Among the most obvious benefits of modern technology is improved
health care. Some of the greatest medical advances have been new
pharmaceuticals.
But medicines don’t magically appear. They will not be produced
if prices don’t reflect research costs.
Unfortunately, some foreign governments, such as Thailand, don’t
care about what medicines patients will need tomorrow. Bizarrely, a
gaggle of Democratic congressmen has endorsed Thailand’s plan to
steal American-made drugs. Several non-governmental groups
supposedly concerned about patient health also are pushing policies
which will discourage future pharmaceutical research.
HIV/AIDS stopped being a death sentence only because of the
development of a variety of pharmaceuticals, beginning with AZT.
But many AIDS sufferers in the developing world are not receiving
antiretroviral (ARV) drugs. With the number of AIDS patients
expected to hit almost ten million by 2010, the need for additional
drugs will only grow.
Of course the poor should be treated. But the question is how?
Policymakers have to decide whether the drugmakers be enlisted as
allies or treated as enemies. Should governments simply steal from
companies medications developed at great cost?
Last year America’s drug and biotech firms devoted $55.2 billion
to pharmaceutical development. The Tufts Center for the Study of
Drug Development estimates that on average every drug takes 10 to
15 years to reach the market, at a cost of $800 million.
Unfortunately, companies discover far more dry holes than
blockbuster drugs, so the prices charged for the few successful
medicines must cover the entire research and development bill.
The expense can be high for Third World nations, but
pharmaceutical costs are not the primary barrier to AIDS treatment.
Note Jeremiah Norris of the Hudson Institute and Philip Stevens of
the International Policy Network, “Even second- line drug prices
are small change compared to the cost of the medical infrastructure
required to administer these complicated medicines.” Moreover,
governments routinely impose tariffs and taxes on life-saving
pharmaceuticals and create burdensome regulatory barriers to their
production and distribution.
Nevertheless, politicians rarely consider the impact of their
policies on drug availability. Even middle-income countries have
increasingly been demanding confiscatory price cuts and issuing
compulsory licences, effectively stealing patented products.
Most recently, Thailand refused to honor the patent for Kaletra,
an AIDS drug marketed by Abbott, and Plavix, a blood- thinner
co-marketed by Sanofi-Adventis and Bristol-Myers-Squibb. Last
November Bangkok seized Merck’s patent for Stocrin, another ARV.
The military junta then threatened to break several more patents
and, in late July, announced plans to confiscate foreign drugs for
additional diseases and health care programs.
“We want lower prices,” declared Mongkol Na Songkhla, Public
Health Minister in Southeast Asia’s second largest economy. But the
issue is not inability to pay. Observes Paul Howard of the
Manhattan Institute, “While the government cries penury, its
defense budget has increased by over 30 percent.” Moreover,
Thailand has imposed a range of duties, tariffs, and taxes on
medicines.
UNFORTUNATELY, OTHER NATIONS HAVE ENGAGED in the same practice, and
not just for ARVs. Brazil, an even wealthier middle-income nation
which possesses the globe’s 10th largest economy, has followed
Thailand in seizing Abbott’s Kaletra patent and Merck’s Stocrin
patent. Again, the ability to afford drugs is not the issue: Brazil
has spent lavishly on wasteful state enterprises, dabbled in
nuclear weapons, and launched a space program.
Although India has implemented new patent legislation protecting
intellectual property, the anti-cancer drug Gleevec has fallen into
an exception. A court rejected Novartis’s legal challenge in early
August. Activists are pushing South Korea, an Asian “tiger” with
one of the world’s top economies, to break Novartis’ patent for
Gleevec.
In all of these cases, governments of prosperous states are
seeking to win political points by demonizing the companies which
produce the products which offer their peoples hope. The motto
seems to be: Why pay for what you can steal?
Some activists plead human rights. Alicia Ely Yamin of Harvard
wrote: “Human rights law not only offers an alternative paradigm
for understanding issues relating to the availability and
distribution of medications, it also provides a workable framework
for influencing the way in which adjudicative and legislative
bodies, as well as other actors, make decisions that affect access
to medications.”
