[Ip-health] Financial Times: Patent or patient? How Washington uses trade deals to protect drugs

[Thiru Balasubramaniam]

http://www.ft.com/cms/s/5942d150-317a-11db-b953-0000779e2340.html

------------

William Aldis was agitated. As the World Health Organisation's top man
in Thailand, he knew Thai officials were hosting their US counterparts
in the northern city of Chiang Mai to negotiate what to many outsiders
might seem an entirely worthy objective: a bi=ADlateral free-trade deal.
But he saw dangers - and decided to make his views public.

The "lives of hundreds of thousands of Thai citizens" would be put at
risk if negotiators accepted Washington's demands for greater protection
of drug companies' intellectual property rights, he wrote in an article
for a Bangkok newspaper.

That was in January. By the end of March, Dr Aldis - just 16 months into
what is normally a four-year tenure - was abruptly transferred sideways
to a job in India, raising concerns in Thailand about US efforts to curb
the independence of the WHO's public health professionals.



<SNIP>

The controversy poses particular difficulties for the Geneva-based WHO,
which is gearing up for the highly political election of a new
director-general after the death in May of Lee Jong-wook. A WHO assembly
is due to choose a successor in November.

<SNIP>

After the article appeared, Kevin Moley, then head of the US permanent
representation to the United Nations in Geneva, called on Dr Lee. Both
verbally and in writing, he registered Washington's displeasure with the
statements of the WHO's Bangkok representative.

One US official familiar with the discussions says: "For someone on the
WHO payroll to criticise a bilateral negotiation is not appropriate."

Yet the subsequent abrupt transfer of Dr Aldis (himself an American)
brought alarm in Thailand. "If outside political pressure can influence
an organisation which is supposed to be dedicated to the health of the
people, it is a really bad sign," says Jiraporn Limpananont, a
pharmaceutical sciences professor at Bangkok's Chulalongkorn University
and an expert on intellectual property rights. "It will be a threat for
people all over the world, not just for the Thai people."

<SNIP>

Even Jamie Love, a veteran critic of the US campaign for tougher
intellectual property rights abroad, says: "There's no doubt the
bilateral agreements are designed to step back from Doha, making it
harder to introduce generics. But it's hard to say the US position is
crystal clear. It depends who's on the ground."

<SNIP>

Dr Lee, a cautious man, was wary of antagonising the US, to which he
owed his election three years ago. In the contest to replace him, the
candidates may find reconciling drug affordability and intellectual
property to be among the trickiest stances on which they will campaign.




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    Patent or patient? How Washington uses trade deals to protect drugs

By Alan Beattie, Andrew Jack and Amy Kazmin

Published: August 22 2006 03:00 | Last updated: August 22 2006 03:00

William Aldis was agitated. As the World Health Organisation's top man
in Thailand, he knew Thai officials were hosting their US counterparts
in the northern city of Chiang Mai to negotiate what to many outsiders
might seem an entirely worthy objective: a bi=ADlateral free-trade deal.
But he saw dangers - and decided to make his views public.

The "lives of hundreds of thousands of Thai citizens" would be put at
risk if negotiators accepted Washington's demands for greater protection
of drug companies' intellectual property rights, he wrote in an article
for a Bangkok newspaper.

That was in January. By the end of March, Dr Aldis - just 16 months into
what is normally a four-year tenure - was abruptly transferred sideways
to a job in India, raising concerns in Thailand about US efforts to curb
the independence of the WHO's public health professionals.

The spat highlighted the tensions generated by a US drive to strengthen
patent enforcement and intellectual property rights protection around
the world - a campaign backed by some of the powerful drugs companies
that produce Aids medicines but opposed by many public health
specialists, patient groups and developing nations.

On one side are those who argue that stronger patent protection will
keep drug prices too high to meet the needs of developing-world
patients. Pitted against them are others who insist innovation is under
threat and the real problem in poor countries is a lack of hospital
facilities and medical staff.

Widely discussed at last week's world Aids conference in Toronto, the
issue prompted a petition signed by M=E9decins sans Fronti=E8res, the
doctors' aid organisation, and dozens of other groups calling for a
moratorium on free-trade provisions that threaten access to treatments.
In it they demand that governments "protect the public from the
potential negative consequences of bilateral and regional trade
agreements on public health".

The controversy poses particular difficulties for the Geneva-based WHO,
which is gearing up for the highly political election of a new
director-general after the death in May of Lee Jong-wook. A WHO assembly
is due to choose a successor in November.

