PHM-Exch> NY Times: A Trade Barrier to Defeating AIDS

[Claudio Schuftan]

From: Ellen Shaffer <ershaffer at gmail.com>

July 26, 2011, 9:45 pm A Trade Barrier to Defeating AIDS By TINA
ROSENBERG<http://opinionator.blogs.nytimes.com/author/tina-rosenberg/>
  In Friday’s Fixes column, I
wrote<http://opinionator.blogs.nytimes.com/2011/07/26/2011/07/21/sharing-patents-to-wipe-out-aids/>about
the Medicines Patent Pool, a new organization trying to make AIDS
drugs better, cheaper and available sooner to people who need them in poor
countries.   It relies on voluntary donations of rights by patent holders,
most of them pharmaceutical companies.   Its success is crucial;  new
research shows that if we can dramatically increase the number of people on
antiretroviral medicines, we can not only save millions of lives, but
potentially cause the epidemic to die away.

Earlier this month, the patent pool received its first donation of rights
from a pharmaceutical manufacturer, Gilead Sciences.   It is an important
step  — but the terms Gilead negotiated are also confirmation of a dangerous
new trend: middle income countries as a target market for drug makers.  In
the past, pharmaceutical companies have lowered prices in these countries to
increase sales.  The new strategy is to treat people in Egypt, Paraguay,
Turkmenistan or China — middle-income countries, all — as if they or their
governments could pay hundreds or even thousands of dollars a year each for
AIDS drugs.   This low-volume high-profit strategy might make  business
sense.   But in terms of the war against AIDS, it means surrender.

In the world’s most impoverished countries, AIDS drugs are cheap.   It
wasn’t always that way.  Until well into the Clinton administration, the
United States government pressured even the poorest countries shamelessly if
they tried to bring down the prices of medicine.   Even newly democratic,
AIDS-ravaged South Africa became the object of an all-out assault by the
Clinton administration to get the country to repeal a law allowing it to
break medical patents, a step that was perfectly legal under world trade
rules.  Washington was not interested in the health consequences.   (A U.S.
trade negotiator who worked on South Africa at the time told me that he had
been unaware that AIDS was a major problem there.)    Public outrage over
South Africa ended Washington’s pressure on poor countries.   In 2000,
President Clinton issued an executive order pledging that sub-Saharan
African countries would not face trade sanctions for laws promoting access
to AIDS medicines.

The order continues to be largely respected, and the group of countries who
are generally able to get access to the cheapest drugs has grown to include
the poorest countries from around the world — Afghanistan, Tajikistan,
Bangladesh, Burma.    Gilead’s agreement with the Medicines Patent Pool
covers these countries.

But countries just above this cutoff line are on their own.  “There are
countries that are considered to be “middle income” that will never be able
to afford the high prices charged by innovative pharma companies,” said
reader A. Grant of New York
(13<http://community.nytimes.com/comments/opinionator.blogs.nytimes.com/2011/07/21/sharing-patents-to-wipe-out-aids/?permid=13#comment13>).
These nations are also losing the discounts that major manufacturers of AIDS
drugs used to offer them.  According to Médecins Sans Frontières, which
tracks drug prices, prominent manufacturers of AIDS drugs have stopped
offering discounts to middle-income countries, or now require that countries
negotiate those discounts one by one.

Yet another assault on middle-income countries’ ability to buy drugs comes
in the form of trade deals.   The ongoing negotiations for a free trade
agreement between the European Union and India is particularly crucial, as
India is drug maker to the world — 92 percent of people taking
antiretroviral medicines in developing countries use generic medicines made
in India;  U.S. programs to provide AIDS medicines overseas rely on Indian
generics as well. The European Union is pushing India to adopt laws that
will undermine generic production.

India is fighting back — in part because the generic drug industry is so
strong.  But this is a rare case of power being on the side of public
health.  The wealthy countries are largely doing the bidding of the
pharmaceutical industry that seeks to keep prices high.  Even In developing
countries, health concerns are underrepresented in these negotiations.
Trade agreements are not negotiated by health ministers, but by trade
ministers, advised by powerful commercial interests.   Their goal is access
to foreign markets.  They are often quite content to trade away health
considerations.

