UNDP Report Sees Green Light for Generic AIDS Drugs

[Guest guest]

Dear Forum members,

The UNDP Report is a much clearer message than what has come from

UNAIDS or the Secretary Generals' office on the critical importance

of sustainable technology transfer and the role of generics in

addresses the global AIDS catastrophe. It is also the best

researched piece I have seen on the routine use of compulsory

licenses by rich countries.

Please forward this news report and the UNDP link to any country

level decision makers and advocates.

____________________________________________________

The Human Development Report 2001: " Making new technologies work for

human development " can be downloaded at http://www.undp.org/hdr2001/

UN Report Sees Green Light for Generic AIDS Drugs

By Marwaa n Macan-Markar

MEXICO CITY, Jul 10 (IPS) - In a direct challenge to the world's

pharmaceutical industry, the authors of a new UN report call on

developing countries to strengthen their national laws in order to

enable local production of cheaper, lifesaving AIDS drugs AIDS.

Such an option can be pursued legitimately under compulsory

licensing, a principle in international commerce that permits

countries to " use patents without permission of the patent holder in

return for a reasonable royalty on sale, " says the Human Development

Report 2001, released Tuesday by the UN Development Programme.

The international agreement on Trade-Related Aspects of Intellectual

Property Rights (TRIPS) includes provisions for compulsory licensing,

the report notes, adding, " The agreement allows countries to include

in national legislation safeguards against patent monopolies that

might harm extraordinary cases of public interest. "

What is more, the report argues, developing countries that opt to

produce AIDS drugs under compulsory licensing to combat the deadly

pandemic have a strong case against drug industry giants intent on

protecting their patents.

" In some circumstances, such as for national emergencies, public

non-commercial use and antitrust measures, the agreement allows

governments to issue compulsory licenses to domestic or overseas

produces of generic drugs, " the report says.

There is a " popular misconception " that compulsory licensing violates

the rules of TRIPS, says Kate Raworth, co-author of the report. " It

is not so. Developing countries enjoy the right to enact such

measures through national strategies to help their people. "

In fact, the report states that industrialised countries have been

enjoying this right for over a century, ever since intellectual

property legislation was introduced in Britain in 1883. Among the

countries that have benefited from the right of compulsory licensing

are Australia, Britain, Canada, Germany, Italy, New Zealand, and the

United States.

" Until joining the North American Free Trade Area (NAFTA) in 1992,

Canada routinely issued compulsory licenses for pharmaceuticals,

paying a 4 percent royalty rate on the net sales price, " the report

states. " Between 1969 and 1992 such licenses were granted in 613

cases for importing or manufacturing generic medicines. "

Consequently, Canadian consumers saved millions of dollars in drug

costs. In 1991-1992 alone, such savings were estimated at more than

170 million dollars.

Moreover, according to the report, since the adoption of the TRIPS

agreement, compulsory licenses have been used in Britain, Canada,

Japan, and the United States for products ranging from drugs to

computers, tow trucks, software and biotechnology. The licenses

served as " antitrust measures to prevent reduced competition and

higher prices. "

" In the United States, compulsory licensing has been used as a remedy

in more than 100 antitrust case settlements, including cases

involving antibiotics, synthetic steroids and several basic

biotechnology patents, " the report adds.

On the other side of the ledger, however, the report reveals a

glaring discrepancy when it comes to compulsory licensing in the

developing world. " Not one compulsory license has been issued south

of the equator, " it states.

The reason? " Pressure from Europe and the United States makes many

developing countries fear that they will lose foreign direct

investment if they legislate for or use compulsory licenses, "

according to the report.

In addition, developing countries have also faced the threat of

" long, expensive litigation " brought by pharmaceutical companies.

Such a reality does little to help those afflicted with HIV/AIDS in

poor countries, the report argues. The United Nations estimates that,

of the 36 million people living with HIV/AIDS, an estimated 70

percent are in sub-Saharan Africa, with countries like Botswana,

Zimbabwe, South Africa and Kenya the worst affected.

Even when leading pharmaceutical companies have intervened, by

offering drastically reduced prices of their anti-AIDS drugs to

select African countries, the results have not impressed the authors

of the report. In their view, it is a process that has fallen short

of its initial promise.

" Slow negotiations (between the drug companies and countries in need)

run counter to the urgency of the AIDS crisis and, with terms of

agreements kept a secret, some critics suspect that price cuts are

conditional on introducing even tighter intellectual property

legislation, " the report says.

For Raworth, drug industry discounts on anti-AIDS drugs are welcome

but are no substitute for a strong policy to serve the afflicted in

the developing world. " We welcome price reductions, but we want sound

policies, not charity, " she says.

Love, director of the Consumer Project on Technology, a

Washington-based non-governmental organisation (NGO), says the Human

Development Report's strategy to enable easier access to anti-AIDS

drugs through compulsory licensing will give developing countries

" more bargaining power. "

" It will create competition in the market once they push to

manufacture these drugs, and will also help them to bargain with the

pharmaceuticals on the price of the drugs, " he adds.

The impact of competition, in fact, has been evident since

manufacturers of generic anti-AIDS drugs in Brazil, Cuba, India and

Thailand have offered their products at prices far lower than what

the drug industry was offering. " The price breakthrough made possible

by generics has dramatically opened up treatment possibilities in the

developing countries, " says the report.

For the strategy to achieve optimum results, however, the report

underscores the need for legal structures to be created that best

suite developing countries.

These should include five features: " an administrative approach that

can be streamlined and procedural " ; an option for governments to have

broad powers where " no developing country should have public use

provisions weaker than German, Irish, UK or US law on such practice " ;

laws that permit " production for export when the lack of competition

in a class of drugs has given the producer global market power that

impedes access for alternative drugs " ; easy-to-administer rules on

compensation for royalties; and disputes settlement mechanisms under

which " the onus should fall on the patent holder to back up the

claims that the royalty rate is inadequate. "

" This is a necessary intervention, " says Swan, director of the

Access Project at the AIDS Treatment Data Network, a New York- based

NGO. " While we do not want pharmaceutical companies to stop their

research, we cannot let people die due to a lack of access to AIDS

drugs. Poverty is not equal to a death sentence. "

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Health GAP Coalition

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