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Copyright 2006 by Northwestern University School of Law Volume 5, Issue 1 (Fall 2006) Northwestern Journal of International Human Rights
Bryan Mercurio [2007] UNSWLRS 23
Abstract
This article examines the many factors that have created and continue to perpetuate the ongoing health crisis in developing countries. In so doing, the article will reveal that the focus on patent regulation is largely misguided and that the targeting of pharmaceutical companies and TRIPS has led to an unfortunate divergence from the actual critical issues that affect the delivery of much-needed care and medicines to the developing world. The article then argues that the critical issues lie not in constructing appropriate TRIPS provisions, but more so in providing financial resources to build, maintain and stabilize proper healthcare systems in those developing countries afflicted with public health crises. This article does not fully absolve pharmaceutical companies from blame nor does it claim that TRIPS strikes the appropriate balance between creators and users in every situation, but much has already been written on these two issues. Instead, this article focuses on and examines possible solutions or initiatives that may be adopted to alleviate the current public health problems and assesses their practicability in light of the particular situations and circumstances affecting the developing world.
Keywords
public health, patent, TRIPS
Citation
(2007) 5 Northwestern University Journal of International Human Rights 1
I. INTRODUCTION
1
Over the last decade, public health and development issues have become topics
of great international concern. Public health in many
parts of the world has
reached crisis level: Over 14 million people are killed by infectious diseases
each year (90% of which are
in the developing world); over 40 million people
globally are infected with
HIV/AIDS (90% of which are in the developing
world) and the disease kills over three million people annually; over 500
million people
are infected with malaria each year and the disease kills upwards
of two million people annually; over eight million people develop
active
tuberculosis (TB) each year and the disease kills over two million people
annually (95% of those afflicted and 99% of deaths
resulting from TB are found
in the developing world)1 Hundreds of thousands more
people die each year from other, lesser known, diseases which predominantly
affect developing countries.2
2
Perhaps even more alarming is the fact that while most illnesses – especially infectious diseases – are preventable or treatable with existing medicines, the World Health Organization (WHO) estimates that over 1.7 billion people – nearly one-third of the world’s population – have inadequate or no access to these essential medicines.3
Moreover, another study recently found that 10 million children a year die from preventable diseases and conditions, with almost all these deaths occurring in poor nations.4 Another study found that prompt diagnosis and treatment of health problems in Africa and Southeast Asia alone could save approximately 4 million lives each year.5 In addition, resistance to existing treatments due to improper use or over-exposure plays a significant role in increasing the severity of the public health crises in many nations.6 Other studies link health with the economic prosperity of nations and persuasively demonstrate the dramatic role the HIV/AIDS epidemic has played in the declining economic growth in sub- Saharan Africa.7 The consequences of the vicious cycle between poverty and illness are clear8 and the situation will become even more untenable unless the world comes together to resolve the public health crisis engulfing much of the developing world.
3
Fortunately, and in large part due to the tireless efforts of several well- funded non-governmental organisations (NGOs),9 health-related issues of developing countries, and
more particularly the issue of accessibility to essential medicines, have garnered much worldwide attention in recent years. 10 Unfortunately, public debate on the issue is most often limited to blaming the pharmaceutical industry and patent regulations under the World Trade Organization (WTO) and its Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS)11 for the lack of accessibility and affordability of much needed drugs in developing countries. While it may be ‘in vogue’ to attack the pharmaceutical industry, TRIPS and the WTO more generally,12 such attacks are usually simplistic, myopic and apart from adding little substance to the debate, they divert precious time and resources away from efforts that really count toward alleviating the suffering caused by the devastating health crisis. In reality,the impact of patents on public health is moot for many in the developing countries where inadequate healthcare and health infrastructure poses a much more immediate and significant problem. Put simply, patents do not even come into consideration if one cannot get a diagnosis by virtue of the fact that they do not have access to a doctor, or more accurately, a properly trained and equipped doctor.
4
This article examines the many factors that have created and continue to perpetuate the ongoing health crisis in developing countries. In so doing, the article will reveal that the focus on patent regulation is largely misguided and that the targeting of pharmaceutical companies and TRIPS has lead to an unfortunate divergence from the actual critical issues that affect the delivery of much-needed care and medicines to the developing world. The article then argues that the critical issues lie not in constructing appropriate TRIPS provisions, but more so in providing financial resources to build, maintain and stabilize proper healthcare systems in those developing countries afflicted with public health crises. Just as importantly, the article also illustrates the need for developing countries to prioritize public health while at the same time minimize the effects of poor economic planning and policies as well as societal problems such as corruption and civil strife. This article does not fully absolve pharmaceutical companies from blame nor does it claim that TRIPS strikes the appropriate balance between creators
and users in every situation, but much has already been written on these two issues. 13 Instead, this article focuses on and examines possible solutions or initiatives that may be adopted to alleviate the current public health problem and assesses their practicability in light of the particular situations and circumstances affecting the developing world.
5
Part II briefly reviews the TRIPS Agreement and analyses efforts to rebalance the Agreement in favor of developing countries in the form of the Doha Declaration on Public Health and its derivative agreements. Part III shows that, although the regime of patent protection has been blamed for creating or at least worsening the public health crises inflicting much of the developing world, the situations is far more complex and, in reality, patents and TRIPS have played a very small role in the crisis. Part IV reviews several contributing factors into the crisis and offers several suggestions which, if fully implemented, will go a long way in alleviating the public health crises and improving the lives of millions in the developing world. Part V concludes that the health crisis raging through much of the developing world can be alleviated, but only through a global commitment from the international community whereby developed countries increase the amount as well as the coordination of funding and aid activities and developing countries prioritize public health, improve infrastructure and work towards creating an environment conducive to growth and sustainability, and study and implement alternatives to current research and development schemes that provide more incentive to research certain diseases.
II. TRIPS AND THE DOHA DECLARATION ON PUBLIC HEALTH
6
The TRIPS Agreement is comprehensive in its coverage and includes copyright and related rights, trademarks, geographical indications, industrial designs, product and process patents, layout-designs (topographies) of integrated circuits, and protection of undisclosed information.14 Like other covered agreements of the WTO, TRIPS is based on the most-favored-nation and national treatment principles, but unlike any of the other WTO agreements, TRIPS also establishes minimum levels of protection that each Member must provide and grant to other Members.15 It is imperative to understand that such a regulatory, harmonized approach to this issue is unlike the approach taken in any of the other WTO Agreements.
7
The controversial inclusion of intellectual property into the multilateral trading system has already been well-traversed in existing literature and will not be repeated here.16 It must be noted, however, that even with the lengthy implementation periods and ‘flexibilities’ built into TRIPS, several WTO Members and interested observers have long recognized that TRIPS results in overall trade gains for developed nations,17 while at the same time failing to reach an appropriate balance with respect to patent protection and access to life-saving medicines in developing and least-developed countries.18 Unfortunately, reaching agreement on improvements to the system has proven to be a much harder proposition and in this regard, the work of several NGOs should be given due credit for their persistent efforts and pressure in forcing the issue onto the agenda and keeping it in the spotlight of multilateral discussions.19 Those organizations were undoubtedly partially responsible for getting public health issues on the agenda at the Third Ministerial Conference held in Seattle in 1 999.20 Regrettably, the Seattle Ministerial ended without success and the resolution of several key health issues did not solidify until the Fourth Ministerial Conference, held in Doha, Qatar in 2001, launched the Doha Round of multilateral trade negotiations (Doha Round).21
8
At Doha, Members adopted a Declaration on TRIPS and Public Health (Doha Declaration or the Declaration) which restated and affirmed the right of Member States to take measures to protect public health, clarified certain textual ambiguities contained in TRIPS and attempted to provide assistance to developing countries and LDCs in resolving the public health crises that are devastating many parts of the developing world.22 The Declaration is significant for a number of reasons. First, it “represented the first time international health and development was discussed at every level of WTO governance.”23 Second, it was “the first significant victory for developing countries in
the short history of TRIPS.”24 Finally, the Declaration recognized that public health issues can take precedence over the rights of private intellectual property holders.25 India called the Declaration “the most important single achievement of the Doha Round,” while the Philippines hailed the Declaration as being “the crowning glory of the WTO’s contribution to global welfare and humanitarian concerns, especially for those who were gravely afflicted by the scourge of epidemics and other public health problems.”26
9 Broadly speaking, the Declaration sought to “clarify” the TRIPS Agreement while giving emphasis to the “flexibilities” already written into the agreement, including the right of Members to invoke those provisions when needed.27 Paragraphs 1 through 5 contain the Declaration’s most significant conclusions. Paragraphs 1 through 3 outline the concerns of both developing and developed countries by providing context for the issue of intellectual property protection for medicines while recognizing the need to balance private property and public welfare interests.28 More specifically, paragraph 1 “recognizes the gravity of the public health problems afflicting many developing and least-developed countries, especially those resulting from HIV/AIDS, tuberculosis, malaria and other epidemics,”29 while paragraphs 2 and 3 express the need for TRIPS to be part of the wider national and international action to address the problems and recognize that the link between intellectual property protection for the creation of new medicines as well as the concerns about the effect of intellectual property rights (IPRs) on prices.30
10 Paragraph 4 affirms the principle that protecting public health and promoting access to medicines is a valid basis for Members to enact exceptions to patent protection in their domestic legislation.31 Specifically, paragraph 4 states that TRIPS “does not and should not prevent Members from taking measures to protect public health” and “affirms that the Agreement can and should be interpreted and implemented in a manner supportive of WTO Members' right to protect public health and, in particular, to promote access to medicines for all.”32 Thus, paragraph 4 reinforces the plain meaning of Article 8 of the TRIPS Agreement, which permits Members to “adopt measures necessary to protect public health ...”33
11 Paragraph 5 provides Members with flexibilities in implementing TRIPS and reaffirms the right of WTO Members to use the provisions in TRIPS for the purposes of Paragraph 4.34 The paragraph sets out the “provisions,” which may be used for this purpose:
(a) In applying the customary rules of interpretation of public international law, each provision of the TRIPS Agreement shall be read in the light of
the object and purpose of the Agreement as expressed, in particular, in its objectives and principles.
