Drug Deal

By Kelly Hearn, AlterNet. Posted May 25, 2005.

For Luis Lopez, a 42-year-old single dad in Guatemala, globalization has nada to do with economics or democracy. On the contrary, for Lopez, it's about something much more basic: los anti-marcas (against brands), los genericos -- the cheap, generic medications that poor AIDS patients like him need to stay alive.

More than 78,000 Guatemalans are currently living with HIV/AIDS , according to Doctors Without Borders (also called Medecins Sans Frontieres, or MSF). Approximately 13,500 of them are in urgent need of antiretroviral (ARV) treatment; only 3,600 were receiving it as of December 2004. If, in coming weeks, Congress ratifies the bill President Bush signed last year -- the Dominican Republic-Central American Free Trade Agreement (DR-CAFTA) -- many of these patients could wind up literally dying for cheap drugs.

According to groups such as Oxfam and MSF, CAFTA's intellectual property protections will give monopoly-like status to high-priced, brand-name drugs in poor markets; potentially killing off generics in El Salvador, Nicaragua, Guatemala, Costa Rica, Honduras and the Dominican Republic, and preventing millions of AIDS patients from being able to afford the meds they need.

"People here are very worried about laws that will amplify patents and the testing time for drugs," Lopez said via telephone from Guatemala City.

Here's a look at some public health ramifications of CAFTA's intellectual property provisions -- a rarely acknowledged set of dangers that illustrates how pharma-friendly U.S. trade negotiators use back-door legalisms to stamp out generic medications.

Umm, That's My Data

To understand CAFTA's most controversial aspect, consider "data exclusivity." As it stands, the World Trade Organization's TRIPS agreement (Trade Related Aspects of Intellectual Property), gives poor countries the right to break drug patents in health emergencies. The U.S. signed on to that deal, as well as a subsequent agreement called the Doha Declaration, which further clarified the public health aspects of intellectual property and reaffirmed poor countries' rights to essential medicines.

But critics claim that CAFTA, through the "data exclusivity" provision, dilutes those rights by erecting barriers around pharmaceutical test data to delay the registration of generic drugs in poor markets.

To encourage the use of generic medicines, U.S. law states that generic drug-makers need not conduct their own trials; instead, they can rely on safety and efficacy data gathered by brand-name companies and placed on file with the FDA. To compensate the brand-names for their costly work, Congress restricted generic manufacturers' access to that key data -- they won't be able to use it for the next five years. CAFTA takes that even further, extending the prohibition window to "at least five years" of exclusivity for the brand-name companies. This detail could translate to long delays in bringing life-saving generics to the market.

There's more: public health experts worry that data exclusivity could ban generics from poor markets where even the brand-name originator drugs aren't sold -- shutting down all drug access until the prohibition window runs out.

CAFTA does agree to let generic companies conduct their own test data in order to enter a market. But this position could stink of hypocrisy. Multinational drug companies -- which justify high drug prices by citing massive R&D cost for new drugs -- know that generic companies in poor countries likely can't afford such costly trials. Plus, it would be an ethical breach to subject patients in Costa Rica or Guatemala to drug studies that have already been conducted elsewhere in the world.

Without the power to compulsory license the test data (just as they can compulsory license brand-name drugs through TRIPS), poor nations have their hands tied through an indirect but restrictive patent law nuance.

NDRAs: Enforce It For Us

Health experts also claim that CAFTA transfers abusive powers to national drug regulatory agencies (or NDRAs) in signatory countries. In the U.S., a brand-name drug company can stop a generic from being produced if the generic will infringe on an existing patent. CAFTA tweaks that burden of proof; local NDRAs in countries like Guatemala are prohibited from approving a patent unless the agency first proves that no other patent is being infringed upon.

The upshot is that the provision will essentially ban generics whenever a patent is in force. And by passing the responsibility of patent enforcement on to NDRAs (which know nothing about such a job) in countries like Guatemala or Costa Rica, the process is kept in bureaucratic darkness, as opposed to a drug company suing for patent infringement through the courts.

This provision, known as "linkage" (drug registration linked to patent protection processes), "essentially makes drug regulation agencies become a mechanism for private interests of patent holders," says Brook Baker, a law professor at Northeastern University. In other words, drug companies won't have to take patent complaints to court themselves, but, under CAFTA, can sit back and let drug agencies in countries like Costa Rica or Guatemala do it for them.

Bush's Political Baby

Another way CAFTA helps Big Pharma is by mandating two types of patent extensions based on delays in the patent examination and drug approval processes. In short, helping stretch out standard 20-year patent terms embedded in TRIPS.

