TRIPS and Medicines
Photo by Catalina Aneca
Until the early 1990s, many developing countries excluded pharmaceuticals from patent laws or had limited patent protections for drugs. However the WTO has since created the TRIPS Agreement and most countries have had to change their policies on medicine patents. This is entirely favorable for pharmaceutical companies, and of no help at all to poor, sick people in developing countries. Patients facing drug resistant infections such as tuberculosis are particularly at risk, as they must use new, more expensive patented drugs. This can run up the cost for a six-month tuberculosis treatment from $20 to $2,000.
While TRIPS provisions overwhelmingly favor patent holders over the interests of communities, including public health, certain limited exceptions to patent rights are allowed under the TRIPS Agreement. However, these "safeguards" are in practice difficult for developing countries to implement due to economic and political realities. For example, countries seeking to prioritize public health over the rights of patent holders are often subject to extreme pressure by the US Trade Representative, in multilateral, regional, and bilateral forums. This can include the threat of bilateral trade sanctions if they do not offer levels of intellectual property protection demanded by powerful industry lobbies.
Safeguards in the TRIPS Agreement include provisions that allow "parallel importation" and "compulsory licensing."
Parallel importation is the importation of drugs from another country where they are sold at a lower price. This practice is neither explicitly outlawed nor allowed under TRIPS. Countries can decide for themselves whether this method of obtaining cheaper medicines will be covered by their national intellectual property laws. Nevertheless, The United States is pressuring countries to make commitments to restrict parallel importation. The recent US-Singapore Free Trade Agreement is an example of this sort of restriction.
Compulsory licensing allows a government to temporarily override a patent. This allows generic copies of a patented product to be produced domestically, with compensation paid to the patent holder. For example, a government may issue a compulsory license to a company to produce generics when faced with a public health problem. Generic copies of patented drugs are much cheaper than the branded drugs. By introducing generics, governments can bring down the price of a certain medicine, thereby ensuring an adequate, affordable stock of the needed drugs. The introduction of generics competition upon expiry of a patent typically leads to a significant price reduction, often by up to 70 percent.
The TRIPS Agreement lays out certain procedural requirements that governments must follow when using compulsory licensing, including an expedited procedure for times when a government faces a public health "emergency" and must respond quickly. Governments themselves define what constitutes a health problem or health emergency under TRIPS.
Additional Facts on TRIPS and Medicine:
Restrictions on importing generic drugs will impede a country's fight to overcome the HIV/AIDS crisis. In 1999, patented anti-viral triple therapies cost between $10,000 and $15,000 per year for a patient in an industrialized country. Indian generic drug companies started marketing drugs for about $1,500 per year; the price later fell to $295. (source: Rigged Rules and Double Standards: trade, globalization, and the fight against poverty, Chapter 8.)
One pharmaceutical company, Pfizer, had a market value of $266 billion in 2001; this is more than the combined national incomes of the 18 largest economies in sub-Saharan Africa. (source: Formula for Fairness, p. 4)