Not Getting It about Patented Drug Prices at The Wall Street Journal
By Kevin E. Noonan --
Treaties have a funny way of not having the results expected when they are signed. The Versailles Treaty and the Briand-Kellogg Pact did not prevent Germany from rearming prior to World War II; the United Nations Charter did not prevent the General Assembly from adopting resolutions contrary to the West's best interests in the 1970's; and the WTO and TRIPS have not resulted in the general reverence for intellectual property protection intended by Western countries in the developing world, particularly with regard to pharmaceuticals. Indeed, the combination of the Doha Declaration of 2001 and compulsory licensing provisions in national TRIPS implementing laws have created a crisis in certain areas, most particularly anti-AIDS drugs, where the levels of protection may be lower in the post-TRIPS world than they were before the GATT treaty was signed.
The editorial page of The Wall Street Journal objects to these developments. In an editorial entitled "Abbott's Bad Precedent," the paper excoriates Abbott Laboratories for its decision to sell its anti-AIDS drug Kaletra® to Thailand at a reduced price. This outcome, according to The Journal, was the result of "browbeating" by the Thai government, "intimidation" from non-governmental organizations (NGOs) such as Doctors without Borders and Oxfam, and political spinelessness by the World Health Organization, who "brokered" the deal between the pharmaceutical company and Thailand.
In one way, The Journal has a point - while Thailand's actions with regard to anti-AIDS drugs are becoming commonplace (see "Abbott Agrees to Offer AIDS Drug at Reduced Price"), its inclusion of Plavix® for heart disease is harder to justify, since heart disease certainly doesn't have the "national health emergency" status of AIDS that falls clearly within the WTO's Doha Declaration exception. (Indeed, according to The Journal, neither AIDS nor heart disease qualifies for the exemption, each affecting about 1% of the Thai population; however, a far lower percentage of Brasilian citizens are affected by AIDS and given drugs from the government under similar drug-pricing schemes.) Moreover, the Thai government's intention to transfer the three "negotiated" drugs (including Merck's Stocrin®) to a for-profit state-owned company is unprecedented in these types of negotiated drug pricing schemes.
The Journal's editors are tacking against a strong headwind, however. The poor and developing nation members of the WTO support the ability of their governments to avoid patent royalty payments in the form of higher drug prices for their citizens suffering from AIDS (and, one suspects, other pandemics such as avian flu if they arise). International politics and permissive WTO policies make it almost a certainty not only that countries can avoid drug patent royalties domestically, but that the generic drug industry in each country can export anti-AIDS drugs to other poor or developing countries, also without liability. This has been the pattern developed in Brasil with regard to Merck's efavirenz (Stocrin®) and in South Africa with a number of AIDS drugs. It is clearly the wave of the future, against which only creative solutions may prevail.
UPDATE: Last Friday, Brasil's president signed into law a compulsory license for Merck's efavirenz. This is the first time Brasil has made good on its threat to grant compulsory licenses on anti-AIDS drugs, after threatening several other Western drug companies with compulsory licenses and obtaining substantial discounts thereby. According to The Wall Street Journal, Merck offered a 30% discount while Brasil wanted a 60% discount.
This is the third in a series of articles exploring the issue of compulsory licensing in developing countries. For additional information on this topic, please see:
- "A Modest Proposal Regarding Drug Pricing in Developing Countries" - May 2, 2007
Posted by: | October 16, 2007 at 06:12 AM