As if that weren't enough, some Congressional critics recently argued against CAFTA's IP provisions on domestic grounds. According to a recent letter by three U.S. representatives, CAFTA could mean higher drug prices in the U.S. when Washington eventually harmonizes CAFTA's heightened patent protections with domestic law.

And what about the Bush administration, which has made CAFTA its current political baby?

The Office of the U.S. Trade Representative did not respond to interview requests. But officials spin CAFTA critics as nearsighted protectionists. Speaking at the Heritage Foundation on May 16, U.S. Deputy Secretary of State Robert Zoellick toed the administration's parroted line that CAFTA will spur economic growth and strengthen democratic reforms throughout the Central America. "Improved protection for intellectual property will encourage new creative industries and access to life-saving medicines, as we have already seen in other FTA partners, from Jordan to Singapore," Zoellick said.

Downward Spiral

But recent events in Guatemala -- the country that has already taken a first step toward implementing CAFTA -- seem to prove differently.

In two Guatemala City hospitals, and health centers in Coatepeque and Puerto Barrios, MSF administers antiretroviral medicines to 1,100 patients. Because these meds haven't been patented there, MSF is able to treat more patients -- it dispenses drugs that are 75-99 percent cheaper than the brand-name drugs bought by the Guatemalan government. Example: MSF pays $216 per person per year for the generic version of AZT+3TC, a part of triple combination ARV therapy. Guatemala's social security system, which buys brand-name, shells out $4,818 per person per year for the same combination.

In March came a frightening bellwether of CAFTA's trends.

The Guatemalan Congress, under U.S. pressure, passed a hugely controversial law that paved the way for CAFTA, in part by offering a "data exclusivity" provision. With the help of a civil group known as Grupo Solidaridad Positiva, Luis Lopez and his fellow AIDS sufferers helped organize massive demonstrations. But it may be too late to stop the law and its impact.

"If current data exclusivity provisions [in the new Guatemalan law] had been in effect prior to 2001, generic ARVs would not have been marketed in Guatemala and MSF would not have been able to access generics," according to MSF testimony. "This would have limited our ability to expand access to treatment and demonstrate the feasibility of delivering ARV treatment. In order for the Guatemalan government to expand access to ARV treatment for all those in need, it will need to retain the right to procure affordable generic AIDS medicines."

If CAFTA passes, the ramifications will obviously extend beyond Guatemala. In Costa Rica, the deal's constrictions on generic production will cause government spending on pharmaceuticals to go from 8 to 45 percent of the national health budget. Citing a study by the Costa Rican drug industry, the watchdog group Public Citizen claims that CAFTA could cause drug prices to shoot up 800 percent across the board. And the Congressional letter referenced above notes that Costa Rica faces AIDS drug costs so steep that if it is forced to forego generic drugs, available funds will cover only 18 percent of the AIDS patients who are being treated today.

Private Industry vs. Public Health

While politicians spin their versions of CAFTA's merits, pain runs deep for people working on the ground.

"We are disgusted [that the] government finds it more important to protect the commercial interests of private industry rather than public health," said Rachel Cohen, advocacy liaison for MSF's Access to Essential Medicines Campaign. "It is unacceptable that health is so subordinate to trade and economic industry. We are fighting for lives of patients, and we do not accept that health is traded away like any other commodity."

The Pharmaceutical Research and Manufacturers Association, the drug industry's 800-pound lobbying gorilla, declined to be interviewed for this story. But brand-name drug companies often note that poor markets already get deep discounts. Furthermore, certain high prices are necessary -- even in poor markets -- to pay for the massively expensive production of AIDS drugs. But public health experts point out that many brand-name AIDS drugs already on the market either aren't available or aren't sold for profit in the developing world. What's more, better manufacturing and economies of scale make it possible for companies to produce extra quantities of expensive medications at low costs.

The struggle to balance IP protections with public health was summed up last year in testimony before the International Trade Commission (ITC). Joy Spenser of the Consumer Project on Technology, a respected think tank, asked members of the commission to watch a video entitled Dying for Drugs. The video, she said, depicts the sufferings of a child dying of AIDS whose parents could not afford fluconazole -- a Pfizer product that costs pennies to make but is priced at $27 per pill in Honduras.

"Watch this film with your children," Spenser said, "and then explain why the U.S. needs the IP provisions on medicines in the CAFTA."

Kelly Hearn is a former UPI staff writer who lives in Washington DC and Latin America. His work has appeared in several U.S. publications and websites including the Christian Science Monitor, American Prospect and High Country News.

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