Obama in India -- US position on Patents on Drugs

[Guest guest]

Obama in India -- US position on Patents on Drugs

Love

Director, Knowledge Ecology International

Posted: November 1, 2010 09:08 AM

Obama in India

On November 5, President Obama will begin a four day trip to India. This will

begin with a Business and Entrepreneurship Summit that has been carefully

organized with big U.S. and European business interests.

A number of NGOs working on public health issues are concerned that the

President may push India to adopt more strict intellectual property protections

on pharmaceutical drugs. They have reasons to be concerned.

And, as is discussed below, there is also an emerging argument that current U.S.

trade policies on medicines and intellectual property have an overall negative

impact on our own domestic interests.

Background

India has a population of more than a billion persons. Following more than a

century of occupation by the British and years of questionable domestic

policies, per capita income was just $450 per year in the year 2000, or $1.23

per day. From 2000 to 2009, per capita incomes have increased by 162 percent.

India is now home to an estimated 46 billionaires, and has a growing middle

class that is the subject of considerable interest by the pharmaceutical

industry.

As impressive and encouraging is the recent growth, India incomes are only a

small fraction of the United States and other developed countries. India's 2009

per capita income of $1,180 was 1/40th of the U.S. level of $47,307. Like many

developing countries, expenditures on health lag even more than incomes. In

2007, India spent only $40 per capita on health care. In the United States, the

figure was $7,285. These are averages. For the millions living at the bottom of

the distribution curve, conditions are extraordinarily difficult. The official

poverty line in India is just 11.4 rupees for the rural population, and 17.2 for

urban areas. Converted to U.S currency, this is 26 and 39 cents per day.

India, like most developing countries, is a member of the World Trade

Organization (WTO), and is bound by its tough rules on intellectual property.

Among other obligations, the WTO requires India to grant patents on

pharmaceutical products - a rule designed in large measure to reverse India's

decision in 1970 to abolish such patents.

India enacted legislation in 2005 to implement its WTO obligation to grant

patents on pharmaceutical products. The legislation included a number of

legitimate safeguards to limit the negative consequences on consumers. These

safeguards, which were allowed by the WTO rules, were highly praised by public

health and development groups, but condemned by big drug companies like Pfizer,

Merck, Abbott, Norvartis or GSK.

Trade Policy and the Domestic India Pharmaceutical Industry

As a candidate, both President Obama and Secretary of State Clinton told health

and development groups they would change the Bush Administration policy of

pressuring developing countries over the issue of drug patents and other

intellectual property concerns involving medicines. So far, this has not

happened.

Not content with holding India to the WTO rules, the Obama presidency has called

upon the US Patent and Trade Organization (USPTO), the White House office of the

United States Trade Representative (USTR), and the Departments of State and

Commerce to push India hard to do more.

One of the top priorities of the Obama Administration is a demand that India

prevent generic drug companies from relying upon known scientific evidence that

drug are safe and effective, unless they obtain the commercial rights to rely

upon such studies. So called " data exclusivity " rules are designed to create

monopolies even in cases where patents have expired, or were never granted.

The Obama Administration also wants India to lower its standards for obtaining

patents, so that patent monopolies will be more ubiquitous. For example, the

Obama Administration wants India to grant patents on new uses of older

medicines, something not possible under the current India patent law.

The Obama Administration participates with large international pharmaceutical

companies in an extensive public relations campaign to present such policies as

necessary to promote India's development as an innovation powerhouse. But when

subject to analysis, it is evident that the changes sought by the Obama

Administration are designed to benefit Eruopean, Japanese and U.S.

Pharmaceutical companies, the most, while presenting a growing threat to the

efforts to promote more equal access to medicines, not only in India, but

throughout the developing world.

Taken together, the policies (often quietly) advocated by the Obama

Administration are designed to raise drug prices in India, and make it harder

for India to export low cost generic drugs to other countries. The latter point

is quite important, because today India is the leading source of high quality

generic medicines for the world, a role that is being threatened by the

pressures on India from the European Union and the United States to embrace even

tougher intellectual property rules for medicines, and a wave of recent

acquisitions of leading Indian generic companies by large Japanese, U.S. and

European pharmaceutical firms.

The Obama Administration is not alone in its advocacy of higher intellectual

property right (IPR) norms for the Indian biomedical sector. The European Union

is currently engaged in negotiations over a controversial intellectual property

chapter in a proposed trade agreement with India that covers these same topics.

Are public health groups naïve in objecting to the Obama Administration and

European Union efforts to push higher IPR norms for the Indian biomedical

industry? Are the U.S. President and the EU trade negotiators simply protecting

domestic incomes and jobs by forcing India to pay for its fair share of medical

R & D? Looking only from a U.S. (or European) perspective it may seem that calling

for higher IPR on medicines is a simple matter of looking out for number one.

