The TRIPs Agreement and Pharmaceuticals
(2000; 91 pages) View the PDF document
Table of Contents
View the documentACKNOWLEDGEMENTS
View the documentLIST OF ABBREVIATIONS AND ACRONYMS
View the documentEXECUTIVE SUMMARY
View the documentI. INTRODUCTION
Close this folderII. GENERAL ISSUES
Open this folder and view contents2.1 Background
View the document2.2 WHO’s perspective on globalization and access to drugs
View the document2.3 The history of the TRIPs negotiations
Close this folder2.4 Stakeholders’ views
View the document2.4.1 The international innovative pharmaceutical industry’s perspective (IFPMA)
View the document2.4.2 A national pharmaceutical industry perspective (GP Farmasi, Indonesia)
View the document2.4.3 A consumer’s perspective (Consumers International)
Open this folder and view contents2.5 Country experiences
Open this folder and view contentsIII. TECHNICAL ISSUES
Open this folder and view contentsIV. SPECIAL ISSUES
View the documentV. ISSUES DISCUSSED IN WORKING GROUPS
View the documentVI. RECOMMENDATIONS
Open this folder and view contentsANNEXES
 

2.4.3 A consumer’s perspective (Consumers International)

Access to essential drugs and affordable medical services are major consumer concerns. Currently, over two billion people do not have regular access to life-saving drugs, this, consumer organizations believe, is a crisis situation.

The multinational companies (MNCs), particularly the American industry, have been advocating that developing countries need to provide strong patent protection for pharmaceuticals (20 years) in their national legislation. During this period, the patent holder will have an exclusive monopoly for the manufacture, distribution and sales of the patented drugs. Generic manufacturers can copy them only after the patents expire. If developing countries have to wait for 20 years to manufacture new life-saving drugs, they will be waiting in vain. Modern drugs have a short lifespan. The top sellers of today will be almost extinct in about 10-15 years. Table 6 gives the US ten top prescription drugs in 1983 and traces their ranking during the following 14 years.

Table 6 Top prescription drugs in 1983 and their ranking in 1988 (US) and 1997 (world)

Product

1983 US sales

1988 US sales

500 prescription drugs by worldwide sales


1983 rank

1988 rank

1997 - rank

Tagamet (SK&F)

1

2

154

Inderal (Ayerst)

2

13

321

Dyazide (SK&F)

3

12

365

Motrin (Upjohn)

4

39

-

Aldomet (MS&D)

5

72

-

Valium (Roche)

6

25

296

Feldene (Pfizer)

7

10

153

Naprosyn (Syntex)

8

4

146

Keflex (Dista)

9

44

-

Diabinese (Pfizer)

10

98

-

Source:

(1) 1983 & 1988 US ranking, SCRIP No. 1381, Jan 27, 1989, p. 17.
(2) 1997 Ranking: Annual Report 500 Drugs: 500 Prescription Drugs by worldwide sales, Pharma Business, July/August 1998.

Of the top ten US prescription drugs in 1983, only three were able to retain their ranking within the top ten after five years. None of them was in the top 100 in 1997, and 4 drugs were not even in the list of the 500 top selling drugs that year. The consumer organizations, therefore, reject the position taken up by MNCs, that the TRIPs Agreement should be implemented in ways which would prevent compulsory licensing and parallel imports. Consumers reject this position because no drug at the end of 20 years will be worth manufacturing. The prices fixed indiscriminately by the MNCs (see table 7), will prevent access of the life-saving drugs to over two billion people.

Table 7 Retail prices in USD of 100 tablets Zantac in 11 Asian countries

Countries

Zantac (100 x 150 mg) in US$

Bangladesh

9

India

2

Indonesia

41

Malaysia

55

Mongolia

183

Nepal

3

Pakistan

22

Philippines

63

Sri Lanka

61

Thailand

37

Vietnam

30

Source: Retail Drug Prices: The Law of the Jungle, HAI News No. 100, April 1998.

A major argument put forward by multinational drug companies for strong patent protection is to have exclusive rights for a period of time so that they can earn adequate profits to cover their costs of R&D and to continue further R&D. This seems to be a justifiable argument. Therefore, we would need to know how much profits MNCs make, how much it costs to develop a new chemical entity and the amounts MNCs really spend on R&D. Unfortunately, independent data on the cost of R&D are scarce.

To understand fully the implications of the TRIPs Agreement on access to drugs of consumers in the ASEAN region, it will be necessary to examine the pharmaceutical sector in the ASEAN countries and in the world. Comprehensive research and development to discover and develop new chemical entities require human, technological and financial resources, which, at present, are available in only 10 advanced industrial countries. The United Nations Industrial Development Organization (UNIDO) has classified 190 countries into 5 groups based on the degree of development of pharmaceutical technology and industrial production (table 8).

Table 8 A typology of world’s pharmaceutical industries

Stage of development of the pharmaceutical industry in the country

Number of countries


Total

Industrial

Developing

Sophisticated pharmaceutical industry with significant research base:

10

10

0

Pharmaceutical industry with some innovative capabilities: *)

17

12

5

Pharmaceutical industry with capability to produce both therapeutic ingredients & finished products:

14

6

8

Pharmaceutical industry formulating finished products only (from imported therapeutic ingredients):

89

2

87

Countries and states without a pharmaceutical industry:

60

1

59

*) Each country in this group discovered and marketed at least one NCE between 1961-1996.

