The Hindu : A limited deal on drugs

Online edition of India's National Newspaper
Wednesday, Sep 03, 2003

Opinion

Opinion - Editorials

A limited deal on drugs

THE AGREEMENT AT the World Trade Organisation to make patented medicines available at affordable prices to the developing countries comes with so many conditions that it will be surprising if it does lead to drugs needed to tackle public health crises becoming available at low prices. It has taken almost two years to tie up the loose ends in one area of the 2001 Declaration on TRIPS and Public Health. The 2001 Declaration itself did not re-write the 1994 TRIPS agreement. It merely clarified that countries, when faced with a public health crisis, have the right to issue compulsory licences that would enable production of generic and low-cost variants of drugs under patent. Yet the leading pharmaceutical companies of the world have lobbied their Governments since 2001 to narrow down this interpretation of the TRIPS agreement. The concern of the global giants, which has been articulated most forcefully at the WTO by the U.S., has consistently been how to contain the production of generic drugs. To a large extent, the final WTO agreement meets this concern.

There are two main aspects to the 2001 Declaration. One is the right of countries to use compulsory licences to produce generic drugs so that the prices of medicines patented after January 1995 can be brought down. This provision was never under dispute although the U.S. did try to limit the scope of the Declaration to medicines needed to treat AIDS, malaria and tuberculosis. India can, after January 2005 when all the provisions of TRIPS come into force, cite the Declaration and issue compulsory licences for domestic production of generic variants of patented drugs. The real value of this aspect of the Declaration will be known when India or any country with a well-developed pharmaceutical industry uses the WTO agreement for this purpose. The second main aspect of the Declaration relates to the right of poor countries without a domestic drug industry to import generic variants of drugs under patent; operationalising this has turned out to be extremely difficult. The agreement reached at the WTO last week does make it possible for poor countries to arrange for imports. Where the WTO pact lets these countries down is in the conditionality imposed on such imports. First, the importing country has to inform the WTO why it needs to buy the drug from another country. This opens the door to disputes at the WTO, which will be expensive and time-consuming. Secondly, the generic drugs should have sizes, shapes and packaging that make them distinct from patented medicines. This will add to the cost of production of generic manufacturers who work on the principle of low unit mark-ups. The higher cost could make the generic companies reluctant to take up contracts from poor countries. The aim of both provisions is to prevent diversion of generic drugs, manufactured most profitably by the companies in India and Brazil, to third country markets where the patents are valid. What the two provisions will ultimately achieve is to make it difficult for Governments in poor countries to obtain the medicines they need at the lowest possible prices. The real motive of the 1994 TRIPS agreement's provisions on drug patents was to choke the development of the vibrant generic industries of India and Brazil. The 2001 Declaration, if implemented in letter and spirit, would have relaxed the TRIPS-driven controls on these industries. In a sense, the new WTO agreement turns the clock back to 1994.

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