as if it would hamper an agreement being formed, a group of African countries reminded Ministers that while potential solutions had been discussed in the interim years, the situation of medicinal access in poor countries had worsened. 42 During this time, those countries continued to lose the battle against such public health epidemics as tuberculosis, malaria, and HIV/AIDS.43 In a joint statement, the group poignantly stated that “8,480 people had died unnecessarily in Africa from HIV/AIDS and other diseases since the talks stalled over an accompanying document to the Agreement only two days earlier [Aug. 28, 2003].”44 The statement had the desired effect: the Ministers put their differences aside and reached agreement on a “temporary waiver” in the form of The Implementation of Paragraph 6 of the Doha Declaration on TRIPS Agreement and Public Health (Implementation Agreement) and accompanying Chairperson’s Statement.45 At the time, Canadian Ambassador Sergio Marchi commented: “[The African countries] showed that the poorest among us do make a difference in this organization... They helped the WTO find its heart and soul.”46
15 The Implementation Agreement resolved the Article 31(f) situation by creating an exception to Article 31(f) of TRIPS that allows nations with insufficient or no manufacturing capabilities to override intellectual property protection and import generic copies of patented drugs to combat public health crises.47 However, in order to be TRIPS compliant, the importing Member must abide by several procedural steps, namely that the importing Member:
(1) must notify the TRIPS Council of the “names and expected quantities of the products needed”;
16 The Implementation Agreement also outlines several procedural conditions an exporting Member must fulfill when issuing a compulsory license:
2. The obligations of an exporting Member under Article 31(f) of the TRIPS Agreement shall be waived with respect to the grant by it of a compulsory licence to the extent necessary for the purposes of production of a pharmaceutical product(s) and its export to an eligible importing Member(s) in accordance with the terms set out below in this paragraph:
a) the eligible importing Member(s) has made a notification to the Council for TRIPS, that:
(b) the compulsory licence issued by the exporting Member under this Decision shall contain the following conditions:
special packaging and/or special colouring/shaping of the products themselves, provided that such distinction is feasible and does not have a significant impact on price; and
(iii) before shipment begins, the licensee shall post on a website the following information:
- the quantities being supplied to each destination as referred to in indent
(i) above; and
- the distinguishing features of the product(s) referred to in indent (ii) above;
(c) the exporting Member shall notify the Council for TRIPS of the grant of the licence, including the conditions attached to it. The information provided shall include the name and address of the licensee, the product(s) for which the licence has been granted, the quantity(ies) for which it has been granted, the country(ies) to which the product(s) is (are) to be supplied and the duration of the licence. The notification shall also indicate the address of the website referred to in subparagraph (b)(iii)
above. 49
17 While the Implementation Agreement goes some way in addressing the legal hole that existed, it is not a miracle solution and to hold it out as such would be extremely misleading.50 To some, the Implementation Agreement fails to satisfactorily resolve several issues, including: (i) the scope of diseases and product coverage; (ii) countries that would be eligible to use the system; (iii) ensuring adequate remuneration; and (iv) safeguarding the system against diversion of drugs into other markets.51 Health and policy advocates, meanwhile, have also criticized the Implementation Agreement, in particular the prerequisite that a drug supplied under compulsory licence must normally be clearly identifiable as a generic version.52 These critics often argue that even though the requirement may be met through a variety of features – such as labelling, marking,
special packaging, or by the specific colouring of shaping of the drug – ensuring that such distinguishing characteristics are present could raise procedural and administrative costs in the export of generic versions.53 This could possibly render the process less cost-effective and efficient than initially presumed and lengthen the time it takes to get the generic drugs to countries where they are needed.54 Furthermore, many in the international community believe that meeting other requirements of the Implementation Agreement will also make the waiver hard to exploit.55
18 In addition, and importantly as will be discussed below, both developing and developed countries have been slow to secure the necessary domestic implementing legislation operationalizing the Implementation Agreement. For instance, countries that may wish to take advantage of the provision in the future – that is, those which could possibly have insufficient or no manufacturing capability to meet a public health need – have by and large not passed domestic legislation which would override patent laws and allow them to import necessary medicines under a compulsory licence. In addition, countries which have pharmaceutical manufacturing capabilities have been slow to pass legislation allowing their respective industry to supply nations attempting to make use of the provision with the requested drugs under compulsory licence.56 For some time, only Canada and Norway had passed the necessary implementing legislation.57 At the time of this writing, China, the European Communities, India, Korea, the Netherlands, and Switzerland have also enacted comprehensive legislation implementing the 30 August decision.58 Even more worrisome is the fact that some developed nations do not appear interested in promoting and passing such legislation.59
19 To date, there have not been any notifications to the TRIPS Council regarding the issuance of a compulsory licence. This is not surprising, as prior to 2005, developing country members such as India and Brazil could produce and supply generic versions of patented drugs without the need for the issuance of a compulsory license. 60 TRIPS, however, is playing an increasingly bigger role and becoming more important in the expansion of access to medicines and public health in the developing world following the expiration of certain transitory flexibilities and implementation periods in January 2005.61 TRIPS now has the potential to become a barrier to access to affordable new medicines and vaccines as the rules on compulsory licensing become operational for a number of developing country Members who are now subject to totality of the TRIPS Agreement.62 The practical result of this is that TRIPS now affects generic producers’ ability to provide existing medicines for developing countries without sufficient manufacturing capabilities. 63 Thus, developed nations passing the necessary legislation operationalizing the Implementation Agreement takes on even more importance.
20 Perhaps more worrisome with regards to the development of essential medicines in the developing world is the addition of intellectual property provisions in bilateral and regional free trade agreements (FTAs) requiring signatories to advance protection beyond
the minimum standards required by TRIPS (the so-called TRIPS-Plus provisions).64 Not only is the addition of the so-called “TRIPS-Plus” part of a larger strategy to achieve outcomes which are not feasible multilaterally, but it is also apparent that such provisions are in response to the powerful and persistent lobbying efforts of the pharmaceutical industry.65 These provisions have the potential to hinder access to essential medicines by limiting access to the flexibilities that currently exist in TRIPS to protect public health. Such TRIPS-consistent flexibilities that are now forming part of many FTA provisions limiting the flexibilities granted in TRIPS and potentially curtailing possible government responses to public health crises include, inter alia, restricting the conditions for the issuance of compulsory licensing, extending the period of data exclusivity and other protections, extending the patent term and ‘new use’ patents (so called ‘evergreening’), preventing parallel importation, and linking the ‘market approval’ of a drug to patent status (requiring drug and health regulatory agencies to intersect with national patent offices and undertake some form of oversight duties). 66 These provisions are, however, WTO-consistent as the standards elucidated in TRIPS are simply minimum standards, and Members are allowed to grant greater protection to intellectual property rights if they so desire. 67
21 Thus, despite the Doha Round’s merits in bringing the issue of the international health to the fore, serious gaps must still be addressed in the regulation of intellectual property at the global level. 68 The impact of the Implementation Agreement may be debated,69 but even if intellectual property provisions contained in TRIPS were
completely pro-developing country, or if the (mostly western) NGOs purporting to represent the interests of the developing world received everything that they demanded of the WTO, would the continuing health crises in the developing world be alleviated? Would the health crises even be minimized? The pharmaceutical industry and the patent provisions in TRIPS have been subjected to much criticism over the last decade and charges that they are to blame for the lack of access to medicine in developing countries are not uncommon. However, there is strong evidence which shows that patent protection of pharmaceuticals and TRIPS alone are not impeding access to essential medicines in developing countries. In fact, this article argues that IPRs have not even been a significant factor when the situation is objectively assessed and considered in its entirety.
III. CRITICAL ISSUES INVOLVED IN SOLVING THE ACCESS TO MEDICINE PROBLEM
22 Even under the best circumstances, merely alleviating the public health crisis in many parts of the developing world to a noticeable degree will be difficult to achieve. The situation requires international cooperation on a massive scale to not only ensure that the developing world has access to essential medicines but to also create incentives to stimulate (or directly fund) research and development into new medicines and vaccines to treat the diseases primarily affecting the developing world.
23 It is unfortunate that several high profile NGOs have concentrated their effort in blaming the pharmaceutical industry and the patent regime for worsening the crises. 70 While these groups have spent significant monetary resources and intellectual effort directing much of the debate over the access to essential medicines in the developing world on the issue of patent protection of pharmaceuticals to the actions of the pharmaceutical industry and the patent regime, the constant accusations and resulting publicity have not helped the situation and, to the contrary, have been highly divisive, arguably lengthening the time between the Doha Ministerial and the implementation of the Implementation Agreement and obscuring longstanding impediments to improving the lives and health of millions. In order to control the problem and even hope to alleviate suffering, all interested parties must realize that patent protection is only one of many factors that play a role in the health of the developing world and other critical factors, such as poor living conditions, the lack of medical facilities and proper
infrastructure, malnutrition, and the lack of means for distributing and administrating medicine, must be addressed in order to alleviate the public health crises.71
24 Somewhere in the past decade, important facts such as the appallingly low levels of medical infrastructure in developing nations, inadequate levels of foreign assistance and seeming lack of political will in some developing countries to alleviate the suffering were marginalized as the debate focused on TRIPS.72 Thus, even though infrastructure, aid from developed countries and political will in developing countries is not even remotely adequate to ease the worsening health situation in the developing world, the international debate diverted key monetary resources, intellectual efforts and negotiating capacity on a secondary issue. One noted expert concludes: “AIDS activists have done a huge disservice to the problem of providing relief to people in the developing world by directing a disproportionate focus on the patent issue.”73
25 Crises such as HIV/AIDS, tuberculosis and others gripping much of the developing world are a very real and escalating problem in many developing nations. But the fact is that if patent regulation did not exist, much of the developing world would still lack access to essential medicines. Importantly, 95% of the pharmaceutical products on the WHO Essential Drug List (such as medicines to treat AIDS, tuberculosis and malaria) are off-patent and, due to flexibilities contained in TRIPS and extended by Paragraph 7 of the Declaration and waivers granted in 2002 by the Council for TRIPS, the grace period for LDCs delaying implementation of Sections 5 (patents) and 7 (confidential information) in relation to pharmaceutical products and the marketing rights thereof have been extended until 2016; meaning LDCs do not currently have to provide patent protection for pharmaceuticals.74
26 To illustrate, as of 2003, of the fifteen antiretroviral (ARV) drugs used for treating AIDS, patent coverage is below 20%, with 172 patents out of the 759 that could theoretically apply.75 Moreover, of the 52 African nations, only South Africa has patent
protection for more than half of its AIDS drugs, with 15 patents out of a possible 16. Importantly, 25% of the countries provide no patents and the rest have an average of 4 patented drugs, with no patents on more than a dozen different triple-therapy cocktails used to combat HIV/AIDS.76 Thus, while the majority of African countries do not patent most ARV drugs used to treat AIDS and the majority of countries of sub-Saharan Africa do not have any patent protection for any of the drugs, the AIDS epidemic continues to infect and kill millions of people per year on the continent.
27 Interestingly, several members of the medical community also contest the view that patent protection has exacerbated the HIV/AIDS crisis or significantly impeded access to essential medicines. For instance, a widely cited study conducted in 2001 by Amir Attaran and Lee Gillespie-White and published in the Journal of the American Medical Association states:
[It appears that] patents and patent law are not a major barrier to treatment access in and of themselves.77
28 Yet the developing world continues to suffer without adequate supply of the needed medicines, begging the question what are the primary causes of, or more appropriately, what are the barriers to resolving, the continuing crises and lack of access to life-saving medicines in the developing world. This article suggests that there are two main solutions for the ongoing public health crises in the developing world:
29 Part IV elaborates upon these two issues by addressing several barriers currently present and offering indicatives and suggestions in an attempt to alleviate the suffering and resolve the public health crises.
IV. POLICY BASED SOLUTIONS/INITIATIVES AND THEIR VIABILITY
30 The public health crisis in the developing world is a global problem and any potential solution cannot be borne by one entity. Instead, the problem requires a commitment from all members of the international community to provide funding and strategic planning to improve the currently insufficient medical infrastructure of many developing world countries. The burden cannot be placed solely on governments of developing or developed countries, on pharmaceutical companies or on international organisations, such as the WHO. Rather, those entities as well as research groups, the media and even the citizenry of developed nations all must participate as vital actors.
This section examines how these entities can all play a pivotal role in easing the suffering
in the developing world. At the outset, it must be noted that as situations differ for every region and for every disease it is not possible to design one encompassing solution to the problem. Therefore, the following merely offers general indicatives and suggestions which should be further studied and employed as the situation dictates.
A. Global commitment from developed countries
31 The suffering in the developing world will not be alleviated without a global commitment to finance health improvements. As developing countries historically do not have the necessary resources and/or will to finance such an initiative, advanced industrialized countries must take on more responsibility and lead the way in funding the restructuring of the current inadequate medical infrastructure that exists in so many developing countries. One funding initiative governments could take is to raise general revenues through the wide range of available tax instruments or shift financing from other domestic areas to fund this global initiative.78 Practically speaking, however, neither option is particularly appealing as governments are hesitant to raise taxes or shift funds from certain domestic areas to any international effort due to potential opposition by their citizens or embarrassment by opposing political parties.