The United States was supposed to have abandoned this approach.
President-elect Barack Obama made a strong statement backing countries’
rights to buy affordable generics and promised to “break the stranglehold
that a few big drug and insurance companies have on these life-saving
drugs.”  In addition, on May 10, 2007, Congress and President Bush agreed to
standards for trade agreements that, among other things, protect the right
to access to medicines.

But the Office of the United States Trade Representative does not see it
that way.  The office is now negotiating a new free trade agreement, the
Trans-Pacific Partnership Agreement, with eight other countries.Inside U.S.
Trade reported that at a briefing this May, a U.S. trade official said that
the office does not intend to respect the May 10 agreement.   “2007 is 2007
and 2011 is 2011,” the official reportedly said.

“Companies are finding new ways to be aggressive about protecting
pharmaceutical monopolies that haven’t been in past free trade agreements,”
said Peter Maybarduk, the global access to medicines program director at
Public Citizen.  Leaked drafts of the trade office’s negotiating proposals
for the Trans-Pacific agreement show that Washington has proposed
eliminating formal ways that patents can be challenged before their
registration and proposed measures to lower the standards for what can be
patented — for example, allowing companies to extend their monopolies by
making minor modifications in a product, whether or not they lead to
improved results.   According to Inside U.S. Trade, trade office officials
have said they would likely follow what the pharmaceutical industry wants on
the extremely controversial issue of data exclusivity — rules that
discourage generic production by keeping data proprietary, requiring generic
manufacturers to re-do clinical trials. (Reader Edward Low of Kuala Lampur (
20<http://community.nytimes.com/comments/opinionator.blogs.nytimes.com/2011/07/21/sharing-patents-to-wipe-out-aids/?permid=20#comment20>)
noted that one medicine became 845,600 percent more expensive in Guatemala
after the country signed a free trade agreement with the United States.   This
is, bizarrely enough,
true<http://www.cpath.org/sitebuildercontent/sitebuilderfiles/cpathhaonline8-25-09.pdf>—
data exclusivity was the culprit.)

A U.S. trade official told me that its proposals on data exclusivity are not
yet set, but that Washington’s  goals in the agreement are “predictability
and transparency” on drug prices.

Countries that take measures to lower drug prices also often find themselves
on the trade office’s Special 301 Watch
List<http://www.ustr.gov/about-us/press-office/reports-and-publications/2011/2011-special-301-report>,
a precursor to sanctions.   Brazil, India and Thailand, among other
countries, are on the lists for insufficient protection for intellectual
property — even though their measures are fully within international trade
law.

The list of people worried about the terms of U.S. trade agreements contains
some unusual suspects.  Last year, the then-governors of Vermont and Maine
wrote to the Obama administration protesting what they saw as a particularly
dangerous part of past free trade agreements:  language that restricts
government-run pharmaceutical pricing programs.   Trade agreements with
Australia and Korea contain these clauses.  If Washington proposes the same
thing in the Trans-Pacific agreement, it will be applying this policy to
countries that are much poorer, including Vietnam, Malaysia, Chile and
Peru.  In addition, the introduction to the Watch List cites several
countries for using a government’s negotiating power to buy cheaper
medicine.

Why would this bother these governors?  Because this is exactly what states
and the federal government do in America.  They negotiate big discounts on
the medicines they buy for Medicare Part B and Medicaid.   Without those
discounts, those programs could not survive.  The Veterans Administration
and the Pentagon, among other agencies, do the same thing. “Trade
agreements, are, of course, reciprocal by nature,” wrote the governors, John
Baldacci of Maine and James Douglas of Vermont.   Washington argues that the
fine print exempts U.S. programs — in the Korea agreement, this argument was
explicit.  It is difficult to decide what’s worse: the chutzpah of telling a
poorer country that it can’t negotiate lower prices while the United States
can, or allowing pharmaceutical company lobbying to result in the
destruction of a substantial slice of American health care.

The pharmaceutical industry is seeking to take this a step further.  The
chief executive of Pfizer, Jeff Kindler, and the late John Barton, a
Stanford University Law professor, proposed a global agreement on
pharmaceutical prices that would, among other things, severely restrict the
ability of wealthy and middle income countries anywhere to use such
pharmaceutical pricing programs.  Ambassador Ron Kirk, the U.S. Trade
Representative, has said the idea deserves
consideration<http://www.ustr.gov/about-us/press-office/speeches/transcripts/2009/september/remarks-ambassador-ron-kirk-global-intelle>
.
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