Tuesday, May 13, 2008
Last week, a group of 11 Latin American nations, including giants Mexico and Brazil but none of the CAFTA countries, cut a deal with more than 20 brand-name companies on region-wide prices. Brian Henry, a spokesman for Bristol-Myers Squibb, says the company negotiates prices with countries depending on their wealth and infection rate. "We do openly work with governments around the world to make sure medicines are appropriately priced," he says. "Compulsory licensing is not necessarily an answer to something like HIV-AIDS" because it's name-brand companies, not generics, that develop new drugs.
The deal should cut prices in the short term, but the long-term effects will be a prolonged name-brand monopoly, according to Robert Weissman, director of the activist group Essential Action. "The strategy of negotiating with the brand-name companies is a dead-end strategy," he says. "The only thing that's surprising is how unwilling the [brand-name] companies have been to offer meaningful discounts given what's at stake. You're not going to get progressively diminishing costs unless you have generic medicine."
Latin America's AIDS burden is relatively small compared to that in other parts of the world. About 1.7 million people there have AIDS -- less than half of 1 percent of the population -- compared with more than 25 million in sub-Saharan Africa. Central America represents about half of 1 percent of worldwide drug sales. So why do the pharmaceutical companies expend so much effort to protect themselves when there's little profit to be made? "If they can get the Central American countries signed off on this deal, then that provides them leverage for extracting the same kind of agreement" in negotiations with other countries, Weissman says. Brand-name companies can use the terms of smaller deals to build larger ones and use those agreements persuasively when they make deals with more powerful nations such as Brazil or South Africa, he added.
Generic-drug advocates fear these restrictions will come back to bite U.S. consumers, and not just on drugs to treat AIDS. For example, the United States has limits on patent extensions and on how long companies can keep secret their test data. But if the United States' neighbors adopt different requirements, like those in CAFTA, pressure will build at home to "harmonize," or get on board with what everyone else is doing. "People are starting to realize, yes, indeed, this is a part of grand strategy," said Kathleen Jaeger, president of the Generic Pharmaceutical Association.
Brand-name companies, and the office of the U.S. Trade Representative, which negotiates these deals, say their goal is to protect intellectual property rights. "It's important for us to have patent protection and to be able to recoup our costs so we can reinvest that into research and development," says Henry, of Bristol-Myers Squibb. Brand-name companies run tests not only to prove their drugs are safe but also to develop information on dosages and side effects, he added. And unless there's a possibility of profit, there's no incentive to do research in the first place. "Generics aren't going to be forced off the market," says Jim Mendenhall, acting general counsel at the USTR. "The [deal] doesn't have any retroactive effect. The provisions including data protection in CAFTA will actually enhance access to medicines by encouraging the early launch of innovative drugs in these countries."
Next up on the U.S. trade agenda are Thailand and an Andean free-trade agreement, which would cover Colombia, Peru, Ecuador and Bolivia. Thailand has a robust generic industry and a national program to fight HIV, and activists fear a trade deal will undermine both. Unlike the CAFTA negotiations, the Andean talks have brought in health ministers, who offered a cost-sharing proposal that would give generics access to the market in exchange for royalties. "That's the kind of compromise that meets the substantive basis for Big Pharma and [the U.S.] demand for data protection without locking in a model that blocks generic competition," Weissman says. The United States has not yet responded to the offer, but the U.S. proposal would limit the ability of countries to grant compulsory licenses and block countries from importing brand-name drugs if they're cheaper abroad.
Advocates differ about an appropriate response to those deals, but most want an exemption from patents if public health is in danger. A December WTO summit in Hong Kong will provide an opportunity to cement the rights of countries to such exceptions. Some say rights to research data should be preserved only in countries rich enough to afford the drugs, which can still provide the industry with plenty of profit. Weissman says countries should be able to issue compulsory licenses whenever they want, while Jaeger, of the Generic Pharmaceutical Association, says a limited amount of protection for brand-name companies provides an important incentive for new drug development.
Whatever the solution, advocates agree there's an imbalance in these negotiations that protects innovation while doing little to guarantee access. The protections in CAFTA and upcoming deals go beyond those in U.S. law and NAFTA, allowing the pharmaceutical industry benefits through trade agreements it cannot obtain through the legislative process.
And the Bush administration continues to present two faces, claiming it supports global health and investing in the battle against AIDS in the developing world while pushing trade deals that undermine the same principles. "The administration is very concerned about global public health on the one hand, but that's not being carried over to free-trade agreements," Jaeger says. "This is not acceptable."
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