Thus, someone must provide drugs to those who need them because
patients have a right to life, health, an adequate standard of
living, and the benefits of scientific progress. Moreover, someone
must provide medicines since failing to do so would have a
disproportionate effect on children and discriminate against the
poor and vulnerable. To defend property rights is to favor “patent
protection and profit over saving lives.”
Yamin emphasizes that governments have a responsibility to meet
these alleged international obligations, including by acting “to
deliberately block intellectual property reform,” that is, to steal
patented pharmaceuticals. Other activists emphasize the duty of
companies to essentially give away their products, irrespective of
R&D costs. After Abbott, which has reduced prices on its
medicines in middle- as well as low-income countries, announced
that it was no longer going to market drugs in Thailand — which
was expropriating one of its products — AIDS Access director
Nimitr Tien-udom declared: “Now they have pulled off the mask, we
can see how greedy they are.”
YET PATENTS ARE NOT THE CHIEF BARRIER to treatment of the poor. The
vast majority of medicines on the World Health Organization’s
“Essential Medicines” list have not been patented in any poor
nation. Moreover, many companies discount and even donate their
drugs in poorer states. Some work with NGOs and governments to
create a workable health infrastructure and distribute ARVs and
other pharmaceuticals.
Unfortunately, attacks on drugmakers — whether seizing patented
products or imposing price controls — discourage the creation and
distribution of the very medicines which are most needed. Patents
enable firms to earn back the money spent to develop their products
as well as to invest in further R&D efforts. Governments can
only steal drugs already on the market or in the pipeline: doing so
inevitably will discourage companies from producing new medicines
in the future.
Nowhere would the human cost of discouraging R&D be greater
than in treating AIDS. Some 80 anti-AIDS drugs are currently being
developed, including almost 20 vaccines.
Attacking the research drug industry in industrialized states
also will discourage development of a research industry in
developing states. Note several analysts in a study for the
Campaign for Fighting Diseases (CFD):
Weak [intellectual property] laws enable the emergence
of copycat industries at the expense of innovator industries —
with negative consequences for economic growth because the added
value of the copycat industries is typically lower than that of
innovator industries. In addition, innovator companies based in
countries with strong IP protection will be less likely to engage
in joint knowledge-oriented projects with firms in countries with
weak intellectual property protection.
Stronger IP protection also will spur additional investment,
foreign and local, in local firms to research diseases that
disproportionately afflict the local population. India has adjusted
its law to improve IP protection. Reports CFD: India currently has
the largest number of FDA approved pharmaceutical manufacturing
companies outside the U.S., and has increased spending on R&D
from 4 percent, five years ago, to 8 percent today.”
WHAT TO DO? THERE IS A MORAL IMPERATIVE to distribute life- saving
products in impoverished states, but the duty of doing so falls on
all of us — including activists who raise money by attacking the
drugmakers. It would be far better if industry critics, such as
Oxfam and Medecins Sans Frontieres, raised money to purchase needed
drugs for patients in poor nations.
In contrast, prosperous but stingy countries like Thailand and
Brazil should be held accountable for their misbehavior. If sweet
reason doesn’t change their behavior, drugmakers, like Abbott in
Thailand, should refuse to market any of their goods in offending
nations.
Moreover, Washington should insist on IP protection in
negotiating trade liberalization agreements. The U.S. Trade
Representative has asked Thailand to reconsider its decision, but
the U.S. government must be prepared to penalize states that
violate patent rights by filing complaints under U.S. and
international law. The USTR could be empowered to suspend patents
issued by countries that do not respect IP and end any special
trade benefits (both Brazil and Thailand enjoy lower tariffs under
the Generalized System of Preferences).
America’s task has been made harder by the World Health
Organization’s refusal to defend production of the drugs it seeks
to distribute around the world. Moreover, nearly two score
congressmen, led by Rep. Henry Waxman (D-Calif.), have endorsed
Thailand’s theft of the drug patents.
Protection of American intellectual property is a vital economic
and health issue. Pharmaceuticals save lives. Stealing patents is
really stealing the health future of Americans — who pay a
disproportionate share of the globe’s pharmaceutical R&D — and
disadvantaged peoples around the world.
