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Mon, April 23, 2007 : Last updated 14:33 pm (Thai local time)

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Home > Opinion > The eight deadly lies of Big Pharma

The eight deadly lies of Big Pharma

As Thailand issues more compulsory licences for Aids and heart medicines that are compliant with the World Trade Organisation's (WTO) Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) and Thailand's laws, the multinational drug industry and its allies are unleashing an ever more strident public disinformation campaign.

Lie No-1: Mellisa Brotz, a spokeswoman for Abbott Industries: "We do not view [the compulsory licence on Kaletra] legal or in the best interest of patients."

Truth: Thailand's compulsory licence on Kaletra is lawful in every respect: (1) it is a fully TRIPS-compliant Article 31(b) licence issued on valid public health grounds and for government, non-commercial use, which requires no advance negotiation with the patent holder; (2) it is fully complaint with Section 51 of the Thai Patent Act, which directly authorises government, non-commercial use licenses without prior negotiation; and (3) it sets a royalty at .5 per cent of the sale price, which royalty is appealable by the affected patent holder. Although drug companies complain the loudest that Thailand has failed to engage in prior negotiation, in fact, the record shows that Thailand has engaged in many fruitless negotiations with the drug industry for the past two years.

Lie No-2: Roger Bates, American Enterprise Institute: "It is generally understood that compulsory licences should be confined to 'public health crises, including those relating to HIV/Aids, tuberculosis, malaria and other epidemics,' which represent a 'national emergency or other circumstances of extreme urgency'."

Truth: This assertion is the most widely circulated and most repeated misrepresentation that Big Pharma has propagated. The Doha Declaration of 2001 is exquisitely clear that, "each member has the right to grant compulsory licences and the freedom to determine the grounds upon which such licences are granted". Although there are special rules for emergencies that permit expedited procedures for granting a licence, the right to issue compulsory licences is not limited to public-health emergencies.

Teera Chakajnarodom, president of Thailand's Pharmaceutical Research and Manufacturers' Association, takes the alleged emergency rule and raises it one degree higher: "The law allows such actions with pharmaceutical products only in cases of extreme national emergencies, or during wartime."

Lie No-3: Teera again: "After the company does 10 years of research, and then suddenly the Thai government would like to impose the compulsory licence, taking away their property, their assets."

Truth: Patents are not "property" in the traditional sense - they are government-granted rights that are intended to balance the interests of innovators and the public at large, and which are granted by governments with many express and implied conditions, including the right to issue compulsory licences. Governments around the world, including the US, have issued thousands of compulsory licences since the late nineteenth century, including on pharmaceutical products. Moreover, Thailand had its compulsory licence law on the books when all three companies, Merck, Abbott, and Sanofi-Aventis, filed their patent claims in Thailand.

Lie No-4: Khun Teera again: "Everything is negotiable."

Truth: For monopoly-based drug companies, everything isn't negotiable. Abbott has flatly refused for nearly six months to lower its mid-tier price for Kaletra. Moreover, even when negotiating deeper discount prices, drug companies frequently extract promises that countries will refrain from seeking other cheaper sources of supply. In this context, drug companies are mainly interested in preventing generic competition.

Paradoxically, in pursuing the generic-freeze-out option, drug companies will occasionally give concessions to bigger middle-income countries that "make the market" even though they would not do so for smaller and poorer countries like Guatemala.

Lie No-5: Harvey Bale, director-general of the International Federation of Pharmaceutical Manufacturers Associations: "Compulsory licensing can be a route to commercial abuse."

Truth: Monopolies and excessive pricing are not commercial abuse, but competition and lower prices are - go figure. For the hugely rich, R&D drug industry (more than 90 per cent of the global pharmaceutical market) to complain about commercial abuse by generic producers (less than 10 per cent of the global pharmaceutical market) is deeply ironic.

A particular form of this complaint has been asserted by Pharma apologists Roger Bates and Ronald Cass. These two industry-sponsored pundits complain that licenses might eventually be granted to Thailand's own publicly owned, profit-making pharmaceutical company, the Government Pharmaceutical Organisation (GPO). They assert that this will be a form of cheating because production by the GPO will create a commercial advantage to domestic producers, who might thereafter become regional suppliers to other countries.

Nothing in TRIPS prohibits granting licences to profit-making entities. Since Big Pharma has disinvested in developing countries' pharmaceutical capacity post-TRIPS, it makes sense for countries to increase their own capacity to meet domestic and regional needs for essential medicines.

Lie No-6: Harvey Bale: "Compulsory licensing can ... put patients at risk." Merck, Abbott, and Sanofi-Aventis also warn that overriding patents risks jeopardising quality.

In terms of product quality, Bale roll outs out another old chestnut - "generics are inferior". He neglects to mention that multiple generic versions of efavirenz manufactured in India have already received pre-qualification at the WHO. Although it is true that the Thai Government Pharmaceutical Organisation has not yet received WHO-pre-qualification on its first-line ARVs, it is building a good manufacturing practices manufacturing plant after which it will surely meet global standards.

Lie No-7: All of the sources from Big Pharma previously quoted have said that compulsory licences will reduce incentives for innovation.

Truth: All of Asia (except Japan) and all of Africa comprise only 5.1 per cent of the global pharmaceutical market, according to Information Management Group.

Even though low- and middle-income markets are growing faster than developed country markets, drug companies continue to make the vast bulk of their profits from sales in the US, Canada, Europe, and Japan, which collectively buy nearly 89 per cent of drugs by dollar volume. Drug companies always argue that compulsory licences interfere with their R&D incentives, but they never admit that developing countries' compulsory licences never affect their monopoly profits in rich country markets. How can South and Southeast Asia's infinitesimal share of the global market really affect R&D incentive?

Lie No-8: Abbott: "[Because] Thailand has chosen to break patents on a number of medicines, ignoring the patent system ... we've [lawfully] elected not to introduce new medicines."

Truth: As discussed above, Thailand has not ignored the patent system - it has used one of its important lawful flexibilities for licensing access to patented products and processes.

Moreover, instead of Thailand breaking the law, it is Abbott that has engaged in an unprecedented and probably illegal withdrawal from the Thai market, taking seven important medicines, including a heat-stable form of Kaletra, out of the drug registration process.

 To withhold life-saving medicines from the market in retaliation for lawful use of lawful flexibilities is not only unjustifiable, it is abusive and unconscionable.


Brook K Baker is a professor in The Programme on Human Rights and the Global Economy at Northeastern University's School of Law.

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