By Kevin E. Noonan --
The crisis regarding the pricing of patented drugs in poor and developing countries continues this week, with actions by current and former U.S. chief executives contributing to the situation.
The U.S. Trade Representative issued a "Special 301 Report" on Monday, pursuant to the provisions of the Trade Act of 1974. This report on the state of intellectual property rights worldwide identifies twelve countries on a "priority watch list" and promises consultations with Congress, affected industry groups, and foreign governments to address IP issues. Although the majority of the report focuses on software and entertainment piracy, the portion addressing pharmaceuticals focuses particularly on Thailand. This country has over the past six months moved aggressively with regard to anti-AIDS drugs, compulsory licensing, and parallel imports. Most disquieting to Western drug companies is Thailand's expansion of what it considers "necessary" drugs outside the "traditional" boundaries of anti-AIDS drugs to include medications like Plavix®. Even more disquieting are comments this week from the Thai Public Health Minister, Mongkol Na Songkhla (at left), that indicate that Thailand will further expand this category for all "essential" drugs needed to support the government's universal health care plan. However, the report was constrained to specify merely perceived procedural irregularities rather than the substantive actions of the Thai government, because these actions fall squarely within World Trade Organization (WTO) rules (most importantly the Doha Declaration) that permit compulsory licenses and parallel imports of generic equivalents of patented drugs in times of national medical emergency.
Surprisingly absent from the priority watch list is Brasil, which recently granted its first compulsory license after years of threatening to do so. The license was for efavirenz, an anti-AIDS drug that Brasil plans to import from India. The U.S. Trade Representative's failure to include Brasil on the priority watch list continues a trend in which the Bush administration has been reluctant to oppose Brasil's exercise of its WTO rights to the detriment of Western, particularly American, drug companies.
The actions of the Clinton Foundation and the comments of former President Clinton yesterday exacerbate the problem with unnecessary rhetoric, while demonstrating how nongovernment organizations (NGOs) are becoming increasingly involved players in international drug pricing policy. Mr. Clinton announced that the Clinton Foundation, acting in concert with a group of world governments headed by the French, and acting through the Global Fund to Fight AIDS, Tuberculosis and Malaria, would provide part of a $100 million dollar fund for purchasing anti-AIDS drugs from generic drug makers, including Cipra and Matrix in India, to be distributed in so-called "better-off developing countries." (This category includes countries such as Mexico and Brasil.) The effect of this effort is predicted to be a 50% reduction in drug costs in these countries, and a 25% reduction in poorer countries, based on their already discounted drug costs. The combination of such international humanitarian relief efforts and the provisions of the Doha declaration leave Western drug companies completely undefended in this dispute, absent efforts by the American and other Western governments before the WTO, that they frankly have not shown the political stomach to undertake.
In view of the full-fledged retreat the developing world has imposed on Western drug companies, Mr. Clinton's comments in support of Thailand's compulsory license scheme, that "[n]o company will live or die because of high price premiums for AIDS drugs in middle-income countries, but patients may," is unnecessary and inflammatory. More importantly, such comments are irresponsible insofar as they hasten the day when the economics of drug discovery and development retard or preclude Western companies from performing basic research, and incurring the exorbitant costs thereof, that produces new drugs. It is clear that world governments need to fashion a means for distributing the costs of drugs for deadly diseases, such as AIDS, malaria, dysentery, and if we are very unlucky, avian flu, but applauding steps that increase the political and economic tensions between the West and the developing world is not a useful way forward. It is ironic that Mr. Clinton, whose presidency was so bruised by the politics of stigmatization and character assassination, should employ those methods against the only actors on the world stage developing the drugs that save lives, both at present and in the future.
For additional information on the topic of compulsory licensing in developing countries, please see:
- "Not Getting It about Patented Drug Prices at The Wall Street Journal," May 6, 2007
- "A Modest Proposal Regarding Drug Pricing in Developing Countries," May 2, 2007
- "The Law of Unintended Consequences Arises in Applying TRIPS to Patented Drug Protection in Developing Countries," May 1, 2007
- "Abbott Agrees to Offer AIDS Drug at Reduced Price," April 12, 2007
- "No New Abbott Medicines for Thailand," March 14, 2007
- "More Compulsory Licensing in Thailand," February 1, 2007
- "Thailand Compulsory License Still in the News," December 18, 2006
- "Thailand Issues Compulsory License for AIDS Drug," December 6, 2006