Castan Centre for Human Rights Law

"Pharmaceutical Corporations, Access to Drugs, and Human Rights"

Sarah Joseph

{DRAFT ONLY - NOT FOR QUOTATION}
INTRODUCTION

In the past few years, especially since the famed battle of Seattle in December 1998, human rights activists seem to have switched their gaze from the traditional 'enemy', State governments, and have manifested increasingly visible alarm over the activities and power of corporations in the new global economy.1 This tide of concern however predated battle of Seattle and has, simplistically, come in four waves, all of which are ebbing away at the shores of corporate reputations.

The first wave, with noteworthy proponents such as veteran campaigner Ralph Nader in the United States, advocated consumer rights to safe products, and has been for example directed at car companies, tobacco corporations, Nestlé for its alleged continued marketing of improper baby milk products in the developing world, and, lately, the manufacturers of genetically modified food such as Monsanto. The second wave broke on exploration and extractive industries, such as Shell in Nigeria, and BP in Colombia, which have been criticised for allegedly conducting operations which severely damage the environment in developing countries, as well as for collusion with oppressive governments, often with allegedly brutal results.2 The third wave has targeted unsafe and exploitative work practices in developing nations, particularly at the behest of the textile and toy industries.3 For example, campaigns have been waged against high profile industry names such as Nike and the Gap. The fourth wave, which has been cresting in 2001, has been against the pharmaceutical industry, particularly, but not only, with regard to its perceived greediness in pricing essential medicines out of the reach of most sufferers. These criticisms have been stoked no doubt by the publication in early 2001 of The Constant Gardener by popular author John le Carré, a novel which paints a very sinister picture of the practices of 'Big Pharma'.4

ACCESS TO DRUGS - THE HIV/AIDS EXAMPLE

The most prevalent criticism of the pharmaceutical industry has related to the high prices charged for life-saving drugs, particularly drugs which combat and relieve the symptoms of HIV/AIDS.

Since 1996, combination anti-retroviral [ARV] or 'cocktail' therapies have been available, and have had considerable success in curtailing the death rate from HIV/AIDS. These ARV therapies do not cure HIV/AIDS and can have side effects, but have nevertheless greatly improved the quality and length of life of many HIV positive people, at least in the Western world.

However, these drugs have been generally unavailable in the developing world, where they are most needed. Indeed, 95% of new infections worldwide are in the developing world.5 South East Asia and the Asia Pacific, the Caribbean, Latin America, and Africa all have comparatively enormous HIV infection rates. The worst-hit region is sub-Saharan Africa, where 8.8% of the population is HIV positive.6 The rate is more alarming in the southernmost part of the continent, where the HIV/AIDS pandemic is having an equivalent effect to the bubonic plague in mediaeval Europe, with for example adult rates of infection of 35.8% in Botswana and 19.94% in South Africa in June 2000.7 Indeed, a conservative present projection is that a 15 year old in Southern Africa today has a one third chance of dying of AIDS.8

The HIV/AIDS tragedy is not only humanitarian, in terms of rates of illness and death. It is causing major breakdowns in third world societies with large proportions of a generation being wiped out, creating a generation of orphans and concomitant social problems. The damage is also economic, as the generation most affected is that which makes up the bulk of the current workforce. HIV/AIDS is yet another reason why underdeveloped countries, particularly those in Africa, will suffer even greater rates of poverty and consequent instability. Despite the scale of the tragedy, the people in developing States have had little hope until recently of gaining access to the medicines which are sustaining HIV-positive people in the West.

Whilst there are many reasons why the HIV infection and fatality rates in the developing world far outstrip those in the West, lack of access to appropriate drugs is clearly a major factor. Drug prices significantly limit that access.9 Combination therapies in the West cost about US$10,000 - 15,000 per person per year, a number which is far beyond the means of sufferers in the developing world.10 That price is essentially determined by a small group, the world's major pharmaceutical corporations such as Merck, Glaxo-Smithkline, Pfizer, Roche, Bristol Myers Squibb, colloquially known as Big Pharma.

PATENT PROTECTION AND TRIPS

The major pharmaceutical corporations are able to charge high prices for HIV cocktail therapies because they hold the patents on these medicines. A patent-holder over a drug has monopolistic control over the sale of that drug for generally twenty years,11 so there is great scope for uncompetitive and arguably unconscionable prices. Indeed, it may be noted that the pharmaceutical industry is largely cartelised, with control of the global prescription drug industry in the hands of comparatively few players, exacerbating the problem of monopolies and high prices.12 The 'cartelisation' problem has been intensified by a recent spate of mergers in the pharmaceutical industry.13

The patent system has been strengthened in recent years by the incorporation of a regime for protecting intellectual property rights known as TRIPS (Trade-Related Intellectual Property Rights) within the GATT/WTO system. All parties to the WTO must now abide by TRIPS, and therefore recognise and enforce intellectual property rights, such as trademarks, copyrights, and patents. As most States perceive admission to the WTO to be beneficial, most will ultimately pay the TRIPS price. Developing nations were given some leeway, with a deadline of 2001, or 2006 for the least developed countries, set for their total compliance with TRIPS.14 Nevertheless, there are transitional obligations on all developing nations.

TRIPS does allow for some exceptions to strict intellectual property protection. For example, compulsory licenses, ie when a license is granted by the government to a manufacturer to make a product without the consent of the patentholder, are allowed under certain conditions, such as adequate attempts at obtaining a voluntary license, and remuneration to the patentholder.15 Some of those conditions can be waived in times of national emergency,16 a term which aptly describes the HIV/AIDS crisis in southern Africa.17 The boundaries of TRIPS with regard to these provisions, which purport to balance the rights of patentholder and the broader society,18 have not been extensively interpreted.19 However, a recent consensus statement on the application of the TRIPS exceptions to pharmaceutical products was issued after the recent WTO meeting in Doha, and will be discussed below.