32 In this regard, the media and international organisations – such as the WHO – may be able to play a significant role in raising awareness of the extent to which widespread epidemics ravage much of the developing world. Unfortunately, for many in the developed world, epidemics such as malaria and tuberculosis seem so far removed from their highly industrialized societies, where such diseases do not exist or are controlled to acceptable levels, that often the awareness generated does not arouse sufficient empathy to the cause. This apathy, and corresponding shortage of international funding, is a major contributing factor to the ongoing public health crises in the developing world. This fact led Attaran and Gillespie -White to conclude that “the extreme dearth of international aid finance, rather than patents, is most to blame for the lack of antiretroviral treatment in Africa.”79
33 On the other hand, there is clear evidence that both governments and citizens of the industrialized world can be generously responsive to public health crises. For instance, one need only look back at the international response to the 2004 Boxing Day Tsunami disaster, where worldwide broadcasting of the sudden devastation resulted in billions of dollars of aid donations within a matter of weeks to fund the provision of necessary medicines, food, clean water and other relief efforts.80 The large-scale international outpouring of aid was no doubt largely a result of people visualising the suffering of
millions of displaced people and the death of hundreds of thousands of people in the days following the disaster.81 Perhaps if there was extensive coverage of public health issues in the media informing of the urgency to control widespread epidemics such as HIV/AIDS and malaria, a similar outpouring of aid relief may be possible. At the very least, the campaign may lead to a positive and willing response by citizens of developed countries to support government actions to raise taxes or redistribute domestic funding for this international initiative.82
34 Developed countries do currently contribute to the fight against diseases in a number of ways, including partially financing medical programmes such as the Global Fund to fight AIDS, Tuberculosis and Malaria83 While such initiatives are certainly a step in the right direction, developed countries have been criticized for their lack of commitment to the effort.84 In this regard, not only must the international community commit to increased financing and aid efforts, but perhaps more importantly, it needs to actually execute and fulfill its existing aid promises and commitments. Increased levels of properly targeted, long-term aid would go a long way towards alleviating the public health crises while at the same time assisting countries in working to end economic dependency. 85 In fact, the situation would improve if countries merely fulfill their commitment to providing an amount equal to 0.7% of gross national income (GNI) on official development assistance (ODA).86 Increased aid, however, will not materialize without effective monitoring coupled with the minimisation of waste and a reduction in corruption; in other words, the international community will only increase their financial obligations and commitment to the developing world when they are confident the aid will be effective. 87
35 Closely tied to the above is the fact that a lack of coordination of international aid currently impedes the efficient and effective use of aid. 88 The need for large-scale, long
term assistance and aid is well known and understood, but the present system of distributing aid and assistance is disparate, wasteful and lacking transparency.89 The current system sees groups and organisations competing with each other and duplicating technical, research and on the ground efforts.90 In short, useful information and analysis is not well known or published and experiences within organisations, nations or regions are not transferred to others. Not only does this damage and marginalize aid efforts, but it also makes it hard to get adequate levels of assistance and even maintain sufficient quality of drugs.91 A properly administered system which increases coordination and transparency of activities would improve the situation by combining resources and efforts to maximize efficiency and targeted assistance. While financing is certainly imperative to controlling the pubic health crisis in the developing world, it is not the only global initiative in which nations must engage. Other positive actions that developed countries and international bodies such as the WHO and UN could take to control the crises in the developing world include negotiations and planning efforts with the heads of the affected developing nations to devise strategic plans to distribute funds efficiently and effectively in those affected countries.92
B. Political commitment from developing nations
36 The burden and responsibility for alleviating the public health crisis in the developing world should not fall solely on developed country governments. On the contrary, important to any effort is a concurrent political commitment from the governments of the developing nations in the midst of widespread epidemics to control and alleviate the problem. At present, it is clear that there is an inadequate level of national commitment of developing country governments to prioritize healthcare.93 Like many of the other barriers listed in this section, the lack of commitment transcends
boundaries and depends upon a number of factors. Reasons for the lack of prioritization, however, include a lack of political will by policymakers, blatant corruption at every level of the public sector,94 a lack of health infrastructure or even pre-conditions necessary for adequate healthcare, restrictive donor programs, large scale debt repayments, and strict conditions for loans from international financial institutions that may have the effect of further precluding basic social service needs of citizens.95
37 The lack of political will of developing countries combined with a lack of capacity to deliver proper healthcare solutions is the most prominent detriment to resolving, alleviating or even lessening the health crises.96 At present, even when essential vaccines and medicines are heavily discounted or even donated to developing markets, the cost of transportation, storage and administration of vaccines and medicines often cost more than the drugs themselves.97
38 Evidence indicates that the majority of developing countries and LDCs lack the economic foundation to sustain a properly functioning public health climate, which includes the costs of purchasing, storing, transporting, and administering needed medicines.98 For instance, LDCs, on average, spend approximately US$11 per capita on health99 – as compared with $US93 for lower middle-income nations and $US1,907 for developed nations – thus, even when pharmaceutical companies donate necessary drugs
to these countries, these developing countries still cannot afford the storage and administrative costs associated with receiving the drugs.100
39 The poor level of existing infrastructure in many developing countries is evidenced by inadequate health facilities, lack of hospital beds and laboratories, lack of trained medical and laboratory staff101 and incomplete or non-existent drug distribution systems.102 Inefficient use of aid and resources, poor management and little oversight of existing programs is also a large impediment to maintaining a properly functioning public health system.103 Additionally, it must be noted that in order to see any meaningful progress, significant monetary resources must also be expended to meet the most fundamental of needs for food and clean water to remove some of the conditions leading to illness and disease and to build the necessary medical infrastructure to enable the provision of adequate health services.104
40 Developing countries do not have the monetary resources to combat these health problems.105 As illustrated throughout this article, developing countries need assistance in alleviating poverty, minimizing social disruptions, overcoming inconsistent donor aid and encouraging research and development on diseases primarily afflicting the developing world in order to eliminate or at the very least lessen the burden and create a situation more conducive to the provision of health services. Developing countries, however, can help themselves in this process. The first step in finding a long term solution to the problem is for governments in the developing world stricken with health crises to adopt a national medicines policy.106 The design and implementation of this
policy should enable the country to meet its national health needs as well as be simplistic enough to enable its realisation.107 One part of this policy should be a strategy for providing essential medicines to citizens. The importance of such a government policy initiative cannot be understated, as policies and programmes initiated to increase access to essential medicines or to improve the health of a nation can rarely succeed without the support and understanding of all levels of government. For instance, an ambitious health policy without financial support from the government, proper infrastructure and resources for training healthcare workers, sufficiently salaried public servants (including but certainly not limited to healthcare workers), and the implementation of trade, taxation and customs policies creating conditions conducive to smoothly facilitate the improvement of health conditions, is likely to fail.108 Moreover, institutions such as the police, the judiciary and regulatory bodies must be adequately financed in order to stem rampant corruption. In addition, and importantly, countries must recognize the effect of civil instability on public health (displaced citizenry, lack of and poor quality water, food shortages and a lack of quality medicine and health services). Simply stated, efforts aimed at resolving the problem of access to essential medicines problems will be fruitless if there is a lack of political commitment in the affected developing nation to refocus priorities to the health, or even the public, sector.109
41 In order to alleviate the situation, governments must also
reorientate their priorities
and devote more of their scarce resources to
meeting the health needs of their citizens. The need for such a reorientation is
evidenced
by relatively low budgeting for and expenditures on public
health110 which in turn causes shortages of storage
facilities, transportation networks, and medical equipment and
personnel.111 In addition, in many
parts of the developing world, corruption on the part of high level government officials or poorly paid public servants prevents the drugs from reaching the intended beneficiaries.112 The impact of corruption in the health network of developing countries is significant and costly, both in monetary and human terms, and often prevents even the cheapest of treatments from reaching hospitals and patients.113 A reorientation of resources could also fund (with the assistance of international aid) increased educational efforts, the dissemination of information and in-service training as well as better retention of skilled workers (and hopefully decrease the incidence of corruption) and compensation schemes for countries that lose health workers.
42 Another significant burden to the access of essential medicines is the fact that governments of many developing countries place tariffs, levies, duties and other taxes on pharmaceutical drugs and equipment crossing into their borders, thereby significantly raising the price of the drugs for patients in their own countries.114 For instance, while the average tariff on medicines is 18%, several developing countries and LDCs levy much higher rates on medicines entering their respective countries.115 For example, the incredibly poor Democratic Republic of the Congo levies a 30% duty on all drugs crossing its borders, with further taxes adding at least another 13% to the final price at which the drugs can be provided to its citizens.116 Moreover, other countries in the midst of public health crises such as India, Sierra Leone, Nigeria and Bolivia also impose significant tariffs on the importation of pharmaceuticals at 55%, 40%, 34% and 32% respectively. 117 Examples of governments that charge excessive sales tax on medicines include South Africa (14%), Argentina (2 1%), Bangladesh (15%), the Dominican Republic (28%), Greece (15%) and Turkey (18%). 118 Perhaps worst of all is India, which, having more than 3 million HIV/AIDS cases and only 17,000 patients being regularly treated, charges at least 25% duty on medicines.119 In total, large mark-ups are being paid even when tariff rates are low or even zero. 120 Incredibly, Kenya, Morocco
and Peru impose such high levels of tariff and taxes on imported medications that the citizens of those countries pay a higher price than the domestic market of the drugs’ manufacture – even with price differentiation. 121
43 As a result of the application of tariffs and taxes, the actual price of imported medicines in certain developing countries can be over 50% more than the reported value of the drug. To illustrate, when the Clinton Foundation in October 2003 “brokered” a deal to lower the price of an HIV drug treatment to US$140 a person a year, the final price at which the drugs were provided to citizens was, at its lowest, US$277 in Cameroon.122 In Mozambique, the price was US$389 and in Honduras it was US$426.123
44 Quite obviously, a simple step that every government can take to lower the costs of pharmaceutical drugs and equipment is to lower tariffs, levies, duties and other taxes that raise the price, and therefore reduce access of the medicines to its populace. 124 The argument that the countries which levy significant tariffs need the revenues is intellectually shallow, short-sighted and reveals the priority the countries have placed on public health. The unnecessary raising of prices of essential medicines through tariffs and other taxes is without question unconscionable and a continuing cause of the significant loss of life.
45 Reducing tariffs and taxes on the importation of pharmaceuticals and related products, as well as improving the distribution of health products and services, and maintaining quality of the pharmaceutical supply through reliable testing facilities are key issues which governments must address in the fight to improve the lives of many in the developing world.125 While most, if not all, developing countries need financial assistance to meet these standards, it is clear that “some developing countries have aggregate national resources sufficient to meet all the primary healthcare needs of their citizens, yet non-health priorities are ... given precedence.”126 Unfortunately, the barrier of lack of political will demonstrated by the governments of several countries to address the public health crises in their countries is a problem for which there is not a clear solution. States cannot generally interfere in the activities of other States and so there is little that the governments of other nations can do to stop the mismanagement and corruption that is prevalent in many developing countries or to change the cultural views that impede access to essential medicines and a proper health infrastructure.127 If much of the monopoly that funds the lavish exercises of government officials in developing countries is diverted to build medical infrastructure and control the epidemic diseases prevalent, then together with commitment from developed countries and the international
community, the suffering of millions may be eased. However, considering that in some developing nations, governments have not been elected democratically, changing the political situation will be difficult. The most that can be done is for the international community to place pressure on these governments to make a commitment to their citizens to alleviate the worsening situation. However, as mentioned above, the lack of commitment from developing country governments may be impeding increased aid from the developed world.
