New Trade Deal Would Benefit Big Pharma At AIDS Programs' Expense

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New Trade Deal Would Benefit Big Pharma At AIDS Programs' Expense



First Posted: 10/5/11 12:36 PM ETâ Â â Updated: 10/5/11 04:03 PM ET



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This piece is a continuation of The Huffington Post's collaboration on trade

issues with The Dylan Ratigan Show, called Trading Our Future.

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WASHINGTON -- In 2003, with the AIDS pandemic developing into one of the most

severe humanitarian crises in modern history, President W. Bush pledged

billions of dollars in relief funding for citizens of the world's poorest

countries. Seven years in, the initiative, called the President's Emergency Plan

for AIDS Relief (PEPFAR), is widely regarded as an outstanding success,

responsible for saving millions of lives in 15 developing nations.

Vietnam has received more than $320 million from the program since 2004, giving

thousands of people living with HIV access to critical, life-saving medicine for

the first time. But a new trade deal the Obama administration is pushing to

complete with Vietnam and seven other Pacific nations threatens to seriously

hinder both U.S. and international efforts to combat AIDS -- including the

government's own efforts in Vietnam.

According to leaked documents from the talks, U.S. negotiators are seeking to

impose a set of restrictive intellectual property laws that would help American

drug companies secure long-term monopolies overseas. The result? Higher prices

for drugs. That's good for corporate profits, but disastrous for relief programs

like PEPFAR that depend on cheaper generic medications to treat the global poor.

" This U.S. trade policy is going to undermine U.S. AIDS policy by driving up

medicine costs and keeping new HIV/AIDS drugs monopolized for longer periods of

time in Vietnam, " says Maybarduk, director of Public Citizen's Access to

Medicines project. " We're setting up U.S. taxpayers to pay more for the same

result or just accomplish less. "

While the potential repercussions are most obvious in Vietnam, the trade talks

have broader implications. Trade experts at Public Citizen, the Health Global

Access Project and other nonprofits view the current negotiations, dubbed the

Trans-Pacific Partnership, as part of the Obama administration's " beachhead

strategy " to establish a new international trade standard on drug access -- just

as the North American Free Trade Agreement did for scores of trade issues in

1993.

The Office of the U.S. Trade Representative, the federal agency with formal

responsibility for the negotiations, is aware of the concerns. But a USTR

spokesperson, who requested anonymity, says the agency needs restrictive patent

standards in order to " incentivize " drug companies to supply medicine.

The same view is frequently voiced by U.S. pharmaceutical giants, many of which

have close ties to USTR and the Obama administration through key staffers who

had careers at the Big Pharma heavyweights before moving to their government

positions.



And plenty of economic data suggest that the American patent regime does not

foster useful medical innovation. Pharmaceutical companies spend about twice as

much money marketing their drugs as they do on researching and developing them,

and a tremendous portion of drug research is conducted by universities and the

federal government's National Institutes of Health. Much of the research

pharmaceutical companies do conduct is simply not relevant to public health

concerns, with money pouring into projects for hair loss, for instance, while

funding for diseases that primarily afflict the poor, like tuberculosis, stays

in perpetual short supply.

" The drug companies would say it generates research, but the evidence is very

questionable, because much of the research is not directed at important

diseases, " says Nobel Prize-winning economist ph Stiglitz.

USTR's efforts have alarmed some congressional Democrats, eight of whom wrote a

letter to USTR head Ron Kirk emphasizing that the Obama administration's trade

proposals are significantly more restrictive than the access-to-medicine terms

negotiated in trade deals with Peru, Panama and Colombia under President Bush in

2007.

" The 2007 bipartisan 'May 10th agreement' was an important step in moving U.S.

trade policy back toward a more balanced approach to promoting innovation and

health in trade agreements with developing countries, " the Aug. 2 letter reads.

" We are concerned about reports that the balance is once again shifting away

from the progress achieved in those past efforts ... a move that would

jeopardize treatment goals and millions of lives. "

Nevertheless, in several rounds of negotiations, the Obama administration has

continued to press for a hard-line patent regime, claiming that stricter rules

build on existing requirements that encourage innovation.

The USTR spokesperson tells HuffPost that Vietnam, in particular, already has

some patent requirements in place and that those standards have not hampered the

U.S. AIDS relief effort.

