Patents and the Developing World–Commentary

by on November 28, 2007 · 8 comments

Recently, there are reports of more compulsory licensing for 20 more drugs in Thailand; and a conference is announced to celebrate this strategy.

Hence this series of links and clips.

On April 11, reported on a plan that seems to implicitly suggest that African states might set aside an array of patents (sorry, no present link):

“We need to produce (medicines) in Africa. We have the potential, why do we want to take them from outside when we can take it in Africa?” Mamadou Diallo, chief pharmacist in the AU commission’s medical services directorate, told AFP.

“The main objective is to identify which kinds of medicines we are going to produce, essential drugs we need for Africa, and who is going to produce these drugs.”

Many African countries currently rely on India and China for imports of affordable generic drugs, but both countries are subject to patent laws which threaten Africa’s access to the medicines.

According to Diallo, Africa has all the resources and capacity at its disposal to manufacture essential medicines for the opportunistic infections like tuberculosis, malaria and HIV/AIDS which plague the continent.

It is sad that the plan to produce the drugs in Africa apparently does not extend to actually inventing and developing more such drugs in Africa–or then the patents would be important.

Contrast Alec Van Gelder’s article on African medicines:

The UN Economic Commission for Africa endorses fears that “drastic trade liberalization, particularly substantial reductions in tariff, could entail, for instance, loss of tariff revenue hence fiscal difficulties.” The anti-globalisation group Oxfam issued a 128-page document in 2005 called “Why Developing Countries Need Tariffs”, as part of the Trade Justice Movement coalition.

All of this means that many religious, aid and international organisations think incomes for bureaucrats matter more than prices for citizens. They also believe that tariffs protect local industries and allow them to grow up into competitive industries.

Thus Tanzania imposed on 26 July a 10 per cent tariff on imported medicines, to protect what it called its “infant medicine industries.”

What about real infants? The immediate effect of this new tariff will be deadly. “Low income of the majority of the Tanzanian population hinders their accessibility to health services as medicines and other services are unaffordable,” according to the World Health Organisation. The average Tanzanian earns US$744 annually–a 10 % increase in the cost of medicines can make the difference between life and death for the 21.7% of the population that suffers from malnutrition.

While few of the world’s poorest–and least healthy–countries have any viable pharmaceutical sectors, a shocking number apply similar taxes and tariffs on medicines. A 2005 American Enterprise Institute study revealed that over 33 countries impose levies higher than the new Tanzanian rate.

And Doug Bandow’s article in the American Spectator:

The Tufts Center for the Study of Drug Development estimates that on average every drug takes 10 to 15 years to reach the market, at a cost of $800 million. Unfortunately, companies discover far more dry holes than blockbuster drugs, so the prices charged for the few successful medicines must cover the entire research and development bill.

The expense can be high for Third World nations, but pharmaceutical costs are not the primary barrier to AIDS treatment. Note Jeremiah Norris of the Hudson Institute and Philip Stevens of the International Policy Network, “Even second- line drug prices are small change compared to the cost of the medical infrastructure required to administer these complicated medicines.” Moreover, governments routinely impose tariffs and taxes on life-saving pharmaceuticals and create burdensome regulatory barriers to their production and distribution.

Christopher Bowes writes on 9/28/2007 in the Financial Times,:

The pharmaceutical industry’s future success will require a new generation of executives who can find a fresh way to look at the world’s health challenges and its neediest countries, said Tachi Yamada, global health chief of the Bill and Melinda Gates Foundation.

Exactly what the new generation will do remains a little unclear, however.

On neglected diseases of the poor, the Civil Society Commentary on the WHO Plan of Action ( calculates that since 2004 over $41 billion has been spent on three disease entities, HIV/AIDS, malaria and tuberculosis. People in poor countries are much more likely to suffer from easily treatable diseases especially linked to poor sanitation or decaying infrastructure (thanks to Alec Van Gelder)

Temba Nolutshungu writes in “Statist NGOs wreak havoc in Africa”:

But despite their elevation to the policy establishment, the NGOs consistently get things wrong.

Take the example of AIDS. Health experts recognise that the best way to tackle the disease is to prioritise prevention, thereby stopping the total number of infections from increasing every year. Of course treatment is essential, but not to the exclusion of spending on prevention. The NGOs, however, pushed hard for the majority of public monies to be spent on drug treatment programmes for the already infected – even though the most affected countries don’t have the doctors and clinics required to administer the drugs. WHO bowed to this pressure: infections continue to rise, and treatment is delivered in a haphazard and therefore medically questionable manner.

Here are links to information on the WIPO Development Agenda: Thus.

An L.A Times piece unfortunately gets some key facts wrong. The problem is medical infrastructure. Without it, even free or cheap medicine doesn’t get where it is needed. WHO’s 3 by 5 Programme, which tried to get 3 million AIDS patients on regular ARV treatment by 2005 fell short by 2 million people. Most of the drugs were sold at cost or donated for free. And blue-sky research funding won’t get medicines through the very expensive testing stage. (Again, credit goes to Alec Van Gelder for the link and the development examples).

More on what drug developers go through, from Greg Conko.

Bibek Debroy in the China Post on on the misguided view that patents hurt the poor:

…only 20 percent of India’s total health expenditure is on drugs, as in most other developing countries. Of this 20 percent, every drug on India’s essential list of 74 is already generic, meaning its patent has expired so production is cheap. So India’s low rate of access to essential medicines is in no way caused by patents.

Patents have nothing to do with the fact that many doctors don’t turn up to work at state clinics, even though they are being paid, or the shortage of nurses and medical staff and their poor training. Bureaucratic, centralized public procurement procedures, coupled with corruption, mean many drugs are not even available to dispensing pharmacies. And an inept regulatory system means that many of the drugs churned out by India’s 8,000 manufacturers are often counterfeit or sub-standard.

India actually tightened up its intellectual property laws in 2005 and the results are beginning to show. Indian drugs companies have started investing in research, instead of simply copying existing medicines, and multinational pharmaceutical companies have set up shop here — bringing much-needed investment and jobs — because they know their inventions will be protected by patents. Continued improvement in patent laws is vital if India is to complete its transition from an agrarian to a high-tech economy.

John Gardner’s paper for the Federalist Society outlines how weakening IPRs will deter innovation and other problems with the international development agendas. Download file

Nonoy Oplas on patents and medicine.

The American has an article by Roger Bate assessing current compulsory licensing trends at WHO:

The drug companies have tried voice: they have pointed out the need to make some profit from middle-income markets; they have complained to governments, activists, the media, and anyone that will listen; and they have tried litigation and threats of exit. Perhaps it is time to actually try exit.

The first to take action might be Novartis. According to several sources, the company has shelved plans to build a $500 million factory in Brazil that would manufacture an anti-meningitis vaccine.

All for now.

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