46 Another method developing countries can utilize to reduce expenditures on drugs is regional negotiation using potential purchasing power as an advantage. While this strategy may not be appropriate in every setting, regional negotiating efforts have proven to be successful in the eastern Caribbean. 128 It has been noted, however, that such a strategy requires, among other things, significant purchasing power, homogeneity of members, financial stability, prediction of needs, loyalty and monitoring. 129 However, even if countries cannot make use of bargaining strengths, all developing countries can guarantee price transparency when purchasing drugs and medical supplies to ensure, inter alia, competition and rational decision making.130
47 In a perfect world, developing countries would be able to ease the ongoing health crises by simply increasing local production of pharmaceuticals but the reality is that this involves large capital investment, basic infrastructure capable of supporting such a venture, trained technical staff and ongoing costs, i.e., maintaining quality and standards. In addition, competition is fierce in the global pharmaceutical market and a developing country start-up faces many challenges. Thus, despite a World Bank report deeming it technically feasible for a developing country to build a pharmaceutical industry, it is doubtful whether it will be able to compete with the already established industries in India and Brazil, among others.131
48 That said, numerous benefits can result from having a local industry and establishing such an industry is an option which should be explored by developing countries. 132 For example, native industries have recently been promoting technology
transfers and participating more directly in research and development of diseases afflicting the local population.133 In addition, generic industries in such countries as Brazil have acted to lower the price of drugs in recent years.134 Brazil also successfully reduced the price of several drugs by threatening to issue a compulsory licence unless the patent holder reduced the price of the drug in question. 135 In each instance, the patent holder eventually succumbed to the threat because Brazil has the technological capacity and well-established generic pharmaceutical industry to manufacture sufficient quantities of the drug in question.136 Without a native industry, such threats would merely be idle and could not be acted upon. 137
49 Unfortunately, all of the above (as well as international efforts)
will be for naught if
simple information regarding infectious diseases fails
to be effectively communicated to the populace. In this regard, the governments
of the developing world have failed and this failure is no more apparent than in
South Africa, which until 2002 denied that HIV caused
AIDS.138 More recently, former South African Deputy
President Jacob Zuma, in his trial for allegedly raping an AIDS activist,
admitted to
having unprotected sex with the woman despite knowing that she was
infected with HIV.139 Moreover, Zuma – who
once headed South Africa’s anti-AIDS campaign – testified that he “took a shower” after the sexual encounter to diminish the risk of infection.140 Furthermore, South Africa continues to promote lemons, beetroot, garlic and other traditional medicine as HI V/AIDS preventative medicine while at the same time publicly criticizing the side effects of ARV drugs.141 Such practices recently drew the ire of the international community at several AIDS conferences, where its policies and drug delivery record were chastised and for embracing theories worthy of the “lunatic fringe.”142 With such ignorance shown by the leaders of South Africa, it is questionable whether any coordinated effort will be effective until domestic knowledge is substantially improved.
C. Innovative financing solutions for new medicines
50 In addition to patent protection, the pharmaceutical industry has also often been a scapegoat for the lack of access to life-saving drugs in the developing world, with many asserting that the industry should devote more resources to illnesses and diseases affecting developing countries.143 This criticism is overly simplistic and does not accurately reflect the situation. For instance, 77% of the WHO Essential Drugs List between 1977 and 2002 originated or were substantially developed by the pharmaceutical industry.144 In addition, as noted above, pharmaceutical companies routinely sell pharmaceuticals at heavily reduced prices to developing countries in order to promote goodwill and, in all probability, to counter the negative publicity the industry has received in recent years. However, even the most ardent critic should realize that it is unrealistic to ask the industry to incur losses ad infinitum. But the situation of donations and voluntary reductions of pricing is different than one which requires the industry to discount or donate its product or to forgo its patent rights in that such a mandate results in a de facto discriminatory tax on the industry; such a de facto tax would place the pharmaceutical industry at a significant disadvantage in its ability to compete for capital and other resources with other industries. 145 Much like every other industry, one can only expect the pharmaceutical companies to continue researching and developing new drugs to combat health problems associated with the developing world when it can expect a reasonable return on its investment.
51 On the other hand, it is well known that research and development of medicines and vaccines to address health problems of developing countries is inadequate. The main problem with the current system is that patents do not provide sufficient research incentives where the market for the product is insufficient. In such a circumstance, even though the pharmaceutical industry appears to be genuinely making an attempt to develop vaccinations and drugs to treat several developing country diseases,146 the fact of the matter remains that these vaccines and drugs are either non-existent or no longer effective due to resistance.147 Quite obviously, the lack of innovation in this area is at least partly responsible for prolonging the public health crises in the developing world. 148 Again, the current incentive structure promoting research and development of medicines and vaccines to address health problems of developing countries is deficient. 149
52 In order to ensure sustained research and development into the afflictions of the developing world and widespread access to the resulting drugs, health priorities must be re-oriented and incentives provided for the industry or pharmaceutical companies will eventually exit the market, thus reducing the number of new drugs to service the developing world.150 Despite much publicized rhetoric, simply expropriating the intellectual property rights of pharmaceutical companies is not the long-term solution. This point is illustrated by using an analogy to the expropriation of a foreign-owned manufacturing plant or a foreign-owned bank account. Such expropriation would inevitably result in less foreign investment in the country. Likewise, the expropriation of a company’s intellectual property results in less research and development into medicines to prevent and treat diseases afflicting the expropriating country.
53 It is also too simplistic to demand that the pharmaceutical company expend more resources on researching and developing drugs relating to developing country diseases. The pharmaceutical industry is like very few in the world where research and development and trials account for 30% of total production costs and where a rigorous regulatory process is necessary before the products can be marketed and sold.151 This procedure guarantees the safety and effectiveness of the drugs, but in the process renders much of the research and development expenditure by the industry essentially wasted as the vast majority of drugs fail to reach the market. In fact, only 5 of every 250 compounds that enter preclinical testing make it to clinical trials, with over half failing the clinical trial stage and an additional large number failing the regulatory stage.152 For those drugs proven to be safe and effective, the process of navigating through the trials and regulatory stage takes years and millions of dollars, and all this takes place while the period of exclusivity granted by the patent is dwindling. 153 Pharmaceutical companies can only ever hope to generate modest profits in the developing world, but it may be that modest profit is vital to ensure that research and development continues for certain diseases.154 Therefore, a period of restricted competition is required for the recoupment of research and development and regulatory costs, as well as for the making of small profits in order to encourage future creation and ensure that some suppliers do not exit the market entirely. 155 However, where a market is incapable of paying for the treatment, patents do not provide the necessary impetus to encourage research and development. In such a circumstance, incentives must be provided to the pharmaceutical industry or directly funded by governments, international organizations or from other sources.
54 In this regard, the problem with access to medicines in the developing world is two-fold: (1) developing countries either cannot afford to purchase existing drugs or do not have the infrastructure to safely store, transport and administer the drugs; and (2) there are no existing drugs to prevent or treat diseases mainly afflicting the developing world.
55 An example of developing countries not being able to afford existing treatment options can be seen from the recent advances of ARV drugs in the treatment of HIV/AIDS. Thus, while there is still no cure for the disease, it has been effectively controlled in the developed world largely due to the availability of modern ARV drugs.156 Studies have shown that the mortality rate in the United States has declined by over 75% over three years through the use of ARV drug cocktails.157 Patients in developing countries, however, can neither afford the wide range of drugs available on the developed country market, nor do they have the facilities or the means to effectively administer the few drugs that they do have access to. For these reasons, the epidemic remains uncontrolled in the developing world and sub-Saharan Africa alone must contend with over 25 million people infected with HIV/AIDS (which account for more than 70% of all HIV/AIDS cases globally). 158
56 In this regard, while the efforts of the pharmaceutical industry159 and aid agencies in either reducing the price,160 donating drugs or facilitating delivery to developing countries,161 are beneficial, ad hoc arrangements are not sufficient.162 Instead, scale coordinated, targeted aid and large scale equity pricing schemes must be implemented in order to guarantee the long-term supply of affordable, quality drugs to the developing world.163 Under equity pricing, countries and regions would only pay what they can afford while continuing to make use of voluntary and compulsory licences, negotiating and transparency in order to ensure the procurement of low cost drugs.164 In essence,
equity pricing would allow developing countries to procure drugs without having to pay for development costs, marketing or shareholder returns. More specifically, sales to lower- income developing countries would be at a “no profit, no loss.”165 Middle- income countries would pay a higher rate for the drugs while the burden on developed countries would be even greater in order to cover the development costs, marketing and shareholder returns.166
57 The second, and perhaps more difficult, problem is that a number of diseases primarily affecting the developing world, i.e., African trypanosomiasis, Chagas disease, leishmaniasis, and dengue fever, have been neglected by the pharmaceutical industry and there is either no cure, vaccine or treatment or new medicines available to “address [the] shortcomings of existing treatments, such as safety, efficacy, appropriate dosing, length of treatment, and the ongoing threat of drug resistance.”167 While the international community (most notably, philanthropic foundations, certain governments and the pharmaceutical industry) has improved its response and has provided needed resources to fund research and development for new medicines, more financial resources are needed on an ongoing basis to “create a strong and sustainable pipeline of new products”. 168 In this regard, “[n]ew thinking, different means of financing and organizing medicines development, and other reforms are needed. For example, the WHO Commission on Intellectual Property Rights, Innovation, and Public Health should examine alternative international models to the current patent-based system for priority setting and financing of health R&D.”169
58 In the current climate, for-profit pharmaceutical companies will not reorientate research priorities. Therefore, incentives in the form of subsidies and other support need to be given to all those involved in the research and development of essential medicines, including pharmaceutical manufacturers, academia, government researchers and national organisations. Industrialized countries must bear the cost of these subsidies.170 In addition, alternative intellectual property strategies, such as placing medical innovations in the public domain, sharing bundles on IPRs, patent pools, patent clearinghouses, public
databases and non-rival access to knowledge must be further studied and
implemented.171 Moreover, complete alternatives to the
current scheme must be further studied to provide the needed incentives to
increase research
and development of neglected diseases. Such efforts include
compulsory licensing or patent buy-outs,172
employer-based payroll taxes,173 patent
auctions174 and well- funded research
centers.175
59 Currently, the development of
public and private partnerships (PPPs) is one of the
most encouraging developments in the area.176 PPPs are an innovative way to finance
creative solutions and encourage innovation. 177 More specifically, successful PPPs:
60 In addition, it is widely believed that the probability of the success of PPPs is
enhanced when:
coordinated; and
• industry contributions are fully recruited and involved.179
61 While it is beyond the scope of this article to develop a model for increasing research and development into these diseases, several useful models already exist and all stress the need for cooperation between public, private, academic, philanthropic foundations, government and international organisations.180 All of these models stress that increased financing, clear priorities, effective management and meaningful technology and knowledge transfers are all necessary components to the equation.181
62 Importantly, PPPs provide a viable solution to improving the public health crises without the need to tackle the reform of intellectual property systems. Moreover, PPPs address both the underlying problems of affordability and development by providing an alternative to dependence on donations from governments and other organisations or access to essential medicines from pharmaceutical companies.182 Under the PPP model, private companies provide technology as well as development and distribution expertise, while the public sector partners fund development costs and help ensure the medicines reach those who are most in need.183 There is thus no set formula for PPPs and different groups tend to focus on different (or multiple) access and development aspects; for instance, some promote leadership and capacity building, others focus on educating the public on intellectual property laws and promoting access to medicines and still others focus on increasing regulatory bodies in the developing world to ensure safe and quality medicines and increased registration. 184
63 By far, the Bill and Melinda Gates Foundation is one of if not the largest donors to PPPs, supporting, among others, the Global Fund, WHO efforts and US agencies providing access to medicines.185 Significantly, the Gates Foundation provides grants and rewards for discovery of new medicines to prevent, alleviate or treat developing county illnesses and diseases.186 The Gates Foundation also excels in the promotion of research and development (such as clinical trials) currently lacking existing vaccines or medicines. 187
64 By working together, the public and private sector, aid organisations and governments have demonstrated the ability to positively influence the course of the developing world. One example of a potential PPP success is the partnership initiative between the pharmaceutical company GlaxoSmithKlein, the University of Liverpool and
the London School of Hygiene and Tropical Medicine, and a £2.5 million grant from the UK Government’s Department of International Development to research and launch the malaria-treatment drug Lapdap.188 This initiative highlights two important points, namely that public funding can be used on a range of public policy initiatives to control and relieve the overall health crisis, and second, that resources and attention do not need to be predominantly placed on amending the current IP regulation which allow for viable solutions to the lack of access to medicine problem. 189
65 Both the quantity of PPPs and funding to PPPs is increasing, but the majority of initiatives – including the Global Fund and WHO efforts – remain under-funded.190 This is especially the case for the traditionally neglected diseases such as African trypanosomiasis, Chagas and leishmaniasis.191 While funding for these diseases is improving,192 a critical shortage remains. However, it cannot be stressed enough that in order to be effective, aid programs must be coordinated and address issues surrounding the governance, participation, procurement, prioritization and best practices of PPPs.193 Sporadic, ad hoc, diffuse or uncoordinated aid or PPPs will not help alleviate the suffering.