TRIPS has led to and will lead to fundamental changes in the intellectual property laws of a number of countries which have previously refused to patent pharmaceuticals, such as India.20 Failure to respect TRIPS may expose a State to WTO complaints and consequent sanctions. For example, India's inadequate transitional arrangements regarding pharmaceutical patents were found in breach of TRIPS after complaints by the USA and the European Union.21 India is currently amending its Patent Act of 1970 so as to comply with these rulings.22

ARGUMENTS IN FAVOUR OF PATENTS

So what is the justification for these patent rights, which, in the context of new AIDS drugs, seem to undermine access to life-saving drugs, thus compromising human rights to life and adequate standards of health. Ironically, patents also appear to undermine the WTO mantra of free trade, as they encourage monopolistic practices rather than competition.

Patents can be defended on a number of grounds. In particular, patents reward people for their inventions, thus encouraging creativity and innovation. Patents operate on the reasonable assumption that people are not inherently altruistic, and expect rewards for their endeavours, especially when those endeavours are risky as they may, and often do, result in costly failure.23 Furthermore, the money raised from patent protection is said to be necessary to fund the considerable costs of research and development (R&D).24 Therefore, without patents, innovation in the pharmaceutical field might grind to a standstill. Whilst it is true that the high prices generated by patent protection may render access to the drugs selective, it is nevertheless perhaps better that a drug is available to some rather than non-existent and available to no-one. Finally, a prerequisite for patent protection is that the contents of a product patent, or the relevant production process in a process patent, are disclosed. Therefore, information, which may otherwise have been kept secret, is disseminated which may assist future R&D initiatives.25

It is further argued that the global extension of patent protection mandated by TRIPS is designed to ensure that patents, which were predominantly creatures of Western law, are not unfairly undermined by the sale of pirated copies in the non-Western world. Furthermore, global intellectual property regimes should encourage greater foreign direct investment, greater technology transfer between countries, and greater local innovation within all States.26 All of these outcomes would accelerate the economic development of poor countries, which should result in the alleviation of poverty in such countries.

DOES BIG PHARMA HAVE TO CHARGE SO MUCH?

Despite the arguments in favour of patents, serious questions can be raised about the level to which patents in the pharmaceutical field are exploited. The pharmaceutical industry has consistently, for many decades, been an extraordinarily profitable sector.27 Furthermore, one may note that Big Pharma tends to spend two to three times more on marketing than it does on R&D.28 Indeed, as an aside, it may be noted that some of the marketing techniques used, which are occasionally described as inducements to doctors to prescribe a corporation's brandname drugs, are ethically questionable for a number of reasons.29 For example, such practices can encourage overprescription which leads to people taking unnecessary medicines, which not only hurts their hip pockets, but encourages growth of drug-resistance on an individual or societal scale.30 In any case, the large marketing budgets indicate that Big Pharma can afford to trim its prices without cutting R&D budgets.

Moreover, there are suggestions that pharmaceutical corporations frequently overestimate their R&D costs.31 For example, much of the R&D that contributes to the creation of new drugs is actually done at public expense in government or university laboratories.32 Indeed, publicly funded researchers may often perform the basic research into a drug, which is the most risky phase as it is the stage at which future marketability is at its least predictable.33 However, public funds are also often used at the later stages of a drug's development, such as in clinical trials.34 Furthermore, R&D costings do not necessarily take into account the generous tax deductions available in many countries to the pharmaceutical industry.35 Indeed, it is pertinent to note that the pharmaceutical industry fought a nine year battle to prevent the dislosure of its R&D costs to Congressional investigators, culminating in a Big Pharma victory in the US Supreme Court in 1983 in Bowsher v Merck.36

Finally, one may note the comparative cost of generic equivalents to brandname drugs. Cipla, a generic drug manufacturer from India, offered in early 2001 to supply copies of various patented anti-HIV drugs to Southern Africa at less than 10% of the cost generally charged by patent-holders.37 R&D costs would not seem to justify the apparent 1000% markup indicated by the Cipla offer, even taking into account the fact that 'the cost of replication of the creation of an invention is significantly smaller than the cost of invention of a new product'.38

CHALLENGES TO BIG PHARMA

THE GENERIC THREAT

The Cipla offer brings up the issue of generic competition to Big Pharma. Generic competition undermines Big Pharma's profits and can potentially undermine its patents, as would have been the case had Cipla gone ahead and exported anti-HIV drugs to South Africa. While the African continent constitutes only 1.3% of Big Pharma's market, Big Pharma's real worry is that those drugs will somehow make their way back to lucrative Western marketplaces.39

Big Pharma make a number of claims to discourage the use of generics, apart from the standard arguments in favour of patents. First of all, it is said that the quality control of generic drugs cannot be guaranteed. Such a claim underestimates the very good reputation of some generic drug manufacturers, such as Cipla in India. Furthermore, Western government healthcare providers have shown a marked increase in their faith in generics by purchasing cheaper generic alternatives once patents expire.40

Second, it is argued that the supply of generic drugs in developing countries, which often lack adequate health care infrastructure, can lead to haphazard distribution of drugs without adequate explanation of the necessary consumption regime for the relevant drug. Certainly, it is true that the regimes for consuming the new ARV therapies for HIV/AIDS are unusually complex. If a consumption regimen is not adhered to, the drugs will not be effective, and widespread non-adherence could lead to the development of ARV-resistant strains of HIV/AIDS.

One, perhaps overly cynical, response to this claim is to note that the pharmaceutical industry does not seem to demonstrate the same concern when encouraging Western doctors to prescribe their wares. The danger of drug-resistant 'superbugs' emerging in the West due to widespread overprescription of anti-biotics has been publicised for a number of years.41 As stated above, over-prescription is likely encouraged by Big Pharma marketing.

Furthermore, developing nations are not per se incapable of adequately overseeing the distribution and administration of ARV therapies, as evinced by the Brazilian experience, detailed directly below.

