[Ip-health] Health GAP: U.S. Fake Post-Doha Moratorium Shows Murderous Bad Faith

[B.Baker@neu.edu]

U.S. Fake Post-Doha Moratorium Shows Murderous Bad Faith
Brook K. Baker, Health GAP

On January 14, 2003, the U.S. formally notified the World Trade
Organization concerning the "details" of a unilateral moratorium it had
announced on December 20, 2002, in the wake of negative publicity
surrounding its derailment of post-Doha production-for-export negotiations.
After negotiating all year to impose onerous conditions on poor developing
countries trying to access generic medicines, the U.S. threw a trade-fit
when it couldn't have its way on limiting the diseases to be covered by the
proposed accord to the big three--AIDS, TB, and malaria (and a small
handful of similarly grave infectious diseases).  As if scuttling the
admittedly poor Chairman's Draft Text were not enough, the U.S. has now
arrogantly announced the terms and conditions of its continued bullying of
poor countries trying to purchase cheaper generic medicines from abroad
when they cannot manufacture drugs efficiently (or at all) at home.  In
making its announcement, the U.S. shows murderous bad faith and a great
leap backward in the global effort to redress intellectual property rules
that will dramatically decrease production-for-export in the very near
future.

At the WTO Ministerial meeting in Doha, Qatar, on November 14, 2001, the
U.S. government signed a Declaration on the TRIPS Agreement and Public
Health declaring that

      4.  We agree that the TRIPS Agreement does not and should not prevent
      Members from taking measures to protect public health.  Accordingly,
      while reiterating our commitment to the TRIPS Agreement, we affirm
      that the Agreement can and should be interpreted and implemented in a
      manner supportive of WTO Members' right to protect public health and,
      in particular, to promote access to medicines for all.

      In this connection, we reaffirm the right of WTO Members to use, to
      the full, the provisions in the TRIPS Agreement, which provide
      flexibility for this purpose.

Among the flexibilities addressed was that which gave all Members unlimited
rights to issue compulsory licenses on any grounds, including public
health:

      5(b) Each Member has the right to grant compulsory licenses and the
      freedom to determine the grounds upon which such licenses are
      granted.

In addition to clarifying key flexibilities concerning the grounds for
compulsory licenses under the TRIPS Agreement, the Doha Declaration also
promised to resolve the so-called production-for-export problem:

      6.  We recognize that WTO Members with insufficient or no
      manufacturing capacities in the pharmaceutical sector could face
      difficulties in making effective use of compulsory licensing under
      the TRIPS Agreement.  We instruct the Council for TRIPS to find an
      expeditious solution to this problem and to report to the General
      Council before the end of 2002.

Paragraph 6 was adopted with express acknowledge that WTO members might
choose to address a broad array of public health needs and that they might
choose to do so by means of compulsory licenses.  Moreover, Paragraph 6 was
adopted on the premise that poor countries should have the same capacity to
access cheaper generic medicines by means of compulsory licenses that a
rich country would enjoy if it exercised its TRIPS-compliant right to issue
a compulsory license, like the U.S. and Canada almost did to access Cipro
at the height of the anthrax scare.  But the U.S. doesn't want a level
playing field--it wants to secure the ongoing monopoly profits of its
profit bloated drug industry, which "earned" nearly $37 billion in profit
in 2002.

The details of U.S.'s broken promises and bad faith are important, if for
no other reason that they document a punitive streak in the U.S.
intellectual property rights leitmotif:  unilateralism, trenchant disregard
of human rights, and big-stick protection of Pharma profits.

Condition #1 - limit medical technologies:  The U.S. limits its moratorium
to patented pharmaceutical products or HIV/IDS tests kits, arguably
excluding many other important medical technologies including vaccines.
This limitation has been roundly critiqued by public health specialists
including Medicins Sans Frontier.

Condition #2 - limit countries that can import medicines based on income:
The U.S. has excluded "High Income Economies," like those of South Korea
and Singapore which might on occasion need to access cheaper generic
medicines cost effectively and whose purchasing power could be added to
poor countries to produce needed AIDS medicines even more cheaply.

Condition #3 - limit covered diseases:  Here the U.S. has actually gone
backwards.  Though its most recent proposals included direct reference to a
list of infectious diseases, particularly those that plague Africa, it has
now agreed to cover only HIV/AIDS, TB, and malaria "or other infectious
epidemics of comparable scale and gravity."  This disease limitation was
the major sticking point in the late December negotiations.  Both
developing countries and their international allies, including the World
Health Organization, have agreed that determinations of public health needs
should be left to sovereign nations and that disease limitation fly in the
face of compelling public health principles.  In this regard developing
countries and their allies are also rejecting the so-called compromise
proposal offered by the European Union to have the WHO broker the diseases
warranting production-for-export.

Condition #4 - limit countries that can import medicines based on technical
manufacturing capacity:  The U.S. is trying to impose economically
preposterous definitions of productive capacity.  After admitting that
least developed countries are automatically eligible to import, the U.S.
limits importation to an economy "considered to have no or insufficient
manufacturing capacities if it has demonstrated that it has no or
insufficient technical manufacturing capacity in the pharmaceutical
sector."  Generic drugs will only be cost effective for poor countries if
they are produced at meaningful economies of scale.  A few large developing
countries like China, India, and Brazil, might have a population size to
support efficient production, but a great many developing countries are too
small and too poor to have cost-efficient markets for production.  The
theoretical "technological" ability to make one drug does not mean that a
country can produce other medicines let alone that it can do so
efficiently.  The U.S. is basically proposing that every small country have
its own mini-drug industry, at enormous social and technological cost and
with little if any cost advantage.  This definition of capacity is designed
not to promote local production of drugs, but rather to prevent aggregated
demand and worldwide production of generics at truly cost-effective
economies of scale.  If a country dares to try to import medicines, despite
having a theoretical modicum of of technical capacity, both the importing
country and the generic producer face possible trade sanctions at the WTO
or in private infringement suits by the patent holder.