D. Diferential pricing and the prevention of trade diversion
66 Parallel importation occurs when the patent holder sells a product to a buyer who exports the product to a second buyer in another country.194 Parallel importing of products is an attractive option when the price of the imported product, taking into account transportation and tariffs, is lower than the price of the same product legally made or imported into the country. Parallel importation undercuts the ability of a patent holder to engage in price discrimination, i.e., tiered pricing, across national borders and can severely reduce profit levels of international companies. Importantly, the Doha Declaration confirmed the existing right available under TRIPS that each WTO Member may establish its own regime of exhaustion of intellectual property rights.195 Parallel importing is therefore not in and of itself a violation of TRIPS and many countries (both
developed and developing) take advantage of this flexibility to import products such as books and CDs.196
67 The problem for the parallel importation of pharmaceuticals and related products is that they are being distributed to developing countries at reduced prices or donated, which also allows companies to charge a high price in developed countries able and willing to meet the higher price.197 This enables the companies to recoup the costs of offering a lower price to those markets unable or unwilling to meet that same price, but there is nothing to prevent the importing nation from exporting the drugs back to the original market or any other market for profit. Of course, such conduct on the part of developing countries would be against the spirit of the Doha Declaration and prevent the goal of facilitating access to medicines from being reached.198 Paragraph 4 of the Implementation Agreement attempts to resolve the uncertainty, but it is a compromise provision fraught with uncertainty.199 Paragraph 4 attempts to balance the concerns of both developed and developing countries by instructing importing countries to take measures to prevent re-exportation, but leaves unclear the issue of to what extent an importing country must act.200 Instead, Paragraph 4 merely states that the measures must be “reasonable,” “within their means,” and “proportionate to their administrative capacities and to the risk of trade diversion.”201
68 In order to maintain price discrimination between developed countries that can afford the medicines and developing countries that need the medicines, the supply of pharmaceuticals at reduced prices must be conditioned on the fact that the drugs will be used to ease their health crisis, not simply re-exported to a market willing to pay a higher price for the drugs. While the Implementation Agreement is designed to avoid imposing conditions that developing countries cannot meet while also encouraging them to take responsibility to ensure that medicines reach their intended destinations, the ambiguity of their responsibilities and the lack of repercussions following a breach could potentially unsettle the system. Whether the risk is real or imagined, it is clear that the pharmaceutical industry is concerned about the implications of pharmaceutical arbitrage/diversion from low income markets to high income markets.202 This fear, in turn, impacts upon the willingness of the industry to donate or sell drugs at a reduced price to the developing world.203
69 In addition, while Paragraph 4 envisions developed countries assisting those developing countries and LDCs that “experience[] difficulty” in preventing diversion, its conditions and guidance are inadequate, only allowing developed countries to provide technical and financial cooperation to prevent diversion “on request and on mutually agreed terms and conditions” of the importing Member. 204 Therefore, if an importing Member does nothing to prevent or encourages or even brokers a deal for the diversion of medicines away from its citizens and into another market, other Members and/or the patent holder cannot prevent the diversion (other than through their domestic institutions). Such a system invites abuse and provides no stop mechanism. It would seem appropriate for Members to have the ability to become involved in an effort to prevent diversion, particularly if the importing Member is actively participating in such diversion. At the very least, one would expect that the Implementation Agreement would include a provision allowing aggrieved Members the right to complain to and refer the matter to the Council for TRIPS. But the Implementation Agreement does not provide for redress of diversion, instead viewing the measure’s only purpose to ensure medicines reach their destination, and fails to provide property holders with any mechanism to enforce their rights. 205
70 In not taking a stronger stand in the Implementation Agreement, WTO Members missed an opportunity to effectively monitor the sale of pharmaceuticals to developing countries (whether by compulsory or voluntary licensing or through price discrimination).206 For instance, the Council for TRIPS could monitor transactions and better ensure not only that the drugs do not get re-exported but also that only minimal economic, legal, and bureaucratic burdens are placed on the importing country. Such a system, if properly designed, could have been workable and agreeable to all concerned parties.207 On the other hand, while preventing re-importation is the goal, any potential solution cannot unduly raise developing country compliance costs.208 In this regard, the implementation concerns of developing countries are well- founded.
71 Therefore, while patent protection and TRIPS is not the cause of or even a significant factor in worsening the public health crisis in the developing world, it is not a perfect agreement and – if the pharmaceutical industry is to be believed – can be amended to facilitate increased donations of essential medicines. Two possible solutions are suggested for dealing with the shortcomings of TRIPS and the accompanying agreements. First, TRIPS could be amended so as to allow for redress of diversion through dispute settlement. This suggestion concededly has many flaws, but a possible solution to halting existing and preventing further trade diversion may lie in setting up an effective dispute settlement scheme or allowing the existing system to hear cases where Members who have acquired drugs under a license or through price discrimination/donation based on their economic and public health needs are exporting the drugs for profit. It must be acknowledged, however, that Articles 28 and 5 of TRIPS and Paragraph 5(d) of the Doha Declaration may perhaps impede such a solution as they do not permit Members from challenging schemes dealing with the exhaustion of intellectual property rights.
72 Of course, even if TRIPS was amended to allow dispute settlement over diversionary issues, an additional barrier exists on the practical matter of how to monitor such trade diversionary practices. One possibility would be for a body to be established to monitor possible trade diversions,209 but this would be a costly endeavor as considerable funding would be required to set up such an international watchdog. It would seem more practical for that funding to be diverted into more essential areas such as building infrastructure and alternative solutions to the trade diversion problem.
73 A more practical solution to the problem would seem to be through simple amendments to TRIPS. For example, Sykes suggests that amendments to TRIPS could be made which permit sectoral agreements on the exhaustion issue depending on the product in order to discourage or prohibit parallel imports of pharmaceuticals.210 However, it is well known that consensus decision making in the WTO significantly impedes progress or amendments of any kind.211 For instance, one must remember that Members negotiated for over two years to reach a consensus to a solution on the Paragraph 6 issue of the Doha Declaration and it seems unlikely that any revision of TRIPS will be any easier.212
74 That being said, there may be potential in the future to adopt a regime which is similar to the system currently operating in the EU. The EU uses its own regional exhaustion of rights doctrine to prohibit imports of cheaper patented drugs from outside the EU.213 The EU arrangements differ from the system agreed by the WTO in the Implementation Agreement in that the EU scheme protects the interests of patent holding proprietary pharmaceutical companies by deterring trade diversion of low-cost drugs they
have made available.214 Under the EU arrangements, exporting drug companies may apply to the Commission for permission to put their medicines onto a tiered price list, selling them to developing countries at a fraction of the factory price.215 Re-importation of these drugs is prohibited from 76 least-developed and developing countries. In order to facilitate the agreement, the drugs listed carry a logo so that they are identifiable by customs authorities examining imports at the EU borders.216
75 Practically, the EU approach is more favorable than the current multinational approach for several reasons. First, it protects the patent-holding pharmaceutical companies directly and provides incentives, through the safeguards imposed, for these companies to provide discounted drugs to the developing world.217 Second, the cost of the EU approach may prove to be significantly less than the current administrative and procedural costs under the WTO scheme as the EU scheme only requires that the products listed carry a particular logo.218 Perhaps on the global scale, each region of the developed world participating in such a scheme, for example, North America, Australasia, etc., may have its own logo to identify that particular region. If the EU scheme proves both effective at encouraging the export of discounted pharmaceuticals to the developing world while also preventing diversion back into the market, or into another market, it may provide the evidence needed to amend Article 6 of TRIPS and sanction a uniform and non-discretionary scheme to prevent the diversion of trade.
V. CONCLUSION
76 This article demonstrates that the TRIPS regime of patent protection does not fully explain why one-third of the world’s poor lack access to essential medicines. The public health crises plaguing much of the developing world are a large-scale global problem, but it is a problem for which there is a global solution.219 The developed world has a duty to the countries suffering public health problems and, in doing so, must address several factors, including funding, medical infrastructure, education, and intellectual property regulations. Although seemingly forgotten, it is important to realize that the issue of global access to medicine requires measures and policies much broader than simply amending global intellectual property protection. In the current situation, many of the developing countries experiencing public health crisis cannot even afford to buy and distribute pharmaceutical products that are off-patent, let alone warehouse, store and
administer the drugs and vaccines donated by the pharmaceutical companies.220 This is the reality they face and in this reality we must ask if the issuance of compulsory licenses, or otherwise allowing access to patented pharmaceutical products, will do any good.
77 Numerous diseases, such as HIV/AIDS, malaria, and tuberculosis, are at an epidemic level in many developing countries, and yet commercial research and development of essential medicines to prevent or treat these ailments (less HIV/AIDS) is almost non-existent.221 The reason for this is simple: it does not make good economic sense for any industry to pour money into a product that does not have at least a promise of return and the countries afflicting with these diseases do not have the ability to pay for any new medical and treatment options. Thus, under the current structure, incentives to research into the area of diseases afflicting the developing world are almost non-existent. Therefore, while TRIPS allows for countries to issue a compulsory license to acquire needed drugs, there is sometimes no drug on the market to alleviate the problem due to lack of research and development. 222
78 Developing countries themselves do not, in the main, have the incentives or ability to fund, develop and distribute new drugs. Thus, patent protection must ensure that the pharmaceutical industry's incentive to create remains strong. If properly administered, a system of intellectual property rights, combined with a compulsory licensing regime could strike the appropriate balance.223 On the other hand, a system of intellectual property that guarantees no return on investment and allows for the expropriation of intellectual property rights without proper compensation or enforceable limits will reduce the incentive to research and invest into the area and exacerbate the relative dearth in medicines for “third world” diseases. Such a situation must be avoided. But another, possibly larger, problem is that the current system of patent protection does not create the incentives necessary to encourage research and development into diseases for which there is little or no possibility for return. Instead, diseases primarily afflicting the developing world – including but not limited to malaria and tuberculosis – remain under- funded.224 It is, therefore, incumbent upon the governments of the developed world to provide incentives to the pharmaceutical industry to research and develop treatments and vaccines for these neglected diseases, directly fund the research and develop treatments and
vaccines themselves, or totally recalibrate the patent system for traditionally neglected diseases.
79 Simply stated, the current system does not provide incentives to research developing country diseases.225 But the patent system alone is not the problem, as pharmaceutical companies have in recent years expended significant resources to combat diseases which afflict both the developed and developing world (such as HIV/AIDS) and the disparity between the two groups of nations has increased in recent years.226 Even more important than the current system of IPRs to the lack of access to medicines and corresponding health crises in the developing world is one of funding: developing countries do not have adequate resources, developing countries misallocate resources, international support is inadequate and the levels of research and development into diseases afflicting the developing world is insufficient.227 As Attaran and Gillespie-White conclude:
“[A] variety of de facto barriers are more responsible for impeding access to antiretroviral treatment, including but not limited to the poverty of African countries, the high cost of antiretroviral treatment, national regulatory requirements for medicines, tariffs and sales taxes, and, above all, a lack of sufficient international financial aid to fund antiretroviral treatment.”228
80 Therefore, while a solution to alleviating the public health crises currently tormenting much of the developing world is achievable, such a solution cannot be attained by merely amending, or even abandoning, TRIPS and patent laws or by implementing only one of the initiatives outlined above. This is especially the case given that while over 95% of the WHO Essential Drugs List is off-patent, these inflict ions and diseases continue to decimate much of the developing world. 229 The initiatives suggested in this article must be explored in combination to tackle the twin problems of inadequate development of vaccines and drugs and access to existing vaccines and drugs facing developing countries. Developed countries and the international community must increase both the amount as well as the coordination of funding and aid activities, developing countries must prioritize public health, improve infrastructure and work towards creating an environment conducive to growth and sustainability, and alternatives to current research and development schemes (such as alternatives to patents, the further development of PPPs and the provision of research incentives/subsidies to the pharmaceutical industry) must be studied and implemented. It is only then when, through global commitment from the entire international community, that the public health crises may be alleviated and suffering end.