THE BRAZILIAN SUCCESS STORY

Since 1997, Brazil has successfully supplied combination therapies for free to all who need them.42 The government has been able to afford to do so, as it has authorised the local manufacture under a compulsory license of patented AIDS drugs. As a result of this programme, the death rate from HIV/AIDS has been reduced by 50%. The infection rate has also dropped; infection is less likely when a carrier has a lower viral load, which will result from the use of the ARV therapies.43 The costs to the government have been almost totally offset by subsequent savings in hospitalisation rates. There are also incalculable savings for the Brazilian society and economy. Studies have revealed that HIV positive Brazilians are adhering to the complex drug regime as much as HIV positive Westerners, so the Brazilian programme poses no great threat of developing drug resistance.44

Despite the undoubted humanitarian, social and economic success of the Brazilian strategy, the USA responded by bringing a complaint against Brazil under the WTO in January this year.45 Threats of unilateral US sanctions under US domestic law have in the past staved off similar strategies on the part of a number of other States, including Thailand and South Africa.46

THE SOUTH AFRICAN MEDICINES ACT CASE

The US sanction threats arose after the South African government introduced the Medicines and Related Substances Control Amendment Act in 1997, which brought in three important measures designed to facilitate access to cheaper drugs.47 First, the Act enables the parallel import of patented drugs.48 Such a measure will reduce South African drug prices, as the prices of patented medicines in States with generic competition, such as India, is substantially cheaper. Second, the Act compels pharmacists to prescribe cheaper generic versions of off-patent medicines when presented with a prescription, unless non-substitution is expressly requested by the prescribing doctor on the face of the prescription. Finally, the Act establishes a pricing committee to facilitate the development of a transparent system for pricing medicines, which should force Big Pharma to justify its local prices. Contrary to some reports, the Act did not strengthen the government's ability to prescribe compulsory licenses for the local manufacture of patented goods - such compulsory licenses were already and are currently allowed under the long-standing Patents Act of South Africa. Furthermore, the Act does not allow the import of generic versions of patented drugs. Big Pharma did however fear that the Act granted the government enough discretion to implement such measures.

The US government, after local and international protests had dogged the presidential campaign of then Vice-President Al Gore, dropped its opposition to the Act in late 1999 after reaching a memorandum of understanding with the South African government.49 However, Big Pharma remained opposed. In March 2001, a hearing began in the High Court in Pretoria where thirty-nine subsidiaries of the world's biggest pharmaceutical corporations sought a declaration that the legislation was unconstitutional.50 The pharmaceutical companies claimed that the Act abrogated a number of their rights under the South African Bill of Rights, particularly freedom from arbitrary deprivation of property.51 The plaintiff companies urged that the relevant rights be interpreted in accordance with TRIPS, which they claimed was violated by the Medicines Act. Section 39(1)(b) of the South African Constitution requires courts, when interpreting the constitutional Bill of Rights, to take account of international law. It is worth noting that the plaintiffs did not refer to any other relevant international treaties, such as international human rights treaties, despite their obvious relevance to the interpretation of a Bill of Rights.52

However, much if not all of the Medicines Act was probably TRIPS compliant.53 For example, under TRIPS, the parallel importation of patented goods is permitted.54 Furthermore, counter-arguments were made that implementation of the Medicines Act initiatives enabled the South African government to conform with the constitutional guarantees of rights to life, access to health care, dignity, and a child's right to basic health care.55 Thus, there is a substantial possibility that Big Pharma would have lost on the merits.

In any case, no decision was ever made. The drug companies dropped the suit in April 2001,56 prompted by the extraordinary wave of public protest that the suit had provoked, the possibility of failure, and, perhaps crucially, fear of a court order forcing disclosure of their real R&D costs.57 The spectre of 39 companies, whose combined profits far outweighed the GDP of South Africa, moving to stop the provision of cheap drugs to a population in dire need, probably did immeasurable damage to the companies' reputations. Big Pharma is currently trying to recover that massive lost public relations ground.

RECENT TRIUMPHS IN THE BATTLE FOR ACCESS TO DRUGS

Big Pharma's capitulation in South Africa was one of a number of important steps recently taken to reduce the problem of access to drugs in the developing world. In 2000, a number of multinational drug companies became involved in programmes aimed at delivering patented HIV drugs to poor countries at discounted prices.58 However, the programmes were not initially successful due to the number of conditions attached to country participation by drug companies, such as the surrender of any rights a State might have, even under TRIPS, to approve compulsory licenses, and Big Pharma's refusal to supply the private as opposed to public sectors in target countries.59 It also seemed that the discounts were simply not deep enough to really facilitate access, and were certainly not as low as the prices offered by generic drug makers like Cipla.60 However, there has been more movement on these initiatives this year, with deeper discount offers including outright gifts and donations of drugs, and less secrecy in the negotiations between States and drug companies.

There have also been significant initiatives within the WTO. For example, the USA's WTO complaint against Brazil was dropped in July,61 which followed the removal of unilateral threats of sanctions against South Africa and Thailand in 1999 and 2000.62

Earlier, in April, an expert colloquium was convened under the auspices of the WTO and the WHO, which ultimately advocated differential pricing as the solution to the access issue - whereby highly discounted patented drugs would be made available in the developing world, while prices in the West remained the same.63 Nevertheless, disagreement amongst WTO members over the application of TRIPS to pharmaceutical products remained evident in September 2001 at a TRIPS council meeting, with two separate draft ministerial declarations on the issue, written by developed and developing nations respectively, being released in early October.64 The 'sticking points' concerned the requisite level of patent protection for pharmaceuticals,65 and concern over the possibility of discounted drugs for poor countries finding their way into other markets via parallel importation.

However, at the same time as the publication of the separate draft ministerial declarations, a crucial albeit traumatic event was taking place, which probably played a crucial role in breaking the impasse: the anthrax scare in the USA. A few weeks after the September 11 terrorist attacks in New York and Washington, and in the midst of much apprehension over 'what would happen next', a number of anthrax cases appeared in the United States. Understandably, there were fears that the anthrax outbreak was part of a bio-terrorism attack,66 so there was heavy demand for supplies of anti-anthrax drugs. In late October, Bayer was forced to sell its patented anti-anthrax drug Cipro to Canada and the USA at heavily discounted prices, after both countries had made it clear that they would consider issuing compulsory licenses for the generic manufacture of Cipro in the absence of such a discount.67 It is interesting to note how quickly the USA and Canada were to threaten the Bayer patent, and how quick were media commentators to question Bayer's profit margin on Cipro, at a time when the USA had 13 anthrax cases with 3 deaths, and Canada had no cases at all.68 The North American anthrax scare, serious as it was and is, was clearly not an emergency on a par with the devastating effects of HIV/AIDS in the developing world. The North American response to the anthrax scare was probably legitimate in the circumstances. However, it displayed blatant hypocrisy on the part of the West regarding the acceptability of patent relaxation in the context of emergencies which confront 'us', and in the context of the very severe health emergencies which constantly confront 'them' in the developing world. Given the conspicuous nature of the exposure of this double standard, it is not perhaps surprising that consensus amongst WTO members on the issue of TRIPS and pharmaceuticals was relatively easy to reach one month later at the WTO Ministerial meeting in Doha.