That claim directly conflicts with PEPFAR's official 2010 report (PDF) on its

operations in Vietnam. Generic HIV drugs, which cost around $100 a year per

patient, constitute 98 percent of the medicines that the U.S. buys for the

Vietnam relief program, according to the report.

But the remaining 2 percent of drugs that are patented -- and thus far more

expensive -- are a significant financial burden. Many of these patented

medicines are " second-line " drugs, which patients need to combat HIV once the

infection develops resistance to standard treatments. PEPFAR has expressed

particular concern about Kaletra, a key second-line drug produced by Abbott

Laboratories, one of a handful of multinational pharmaceutical companies with

influence over the Trans-Pacific talks thanks to its position on a USTR advisory

board.

" A key driver is the cost of Abbott products, " reads the 2010 report on AIDS

relief in Vietnam. " Expectations that the cost ... would fall by 50% in 2009 due

to the introduction of generic versions were dashed when it was discovered that

Abbott has patents pending in Vietnam and that Abbott intended to use the

patents to prevent the procurement of generic alternatives. "

" Work is continuing with intellectual property experts ... to determine if there

are any legal grounds to enable the procurement of generic [Kaletra], " the

report continues. That suggests patented medicine is a big financial hurdle for

the program, contrary to USTR's claim. PEPFAR declined to comment for this

article.

The framework proposed in a leaked draft of the Trans-Pacific pact builds off

the U.S. patent regime, long maligned by public health advocates for fueling the

highest drug prices of any nation. In Vietnam, such policies could end up

extending already long-held monopolies on life-saving drugs, including Kaletra.

The World Trade Organization requires all countries to grant 20-year patents on

medicine, but gives nations substantial leeway over which specific drugs

actually receive patents. Less-developed countries with pressing epidemics often

do not permit patent protections for drugs that receive monopoly rights in the

U.S. Further, medicines that governments purchase for state-run health care

programs are currently exempt under WTO patent rules.

According to leaked documents from the Trans-Pacific talks, the U.S. wants to

require the eight other Pacific countries in the negotiations to grant patents

on a wider swath of drugs and bestow a host of secondary patents that go beyond

the simple chemical compound for the drug. These secondary patents can cover

almost any characteristic of a particular medicine, from the color of a pill to

a capsule's ability to resist heat.

Public health advocates refer to these types of patents as " evergreening

patents " -- or even " junk patents " -- because they allow companies to extend

their monopolies beyond the 20-year WTO window without actually creating a new

medicine. The World Health Organization frowns on these secondary patents and

has said they should be rejected.

But USTR is expressly seeking to require countries to issue patents on " any new

form, use, or method of using a known product ... even if such invention does

not result in the enhancement of the known efficacy of that product, " according

to the leaked draft of the trade agreement.

" It's an invitation to the pharmaceutical industry to extend drug monopolies and

charge unaffordable prices for medicines, " says Rohit Malpani, director of

Oxfam's Access to Medicines campaign. " Not only do these restrictions deny

affordable medicines to poor people in developing countries; they also encourage

drug companies to focus on extending monopolies for existing medicines, instead

of investing in research and development to develop the new medicines needed to

improve treatment outcomes around the world. "

The USTR spokesperson tells HuffPost that these secondary patents encourage

companies to develop new uses for drugs and improve on existing drugs in ways

that benefit developing nations. The agency also argues that even if a company

obtained such secondary patents, the original compound would be available for

generic competition.

But public health advocates say that, in practice, drug companies do extend

their monopolies for years with these patents, by filing for protection on

secondary aspects of existing drugs -- sometimes repackaged under a new brand --

that are essential for use in a certain regions. The heat-stable version of

Kaletra, for instance, is prized by doctors in Africa and hot Asian nations such

as Vietnam, but under secondary patent regulations could remain cost-prohibitive

for decades to come.

" USTR wants to create brand-new monopolies on older drugs, for formulations that

are developed with the U.S. and European market in mind, " says Love,

director of Knowledge Ecology International, a nonprofit focusing on how

intellectual property rules affect the poor. " The fact that these formulations

are more valuable in a country with poor cold storage isn't a reason to block

generic competition in places where people live in shacks and depressing

poverty. "

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