TRIPS ACCORD WILL SKYROCKET HEALTH CARE COSTS

9:03 AM Nov 24, 1993

TRIPS ACCORD WILL SKYROCKET HEALTH CARE COSTS
Geneva 23 Nov (Chakravarthi Raghavan) -- Representatives of national pharmaceutical industries and associations of Canada, Egypt, India and a number of Latin American countries have warned that if the Dunkel text of the draft Trips agreement is accepted without change, health care prices will escalate by 500-800 percent in many cases, putting modern health care beyond reach of large segments of world populations.

Representatives from the national pharmaceutical industries of Argentina, Canada, Egypt, India, of the Latin American Pharmaceutical Association (ALIFAR, representing Argentina, Brazil, Colombia, Chile, Costa Rica, El Salvador, Guatemala, Mexico, Paraguay, Peru, Dominican Republic, Uruguay and Venezuela) and the Indian National Working Group on Patent Laws gave this warning in a declaration adopted by them at a meeting here.

The declaration called at the minimum for changes in the Trips proposals for automatic license or license of right for commercial use of patents by domestic companies, with patent holders compensated by royalties, for provisions against patenting of life-forms and provisions to ensure that importation is not be considered as working of a patent.

At a press conference Tuesday evening, the group said they hoped to meet some GATT officials and some delegations, but had not so far been able to set up a meeting with the GATT head and TNC chair, Peter Sutherland.

According to a study by Stephen Scholtenmeyer at Minnesota Unviersity (USA), cited by Brenda Drinkwalter (President of the Canadian drug manufacturers association), in the case of Canada, the Dunkel text provisions of the TRIPs would add four to seven billion dollars per annum to the health care of 26 million people by 2010.

"Even in a rich country like Canada it will add horrendous costs for medicines," Drinkwalter said. "But those who have signed these accords won't be there, but their actions would make health care beyond reach and would create social problems...If that is the case for a rich country, what would happen for the poor in countries like India or Africa," she asked.

The changes in Canadian laws, put through by the previous conservative government, to comply with US demands and get rid of compulsory licensing of patented pharmaceutical products for sale under generic names had been very much an issue in the recent Canadian elections, and was one of the important factors that brought millions of the old and young, who had never voted before, to the polls to inflict an ignominious defeat on the previous government.

The new Canadian Prime Minister, John Chretien, she said in his election campaign had promised to take up and reverse these laws and the Canadian national drug manufacturers were pressing on him to reflect this in the final days of the negotiations, she said.

B.K.Keayala of the Indian National Working Group on Patent laws that the prices of essential drugs in India would go up by five to ten times, and would affect not merely the new drugs that might be patented but existing ones too.

Even new combinations of existing drugs, including drugs like aspirin long in the public domain, would be affected -- notwithstanding the assurances being held out by GATT officials and Indian officials that the TRIPs accord would affect only about 20-30 percent of medicines being sold now.

In Argentina, according to Pablo Challu representing the national pharmaceutical industry the prices would go by 300 percent than currently when the drug industry (national and transnational) were in a competitive situation.

The national industry representatives said studies had shown that the R & D expenditures on developing a new drug was about $300 million and on this basis a licence of right or compulsory licensing on payment of a royalty of four percent on sales would more than adequately compensate the innovators.

Some of the delegates, like Egypt's Ahmed Aboulnain said that in his own as in most of the African countries, little was known of the effects either among the public or even ministers and officials

But others said that in their own countries the governments had yielded, despite knowing the high price to be paid, under pressure and S.301 threats from the United States, as well as the hope that they would gain on agriculture and other areas.

An ALIFAR spokesperson noted that with the introduction of the process and product patents in Chile, as demanded by the United States, two of three of the major TNCs had shut down their production facilities, opting instead to supply the drugs from abroad -- since importation was made tantamount to the working of patents.

Carlos Correa, an Argentine academic and former negotiator on intellectual property questions, said that though the Dunkel text provided for compulsory licensing in certain conditions, the fact that the prices of the drugs (imported and sold by the patent holder) was high would not be a sufficient reason for issuing compulsory licenses.

The real solution would be to make sure in the text that importation does not amount to working of the patent, and to provide for a licence of right on payment of compensation in the form of royalty.

The provision in the text (Art.27.3.b) would not be sufficient to prevent patenting of life forms, he said.

Firstly, the text would require patenting of 'micro-organisms' (on which there is no agreed definition within the scientific community) and protection for plant varieties through patenting or sui generis system.

Secondly, while plants and animals as such could be exempt from patenting, this provision itself is only for four years from entry and has to be reviewed thereafter and subject to changes

The representatives said the real consequences of the Dunkel text on Trips being accepted would be seen soon and would create social problems and unrest because of the costs of the health care it would involve. When countries like the United States and Europe were finding the costs of medicines skyrocketing and facing problems, the outlook for the poorer countries of the South was bleak they said.

Unfortunately, one of them said, Bill Clinton and his wife were campaigning to reduce health costs for the American people, and at the same his US Trade Representative was pushing to increase costs for the developing world and add to the profits of the US TNCs.

The view that 'prices' could be fixed and controlled was not a feasible proposition in respect of pharmaceutical products to be imported -- particularly when importation would be covered by the product patent, they said.

Keayala said that there were about 18,000 pharmaceutical manufacturers registered in India, most of them in the small-scale sector. They would be out of business under the proposals and when that happens all their "expertise" would be used in illicit manufactures and perhaps even in smuggling of drugs, and it would all become a law and order problem, he warned.

In their declaration and statement, the representatives of national pharmaceutical industries said the Dunkel text did not reflect a balance among the negotiating parties but weighted in favour of the Transnational pharmaceutical companies.

Given the important role of pharmaceuticals in human health, the patent privileges and private property rights should balanced with public good and each country, in formulating its pharmaceutical patent policy, should be able to preserve its sovereign right to strike the most appropriate balance.

TNCs should not be allowed to drive the IPR agenda and impose their will on international trade negotiations. By establishing long-term monopoly rights in an extremely sensitive area like health care, the Dunkel text would escalate health costs five to eight times and place modern health care beyond reach of large segments of the world's population.

Keeping broader public interest in view, the group said:

* there should be unambiguous provision in the text for automatic license or licensing of right for commercial use of the patent in any form by domestic companies, with patent holders being compensated by payment of royalties;

* there should no provision for patenting of life forms;

* importation should not be considered as working of the patent;

* the transition periods given to countries must be consistent with the state of development of their national pharmaceutical industry and domestic health care policies.