In a 'Declaration on the TRIPS agreement and public health', issued 14 November 2001,69 WTO members recognised the concern about the possibly deleterious effects of widespread intellectual property recognition on the ability of poor people to obtain essential drugs.70 Therefore, it was agreed that TRIPS was to be 'interpreted and implemented in a manner supportive of WTO Members' right to protect public health and, in particular, to promote access to medicines for all'.71 More specifically, the Declaration affirms the right of each Member to 'grant compulsory licenses and the freedom to determine the grounds upon which such licenses are granted'.72 Furthermore, 'public health crises', such as 'those relating to HIV/AIDS, tuberculosis, malaria and other epidemics', were unambiguously accepted as constituting national emergencies for the purposes of TRIPS.73 No change to TRIPS was advocated regarding parallel imports, so they are still permitted in all circumstances. Furthermore, the obligation of the least developed nations to comply with TRIPS viz pharmaceutical products was extended from 2006 to 2016.74 Finally, it was recognised that certain Members did not have the capacity to manufacture their own generic drugs via compulsory licensing, nor implicitly the finances to parallel import patented drugs. The Council for TRIPS was therefore instructed to 'find an expeditious solution to this problem' by the end of 2002.75 Implicitly, the import of generics in such situations may be allowed for such countries, in the absence of deep discounts offered by Big Pharma.

2001 therefore appears to represent a turning point with regard to the question of third world access to drugs, and with regard to the global enforcement of pharmaceutical patents. Pharmaceutical corporations will have to accept that lower prices must be charged, or generic competition allowed, for life-saving medicines in poor countries, and also in emergency situations. The Doha Declaration hopefully signals the end of legal and political battles, whether fought in domestic fora such as South African courts, or international fora such as WTO panels, which delay the implementation of programmes designed to secure low-cost necessary drugs for poor people in the developing world. Whilst it is possibly true that the full recognition of intellectual property rights may ultimately benefit the developing world, by spurring greater innovation, development and investment,76 the present health calamities faced by that part of the world must be confronted now, rather than put on the backburner pending completion of the slow process of development.

AIDS IN THE DEVELOPING WORLD: CONTINUING PROBLEMS

Thus, the resolution of the problem of access to HIV drugs in the developing world, dumped in the too-hard basket by relevant players in the international community only a few years ago,77 is now high on the international agenda. The ball is undoubtedly rolling on the issue of access to drugs, and with some help from Big Pharma itself. This is undoubtedly a credit to HIV activists across the world, and demonstrates the power of grassroots pressure against even the most dominant global players such as Big Pharma and the US government.

The provision of cheaper drugs by Big Pharma, or failing that, generic drugmakers, will go some way to alleviating the third world AIDS crisis. However, it must be admitted that other problems will continue to exacerbate the predicament. For example, the failure on the part of many governments to recognise the problem must also be overcome. A key factor in the Brazilian success has been the willingness of the government to devote serious resources to the problem, in the form of the provision of AIDS clinics, and experts to ensure proper adherence to combination therapy programmes.78 Other governments have been much less forthcoming in recognising the problem due to the unfortunate stigma associated with HIV/AIDS. For example, India has not had the same success in dealing with HIV as Brazil despite having similar policies in relation to the generic manufacturing of drugs.79 Thabo Mbeki, President of South Africa, has shown a disturbing reluctance to recognise the link between HIV and AIDS, and seems unwilling to take measures to seriously combat the disease, despite his government's victory over Big Pharma in April. His government is now being sued by AIDS activists in South Africa for its failure to make the drug nevirapine widely available via the public health system to prevent in utero transmission of HIV by pregnant women who are HIV positive.80

Corrupt and/or incompetent governments continue to impede the distribution of HIV drugs. Sadly, many States are so poor that the discounts offered even by the generic companies are beyond their means.81 And yet these same governments often have little comparative difficulty in finding the money to buy military hardware.82 Any blame attributed to Big Pharma for its failure to lower prices earlier cannot absolve certain governments of their complete failure to take appropriate measures to combat HIV/AIDS.

Responsibility for combating the third world AIDS crisis also lies with the rest of the world. For example, debt alleviation for poor countries would improve their capacity to fight HIV/AIDS.83 Foreign aid will be necessary in order to provide drugs for HIV victims, to ensure appropriate delivery of drugs, and to oversee adherence to drug regimens in the poorest countries.84 A Harvard study has costed a programme for delivery of ARV drugs to the poorest nations, based on generic drug prices, at 0.01 of the aggregate GNP of developed nations over five years.85 This seems a small price to pay to alleviate the worst pandemic in 600 years, and to possibly save the continent of Africa.86

CONCLUDING COMMENTS: A RE-EXAMINATION OF PHARMACEUTICAL PATENTS

To conclude, I turn to a more general issue raised in this paper. That is: can we not seriously question the extreme profits made by Big Pharma over prescription drugs, whether in the developing or developed world?

Big Pharma may protest that they are businesses just like other businesses, and it is unreasonable to expect them to be overly altruistic and charitable.87 However, prescription drugs are inherently different to other commodities. Whereas profits may seem morally justifiable when there is a willing buyer and willing seller, the consumers of prescription drugs are often a captive rather than a willing market.

To recap, a major problem appears to be the patent protection conferred upon Big Pharma. Patents facilitate profit, indeed massive profit, due to their conferral of long-term (20 years) monopoly rights. Removal of patents would allow immediate competition, and would result in a marked drop in prices. Are patents, essentially temporary rights of private ownership over these particularly essential commodities, justifiable? Even if one accepts that the right to property is a human right (even though it was the only substantive right in the Universal Declaration of Human Rights not to make it into either International Covenant),88 it is surely doubtful that the right to property can outweigh rights to life and health. Therefore, it is plausible to classify the enforcement of patents over essential drugs as a breach of human rights.