Adapted from: The World’s Pharmaceutical Industries: An International Perspective on Innovation, Competition and Policy by Robert Balance, Janos Pogany & Helmet Forsteiner, UNIDO, 1992.

Empirical data on pharmaceutical production and consumption in five ASEAN countries - Indonesia, Malaysia, Philippines, Singapore and Thailand - are given in table 9.

Malaysia produces about 50 per cent of the country’s requirements of pharmaceuticals. The other four ASEAN countries in table 9 are almost self-sufficient. However manufacture in all ASEAN countries is limited mainly to formulation of dosage forms from imported raw materials. The pharmaceutical industry in these countries is, therefore, totally dependent on the availability of raw materials in the world market. Before the TRIPs Agreement came into force, the national patent legislation in most developing countries did not provide patent protection for pharmaceutical products. This enabled developing countries like Argentina, China, India, Korea and Mexico to have a strong vertically integrated pharmaceutical industry. They were able to put into the world market raw materials of all essential drugs at competitive prices.

Table 9 Pharmaceutical production and consumption in five ASEAN countries

Country

Consumption per capita in US$ (1990)

Percentage ratio of production to consumption



in 1975

in 1989

Indonesia

3.9

94.6

98.8

Malaysia

7.8

27.5

49.5

Philippines

7.7

98.5

89.7

Singapore

20.1

58.2

83.5

Thailand

6.6

71.7

87.6

Source: UNIDO, op. cit.

All these countries now have to change their national legislation on patents in accordance with TRIPs Agreement. They will have to provide 20 years patent protection for pharmaceutical products. As a result, the multinational drug companies will have the monopoly of all patent protected drugs and will not be marketing raw materials at competitive prices. The pharmaceutical industry in developing countries will therefore collapse.

The only way to avoid this and to strengthen the pharmaceutical sector in the ASEAN and other developing countries will be through compulsory licensing and parallel imports. These are allowed in the TRIPs Agreement. National legislation on patents which allows for compulsory licensing and parallel imports will enable consumers in the ASEAN countries access to affordable pharmaceuticals. This, consumers believe, is a short-term solution.

In order to arrive at a long-term solution, the short and long-term implications of the TRIPs Agreement on access to pharmaceuticals need to be critically examined and analysed. Consumers have expressed the following concerns:

• The TRIPs Agreement represents an unprecedented transfer of power over economic functioning from the heads of nation states to MNCs.

• There should be a major review of the WTO multilateral trade agreements. Subsequent reforms should incorporate as a central objective the promotion of sustained development in the Third World.

• The special problems of the least developed countries (LDCs) should receive particular attention. In 1978, according to the United Nations, there were 28 LDCs. In 1998 there were 48. The rapid decline into poverty is due to rapid liberalisation, imposed by WB/IMF structural adjustment programmes and, recently, WTO.

• Trade policy should be a powerful instrument for economic development, and this aspect must not be lost sight of by narrowly focussing on liberalisation.

Based on analysis of empirical data on the impact of the TRIPs Agreement on access to drugs and health services in developing countries, the UNDP’s Human Development Report 1999 has listed the following concerns:

• Liberalisation, privatisation and tighter intellectual property rights are shaping the path for the new technologies, determining how they are used. But the privatisation and concentration of technology are going too far. Corporations define research agendas and tightly control the findings with patents, racing to lay claim to intellectual property under the rules set out in the TRIPs Agreement.

• Poor people and poor countries risk being pushed to the margin in this proprietary regime controlling the world’s knowledge.

• In defining research agendas, money talks, not need. Cosmetic drugs and slow-ripening tomatoes come higher on the priority list than drought-resistant crops or a vaccine against malaria.

• Despite the risks of genetic engineering, the rush and push of commercial interests are putting profits before people.

• From new drugs to better seeds, the best of the new technologies are priced for those who can pay. For poor people, they remain far out of reach.

• Tighter property rights raise the price of technology transfer, blocking developing countries from the dynamic knowledge sectors. The TRIPs Agreement will enable multinationals to dominate the global market even more easily.

• New patent laws pay scant attention to the knowledge of indigenous people. These laws ignore cultural diversity in the way innovations are created and shared - and diversity in views on what can and should be owned, from plant varieties to human life. The result: a silent theft of centuries of knowledge from some of the poorest communities in developing countries.

• There is a need for a comprehensive review of the WTO Agreements to redress their perverse effects, undermining food security, indigenous knowledge, biosafety and access to healthcare.

The people’s response has been loud and clear during the violent events in Geneva, Seattle, Davos and other places. Why have people reacted so violently? People see that power is controlled by market forces operating under faulty global governance supported by rules, institutions and practices that have been formulated by a selected few. People ask that they be given a participatory role in decision making to ensure that people will be put at the centre of development and that the highest priority be given to goals of enhancing social development and ensuring human well-being for all throughout the world. People want a restructuring of the present global governance with a new set of rules, institutions and practices that will ensure global responsibility, so that the benefits of globalisation will be shared equally by all the people of the world and not exclusively by the 20 per cent of the people living in the richest countries.

To conclude, consumers believe it is critical to examine the TRIPs Agreement and explore the best options in interpreting and incorporating relevant provisions into national legislation. The better options will be those that will strengthen the technological, economic and commercial development of the pharmaceutical sector in developing countries, which ultimately will ensure regular access to affordable, good quality, safe and effective drugs.

Moreover, long term solutions would include a World Trade Organization that ensures both free and fair international trade, with a mandate extending to global competition policy with antitrust provisions and a code of conduct for multinational corporations.

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