue of
access to AIDS drugs is, arguably, the weakest link in the TRIPS accord and
the emerging global patenting system. The tremendous evocative appeal of the
"Access Campaign to AIDS Drugs" lends it the potential to delegitimise the
TRIPS agreement.

However, to effectively strike at the "weakest link", the campaign around
access to cheap medicines has to look beyond AIDS or even beyond "health
emergencies" and beyond the TRIPS framework. The "access campaign" must
eventually extend to cover access to all essential medication and draw-in
interest groups from across the globe. The campaign needs also to look
beyond the TRIPS framework. While arguing for a more "liberal"
interpretation of the TRIPS language to ensure better access, it is also
necessary to understand that the TRIPS agreement was arrived at on the basis
of submissions of the pharmaceutical industry. It is an agreement designed
to promote monopolies and hinder competition. The campaign needs to look
beyond TRIPS, and use the present momentum to force that the TRIPS agreement
be interpreted in a manner that promotes competition and technology
dissemination. The minimum that such an interpretation must recognise is the
automatic invocation of provisions that promote competition in all markets,
and curb the monopoly over knowledge that the present TRIPS regime is
interpreted to allow. 

Finally, we need to note that India is a late entrant in this recent fight
against TRIPS. After abandoning the ship in 1989, we seem to have just got
on board again. In the last few years, India's voice was not heard clearly
with those of Brazil, Thailand and the large group of African countries.
This was evident even in Seattle in 1999. The Access Campaign will be hoping
that the
Indian negotiating team's perseverence in Doha was not merely an attempt to
play to the gallery.