Of course, there is the argument that pharmaceutical patents are a necessary evil; they are needed to facilitate the development of newer, better drugs. But perhaps the social cost of encouraging more research is in fact too high, coming at the obvious expense of restricting access by lower end consumers to drugs that they need. Is the development of newer, better drugs an unquestionable good when they disproportionately benefit the West, and sometimes only richer people in the West?89

Indeed, the current marriage between patent-generated profits and prescription drugs is not globally a happy one. First, as already noted, patent protection creates problems regarding access to drugs, particularly in, but not limited to, the developing world.

Second, serious questions may be raised regarding the current level of innovation in the pharmaceutical industry.90 For example, the granting of drug patents in Italy, which only began in 1978, has reportedly not resulted in any real increase in R&D expenditure and drug innovation by Italian drug companies. Indeed, the most noticeable result has been a sharp drop in Italy's drug export market, which had relied on generic copies.91

Furthermore, the lure of patent-generated profits can decelerate research into drugs and substances which are not subject to patent protection. For example, the patent on aspirin has long been exhausted, yet it seems likely that there are multitudes of unknown beneficial uses for that drug.92 It is possible that research into aspirin, and the positive effects of non-patentable natural substances, has been stifled by a perceived lack of profitability.

Big Pharma spends much of its R&D money on drugs which are innovative enough to attract patent protection, but in fact add little of therapeutic value to existing medical regimes. These 'me-too' drugs are the fruits of 'safe' R&D, entailing only slight variations on themes already known to be profitable.93 Indeed, 'me-toos and line extensions typically take up around 80 per cent of R&D spending',94 so there is arguably a 'wasteful concentration of research on problems whose solution in the near future can be foreseen'95 or has in fact already eventuated. One possible benefit of patented me-toos is to provide therapeutic and consequent price competition to the original patented drug.96 However, the cost of patented drugs continues to escalate, unlike patented goods in other industries, such as information technology, where computer products drop in price soon after their placement on the market.97

Finally, the profit motive can also create problems regarding the creation of drugs. Lots of R&D is put into drugs which deal with chronic, ongoing, notably money-spinning problems, like heart disease or high cholesterol. Less is put into cures and vaccines, which do not have the same ongoing market potential. Indeed, one must wonder how much Big Pharma research is going into development of a cure or vaccine for HIV/AIDS, considering the success of the combination treatments.98

Disproportionate research is put into drugs to combat lucrative problems like obesity, cellulite, and impotence; distressing conditions yet they are rarely life-threatening. Comparatively little research is conducted into third world killers like malaria or tuberculosis.99 Perhaps it is arguable that the historically weak patent protection offered in the developing world has caused Big Pharma's indifference to its diseases.100 However, it is extremely doubtful that Big Pharma will radically increase its R&D on diseases in the developing world while its people continue to have a blatant inability to pay big money, even if patent protection in such countries is increased. In this regard, one may note Big Pharma's reluctance to manufacture a drug even after it has been invented, if it is perceived to be unprofitable. For example, a drug called eflornithine was found in 1979 to cure sleeping sickness, a disease which kills up to 150,000 people a year in central Africa.101 Manufacture of the drug however ceased due to its lack of profitability. Production of the drug has recently begun again, not because of any renewed concern by Big Pharma with sleeping sickness, but because it has been discovered that eflornithine has the lucrative effect of removing facial hair on women.102

The eflornithine story was noted to demonstrate that patent protection in the developing world is unlikely to significantly alter Big Pharma's focus on Western markets, except perhaps in the very long term. The eflornithine story also brings up the vexing question of the extent to which Big Pharma should be obliged to take unprofitable actions in order to facilitate the enjoyment of adequate standards of health. It may seem easy to make a moral judgment that rich companies should 'do more' to help poor people, though it is a significant extra step to advocate legal liability for failure by those companies to 'do more'. There is little doubt that international human rights law does not presently impose such legal obligations on private actors,103 and a discussion of the desirability or otherwise of such obligations is beyond the scope of this paper. The salient issue addressed here is whether access to drugs can justifiably be denied by the patent protection presently imposed by domestic legislation and international standards.

Perhaps there are other ways of rewarding an inventor, rather than the conferral of monopolistic control for a term as long as 20 years. Perhaps patents could confer a right to a royalty from sale by competitors, as is the case with compulsorily licensed goods.104 Diminution of patent rights seems inherently justifiable given the fact that only 20% of Big Pharma's massive revenues are plugged back into R & D.105 Nevertheless, there is a danger that any reduction in patent rights and consequently in profits will reduce industry investment in R&D, regardless of whether maintenance of current R&D levels is affordable.106

In this regard however, it is worth noting that some of the biggest purchasers of patented prescription drugs are Western government healthcare programmes. Indeed, the high percentage of government, as opposed to private, trade enjoyed by the pharmaceutical industry is not comparable to any other industry, except the armaments industry. Therefore, taxpayers' money makes up a large chunk of the patent-generated profits of Big Pharma. These profit margins of course include not only R&D costs, but marketing costs, and the ever-increasing profits which Big Pharma, like all corporations, must factor in to make money for shareholders.

If there were weaker patent rights, those taxpayer costs would be considerably smaller. Therefore, is it not possible, in actuarial terms, for that public money saved on patents to be redirected into government-funded R&D? I am not talking here of increased government expenditure. Rather, I am talking of the redirection of government expenditure from funding Big Pharma's patent-generated profits, to government-funded R&D into pharmaceutical products in universities and public bodies like the CSIRO and its overseas equivalents. Perhaps public savings on patent-generated profits could pick up the shortfall into R&D that would eventuate from any reduction in patent rights, considering the extent to which Big Pharma profits currently rely on the custom of public purses. Such a plan might not lead to more net R&D, but it may lead to cheaper drugs for all without a diminution in R&D. Indeed, as more pharmaceutical products grew out of this enlarged public R&D pot, governments could secure those drugs at an even cheaper cost, as they would not have to factor in Big Pharma profit margins at all. It might also lead to more consistently useful innovation, as publicly funded scientists are hopefully more concerned with Nobel prizes than profits.107 This plan is perhaps not so radical, when one considers that governments already fund much of the R&D into prescription drugs anyway, either directly, or indirectly through tax breaks, or indirectly as a purchaser of patented prescription drugs.

