Speaker: Zafar Mirza
Globalization and Pharmaceuticals: Implications for Public Health Policy Perspectives
Health Action International (HAI) believes that global trade liberalization (globalization) can and does have negative impacts on public health, especially in developing countries. Globalization is promoted and protected by a range of international trade agreements, most notably the Uruguay Round of the General Agreement on Tariffs and Trade (GATT) being implemented under the World Trade Organization (WTO). Most, if not all, countries are expected to join the WTO in the coming years. The adoption of the GATT Trade-Related Aspects of Intellectual Property (TRIPS) Agreement has significant implications for pharmaceuticals.
Certainly, the commercial interests of pharmaceutical corporations can complement public health goals. But just as importantly, they can conflict. HAI believes that national governments must maintain the ability to regulate trade in the public interest. HAI also believes that WHO has an important role in assisting countries to comply with trade agreements, while protecting public health, and in having a regular role in providing health expertise to the WTO, particularly in the settlement of trade disputes.
HAI’s Public Health Principles Concerning Intellectual Property Protection:
• IPP is granted for developing a product or process to provide incentives to make that product or processes available to the public.
• A patent is not an absolute right nor an end in itself; public health is an end in itself.
• IPP for pharmaceuticals should always promote and be consistent with public health goals.
Public health goals and commercial interests of companies sometimes coincide and sometimes diverge. They are not identical. When they conflict, governments should always have the ability to choose public health as a legitimate reason for limiting or conditioning commercial interests and rights.
Public Health Implications of Trade Agreements
Patents that lead to higher drug prices restricts access
Patent protection increases the likelihood that prices for a patented product will be higher, especially if competition is limited. Price data also suggest that pharmaceutical corporations are often setting prices according to what the market can bear, not in order to recoup reasonable development costs and profits. Finally, pricing data clearly show that prices of a patented drug drop quickly and dramatically (30 percent) when the patent expires and a generic equivalent comes onto the market. Moreover, price is an important determinant in access to necessary drugs. Whenever patents allow companies to price any drug out of the reach of those who need it, public health suffers.
Trade agreements do not promote R&D on diseases prevalent in developing countries
One of the main arguments for strong patents is that they are necessary for R&D. However, 75 percent of the world’s population in developing countries consume only 14 percent of the world’s drug supply. Fifteen percent of the population in industrialized countries consume 86 percent. Free trade policies and trade agreements are not addressing the obvious market failure to develop and market affordable drugs for diseases most prevalent in poorer regions, such as TB, malaria and HIV/AIDS.
Trade agreements reinforce justifications for commercial secrecy to the detriment of transparency and drug regulation
The positive connection between rational drug use and public health is clear, as is the connection between access to adequate drug information and rational drug use. Therefore, it is disturbing to note that TRIPS has been used recently to argue that access to the full clinical trial data would breach the intellectual property rights of an applicant for a marketing license in Europe.
Strategies for Complying with Trade Agreements while Protecting the Public
In debates on trade and public health, it is very important not to lose sight of the following realities: (1) countries do have alternatives in how they choose to comply with them; (2) they have the right to pursue them in their best interests, which may conflict with other countries’ or corporations’ interests without being illegal under the WTO; and (3) the WHO has a mandate to provide member states with technical assistance, information and advice in how best to protect and promote health for all, which includes addressing the public health implications of trade policies, legislation, regulations and agreements.
Furthermore, the WTO is only three years old. Countries are still in the process of joining, including many developing countries. Countries should have impartial technical advice about coming into WTO compliance with TRIPS. The number of disputes involving public health issues is still limited. In such cases, the WTO needs to have impartial advice from public health experts.
Recommendations at the National Level
Develop effective national drug policies and promote the adoption of essential drug lists
A noteworthy study of international drug pricing done in the 1980s showed that the presence of successful national drug policies was a major factor in lowering drug prices. Furthermore, countries that adopt essential drug lists will have a mechanism for determining what drugs are needed according to the disease patterns in their own countries and can base approvals and/or government procurement based on need, efficacy and price.
Use compulsory licenses to achieve public health goals
Under TRIPS, member countries have the right to issue compulsory licenses on patents based on various public interest grounds (e.g., making essential drugs available at lower cost), subject to several safeguards and limitations.
Permit parallel imports of pharmaceuticals
Global free trade should include the right to shop globally for the best prices. Parallel imports are particularly important for smaller economies that suffer from inadequate competition. Where allowed, parallel imports have shown to be effective in lowering drug prices. A study of the price of HIV drugs in the United Kingdom shows that parallel imports offer an average saving of 41 percent from the list price and a 30 percent saving from the best contract price.
Ensure that trademark protection does not interfere with public health policies
Protection of trademark rights should not interfere with sound public health policies to promote the greater use of generic drugs or to regulate marketing. It should be clear that countries can require generic drug substitution, substitution by generic name or the printing of the generic name on the packaging of the product.
Promote the production and use of generic drugs
Bioequivalence testing, allowed close to the expiration of a patented drug (e.g. six months), does not violate a patent. Preventing testing until the end of the patent has the same effect as granting an extension on that patent by forcing a delay in introducing a generic, which means extended higher prices for consumers.
Promote access to drug information
IPP in national legislation or through international trade agreements should not be used to unjustifiably maintain corporate control over drug information. Specifically, access to clinical trial data is necessary for the public and health care professionals to make rational decisions about drugs.
Focus on alternatives that promote R&D for drugs needed locally
Patents are not the only means for promoting R&D nor do they ensure that needed drugs are brought to market. Trade agreements must be negotiated and interpreted in ways that will permit the adequate redress of that market failure.
Recommendations for WHO
Promote WHO input into understanding TRIPS and other trade agreements
WHO, as a UN agency, is well placed to be an honest broker in offering guidance, information and advice to member states on how to best protect public health while implementing trade agreements. For example, WHO/DAP has produced a clear and informative document entitled Globalization and Access to Drugs: Implications of the WTO/TRIPS Agreement (WHO/DAP/98.9), which gives useful guidance for implementing WTO obligations. The document should be made widely available.
Secure a regular role in providing expertise in WTO trade disputes
WTO panels are comprised of trade experts that can and should benefit from WHO opinion on issues of public health. A few years ago, the United States challenged Thailand’s import restriction and a strict tobacco advertising ban. In weighing its decision, the WTO relied heavily on submissions from the WHO and on WHA resolutions.
Conclusion: Public Health First
National governments have a vital role to play in ensuring the protection and promotion of public health. Although trade agreements limit how they can regulate trade, governments retain a range of alternatives they can pursue to maximize public health goals in a globalized economy. WHO is well placed to advise member states in these matters. Likewise, WHO is well placed to provide expertise to the WTO, particularly in the settlement of disputes involving health issues.