Condition #5 - importing country notification to the TRIPS Council:  The
U.S. requires importing countries to notify the TRIPS Council placing
another procedural barrier in the path of the quick and efficacious
importation of generic medicines.

Condition #6 - compulsory license in the importing country:  The U.S.
proposal requires importing countries with patents to issue compulsory
licenses.  Given that a license is also required in the exporting country
and given that the U.S. has dropped its assurances about avoiding double
licensing fees, it is possible that the importing country will also have to
pay a royalty to the patent holder.

Condition #7 - compulsory licenses and royalty fees in exporting countries:
The U.S. requires the exporting country to issue a separate compulsory
license for each drug produced and for each and every country desiring that
medicine.  These licenses, according to ordinarily compulsory licensing
rules, might require prior negotiation with the patent holder for a
voluntary license.  In addition to this delay tactic, royalty rates will be
set the in exporting country according to its "economic value," presumably
the economic value in the exporting country which is likely to be higher
than in the importing country.

Condition #8 - special packaging, labeling, and product characteristics to
reduce product diversion:  The U.S. joins the E.U. in over-emphasizing the
risks of product diversion and imposing burdens on generic producers to
distinguish their production-for-export products so that they can't be
diverted and substituted for identical products in the rich markets of the
North.  The U.S. and E.U. have time-tested and effective border protections
that historically have worked extgremely well to prevent unauthorized
importation of unauthorized generic medicines. There is no compelling
reason to put additional burdens on producers that will delay product
registration and potentially lead to consumer confusion in importing
countries.

Condition #9 - exporting country notification to the TRIPS Council:
According to the U.S., exporting countries must "inform the TRIPS Council
and post to an official government website information regarding the grant
of the license, including the name and address of the licensee, the
product(s) for which the license has been granted, the quantity(ies) for
which it has been granted, the economy(ies) for which it has been granted,
the economy(ies) to which the product is to be supplied and the duration of
the license."  The expected purpose of this requirement is not
transparency, but opportunity for delay and harassment by the U.S.T.R.
and/or Pharma.

Condition #10 - opportunity for the patent holder to supply the needed
product:  Importing countries, whether there is a competing patent on file
or not, must give the patent holder an opportunity to supply the needed
product.  At present when there is a competing patent on file,
international law does not require prior negotiation with patent holders
with regard to (1) emergencies or other urgent needs, (2) non-commercial
government use, or (3) response to anti-competitive practices.  And, where
there is no patent on file, countries have historically been permitted to
buy generics from any producer whatsoever.  Despite these uncontested
rights, the U.S. now wants to impose a universal requirement of prior, and
time delaying negotiations on each country that wants to import a
life-saving generic medicine.  The U.S. had never proposed this requirement
post-Doha (though it did so earlier in 2001). Now, in a breath-taking
display of bad faith, is doing so in its illusory, unilateral moratorium.

The U.S. reneged on its solemn oath at Doha to find and implement an
expeditious solution to the Paragraph 6 production-for-export dilemma by
the end of 2002.  It did so first by lobbying beyind the scenes for the
Chairman's Draft Text, which itself is deeply flawed because of
U.S./Pharma-imposed conditions.  Yet even the Chairman's Text was not
draconian enough for Pharma profit counters and for the White House
operatives who took over the Paragraph 6 negotiations.  Acting as proxy for
the drug industry, the U.S. had not gotten its last drop of blood on
disease limitations, so it reverted to its earliest negotiation positions
articulated in the run-up to the Doha Declaration.  Bad faith piles on bad
faith, drawn from a bottomless well of malign indifference to the plight of
poor people suffering and dying from lack of access to the same medicines
that we take for granted in the U.S.

In a way, the U.S. moratorium is refreshingly frank.  It shows the U.S.'s
true intentions, including its intention to use every ambiguity not to
maximum, but rather to minimize life-saving access to generic medicines.
It shows as well the flaws that were built into the Chairman's Text, flaws
that the U.S. had almost succeeded in bullying developing countries to
accept.  Well, since the U.S. has gone back to bare-knuckle first
principles, developing countries and their allies should do so as well.
Sovereign nations should decided their own public health needs without
bowing to disease limitations imposed by heartless U.S.T.R. bureaucrats
half a world away.  Importing countries should signal their need for
medical products and technologies and then generic producers should produce
and export those products quickly and efficiently as limited exceptions
under Article 30.  Importing countries may need to issue compulsory
licenses if the products are patented, but they should do so according to
streamlined administrative procedures.  Likewise, registration of imported
medicines should be streamlined as well, either by acceptance of high
standard registration elsewhere or by means of WHO pre-qualification.

The U.S. has been trying to bully developing countries, in trade and
finance ministry offices, to accede to its murderous and bad faith
limitations on access to cheaper generic medicines.  Out in the streets of
Africa, Asia, and Latin America, however, real people are dying because of
the U.S. prevarication--its lies and deceit.  The promise of the crumbs of
free trade and the threat of underhanded retaliation should not deter poor
people and their allies from insisting that the human right to affordable
medical treatment trumps the so-called principles of free trade and
so-called intellectual property rights.  Since the U.S. has no shame, and
no principles, its sham and shameful moratorium should be exposed and
condemned as the instrument of pharmaceutical apartheid that it is.