Of course, the public counterpart of private greed is corruption and inefficiency. Market dynamics and shareholder control in the private sector probably provide a more effective brake on corruption and inefficiency than the power exercised by voters over democratic governments, not to mention the lack of power exercised by the people over undemocratic governments. In response, I cite again the example of Brazil, which shows that government solutions can have excellent results in the area of health care.

The above proposal is put forward for comment and debate. Given that its implementation would result in a massive plunge in Big Pharma profits to the detriment of its many shareholders, such proposals are also politically extreme. But, on the other hand, a reevaluation of the notion of profit and ownership in crucial areas such as access to health-restoring drugs, may help to close the yawning gap between rich and poor in this world, which is generating misery, instability, and, most dangerously, hostility.
1 See N. Klein, No Logo (Flamingo, 2001, 2nd ed), Chapter 14.
2 For example, a number of claims alleging egregious human rights abuses have been brought against oil companies under the Alien Tort Claims Act in the United States of America.
3 Lately, in a number of cases in the UK, the extractive industries (the subject of the second wave) have also been targeted in this putative third wave for unsafe working practices; see eg Lubbe v Cape Plc, House of Lords, 20 July 2000.
4 J. Le Carré, The Constant Gardener (Hodder & Stoughton, 2001).
5 UNAIDS, 'AIDS Epidemic-Update', at http://www.unaids.org/wac/2000/wad00/files/wad2000Master/sld010.htm (accessed 8 November 2001).
6 UNAIDS, AIDS Epidemic Update, December 2000, p. 5.
7 UNAIDS, Table of Country-Specific HIV/AIDS Estimates and Data, June 2000
8 UNAIDS, above, note 6, p. 11. Indeed, the figure of a 50/50 chance of death by AIDS in southern Africa is frequently cited - see, eg, T. Rosenberg, 'Look at Brazil', New York Times Magazine, 28 January 2001, p. 26.
9 See UN General Assembly Declaration of Commitment on HIV/AIDS (hereafter UN Declaration), 2 August 2001, paras 24-5.
10 J. T. Gathii, 'Construing Intellectual Property Rights and Competition Policy Consistency with Facilitating Access to Affordable AIDS drugs to low-end consumers' (2001) 53 Florida Law Review 727, at 734; A. Tabor, 'Recent Development: AIDS crisis' (2001) 38 Harvard Journal on Legislation 515, at p. 525.
11 The twenty-year period dates from the time of the registration of the patent, rather than the date of first sale of the relevant product, which may be delayed by marketing approval processes. In many countries, there are provisions for patent extensions to compensate patentholders for initial marketing delays.
12 J. Braithwaite and P. Drahos, Global Business Regulation (Cambridge University Press, Melbourne, 2000), p 373; Gathii, above, note 10, p. 772.
13 See J. Robinson, Prescription Games (Simon & Schuster, London, 2001), p 25.
14 See Article 65, TRIPS. Developed nations had to comply by 1996.
15 Article 31 TRIPS
16 TRIPS, Article 31(b).
17 Cf J. Jeter, 'South Africa Resists Call for AIDS 'Emergency', 15 March 2001, reporting President Mbeki's refusal to declare the AIDS epidemic in South Africa a national emergency in order to invoke the TRIPS exception.
18 See Gathii, above, note 10, pp. 747-771 on the way TRIPS purports to balance the interests of the producers and the consumers of goods subjected to intellectual property regimes.
19 Only five TRIPS disputes have been resolved by WTO panels: see S. Mota, 'TRIPS - Five Years of Disputes at the WTO' (2000) 17 Arizona Journal of International and Comparative Law 533, at pp 552-3.
20 See, for India's position prior to TRIPS, D. K. May, 'Pharmaceutical Crisis in India: Transcending Profits with Human Rights', (1992) 10 Wisconsin International Law Journal 40.
21 See WTO Panel Report on India - Patent Protection for Pharmaceutical and Agricultural Chemical Products, WT/DS50/R (5 September 1997); WTO Appellate Report on India-Patent Protection for Pharmaceutical and Agricultural Chemical Products, WR/DS 501 AB/R (19 December 1997) (Complaint by USA); WTO Panel Report on India - Patent Protection for Pharmaceutical and Agricultural Chemical Products,WT/DS/79/R (24 August 1998) (Complaint by EU). See generally, Mota, above, note 19, at 540-544.
22 See generally P. Cullet, 'Patents Bill, TRIPS and Right to Health', Economic and Political Weekly, 27 October 2001, accessible via http://www.epw.org.in.
23 Apparently, 'only one in 4000 new chemical compounds discovered in a laboratory is ever marketed': S.A. Singham, 'Competition Policy and the Stimulation of Innovation: TRIPS and the Interface between Competition and Patent Protection in the Pharmaceutical Industry', (2000) 26 Brooklyn Journal of International Law 363, p. 373.
24 See generally, Singham, above, note 23, pp. 372-4. Gathii, above, note 10, argues in the context of US drug prices at pp 771-783 that R&D costs are unnecessarily inflated by the high standards applied to drug approval by the Food and Drug Authority (FDA), which are based on 'irrational public perceptions of risk' (p 773) and are overly paternalistic (p. 777).
25 Singham, above, note 23, p 367.
26 See Singham, above, note 23, at pp. 375-385.
27 See M. Angell (editorial), 'The Pharmaceutical Industry: To Whom it it Accountable?', (2000) 342(25) The New England Journal of Medicine 1902; see also Fortune Magazine, 'How the Industries Stack Up', 17 April 2000.
28 See for example figures quoted in the annual reports of Merck (www.merck.com) and Pfizer (www.pfizer.com), accessed 10 November 2001.
