Skip to content

Pharmaceuticals and Intellectual Property: Overcoming the Impasse

Article by James Walters, Sofia Perenyi and Phoebe Griffith

September 15, 2006

Thursday 24th May, 6:30pm

Despite dissonance over many of the fundamentals, the evening opened several doors for potential solutions to the impasse, including:

1. The introduction of tiered patenting systems
2. Increased flexibility in the terms of TRIPs for developing countries
3. The creation of an international fund to support the consolidation of health systems in those parts of the developing world most violently hit by the AIDS virus.

H. E. Sergio Silvo do Amaral, set out the case of Brazil ¡V a country widely regarded as one of the few success stories of HIV policy in the developing world. While Brazil recognises the need to respect intellectual property rights in order to promote innovation, it has kept regulation flexible and has tackled HIV head on. Through a complex set of State-led initiatives, Brazil now produces certain key drugs 72% cheaper than its counterparts on the world market. These drugs are supplied free of charge to all HIV sufferers. The initiative has had a phenomenal and hope-inspiring effects: death tolls from 9600 in 1996 to 1200 in 2000, and the overall infection rates in Brazil have slowed dramatically.

Brazil is a textbook case of the need to maintain flexibility within this debate. Brazil participated in the negotiation of TRIPS and has applied it to domestic legislation before many other countries. However, it has also taken full advantage of articles 40 and 71 of the TRIPS agreement which make an exception for health emergencies. This amendment on national health emergencies is a key loophole for developing nations, one which could be applied to most African countries. This is significant for South Africa since the government did not declare an emergency to justify the domestic production of the triple cocktail.

In his eyes, the enormity of its social responsibility makes the position of the pharmaceutical industry exceptional. Although the interest of their shareholders is legitimate, it is morally questionable that they should supersede the needs of HIV patients in poor countries. But political will is key in tackling the AIDS crisis in developing nations. Brazil has been successful because there has been a concerted effort to strengthen state provision and to put together a plan which includes not only access to drugs but also a massive educational campaign for prevention, the creation of an extensive network of clinics that gave wide access for those needing testing, treatment and follow-up visits and an emphasis on NGO and civil sector involvement.

Reactions of the pharmaceutical ¡§camp¡¨ were represented by Chris Viehbacher, President of Pharmaceuticals GlaxoSmithKline Europe. Although introduced as the so-called ogre of the group, Mr Viehbacher made clear his company’s commitments to overcoming the impasse. He began by asserting that the bottom line is purely an economic issue. Research and development is what keeps creating medicines the world needs and in order to do this, pharmaceuticals must regain in profits what has been invested in R&D, which amounts to 2 billion per year by GlaxoSmithKline.

Mr. Viehbacher also brought up the multi-faceted character of the issue, which shed light on the fact that it is not solely the existence of patents that prevents AIDS patients across the world from being untreated. In fact, Mr. Viehbacher stated that pharmaceutical patents are not what have prevented AIDS patients in the developing world from being treated. In many developing countries, it is the basic infrastructure of healthcare that is lacking and preventing access to medical care. This point is only underscored by the fact that, according to the WHO, 95% of commonly used drugs today are out of patent, yet people die from curable diseases such as malaria and TB daily.

He pointed to the example of Brazil and the necessity of its well implemented policy-package. HIV treatment is not a simple affair. It is a complex treatment that requires commitment, regularity and high levels of care. Lack of infrastructure inhibits regularity and proper care. More worrying is the fact that discontinued treatments can increase the resistance of the HIV virus, raising the possibility of spreading new strains of the virus and rendering these drugs worthless in the long-term.

Mr. Viehbacher reasserted GlaxoSmithKline’s commitment to the following:
1. Working out an agenda for differential pricing that allows for consumers in developed nations to bear a greater proportion of the overall burden.
2. Recuperating investment in R&D in the developed world
Using the example of Brazil, he also emphasized the need for a dialogue on improving the health care systems of developing nations. Measures such as differential pricing are therefore only the first step.

Adrian Otten spelt out the key dilemma in the IP debate: how to balance the rights of creators and innovators with the need to ensure maximum access to existing innovations to the developing countries facing devastating health-related challenges such as AIDS. Despite much vilification, in Mr Otten’s eyes, the TRIPS agreement is not oblivious to this challenge. The agreement makes certain key provisions for compulsory licensing, parallel imports and exemption in a state of national emergency.

The WTO, he said, recognises that important anti-viral drugs for the treatment of HIV are under patent protection. However, it does not claim that the TRIPS agreement is comprised of a set of rigid rules, as certain clauses do provide flexibility. Furthermore, the WTO does not block measures such as differential pricing.

Phil Bloomer of OXFAM, began with bold assertions of facts that capture what he called a ‘global health gap of obscene proportions’. The death of 30,000 people a day worldwide, half of which are children, speaks for itself and are hard to reconcile with the fact that patients in developing countries with an inadequate healthcare and/or insurance system have to pay for drugs.

HIV has short-term effects on sufferers and their families. More significantly, the blight of human capital has grim repercussions on the long-term prospects of African countries. In his eyes, WTO policies tend to foster the existence of monopolies in certain sectors, putting the credibility and efficiency of today’s economic system into question as the market-driven allocation of goods by the equilibrium of supply and demand clearly fails to occur. How else can it be justified that there is little or no R&D invested in diseases that kill solely in less developing nations?

More needs to be done according to Mr. Bloomer. While he agreed that investment in the health infrastructure of developing countries was crucial and commended any initiatives promoting differential pricing, he criticised global agreements for being biased in favour of corporate interests, and highlighted the need to use multilateral agreements to actively foster shifts in corporate behaviour of industries involved. As sub-Saharan Africa provides only 1 percent profit for pharmaceuticals, he advocates that 20 year blanket global patent are simply unnecessary and counter-productive. The WTO should either allow the import of affordable drugs into developing nations in need, or permit the generic industry to supply their demand.

In Mr Bloomer’s eyes, TRIPS is far too rigid an agreements for a multidimensional issue such as the patenting of medicines. Furthermore, it is unable to take into account the plethora of vested interests which comprise this debate.

The concluding section of the discussion focused on what is generally referred to as the flow back issue. While production in developing countries is not a threat to pharmaceutical profits per se, if unregulated those generic producers will undoubtedly turn their eyes towards profitable developed world markets, be it legally or illegally. Although, as pointed out by Oxfam, these highly controlled markets seem difficult to penetrate illegally, ‘flow-back’ issue makes the differential pricing solution more attractive to pharmaceuticals. It became clear that TRIPS needs to be rethought and in many cases re-negotiated.

TRIPS and patenting laws should not form an obstacle for launching a concerted international effort to tackle the ravages of AIDS. Speakers agreed that an initial move should be the creation of an international fund, supported by government and the private sector, solely to assist the development of healthcare systems in countries that do not have them.

The Global Health Lecture series is organised in association with Medsin, and is kindly supported by the Wellcome Trust. Previous Lectures include:
Big Killers: Aids and the Other Preventable Scourges of the Human Race,
Sex, Population, Pollution and Prospects for a Small Planet,
The Impact of Violent Conflict on Health Services.
A final lecture on Technology and Health will be held later this year.
If you are interested in attending the final lecture on technology and health , please e-mail

    Related Articles

     Join our mailing list 

    Keep informed about events, articles & latest publications from Foreign Policy Centre