Footnotes
* Faculty of Law, University of New South Wales; Director, International Trade and Development Project at the Gilbert + Tobin Centre of Public Law; Fellow of the Tim Fischer Centre for Global Trade and Finance; Visiting Professorial Fellow at the Institute of International Economic Law, Georgetown University Law Center. The author acknowledges the UNSW Faculty Research Grant for making this research possible and thanks the UNSW Researcher Discussion Group, Andreas Ziegler, Jurgen Kurtz, Tania Voon and Andrew Mitchell for commenting on earlier drafts. Special thanks to Bradly Condon for his insightful comments and Nikki Chong for her editorial assistance.
PRESCRIPTION FOR
HEALTHY DEVELOPMENT: INCREASING ACCESS TO MEDICINES, REPORT OF THE TASK FORCE ON
HIV/AIDS, MALARIA, TB, AND ACCESS
TO ESSENTIAL MEDICINES, PRESCRIPTIONS FOR
HEALTHY DEVELOPMENT: INCREASING ACCESS TO ESSENTIAL MEDICINES 26 (Beryl Leach et
al. eds.,
2005), available at http://www.unmillenniumproject.org/documents/TF5-medicines-Complete.pdf
[hereinafter UN MILLENNIUM PROJECT 2005].
4 Robert E. Black et al., Where and Why are 10 Million Children Dying Every Year?, 361 The Lancet 2226 (2003). For similar statistics, see U.K. Dept. for Int’l Dev. (DFID), Increasing Access to Essential Medicines in the Developing World: United Kingdom Government Policy and Plans 7 (2004), available at www.dfid.gov.uk/Pubs/files/accessmedicines.pdf [hereinafter DFID 2004].
5 DFID 2004, supra note 4, at 8.
6 UN MILLENNIUM PROJECT 2005, supra note 1, at 26. It is clear that inappropriate use of medicines leads to resistance. In fact, one study found that in Tanzania, 75% of health workers were dispensing inappropriate doses of malaria regiments to stretch inadequate supplies. Reducing the required dosage of malaria treatment induces resistance and is a major cause of the malaria crisis engulfing part of the developing world. See id. at 88. See also Melinda Pavin et al., Prescribing Practices of Rural Primary Health Care Physicians in Uzbekistan, 8(2) TROP. MED. INT’L HEALTH 182, 182–90 (2003). For approaches resolving this issue, including acquiring more qualified health workers and dealing with illiterate users see R.O. Laing et al., Ten Recommendations to Improve Use of Medicines in Developing Countries, 16(1) HEALTH POLICY PLAN. 13, 13-20 (2001).
7 See generally WHO, WORLD HEALTH REPORT 2002: REDUCING RISKS,
PROMOTING HEALTHY LIFE
(2002), available at http://www.who.int/whr/2002/en/whr02_en.pdf;
see also Brazil Ministry of Health, National AIDS Drug Policy 2001,
available at http://www.aids.gov.br/final/biblioteca/drug/drug2.htm
(last visited Jan. 1, 2007) (linking improved health and prolonged life
expectancy to increased productivity, improved use of resources
and lower
medical costs). Moreover, life expectancy in Africa increased by nine years
between 1960 and 1990, while life expectancy
in high-income countries increased
by six years. The impact of these gains added between 1.7% and 2.7% per annum to
the growth rate
of per capita GDP. Recently, however, HIV/AIDS induced a decline
in economic welfare approximated at 1.7% per annum, leading to an
overall growth
rate of –2.6%. In addition, economic welfare in countries heavily impacted
by AIDS, such as Botswana, decreased
by over 8% per annum for the past decade.
Dean T. Jamison et al., The Efect of the AIDS Epidemic on Economic Welfare in
Sub-Saharan Africa (Comm’n on Macroeconomics and Health Working Paper
Series, Paper No. WG1: 13, 2001). For more on the linkage between health
and
economic prosperity, see, for example WORLD BANK, WORLD DEVELOPMENT REPORT
1993--INVESTING IN HEALTH (1993); David E. Bloom &
Ajay S. Mahal, Does
the AIDS Epidemic Threaten Economic Growth?, 77 J. ECONOMETRICS 105 (1997);
William D. Nordhaus, The Health of Nations: The Contribution of Improved
Health to Living Standards (Nat’l. Bureau of Econ. Res., Working Paper
No. W8818, 2002); John Luke Gallup & Jeffrey D. Sachs, The Economic
Burden of Malaria (Ctr. for Int’l Dev. at Harvard, Working Paper No.
52, 2000), available at http://www2.cid.harvard.edu/cidwp/052.pdf;
WHO, WORLD
HEALTH REPORT 2000, HEALTH SYSTEMS: IMPROVING PERFORMANCE (2000);
HEALTH AND ECONOMIC GROWTH: FINDINGS AND POLICY IMPLICATIONS (Guillem
López-Casasnovas et al. eds., 2005).
8 K. Balasubramaniam, Access
to Medicines and Public Policy Safeguards under TRIPS, in TRADING IN
KNOWLEDGE: DEVELOPMENT PERSPECTIVES ON TRIPS, TRADE AND SUSTAINABILITY 135-42
(Christophe Bellmann et al. eds., 2003).
9 For more information on the work
of one such NGO on the issue, see Ruth Mayne, The Global Campaign on Patents
and Access to Medicines: An Oxfam Perspective, in GLOBAL
INTELLECTUAL
PROPERTY RIGHTS: KNOWLEDGE, ACCESS AND DEVELOPMENT 244-58 (Peter
Drahos & Ruth Mayne eds., 2002).
10 For a definition of access to
essential medicines see WHO, THE WORLD MEDICINES SITUATION 61-74 (1999). This
definition was essentially
incorporated into the Millennium Development Goals
(MDGs): “The world's time-bound and quantified targets for addressing
extreme
poverty in its many dimensions-income poverty, hunger, disease, lack of
adequate shelter, and exclusion-while promoting gender equality,
education, and
environmental sustainability. They are also basic human rights -the rights of
each person on the planet to health,
education, shelter, and security.” UN
Millennium Project website, http://www.unmillenniumproject.org/goals/index.htm
(last visited Jan. 1, 2007). Goal 6 seeks to combat HIV/AIDS, Malaria and other
diseases, and targets 2015 for halting and beginning
to reverse the incidence
and spread of these and other diseases. Id.
11 See Final Act
Embodying the Results of the Uruguay Round of Multilateral Trade Negotiations,
Apr. 15, 1994, Legal Instruments--Results
of the Uruguay Round vol. 1 (1994), 33
I.L.M. 1125 (1994) [hereinafter Uruguay Round] (establishing the WTO in the last
round of GATT and also creating treaties covering various trade
topics);
Agreement on Trade-Related Aspects of Intellectual Property Rights, Apr. 15
1994, Marrakesh Agreement Establishing the World
Trade Organization, Annex 1C,
LEGAL INSTRUMENTS--RESULTS OF THE URUGUAY ROUND, vol. 31, 33 I.L.M. 81 (1994)
[hereinafter TRIPS Agreement] (establishing a multilateral agreement creating
minimum protection standards for various forms
of intellectual property among
Member States).
12 See, e.g., PASCALE BOULET ET AL., MSF, DRUG PATENTS
UNDER THE SPOTLIGHT: SHARING PRACTICAL KNOWLEDGE ABOUT PHARMACEUTICAL PATENTS
(2004), available at http://www.accessmedmsf.org/documents/Patent%20report%20.pdf.
POLICY (2002), available at http://www.iprcommission.org/papers/pdfs/final_report/CIPRfullfinal.pdf [hereinafter UK CIPR]; TRADING IN KNOWLEDGE: DEVELOPMENT PERSPECTIVES ON TRIPS, TRADE AND SUSTAINABILITY (Christophe Bellmann et al. eds., 2003).
62 (2003).
16. See also KATHARINA GAMHARTER, ACCESS TO AFFORDABLE MEDICINES: DEVELOPING RESPONSES UNDER THE TRIPS AGREEMENT AND EC LAW 159-246 (2004).
42 Naomi Koppel, WTO Lets Poor Nations Import Cheap Drugs, ASSOCIATED PRESS, Aug. 30, 2003, available at http://www.aegis.com/news/ap/2003/AP030847.html (last visited Jan. 3, 2007).
43 Id.
44 Id.
45 Council for TRIPS, Implementation of Paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public Health, WT/L/540 (Aug. 30, 2003) [hereinafter Implementation Agreement]. The agreement was only finalized when the Memb ers agreed to attach a statement to the text setting out the conditions under which the measure detailed in the Implementation Agreement can be used. Among other things, the Statement: (i) “recognizes that the [compulsory licensing] system ... should be used in good faith to protect public health and [not as] an instrument to pursue industrial or commercial policy objectives”; (ii) “recognizes that the purpose of the [Implementation Agreement] would be defeated if [drugs were] diverted from the [intended] markets” and calls on Members to take “all reasonable measures” to “prevent such diversion”; and (iii) reiterates the importance of Members to seek expeditious and amicable resolutions to issues arising from the Implementation Agreement. See The General Council Chairperson 's Statement, WTO NEWS, Aug. 30, 2003, http://www.wto.org/english/news_e/news03_e/trips_stat_28aug03_e.htm [hereinafter Chairperson's Statement]. The Implementation Agreement was transformed into a permanent amendment of the TRIPS on December 6, 2005. This represented the first time a WTO Agreement had been amended.
46 Koppel, supra note 42.
47 See Implementation Agreement, supra note 45.
48 Id. at para. 2(a).
49 Implementation Agreement, supra note 45, at para. 2.
50 See Frederick M. Abbott, The WTO Medicines Decision: World Pharmaceutical Trade and the Protection of Public Health, 99 AM. J. OF INT’L L. 317, 325 (2005); Jacques H. J. Bourgeois & Thaddeus J. Burns, Implementing Paragraph 6 of the Doha Declaration on Trade and Public Health: The Waiver Solution, 5 J. OF WORLD INTELL. PROP. 835, 838 (2002).
51 See generally Mercurio, supra note 16.
52 For criticism, see MSF, MSF Comments on the Draft Chairman's Statement of 21 August 2003 (Aug. 26, 2003), http://www.accessmed-
msf.org/prod/publications.asp?scntid=2682003 17121 33&contenttype=PARA& [hereinafter MSF Comments]; MSF, Neither Expeditious, Nor a Solution:
The WTO August 30th Decision is Unworkable, http://www.accessmedmsf.org/prod/publications.asp?scntid=1082006 161 8476&contenttype=PARA& (last visited Nov. 17, 2006) [hereinafter MSF, Neither Expeditious]. MSF also criticizes the requirement of prior negotiation before issuing a compulsory licence (which can be waived for a “national emergency” or for public non-commercial use), the anti-diversion measures built into the waiver, notification of intention to use the Implementation Agreement, and–somewhat bizarrely–even the requirement that the licensee must post on a website the quantities being supplied by compulsory licence and the distinguishing features of the supplied drugs. Id.
53 See, e.g., MSF Comments, supra note 52; MSF, Neither Expeditious, supra note 52 ; Cecilia Oh, The New “Deal” On Trips and Drugs: What Does it Mean for Access to Medicines?, in TWN BRIEFINGS FOR CANCUN 4, 4 (2003), available at http://www.twnside.org.sg/title/cancun4.doc; contra CARLOS CORREA,
DEPARTMENT OF ESSENTIAL DRUGS AND MEDICINES POLICY, IMPLEMENTATION OF THE WTO GENERAL COUNCIL DECISION ON PARAGRAPH 6 OF THE DOHA DECLARATION ON THE TRIPS AGREEMENT AND PUBLIC
HEALTH 22 (2004), www.who.int/medicines/areas/policy/WTO_DOHA_Dec isionPara6final.pdf. It must also be noted that the Implementation Agreement waives the obligation for packaging, colouring or shaping when it is either not feasible or significantly impacts upon the price. Implementation Agreement, supra note 45, at para. 2(b)(ii).
