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World: Striking Balance Between Drug Profits, Public Needs Is Hard Pill To Swallow

  • Kathleen Moore

Bayer, the German drug company that makes the most popular treatment for anthrax, recently gave in to pressure from the U.S. government to lower its price for the medication. Around the same time, Canada backed down from plans to override Bayer's patent and buy a generic version of the drug. The case highlights the difficult balance between drug companies' needs for profits to fund research and the requirements of countries coping with a public health emergency.

Prague, 31 October 2001 (RFE/RL) -- Less than a month ago, few people had heard of the anthrax treatment Ciprofloxacin, or Cipro for short. But within days of the first confirmed death from anthrax in the United States, Cipro became the pill everyone wanted to pop.

Public anxiety in the U.S. over anthrax-laced letters emptied pharmacies of the drug -- even though only four people have died and just a handful of anthrax infections have been confirmed nationwide. Other anti-anthrax antibiotics also exist.

In neighboring Canada, the government temporarily threatened to override Bayer's patent on the expensive drug and place orders for cheaper generic, or non-brand-name, copies.

Just as Canada backed down after a political row, the U.S. government adopted a tougher line. Health and Human Services Secretary Tommy Thompson said he would ask Congress for new powers to waive Bayer's patent rights if it did not cut its prices.

Bayer finally did just that on 25 October when it agreed to sell the U.S. government 100 million Cipro tablets at 95 cents each, about half the usual price.

In a statement, Bayer President Helge Wehmeier called the deal "an important security measure that will enable the nation to have in its stockpile ample supplies of Cipro to combat the threat of anthrax."

The Cipro episode recalls another, much more pressing, health problem that recently pit governments against drug companies.

Earlier this year, a group of drug companies filed a lawsuit against South Africa after the government there said it would make cheaper versions of AIDS-fighting drugs. South Africa has one of the world's worst AIDS crises, with 4.7 million citizens infected with HIV, the virus that causes AIDS.

The lawsuit was eventually dropped after intense public pressure. Some companies lowered their prices. Others waived patent rights on their drugs, allowing domestic companies to produce their own versions.

After the agreement by Bayer on Cipro, international aid agencies were quick to point to what they call a double standard. The U.S., they say, has opposed attempts by poorer countries to break patents or import cheaper generic versions of AIDS drugs.

Adrian Lovett is the director of campaigns and communications for the aid group Oxfam International: "Certainly, when you see how the U.S. has behaved in relation to Bayer and the anthrax antibiotic, you have to say that it looks like there's one rule for themselves and another rule for others. That is a problem when the others are the 40 million children who will be orphaned because of AIDS in the next few years from now, or the 37,000 people who die every day from preventable diseases that are affecting the poorest countries right now."

Drug companies stress that patent protection is vital to ensure a flow of profits to fund more research. Drugs, they say, don't develop by themselves. Someone must put up the money to fund the cost of research, tests and manufacturing.

It can cost $500 million to develop just one medicine -- and it is private industry that foots the entire bill. That is according to Christophe de Callatay. He's the spokesman for the European Federation of Pharmaceutical Industries and Associations, a trade-lobbying group: "[Drugs] are so cheap to copy that if you didn't have a patent system, you would not have any drug on the market."

He cites the example of India, which has no effective patent system for drugs. De Callatay says this means Indian scientists focus not on research but on "reverse engineering" -- copying already discovered drugs.

Oxfam's Lovett says he does not dispute the need for pharmaceutical companies to protect their product, but that profits should sometimes be weighed against humanitarian needs: "What we think is that it has to be balanced against an obvious human need in some of the poorest countries right now to tackle the extraordinary problems of HIV/AIDS and other preventable, communicable diseases, which many of these products that these pharmaceutical companies are producing could go a long way to help with. So it's a matter of balance. But we think that where there are serious crises -- human emergencies around particular health issues -- exceptions should be made. That's the time, if you like, to break the rules in the interest of an awful lot of people [who could be] avoiding some of these awful diseases."

So how can a balance be achieved between the legitimate patent rights of drug companies and cheap access for poor nations to life-saving drugs?

Currently, countries are allowed to manufacture generic copies of drugs under a World Trade Organization agreement called TRIPS -- or trade-related intellectual property rights.

TRIPS seeks to enforce patent rights but allows countries to override patents in certain exceptional circumstances, such as during a public health emergency.

De Callatay says the agreement -- once it is implemented by the countries that signed it -- strikes a fair balance: "What we say is that we should have in place a system that would encourage more worldwide innovation, more research. That's what it's all about. In that context, the TRIPS agreement strikes a reasonable balance between the need to promote innovation and the need to allow access to this innovation."

But aid agencies say TRIPS is too vague and open to interpretation, which is what gave rise to the South African lawsuit in the first place.

It is an issue that is up for discussion at the WTO's meeting in Qatar in November. Some 60 developing countries have put forward the so-called Doha Declaration that -- in their view, at least -- will achieve a better balance by stressing public health over company profits.

The declaration seeks to clarify when poor countries can override drug patents. It states that nothing in WTO patent rules should prevent governments from safeguarding public health.

Daniel Berman works with the international humanitarian aid organization Medecins Sans Frontieres, or MSF, in Geneva. He coordinates MSF's campaign for access to essential medicines, lobbying for cheaper drugs for poor countries.

Berman also believes that what happened between Bayer and the U.S. government regarding Cipro is a "clear double standard," since the U.S. is one of only a handful of countries that oppose the WTO declaration.

"The U.S., on the one hand, [is blocking] a declaration that [gives] clear support to poor countries to use compulsory license, that is, to override patents. [And] on the other hand, they did exactly that when they needed to. So [Health Secretary] Tommy Thompson in the U.S.-- in the press it was clear that he said, 'If Bayer doesn't give us the price we want, then we will override that patent.' But yet the U.S. government is fighting against precisely that, supporting that right at the WTO meeting. We think that is a double standard, and that is wrong."

But De Callatay, who represents the pharmaceuticals industry, says the TRIPS agreement is fine as it is: "TRIPS is flexible because there are different provisions that allow countries to issue compulsory licensing, for example. We say that's fine under the circumstances which are put in the agreement. We say just implement TRIPS as it is. That's the point of view of the European Commission, which we support. We should implement it as it is, including the provisions, meaning exceptional circumstances. But we do not want exceptional circumstances to become the rule."

De Callatay says the recent U.S. and Canadian cases do not constitute exceptions.

A greater good may emerge from the U.S.-Bayer deal -- aside from the U.S. public being assured of enough Cipro in an emergency.

Yo Takagi is director of strategic planning and policy development at the Geneva-based World Intellectual Property Organization.

"This is a good lesson for both sides to consider how to strike the best balance. [And] to answer your question, in my personal view, the attitudes and way of thinking of those stakeholders will surely change."

Both Berman and Oxfam's Lovett say they hope the Cipro case will help build support for the Doha Declaration, arguing that it will now be harder for the U.S. to oppose the declaration.