29 See generally A Wazuna, 'Physicians and the Pharmaceutical Industry: Is a Gift ever just a Gift?' (2000) 283(3) Journal of the Australian Medical Association 373; S Hopper and B McSherry, 'The Pharmaceutical Industry and Ethical Conduct', (2000) 8 Journal of Law and Medicine 18.
30 For example, note the common prescription of antibiotics for flu-like symptoms, even though influenza is a virus which cannot be cured by antibiotics. See also M. Siegel, 'Profits of Fear', The Nation, 5 November 2001, arguing that Bayer aggressively promoted the anti-anthrax drug Cipro as an untested preventative measure (as opposed to cure) to US doctors in the wake of the recent anthrax scare. Overprescription of Cipro could lead to Cipro resistance, which could have a catastrophic effect if a large-scale anthrax outbreak should occur. Indeed, US medical authorities are recommending the generic drug doxycycline rather than the Cipro as the preferred anthrax prophylaxis. See also text below at note 41.
31 See generally, Public Citizen, 'RxR&D Myths: The Case Against Drug Industry's R&D 'Scare Card'', Congresswatch, July 2001.
32 See Public Citizen, above, note 31, pp 7-10, and Appendix C (National Institute of Health, 'NIH Contributions to Pharmaceutical Development: Case Study Analysis of the Top Selling Drugs', February 2000); I. Cockburn and R. Henderson, Public-Private Interaction and the Productivity of Pharmaceutical Research, National Bureau of Economic Research, April 1997. See also J. Love, Affidavit in the matter between Pharmaceutical Manufacturers' Association of South Africa and Others v The President of the Republic of South Africa and Others, April 2001 (available via www.tac.org.za); A. Dembner, 'Public Handouts Enrich Drug Makers, Scientists', The Boston Globe, 5 April 1998.
33 Public Citizen, above, note 31, p 10.
34 Public Citizen, above, note 31, p 10.
35 Public Citizen, above, note 31, pp 15-16
36 (1983) 460 US 824. Congress could subpoena the documents (the power of subpoena was distinguished from the right of access in Inspector General v Banner Plumbing Supply 34 F.Supp.2d 682 (N.D.Ill. Dec 11, 1998)), but has thus far chosen not to. See also text below at and in note 57.
37 Gathii, above, note 10, p. 769; R.L. Swarns, 'AIDS Drug Battle Deepens in Africa', New York Times, 8 March 2001.
38 Singham, above, note 23, 365.
39 Rosenberg, above, note 8.
40 National Health Policy Forum, Issue Brief, 'Pharmaceutical Marketplace Dynamics', 31 May 2000, p. 5
41 See, eg, J. Monroe, 'Antibiotics vs the Superbugs', Current Health, 10 January 2001; B. Foley, 'Overuse of antibiotics linked to Superbugs', The Age, 31 May 2001; B. Martinez, 'U.S. Health Insurers Use Patient Data To Show Antibiotic Overprescription - Flood of Free Drug Samples Often Puts a Bug in Doctors' Disease Approach --- Pharmaceutical-Resistant Bacteria Grab Hold', 10 April 2001, Wall Street Journal Europe.
42 See generally Rosenberg, above, note 8; see also Gathii, above, note 10, p. 734-5.
43 Consensus Statement of Members of the Faculty of Harvard University, 'Antiretroviral treatment for AIDS in poor countries', March 2001, p 4; Rosenberg, above, note 8.
44 Rosenberg, above, note 8.
45 See Request for Establishment of a Panel by the United States', WTO doc. WT/DS199/3, 9 January 2001.
46 Gathii, above, note 10, pp. 756, 767-8.
47 A good explanation of this legislation is contained in 'TAC Commentary on the Court Case', available via www.tac.org.za.
48 Parallel imports are not imports of pirated or counterfeit goods, but importation of goods marketed in another country by the patentholder. See WTO Fact Sheet, 'TRIPS and Pharmaceutical Patents', April 2001, p 5. Seem on parallel trading, Singham, above, note 23, pp. 407-412.
49 Gathii, above, note 10, p. 767; see also S. L. Myers, 'South Africa and US end Dispute over Drugs', 18 September 1999, New York Times.
50 See, eg, R. Block, 'Big Drug Firms Defend Right to Patents on AIDS drugs in South African court', 6 March 2001.
51 See South African Constitution, s 25(1). The corporations also claimed breaches of the requirement of non-arbitrariness with respect to enforcement of the rule of law (s 1(3)); the right of equality before the law (s 9(1)), and freedom of choice of trade kand profession (s 22).
52 See TAC heads of argument in the Medicines Act Case, available via www.tac.org.za/.
53 Indeed, by the time the hearing started in March, Big Pharma had retreated from its TRIPS arguments, and were concentrating more on the interpretation of constitutional property rights per se. See C. Denny, 'A Spoonful of Sugar will not help', The Guardian, 20 April 2001.
54 Article 6, TRIPS. This has been affirmed in the 'Declaration on the TRIPS agreement and public health', WT/MIN/01/DEC/W/2, 14 November 2001, para 5(d).
55 See South African Constitution, ss 11, 27, 10, and 28.
56 See R. Block and G. Harris, 'Drug Makers agree to drop South Africa suit - Bad PR over AIDS quells effort to defend patients; Pretoria concedes little', 19 April 2001, Wall Street Journal.
57 N. Matthieson, 'Drugs: Round One to Africa', 22 April 2001, The Observer. The Treatment Action Campaign had submitted affidavit evidence on Big Pharma R&D costs, such as that by J. Love, above, note 32, which might have prompted the Court to make such an order.
58 The Washington Post published a three-part story about these Big Pharma initiatives in December 2000; see B. Gellman (1), 'An Unequal Calculus of Life and Death; As Millions Perished in Pandemic, Firms Debated Access to Drugs', Washington Post, 27 December 2000; B Gellman (2), 'A Turning Point that left Millions Behind; Drug Discounts benefit few while Protecting Pharmaceutical Companies' Profits', Washington Post, 28 December 2000; B Brubaker, ' The Limits of $100 million; Epidemic's Complexities curb impact of Bristol-Myers's Initiative', Washington Post, 29 December 2000.