54 See, e.g., Duncan Matthews, WTO Decision on Implementation of Paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public Health: A Solution to the Access to Essential Medicines Problem?, 7 J. INT’L ECON. L. 73, 96-97 (2004).
55 See, e.g., Oh, supra note 53; Campaign For Access To Essential Medicines, Joint NGO Statement on TRIPS and Public Health WTO Deal on Medicines: a “Gift” Bound in Red Tape, http://www.accessmedmsf.org/prod/publications.asp?scntid=12920039 1 6443&contenttype=PARA& (last visited Nov. 17, 2006). For a model arrangement, see Condon & Sinha, supra note 13.
56 For detail on the legal and administrative burdens and obstacles to
legislating, see DFID HEALTH
SYSTEMS RESOURCE CENTRE, ACCESS TO MEDICINES IN
UNDER-SERVED MARKETS: WHAT ARE THE IMPLICATIONS OF CHANGES IN INTELLECTUAL
PROPERTY
RIGHTS, TRADE AND DRUG REGISTRATION
POLICY? 6 (2004), available at http://www.dfid.gov.uk/pubs/files/dfidsynthesispaper.pdf [hereinafter DFID].
Id.
57
26/story3.htm; see also MSF, THE JEAN CHRÉTIEN, PLEDGE TO AFRICA ACT OR CANADA’S ATTEMPT TO PROVIDE MEDICINES FOR THE POOR (2002), available at http://www.msf.ca/tour2006/press/images/BRIEF_jcpa.pdf .
http://www.msf.fr/documents/base/2005-02-01 -msf.pdf [hereinafter MSF 2005].
WIPO Publication No. 491(E), available at
http://www.wipo.int/freepublications/en/patents/49 1/wipo_pub_491 .pdf [hereinafter WIPO No. 491(E)].
64 For more on the development of TRIPS -Plus provisions, see Bryan Mercurio, TRIPS-Plus Provisions in RTAs: Recent Trends, in REGIONAL TRADE AGREEMENTS AND THEWTO LEGAL SYSTEM (Lorand Bartels & Federico Ortino eds., 2006).
65 See REPORT OF THE INDUSTRY FUNCTIONAL ADVISORY COMMITTEE ON INTELLECTUAL PROPERTY RIGHTS FOR TRADE POLICY MATTERS (IFAC-3), THE US-CENTRAL AMERICAN FREE TRADE AGREEMENT: THE INTELLECTUAL PROPERTY PROVISIONS (2004),
http://www.ustr.gov/assets/Trade_Agreements/Bilateral/CAFTA/CAFTA_Reports/asset_upload_file57 1_5 945.pdf.
66 See, e.g., Mercurio, supra note 64; Peter Drahos, Expanding Intellectual Property ’s Empire: the Role of FTAs, GRAIN, Nov. 2003, http://www.grain.org/rights_files/drahos-fta-2003 -en.pdf.
67 Article 4 of the TRIPS agreement states that a Member who grants “any advantage, favour, privilege or immunity” to the nationals of any other country (whether that country be a Member of the WTO/TRIPS or not) must accord the same treatment to the nationals of other Members of TRIPS. The clause operates in a relatively unqualified way because, unlike art. XXIV of the GATT, which may serve to exempt FTAs from the operation of MFN, TRIPS does not contain a similar provision; thus, the principle of MFN applies to FTAs. Therefore, if enough FTAs are negotiated containing TRIPS-plus provisions, these provisions will essentially become the new minimum standard from which any future WTO trade round will proceed. For a detailed analysis, see Drahos, supra note 66. See also FREDERICK ABBOTT, THE DOHA DECLARATION ON
THE TRIPS AGREEMENT AND PUBLIC HEALTH AND THE CONTRADICTORY TREND IN BILATERAL AND
REGIONAL TRADE AGREEMENTS (2004), http://www.quno.org/geneva/pdf/economic/Occassional/TRIPSPublic -Health-FTAs.pdf.
68 It is important to note that the issue of TRIPS and public health is now firmly on the international agenda, with the topic regularly discussed and debated at intra- and inter-institutional meetings. For more on the importance of this development see Frederick M. Abbott, Toward a New Era of Objective Assessment in the Field of TRIPS and Variable Geometry for the Preservation of Multilateralism 8 J. of Int’l Econ. L. 77 (2005).
69 For instance, on the day of the Implementation Agreement (August 30, 2003) the WTO headlined a press release “Decision Removes Final Patent Obstacle to Cheap Drug Imports,” Oxfam titled their press release “Flawed WTO Drugs Deal Will do Little to Secure Future Access to Medicines in Developing Countries,” and the European Federation of Pharmaceutical Industries and Association stated in their press release, “Now it is time to focus on the real access barriers.” See Press Release, WTO, Decision Removes Final Patent Obstacle to Cheap Drug Imports (Aug. 30, 2003), available at www.wto.org/english/news_e/pres03_e/pr350_e.htm; Press Release, Oxfam, Flawed WTO Drugs Deal Will do Little to Secure Future Access to Medicines in Developing Countries (Aug. 30, 2003), available at www.oxfam.org/en/news/pressreleases2003/pr03083 0_wto_final.htm; Press Release, European Federation of Pharmaceutical Industries and Association, EFPIA Statement on Compulsory License for Export (“Paragraph 6” of the Doha Declaration on TRIPS & Public Health) (Aug. 30, 2003), available at www.efpia.org/3_press/20030830.htm.
70 See, e.g., MSF, Publications on Patents, http://www.accessmedmsf.org/prod/morepublications.asp?catid=1&subcatid=1 85&status=1 82 (last visited Dec. 3, 2006); MSF, WTO TRIPS Agreement, http://www.accessmed-
msf.org/prod/morepublications.asp?catid=1 &subcatid=1 85&status=182 (last visited Jan. 3, 2007); MSF, Pricing Policy, http://www.accessmed-
msf.org/prod/morepublications.asp?catid=1 &subcatid=1 87&status=182 (last visited Jan. 3, 2007); OXFAM, DARE TO LEAD: PUBLIC HEALTH AND COMPANY WEALTH (2001),
http://www.oxfam.org.uk/what_we_do/issues/health/downloads/daretolead.pdf.
89 See ROY WIDDUS & KATHERINE WHITE, COMBATING DISEASES A SSOCIATED WITH POVERTY: FINANCING STRATEGIES FOR PRODUCT DEVELOPMENT AND THE POTENTIAL ROLE OF PUBLIC-PRIVATE PARTNERSHIPS 23 (Abr. ver. 2004), available at
http://www.globalforumhealth.org/file supld/ippph/CombatingDiseases.pdf; UN MILLENNIUM PROJECT 2005, supra note 1, at 5-6, 30, 42-45, 63.
90 For a specific example, see Widdus & White, supra note 89, at 2 1-22.
91 See UN MILLENNIUM PROJECT 2005, supra note 1, at 41, 100; Patrice Troullier et al., Drug Development for Neglected Diseases: A Deficient Market and a Public Policy Failure, 359 THE LANCET 2188 (2002); see generally WARREN A. KAPLAN, ET AL., THE IMPACT OF REGULATORY INTERVENTIONS ON PHARMACEUTICAL ACCESS AND QUALITY: WHAT IS THE EVIDENCE AND WHERE ARE THE GAPS IN OUR KNOWLEDGE? (2003), available at
http://dcc2.bumc.bu.edu/richardl/RPM+_Project/Regulation&QA/Regulation-evidence-Feb2003
.doc;
WHO CMH, MACROECONOMICS AND HEALTH: INVESTING IN HEALTH FOR ECONOMIC
DEVELOPMENT
(200 1), available at http://www.cid.harvard.edu/cidcmh/CMHReport.pdf [hereinafter WHO CMH 2001].
92 A possible avenue for the distribution of funding could be to establish domestic manufacturers in non-producing countries to save these countries from relying on TRIPS mechanisms for imports of generic versions of drugs. However, there is evidence to suggest that this would not be a viable expenditure of funding due to the need for the drugs to meet an internationally recognized quality standard, which would make it difficult for these producers to offer competitive prices. See BROOK BAKER, DFID HEALTH SYS.
RES. CTR., PROCESSES AND ISSUES FOR IMPROVING ACCESS TO MEDICINES: WILLINGNESS AND ABILITY TO UTILISE TRIPS FLEXIBILITIES IN NON-PRODUCING COUNTRIES (2004), available at http://www.iprsonline.org/resources/docs/Baker_TRIPS_Flex.pdf.
93 See UN MILLENNIUM PROJECT 2005, supra note 1, at 29.
MEDICINES (2005), available at www.who.int/intellectualproperty/studies/TRIPSFLEXI.pdf.
100 Alan Moran, Trade Laws and Pharmaceuticals, 53(4) INST. PUB. AFF. REV. 25, 26 (2001); WHO CMH 2001, supra note 91; INTERNATIONAL CHAMBER OF COMMERCE (ICC), FURTHER VIEWS ON CROSS BORDER COMPULSORY LICENSING 8 (2002), available at http://www.wto.org/english/forums_e/ngo_e/icc_paper_aug03_e.pdf. There is “increasing international agreement that $30 per capita represents the lower bound [needed to provide health services].” UN MILLENNIUM PROJECT 2005, supra note 1, at 63. The price of the cheapest generic triple cocktail to combat HIV/AIDS, on offer by Indian manufacturer Cipla, costs $350 per person per year. See PhRMA 2002, supra note 75 (PhRMA said the marketing and selling of drugs without any price differential to developing countries is cruel and costs lives. One example of this is the marketing of a Hepatitis C treatment at $30,000 a year. This makes the drug unaffordable to most governments and creates a situation whereby only the wealthy citizens can afford treatment.); MSF 2005, supra note 60.
101 The shortage of trained medical practitioners, nurses, aids, technicians, pharmacists, and pharmacy technicians is “a growing problem that, if unaddressed, threatens to undermine all efforts to strengthen health systems and improve healthcare in much of the developing world.” UN MILLENNIUM PROJECT 2005, supra note 1, at 30.
107 The Working Group on Access to Essential Medicines states that such a policy must be “comprehensive and well-planned” and employ “well-proven principles” based on the essential medicines concept as adopted to the needs of the individual country. Effective monitoring of the system’s implementation is also crucial to its success. Id. at 95-96. See also WHO, Framework for Action, 2(1) WHO POLICY PERSPECTIVES ON MEDICINES 2 (2002).
108 See UN MILLENNIUM PROJECT 2005, supra note 1, at 32. The Working Group also noted several other crucial factors which impact upon the success of a national health policy, namely: the understanding of local conditions, long-term (local and international) support from the public and private sectors, the prioritization and targeting of access to medicines, and sufficient data and analysis in order to identify and target critical problems and barriers. Id. at 95. For a detailed analysis of the problem of healthcare workers see WHO, WORKING TOGETHER FOR HEALTH: THE WORLD HEALTH REPORT 2006 (2006), available at http://www.who.int/whr/2006/whr06_en.pdf.
109 See WHO 2004, supra note 3. Thus, in many developing countries, wealthy citizens who can afford to be treated privately have access to essential medicines while poorer citizens who rely on the public health system are deprived of essential medicines and treatments. See UN MILLENNIUM PROJECT 2005, supra note 1, at 95.
110 See MARTIN FOREMAN, BEYOND OUR MEANS? THE COST OF TREATING HI V/AIDS IN THE
DEVELOPING WORLD 13 (2000). Compounding the problem is the heavy debt burden of many developing nations. For details and figures, see Jubilee Debt Campaign, http://www.jubileedebtcampaign.org.uk (last visited Jan. 2, 2007).