Dr Aldis, in his article published in the English-language Bangkok Post
and entitled "It could be a matter of life and death", warned that the
concessions sought by Washington could hinder Thailand's domestic
production of generic drugs, particularly the life-saving medicines that
will be needed to treat the 600,000 Thais living with HIV.

"The price of second- and third-generation HIV drugs will remain
exorbitantly expensive," he wrote, adding that the Thai government -
which has won accolades for its commitment to provide Aids drugs for all
who need them - could thus find its public health system bankrupted.

After the article appeared, Kevin Moley, then head of the US permanent
representation to the United Nations in Geneva, called on Dr Lee. Both
verbally and in writing, he registered Washington's displeasure with the
statements of the WHO's Bangkok representative.

One US official familiar with the discussions says: "For someone on the
WHO payroll to criticise a bilateral negotiation is not appropriate."

Yet the subsequent abrupt transfer of Dr Aldis (himself an American)
brought alarm in Thailand. "If outside political pressure can influence
an organisation which is supposed to be dedicated to the health of the
people, it is a really bad sign," says Jiraporn Limpananont, a
pharmaceutical sciences professor at Bangkok's Chulalongkorn University
and an expert on intellectual property rights. "It will be a threat for
people all over the world, not just for the Thai people."

At root, the dispute concerns US efforts to extend the patent
protections laid down in existing multilateral trade pacts. Under the
WHO's "trade-related aspects of intellectual property" (Trips)
agreement, countries can override drug patents by issuing a "compulsory
licence" to manufacture or import cheaper copycat versions, if they
judge there to be a public health emergency.

But a congressional mandate urges the US trade representative to push
for stronger protection of intellectual property rights around the
world, through bilateral free-trade agreements (FTAs). After signing
deals with small economies such as Oman, Jordan, Morocco and Bahrain,
Washington has turned its attention to more significant trading partners
such as Malaysia and South Korea as well as Thailand.

These efforts have been given added impetus by the expiry next year of
the White House's "fast-track" trade promotion authority, which allows
the administration to negotiate trade deals that Congress must then
either approve or reject in their entirety. Last month's indefinite
suspension of the WTO's Doha round of trade talks also re=C3=82=C2=ADfocuse=
d US
attention on its bi=C3=82=C2=ADlateral trade deals.

In their talks with Thailand, echoing the terms of similar deals, US
negotiators have demanded that the authorities agree to grant
pharmaceutical companies "compensatory" patent extensions in the event
of "unreasonable" delays either in granting drug patents or approving a
drug for market use.

They have also sought five years of "data exclusivity", which would
prevent makers of generic drugs using the clinical trial data, or other
scientific information, from another company to prove the safety and
efficacy of a medication after it comes to market. Such data protection
would have particular repercussions for Thailand, where some Aids drugs
were never patented, as companies previously judged the potential market
to be too small.

Last, the US has pushed Thailand to adopt more specific language on the
terms and conditions under which it would engage in compulsory licensing
of new drugs, although Washington promised to issue a "side letter"
clarifying that the binding language in the bilateral trade deal was
consistent with the WTO's 2001 Doha declaration on Trips and public health.

Achara Eksaengsri, deputy director of research and development at
Thailand's Government Pharmaceutical Organisation (GPO), says the
bilateral conditions would have a highly detrimental impact on
Thailand's ability to fulfil its pledge to provide drugs to Aids patients.

The Thai GPO is currently producing generic versions of older
"first-line" anti-retroviral drugs for some 80,000 people and hopes to
have 150,000 on treatment within two years. It also plans to provide
generic "second-line" treatment using more sophisticated newer drugs for
patients as required, an aim that would be hampered by conceding "data
exclusivity" protection. "We have to plan how the government budget can
support the Thai patients," she says.

In contrast, western pharmaceutical companies say that the protections
are necessary to ensure they make adequate returns to encourage future
research and development of drugs. They also argue that in the poorest
countries most affected by Aids, they have made great efforts to help,
offering discounted prices and waiving or not enforcing patents.

Harvey Bale, head of the International Federation of Pharmaceutical
Manufacturers' Associations, says his members have been made scapegoats
for far broader problems that have hindered the scaling up of Aids
treatment in the developing world. "The issue is getting people access
to drugs," he says. "We're still far short of the WHO's target of 3m on
treatment by 2005 and the pledge for universal access by 2010. The basic
problem is infrastructure, accessibility of trained medical staff,
clinics and diagnostics."

