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Cheap drugs a bitter pill for the West

A global squabble over property rights could see the price of medicine soar in poor countries.


Would you rather pay $12 a dose for malaria drugs or $2.40 – and potentially boost your country’s economy at the same time?

The Ugandan government faced an easy choice when it decided to start producing its own version of a key malaria treatment, rather than continuing to rely on expensive imports. Since the country began making its own medicine in 2007, Uganda has produced not only anti-malarials, but also antiretrovirals (ARVs) used to treat HIV. The public-private company, Quality Chemicals, plans to roll out more ARVs, anti-malarials and antibiotics in the coming months and years. 

The venture, a shining example of African pharmaceutical manufacturing, was made possible in part because Uganda is considered a “least-developed country”. As such, it doesn’t yet have to respect international intellectual property laws, set out through the World Trade Organisation’s trade-related aspects of intellectual property agreement, or “Trips”. All countries are required to adopt the agreement’s measures into their laws if they want to be part of the organisation.

But when the agreement – made to homogenise and streamline intellectual property laws the world over – was signed in 1994, the World Trade Organisation recognised that the poorest countries may not benefit from strong intellectual property protection as much as their richer counterparts would and could request an extension to comply if they saw fit. 

They did, and least-developed countries were given much longer to adopt the agreement’s measures, in the hopes that this wiggle room would give them time to develop their economies and invest in key areas such as health and education. As a result of this extension, least-developed countries can either make, or import, cheaper versions of otherwise protected products, whereas middle- and high-income countries, South Africa included, have to give strong patent and copyright protection. 

Running out of time

But least-developed countries may be running out of time. They have until July to adopt the agreement’s measures into their own laws and a continued extension for pharmaceutical products until 2016. 

The deadline is looming. Feeling stretched for time in November last year, and on behalf of the least-developed country group, Haiti asked the council to consider an indefinite extension. 

If granted, the world’s poorest countries will only have to become Trips compliant when they are no longer considered a least-developed country. This request was discussed in detail at this week’s trade-related aspects of intellectual property agreement council meeting in Geneva, but no decision was made.

Advocates say that, if the extension is denied, the price of key medicines in these countries could shoot through the roof. The potential effect on ARVs is perhaps the starkest example. 

According to Jamie Love, director of Knowledge Ecology International, an organisation that works on a gamut of intellectual property issues, many large donors, including the Global Fund – the world’s largest multilateral funder of global health programmes – use the extension as an excuse to ignore patents on HIV drugs in least-developed countries. 

“Several big drug companies take this as a cue to either abandon enforcement of the patents in those countries, or to grant voluntary licences,” said Love. “If the World Trade Organisation ends the extension, that might change.”

Agencies such as the Joint United Nations Programme on HIV and Aids (UNAids) and the UN Development Programme (UNDP) say that local production ventures may also be hindered if an extension is not granted. 

Historically, the developed world has relied on India to produce generic versions of key medicines: currently, nearly 80% of first-line ARVs (the therapy used for the initial treatment of HIV) used in the developing world are produced in India. But as the epidemic progresses, more patients need more expensive second- and third-line treatment, and under the agreement Indian companies cannot produce generic versions of these products. As a result, poor countries have had to look elsewhere.

Mozambique also plans to produce ARVs and other medicine. South Africa, though not a least-developed country, has discussed increasing local pharmaceutical production, but some activists and academics say that the country will struggle in the face of strong intellectual property right protection.

Unlikely allies

Least-developed countries pushing for an extension have made some unlikely allies. The International Federation of Pharmaceutical Manufacturers and Associations, a key industry body, and the Computer and Communications Industry Association, which represents big-name and historically pro-intellectual property rights companies, have come out in favour of Haiti’s request. At the end of last month, a letter was signed by nearly 400 organisations, including many from South Africa, that also voiced support. 

But the United States and the European Union, home to the world’s major pharmaceutical companies, have yet to be convinced that an indefinite extension is the way to go. According to an official, “the EU has asked for clarifications from the least-developed country group as to why they proposed a transition period that does not have a specific timeframe [as they did on previous occasions].” According to the official, the union has not yet made a decision. No response was offered by the US delegation. A final decision on the matter is expected at a June intellectual property agreement council meeting.

UNAids and the UNDP say that pushing for intellectual property protection in least-developed countries makes little sense, given that they only account for 2% of global gross domestic product and 1% of global trade.

UNAids also says that developed countries shouldn’t push poor countries to implement the protection of intellectual property rights without first giving more financial and technical support, as they are required to do under the agreement.

Despite not being considered a least-developed country, South Africa supports indefinite extension. 

At the intellectual property agreement council on March 5, the country’s delegation explained that: “Circumstances that gave rise to the transition period have not changed much since the last extension … was granted … least-developed countries continue to be confronted by resource and human constraints, increasing technological gaps and weak innovative capacities.” 

“Of course we support indefinite extension,” said Mustaqeem de Gama, the director of legal international trade and investment at the department of trade and industry. “You can’t expect things to change in these countries overnight.” 

Mara Kardas-Nelson is an OSF fellow at the M&G Health Journalism Centre. This story was produced with the support of the Open Society Foundation.

Mara Kardas-Nelson was an OSF fellow at the Bhekisisa Centre for Health Journalism.