111 It has been estimated that over 20,000 health professionals annually emigrate from Africa. UN MILLENNIUM PROJECT 2005, supra note 1, at 97. This contributes to the continent spending $4 billion on 100,000 foreign health workers annually. Id. The reasons behind the emigration include: doctors being more skilled and advanced than required by local populations (little intellectual stimulation); poor remuneration; lack of incentives to stay or return home; security threats, violence and safety; education for children; poor working conditions; oppressive political climate; persecution of intellectuals, discrimination; lack of research funding and poor facilities; and limited career options. To reverse this trend, the PHP calls for the establishment of full fee-paying universities to train doctors for export, increased training, increased
salaries and support (housing, transport, etc.) and improving and stimulating the working environment (computers, journals, etc.). Id.
112 UN MILLENNIUM PROJECT 2005, supra note 1, at 29, 96-98, 148. For instance, a reported 25% of discounted drugs sent to Africa from GlaxoSmithKline between June 2001 and July 2002 failed to reach their intended destination. Carol C. Adelman, et al., Myths and Realities on Prices of AIDS Drugs, HUDSON INST. 13 (2004) [hereinafter Adelman, et al., Myths and Realities].
113 See, e.g., FOREMAN, supra note 110, at 16.
114 See, e.g., U.N. Comm. on Econ., Soc. & Cultural Rights, Report of the High Commissioner, Economic, Social and Cultural Rights: The Impact of the Agreement on Trade-Related Aspects of Intellectual Property on Human Rights, UN Doc. E/CN.4/Sub.2/200 1/13 (2001). Moreover, border delays caused by the facilitation of customs requirements pertaining to tariffs and taxes sometimes result in the medicines expiring during the delays or suffering medicinal degradation due to suboptimal storage facilities (such as heat, cold, humidity or light). See UN MILLENNIUM PROJECT 2005, supra note 1, at 80.
115 Adelman et al., The Full Cost of HI V/AIDS Treatment, supra note 62, at 10.
116 Adelman et al., Myths and Realities, supra note 112, at 3.
117 UN MILLENNIUM PROJECT 2005, supra note 1, at 80.
118 See Roger Bate, The Sick are Taxed to Death in Poor Countries, FIN. TIMES (LONDON), May 31, 2004, available at http://www.fightingmalaria.org/news.php?ID=261 (last visited Jan. 2, 2007).
119 See id.; Roger Bate, Taxed to Death, American Enterprise Institute for Public Policy Research: Short Publications, Jul. 5, 2006, http://www.aei.org/publications/filter.all,pubID.24624/pub_detail.asp. For more details and similar statistics on a number of other nations, see Adelman et al., The Full Cost of HI V/AIDS Treatment, supra note 62, at 10-12.
120 For instance, pharmaceuticals enter Sri Lanka, Kenya and Armenia duty free, but the final mark-up in those countries due to other taxes and the like is 64%, 54.2% and 87.5%, respectively. See Adelman et al., Myths and Realities, supra note 112, at 11.
http://whqlibdoc.who.int/hq/2003/WHO_ EDM_PAR_2003 .2.pdf for the price survey methodology.
medicines should be eliminated; they negatively affect affordability and competition”).
assisting with their own distribution systems, see id. at 80-8 1.
COUNTRIES (8th ed. 2005), available at http://www.accessmedmsf.org/documents/untanglingtheweb%208.pdf.
133 For instance, several initiatives have been formed involving developing country research centers/universities, universities in developed countries and pharmaceutical companies (such as one initiative involving the Kenya Medical Research Institutes collaboration with GlaxoSmithKline and the University of Liverpool for an anti-malaria treatment). See Pres cription for Healthy Development: Increasing Access to Medicines, supra note 1, at 11.
134 See MSF 2004, supra note 1.
135 See, e.g., Andrew Pollack, Defensive Drug Industry Fuels Fight Over Patents, N.Y. TIMES, April 20, 2001, at A6; Mark Drajem, Brazil Pushes Merck, Pfizer to Cut Drug Costs Amid WTO Talks, BLOOMBERG, Aug. 28, 2003,
http://quote.bloomberg.com/apps/news?pid=10000 103&sid=a_804W5JtnZc&refer=us; Paulo Prado, Brazil Again Seeks to Cut Cost of AIDS Drug, N.Y. TIMES, April 20, 2001, available at http://www.nytimes.com/2005/08/19/business/19abbott.html?ex=11 65035600&en=07473c1 d770ae21 1 &ei =5070. For similar reports and newspaper articles, see http://www.cptech.org/ip/health/c/brazil/. See also Paul Vandoren & Jean Charles Van Eeckhaute, The WTO Decision on Paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public Health, 6 J. OF WORLD INTELL. PROP. 779, 793 (2003).
136 Both South Africa and Kenya have likewise received voluntary licenses for the same reason. UN MILLENNIUM PROJECT 2005, supra note 1, at 62.
137 This strategy does have its limitations, as the voluntary license provides the drugs at a lower cost than previously obtainable, but does not involve any technology transfer or facilitate the development of a technologically improved domestic industry. Id.
138 AIDS Ignorance, USA TODAY, May 11, 2006, at 17A, available at http://www.usatoday.com/news/opinion/editorials/2006-05- 1 0-aids-edit_x.htm[hereinafter AIDS Ignorance].
139 Manoah Esipisu & Rebecca Harrison, South Africa's Zuma Acquitted of Rape, THE BOSTON GLOBE, May 8, 2006,
http://www.boston.com/news/world/africa/articles/2006/05/08/safrica_set_for_verdict_in_zuma_rape_trial/ ?rss_id=Boston.com+%2F+News.
140 AIDS Ignorance, supra note 138.
141 See, e.g., Beetroot But No Blushes, ECONOMIST, Aug. 24, 2006, at 40. South Africa’s health minister, Manto Tshabalala-Msimang, recently stated: “Raw garlic and a skin of the lemon--not only do they give you a beautiful face and skin but they also protect you from [HIV/AIDS].” Sarah Boseley, Aids Groups Condemn South Africa's “Dr Garlic,” THE GUARDIAN (London), May 6, 2005, at 16.
142 Id.
143 While respectable NGOs such as MSF acknowledge other
factors relating to a lack of research and development for certain diseases,
they still highlight the pharmaceutical industries’ spending patterns.
See
e.g., MSF, R & D SYSTEM IS FAILING TO MEET HEALTH NEEDS IN DEVELOPING COUNTRIES: MSF BRIEFING NOTE FOR MINISTERIAL SUMMIT ON HEALTH RESEARCH, MEXICO CITY, 16-20 NOVEMBER, 2004 (2005),
available at http://www.accessmed-
msf.org/prod/publications.asp?scntid=12 11200411191 52&contenttype=PARA&.
144 UN MILLENNIUM PROJECT 2005, supra note 1, at 137 (industry dissent).
145 See Mercurio, supra note 16, at 248-253; see also WIPO No. 49 1(E), supra note 63, at 1: (“A robust patent system providing for adequate patent protection is an indispensable incentive to creative and inventive work and is crucial to establishing and maintaining an attractive commercial environment.”); DFID, supra note 56, at 5-6.
FOR NEGLECTED DISEASES (2001), available at www.msf.org/source/access/2001/fatal/fatalshort.pdf . For more on the cost of combating the AIDS crisis, see UN MILLENNIUM PROJECT, REPORT OF THE TASK FORCE ON HIV/AIDS, MALARIA, TB, AND ACCESS TO ESSENTIAL MEDICINES, WORKING GROUP ON HIV/AIDS: COMBATING AIDS IN THE DEVELOPING WORLD, 129-49 (2005), available at http://www.unmillenniumproject.org/documents/HIVAIDS -complete.pdf.
(2004), available at http://www.globalforumhealth.org/Site/002__What%20we%20do/005__Publications/00 1__1 0%2090%20r eports.php (PDF form of THE 10/90 REPORT ON HEALTH RESEARCH: 2003-2004 is available on the right side of the webpage by chapter) (reporting that approximately 90% of the research and development of health research goes to diseases afflicting mainly the developed world); Condon & Sinha, supra note 13.
See PHRMA, GLOBAL PARTNERSHIPS: HUMANITARIAN PROGRAMS OF THE PHARMACEUTICAL INDUSTRY IN
DEVELOPING NATIONS 1 (2004), available at http://www.phrma.org/files/Global_Partnerships_2004.pdf [hereinafter PHRMA 2004]. In addition, in 2003, industry members of the Partnership for Quality Medical Donation provided more than $1.4 billion in donated drugs, and in 2002, pharmaceutical companies’ select humanitarian programs totalled $810 million. See PHRMA, IMPROVING HEALTH IN THE DEVELOPING WORLD (2004) (on file with author). More specific donation programs can be seen throughout PHRMA 2004. Id. Overall, the industry provides almost the same, if not more, total aid than most governments and international health organizations. UN MILLENNIUM PROJECT 2005, supra note 1, app. 2, at 138.
BYSTRÖM & PETER EINARSSON, TRIPS: CONSEQUENCES FOR DEVELOPING COUNTRIES: IMPLICATIONS FOR SWEDISH DEVELOPMENT COOPERATION, CONSULTANCY REPORT TO THE SWEDISH INTERNATIONAL
DEVELOPMENT COOPERATION AGENCY 37 (2001), available at http://ww.grain.org/docs/sida-trips-2001-en.pdf. For similar statistics, see Gavin Yamey, Public Sector Must Develop Drugs for Neglected Diseases, 324 BRIT. MED. J. 698 (2002); Troullier et al., supra note 91; Ellen’t Hoen, Statement by MSF at WIPO General Assembly (Sept. 30, 2004), http://www.cptech.org/ip/wipo/msf09302004.html (last visited July 18, 2006).
PUBLIC HEALTH, INNOVATION AND INTELLECTUAL PROPERTY RIGHTS, REPORT OF THE COMMISSION ON INTELLECTUAL PROPERTY RIGHTS, INNOVATION AND PUBLIC HEALTH 161-92 (2006), available at
http://www.who.int/intellectualproperty/documents/thereport/CIPIHReport23032006.pdf. It must be recalled that alternatives are not likely to have much impact on the pharmaceutical industry (for instance, Africa as a whole comprises only 1% of the world pharmaceuticals market). Moran, supra note 100, at 26.
http://www.weforum.org/pdf/Initiatives/GHI_2003_Meeting_in_the_middle.pdf.
For more information, see Bill & Melinda Gates Foundation, http://www.gatesfoundation.org/default.htm
(last visited Jan. 3, 2007).
THE BILL & MELINDA GATES FOUNDATION, DEVELOPING SUCCESSFUL GLOBAL HEALTH ALLIANCES
(2002), available at http://www.gatesfoundation.org/nr/downloads/globalhealth/GlobalHealthAlliances.pdf.
209 The packaging and labelling requirements
imposed by the Implementation Agreement will allow generic drugs to be easily
identifiable.
210 Sykes, supra note 155, at 67.
211 See, e.g., Jeffrey J. Schott & Jayashree Watal, Decision-Making in the WTO, 00-2 INT’L ECON. POL’Y BRIEFS 2 (2000); Mary E. Footer, The Role of Consensus in GATT/WTO Decision-Making, 17 NW. J. INT’L L. & BUS. 653, 661 (1996-97).
212 The “expeditious” solution to paragraph 6 of the Doha Declaration on Public Health of 2001 was not resolved until August 30, 2003.
213 See Council Regulation No. 953/2003, 2003 O.J. (L 135) 5 (EC), available at http://tradeinfo.cec.eu.int/antitradediversion_html/en.pdf.
214 See id. The WTO scheme, on the other hand, is designed to deter
trade diversion in circumstances
where generic drug producers manufacture and
export low-cost drugs to developing countries under
compulsory licensing conditions. See Implementation Agreement, supra note 45, at paras. 4 and 5. 2 15 Council Regulation No. 953/2003, supra note 213.
http: //www.wto. org/english/forums_e/ngo_e/icc_trips_28_e. doc.
http://www.wipo.int/freepublications/en/patents/49 1/wipo_pub_49 1 .pdf.
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