Yo Ho Ho, and a Bottle of Pills

The past few years have generally been good for pirates, with the release of the popular “Pirates of the Caribbean” movies, their capture of the general public’s imagination, and the quietly anti-establishment but ubiquitous piracy of digital media (primarily music MP3s) by young people everywhere there is Internet connectivity. However, little do most people know that there are also pirates in health care!

For a number of years, the pharmaceutical industry in India has reverse-engineered and produced generic versions of drugs produced under patent by companies elsewhere, including in the U.S. and Europe. Thus far, American and European pharmaceutical companies have failed to successfully lobby for restrictions that would prevent Indian companies from producing these generic drugs. One concern, however, is that drug prices continue to increase as patent protections extend to developing countries, potentially putting large populations at risk of being unable to afford patent-protected drugs. In order to protect the integrity of patent protection as an incentive for drug innovation while attempting to prevent deaths worldwide due to the inability of developing and middle income countries to afford drugs at the prices American and European drug companies charge, the World Trade Organization established TRIPS, the Agreement on Trade-Related Aspects of Intellectual Property Rights. TRIPS has, however, a few important measures to put pharmceutical companies in check. The following are excerpts from a lecture given by Dr. Christopher Murray, formerly of the WHO, on this topic:

<blockquote>The original TRIPS agreement provides for two mechanisms by which governments can minimize the risks to their people’s health: compulsory licensing and parallel importation.</blockquote>

Compulsory Licensing

<blockquote>Compulsory licensing or government use of a patent without the authorization of the right holder can only be done under a number of conditions aimed at protecting the legitimate interests of the patent holder. The person or company applying for a license must have first attempted unsuccessfully to obtain a voluntary license from the right holder on reasonable commercial terms. For “national emergencies”, “other circumstances of extreme urgency”, “public noncommercial use” or remedying anti-competitive practices, there is no need to try for a voluntary licence. If a compulsory license is issued, adequate remuneration must still be paid to the patent holder, taking into account the economic value of the authorization.</blockquote>

Parallel Importation

<blockquote>Countries also have the right to import a product from another country where the patent holder or its licensee are selling the product at a more favorable price.</blockquote>

These measures were recently taken by Brazil in order to obtain the HIV/AIDS drug Efavirenz from Merck & Co. When Merck refused to provide the drug at the same price it was offering to Thailand (it offered a discount, but not matching the Brazilian government’s request), Brazil decided to obtain the drug from India.

Merck’s price: $1.59 per pill
Merck’s offer: $1.11 per pill
Brazil’s request: $0.65 per pill
Brazil’s cost importing the generic from India: $0.45

Brazil is currently undergoing a national campaign to provided free AIDS treatment that has received international attention and praise. However, despite dropping a previous complaint, the Bush administration’s U.S. Trade Representative’s Office may consider remove Brazil’s status as a trading partner. The Bush administration recently included Thailand on its “list of pirate nations” that fail to protect (or perhaps actively seek to break) American copyright protections, although Thailand did the same thing that Brazil is doing by issuing a compulsory license to obtain and/or produce generic pharmaceuticals. This list included countries such as China and Russia that are in poor standing in the eyes of the Bush administration due to the rampant, large-scale piracy of digital media such as DVDs and CDs.

Conclusions

I find this public scolding and posturing by the Bush administration toward Thailand (and possibly soon, Brazil) as being frivolous, considering the complaints issued toward the other countries on the list. It’s very difficult to equate piracy of videos and music with the production or purchase of generic drugs for national public health programs. One saves lives and treats diseases, one doesn’t. Doctors Without Borders has spoken up about this issue. While I think that patent protections are important and don’t necessarily agree with the decisions made by the various parties involved in these instances, the concessions made in TRIPS to protect health are absolutely necessary and shouldn’t be so readily challenged by pharmaceutical companies when the need for affordable treatments are clear.

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