But there are considerations to weigh that suggest otherwise.

1. Trade-offs will be needed on both sides. Polices that drive up the prices of

medicines in India are bitterly opposed by the general population, and unpopular

with many Indian political leaders. In order to get India to implement policies

that reduce access to medicines, the U.S. and the EU will have to give something

in return. India may want changes in agricultural policies that reduce incomes

of U.S. or European farmers, increase its allocation of H1B visas, expand

outsourcing of work from the United States, or countless other things that may

be raised or linked to a negotiation. These issues are often not obvious. For

example, it is widely rumored that in the past, the U.S. Government made

concessions regarding India's implementation of treaties obligations regarding

nonproliferation of nuclear weapons, in return for changes in its intellectual

property laws. People need to ask, what will be the " cost " to us of getting

India to make changes in its

intellectual prope

rty laws?'

2. The US benefits from low cost generic medicines. The United States is now the

single largest purchaser of generic AIDS medicine in the developing world. There

is simply no way that the United States can meet its global obligations to treat

poor persons who have AIDS unless we can obtain inexpensive generic version of

second and third generation AIDS drugs. The policies we are advocating in India

will make that more difficult. The U.S. also depends upon India to provide

inexpensive generic medicines for our domestic market. If India is forced into

managing a complex patent system that is constantly gamed to extend patent

protections forever, we will lose an important supplier of inexpensive

medicines.

3. Higher drug prices make it more difficult to transfer global health programs

to national governments. When medicine prices are high, the United States,

European and other high income countries are increasingly asked to pick up the

tab, not only for AIDS drugs, but for new vaccines involving cervical cancer,

for malaria treatments, and other public health problems. If we want developing

countries to shoulder these costs themselves, and increase national outlays on

health, we can't at the same time be making them too expensive for their own

taxpayers.

4. Loss of exports. In the developing world, higher medicine prices often lead

to reduced access and worse health outcomes. Poor health lowers economic growth,

and reduces purchasing power. This in turn leads to fewer U.S. exports of goods

and services in developing countries.

5. Harsh policies on medicines hurt the U.S. Brand. News media coverage of U.S.

trade policy is often non-existent in the U.S. But in developing countries,

efforts by the United States to raise the prices of medicine are often reported

on the front pages of newspapers in developing countries, and becomes the

subject of extensive discussion among academic experts and policy elites,

generating unwelcome anti-American sentiment. It is no accident that one of the

most dramatic concessions the U.S. Government has made in terms of trade policy

was the November 2001 Doha Declaration on TRIPS and Public Health, where the WTO

agreed that members " should " implement IPR rules in way that promotes " access to

medicine for all. " At that moment, the U.S. was coming to grips with the

realization that there is a much resentment and even hatred toward the United

States.

6. Reputations for not honoring promises erode trust in future promises. In

2001, the US and European countries agreed at a Doha Ministerial meeting that

developing countries would be able to implement their WTO obligations on

intellectual property rights in a manner that promotes access to medicine for

all. The US has agreed to similar text in a more recent negotiation at the World

Health Assembly. In order to get the US to approve that language, developing

countries made concessions in other areas. By reneging on these promises, the

U.S. makes it clear that it won't keep its word. Whatever short term benefits we

may achieve, there should be more appreciation for the longer term consequences

of reduced trust in our promises.

In a number of respects, the current demands on India, which are so

inappropriate given the consequences for poor people all over the world, are a

product of the larger failures of the U.S. political system.

The top companies shaping U.S. Policy toward India on IPR and medicine are

Pfizer, Merck and Abbott. The CEOs of these same three companies had direct

access to Obama immediately after the inauguration, where they traded money for

an ad campaign to support the health care bill for a promise to gut the

legislation of any cost controls involving the pharmaceutical sector. Democratic

Party leaders like Dean and Joe Trippi were hired to lobby for BIO, the

industry trade group. There is also a revolving door between the pharmaceutical

industry and the government. This is particularly true for officials working in

the area of trade policy.

Given the private incentives politicians have to raise cash from drug companies,

or government officials have to seek high paying industry jobs after they leave

the government, there is no reason to believe that the public interest is in

fact first and foremost in everyone's minds in Washington, DC.

We hope that President Obama takes some time in his trip to India to think hard

about the hundreds of millions of persons who are poor, not only in India, but

throughout the world, and ask himself, as a Christian, as an ambassador of hope,

as a former community organizer for poor people, as a winner of the Nobel peace

prize, as the President of the United States of America, and the face of our

country, what is the right thing to do?

It is not unreasonable to ask the President to truly honor the 2001 Doha promise

that countries will have the freedom to implement intellectual property laws in

a manner that promotes access to medicine for all. In the end, an announcement

along these lines, backed up with deeds, would do more to protect U.S. interests

abroad than any of the suggestions he is getting from big pharma CEOs these

days.

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