American trade officials say the provisions they seek in their bilateral
deals in Thailand and elsewhere will not impinge on health. "There is no
evidence that the FTA has damaged access to drugs or the local
pharmaceutical industry," says one. "Since signing its FTA with the US,
Jordan has seen a big rise in the number of launches of innovative
pharmaceutical products, while its own generics sector has thrived."

But Jordan has scant influence on the international pharmaceuticals
market. The big clash relates to larger countries such as China, India
and Brazil, which offer more lucrative potential markets to the drugs
companies - but which also have important domestic generic industries
that threaten to undercut western drugs companies unless patent rules
are toughened.

>From their various perspectives, western drugmakers, generic producers
and patient activists are all particularly focused on the recently
developed second-line anti-retroviral drugs, still under patent. Demand
for these is set to grow sharply in the next few years as patients
develop resistance to their first-line therapies.

Under pressure from fledgling local pharmaceutical companies interested
in innovation as well as international demands, India last year
tightened its patent legislation. The previous generation of first-line
Aids treatments had not been protected by patents, allowing companies
such as Cipla and Ranbaxy to copy western drugs, offering them more
cheaply in the developing world. For second-line drugs, that will be
tougher.

A key test of the new regime is Kaletra, a drug developed by Abbott
Laboratories of the US. The company has already clashed fiercely with
Brazil, which last year threatened to issue a compulsory licence so the
state-owned pharmaceutical company could produce Kaletra. That was out
of concern that purchases for its ambitious Aids treatment programme
would otherwise be too expensive.

"We are supportive of the Trips legislation but we view intellectual
property as at the core of what we do," says Jennifer Smoter from Abbott.

Pedro Chequer, head of Brazil's national Aids programme at the time,
says government officials were subjected to intense lobbying at the
highest levels: "I was told of meetings, phone calls from the Senate,
Congress and the White House, with threats of direct retaliation."

The office of Brazil's President Luiz In=E1cio Lula da Silva eventually
backed away from issuing a compulsory licence, in exchange for Abbott's
agreement to a six-year contract offering the drug at a lower price
while preserving its patents.

That is precisely the type of deal that could be compromised by FTAs.
"Compulsory licensing is a weapon," says one trade expert. "Developing
countries can say: 'We are going to make this unless you cut your
price.' It's a good weapon to use - that itself is a worthy thing to have."

Dr Achara says Thailand may request a compulsory license in three or
four years' time for Kaletra for the Thai GPO. But a Thai-US bilateral
trade deal - talks on which are on hold, probably until after October,
when the country is scheduled to rerun its general election - would
weaken her hand, she fears.

Mr Bale warns that overriding patents may bring unintended consequences.
He suggests that the price, quality and capacity of local manufacturers
may not meet the objectives sought. Conversely, Jim Kim, a former head
of HIV/Aids at the WHO and still active in combating the disease, says:
"The pharmaceutical companies are saying it would be better for
countries to use their discounted price schemes. But we're already
hitting supply problems, while demand for the drugs is growing steadily."

In practice, compulsory licences have so far been issued rarely and
showdowns with countries where FTAs cover pharmaceutical products have
not taken place. Furthermore, US policy is not entirely clear cut.

Even Jamie Love, a veteran critic of the US campaign for tougher
intellectual property rights abroad, says: "There's no doubt the
bilateral agreements are designed to step back from Doha, making it
harder to introduce generics. But it's hard to say the US position is
crystal clear. It depends who's on the ground."

While US trade representatives push for tough patent rules in the
interests of national pharmaceutical manufacturers, for example,
Washington regulators at the Food and Drug Administration recently began
approving foreign-made generic copies of anti-retrovirals. That allows
for their purchase - at the expense of higher-priced US-made drugs - by
Pepfar, President George W. Bush's Aids fund for the developing world,
which is under pressure to escalate treatment cost-effectively.

Still, as the burden of Aids continues to grow, so will the tensions
between developed-world manufacturers and budget-stretched developing
nations. One place where the debate will be played out is at the WHO.

Dr Lee, a cautious man, was wary of antagonising the US, to which he
owed his election three years ago. In the contest to replace him, the
candidates may find reconciling drug affordability and intellectual
property to be among the trickiest stances on which they will campaign.