59 N. Geffen, 'Pharmaceutical Patents, Human Rights, and the HIV/AIDS epidemic', 31 May 2001, p. 18.
60 Harvard Consensus Statement, above, note 43, p 14.
61 See WTO doc. G/L/454/IP/D/23/Add.1/WT/DS199/4, 19 July 2001; H. Cooper, 'US drops WTO claim against Brazilian patent law', 26 June 2001, Wall Street Journal; B. Crossette, 'US drops case over AIDS drugs in Brazil', 26 June 2001, New York Times.
62 See Gathii, above, note 10, pp 750, 752, and 766-7.
63 WTO News, 'Experts: Affordable medicines for poor countries are feasible', 11 April 2001.
64 The two Draft Ministerial Declarations, dated 4 October 2001, are available via www.wto.org, accessed 1 November 2001.
65 See also 'Australia accused of blocking access to cheap AIDS drugs', 5 October 2001, AM, transcript available from http://www.abc.net.au, accessed 20 October 2001.
66 The victims were apparently infected by anthrax spores deliberately sent through the mail. At the time of writing, the source of the letters was unknown.
67 See, eg, E. Silverman, 'A Battered Bayer opts out of a fight over its Cipro patent', 25 October 2001, Star Ledger (New Jersey); M. Friscolanti, 'Drug patent law under pressure: NDP bill may seek to lift restrictions on generic bills', National Post (Toronto Edition); 'US set on getting Cipro for under $1 a pill': at CNN.com/health, accessed on 23 October 2001.
68 At the time of writing, five people had died of anthrax in the USA since the September 11 attacks, and there were still no cases in Canada.
69 WTO/MIN(01)/DEC/W/2 (hereafter WTO Declaration), 14 November 2001.
70 WTO Declaration, para 3.
71 WTO Declaration, para 4 (emphasis added).
72 WTO Declaration, para 5(b).
73 WTO Declaration, para 5(c).
74 WTO Declaration, para 7.
75 WTO Declaration, para. 6.
76 See generally, Singham, above, note 23.
77 As described in Gellman (1), above, note 58.
78 Rosenberg, above, note 8.
79 Rosenberg, above, note 8.
80 Details of this case are available from the Treatment Action Campaign website: http://www.tac.org.za/. See also R. Block, 'AIDS Group to take South Africa to Court over Pregnancy Care', 22 August 2001, Wall Street Journal. A single dose of nevirapine cuts the transmission rate to about 13%.
81 Harvard Consensus Statement, above, note 43, p 15.
82 Rosenberg, above, note 8.
83 UN Declaration, above, note 9, para 30.
84 See F. Roylance, 'UN is warned on anti-AIDS strategy', Baltimore Sun, 1 November 2001.
85 Harvard Consensus Statement, above, note 9, pp 18ff.
86 See also UN Declaration, above, note 9, para 83; see also Rosenberg, above, note 8
87 See Robinson, above, note 13, p. 20, quoting Bernard Lemoine, director-general of France's National Pharmaceutical Industry: "I don't see why special effort should be demanded from the pharmaceutical industry. Nobody asks Renault to give cars to people who haven't got one."
88 Article 17, UDHR, guarantees the right to own property, and the right not to be arbitrarily deprived of property. It is a recognised human right that no-one be arbitrarily deprived of his/her property, or denied the right to own property, on discriminatory grounds. However, neither Covenant recognises the right to property per se; see O.J. v Finland, UN doc. CCPR/C/40/D/419/1990.
89 See T. C. Bailey, 'Innovation and Access: The Role of Compulsory Licensing in the Development and Distribution of HIV/AIDS drugs', (2001) University of Illinois Journal of Law Technology and Policy 193, at 210-11.
90 See, eg, J Drews and S Ryser, 'Innovation Deficit in the Pharmaceutical Industry' (1996) 30 Drug Information Journal 97.
91 F. M. Scherer, 'The Pharmaceutical Industry and World Intellectual Property Standards', (2000) 53 Vanderbilt Law Review 2245, at p 2250. Cf Singham, above, note 23, at p. 382.
92 See, eg, on recent discoveries regarding the benefits of aspirin, including its possible use in reducing the risk of ovarian cancer, M McCullough, 'Researchers discover more aspirin benefits', Chicago Tribune, 8 April 2001.
93 See also Angell, above, note 27, at 1903; see also Public Citizen, above, note 31, pp 13-14.
94 Robinson, above, note 13, p. 12; see also Public Citizen, above, note 31, pp. 13-14.
95 F. A. von Hayek, The Fatal Conceit: The Errors of Socialism (WW. Bartley III ed., 1988), as quoted in Gathii, above, note 10, at note 35 therein.
96 Singham, above, note 23, p. 368-370; see also E. W. Kitsch, 'Elementary and Persistent Errors in the Economic Analysis of Intellectual Property', (2000) 53 Vanderbilt Law Review 1727, at pp 1729-1738.
97 See Robinson, above, note 13, p. 89. Singham, above, note 23, admits that the 'key criterion [for price reduction in the pharmaceutical sector] appears to be the number and weight of off-patent chemical entities' (at p. 370)
98 Tabor, above, note 10, p. 524.
99 See generally, Médecins sans Frontières, Fatal Imbalance: The Crisis in Research and Drugs for Neglected Diseases (MSF, September, 2001)
100 Singham, above, note 23, pp. 392-3.
101 Robinson, above, note 8, p. 17.
102 See D.G. McNeil Jr, 'Profits on Cosmetic save a cure for Sleeping Sickness', New York Times, 9 February 2001.
103 See S. Joseph, 'Taming the Leviathans: Multinational Enterprises and Human Rights', (1999) 46 Netherlands International Law Review 171, at 176.
104 Geffen, above, note 59, p. 3; cf Singham, note 23, above, who disputes the ability of courts or governments to determine a 'reasonable' royalty rate, at p. 395.
105 See National Health Policy Forum, above, note 40, p 4.
106 Cf Public Citizen, note 31, p. 17
107 Note that publicly funded scientists have won 90 Nobel Prizes compared to 4 from private industry; see Public Citizen, above, note 31, p. 8.