In the aftermath of the World Trade Organization’s Trade-Related Intellectual Property—TRIPS—Agreement (1995) and the World Health Organization’s global action plan on public health, innovation and intellectual property (2008), the balance between intellectual property rights and the right to treatment remains a hot topic, especially in relation to the AIDS pandemic. The drugs required to treat AIDS often take many years and millions of dollars to develop but are often needed most in countries with the least ability to pay. This topic is further complicated by the generics market in fast-growing economies such as India and Brazil, two of the world’s top producers of generic drugs. In the face of a pandemic is it permissible to deny treatment in the name of intellectual property? And, if intellectual property rights must be upheld, how can this be done while maintaining growth in the markets that rely on cheaper alternatives and without making healthcare unattainable?
Brazil presents an interesting case because of its involvement in the production of generic drugs, its status as a G-20 nation with a fast-growing economy, and its commitment to provide free treatment to all citizens infected with HIV/AIDS. Brazil is one of the world’s most populous countries and has one of the highest HIV/AIDS rates of any G-20 nation, behind South Africa and Russia.1 Therefore, Brazil’s commitment to free treatment for HIV/AIDS presents both an economic and a trade issue due to its scale, the high cost per capita of AIDS treatment, and Brazil’s manufacturing capabilities. These factors have led Brazil to put pressure on the TRIPS agreement and US pharmaceutical companies in the name of treating its citizens. Its Health Ministry has even threatened to produce bio-equivalent drugs that Brazil had back-engineered if the companies did not give them the discounts they demanded. In one case this forced US manufacturer Abbott Laboratories to lower its price for an antiretroviral called Kaletra, a part of the AIDS treatment cocktail, by nearly half.2 While the bullying of pharmaceutical companies in developed nations may not be the best way to obtain the drugs necessary to treat their people, the fact remains that the TRIPS agreement has left middle-income countries with some industrial capability in healthcare limbo. They are neither exempt from international patent laws—as India and China were until 2005 to allow for economic growth—nor do they have the industry or resources to manufacture or purchase all of the patented drugs they need to treat their people.3
In 2007 the generics sector of the Brazilian pharmaceutical market occupied 11.6% of the total market, and the Health Ministry expressed hopes that this would grow to 20% by 2011, especially in the production of antiretrovirals.4 The national AIDS program currently spends 80-85% of its budget importing these drugs, even though Brazil is capable of manufacturing about half of the drugs it needs.5 The generics industry claims itself to be an equal enemy of bio-equivalent or “similar” drugs along with patent holders.6 However, the financial strain of treating the population is obvious, leading us to question the balance between the economics of cutting edge pharmaceutical research and development and the necessity of treating a pandemic.
The TRIPS Agreement, in an effort to address the WHO-declared pandemics of AIDS, tuberculosis and malaria, allows countries to obtain compulsory licenses for patented drugs to produce them more cheaply in times of national emergency. However, most developing nations do not have the infrastructure to produce such drugs or the funds to buy them from developed nations. This should be the niche for generics manufactured in places like Brazil and India, as the agreement states that compulsory licenses need only be manufactured “primarily” for local use.7 Therefore, it is somewhat legal to produce AIDS drugs without authorization of the patent holder in times of crisis. However, the wording is vague enough to leave it open to interpretation on a case-by-case basis.
In light of the presumption that people have the right to treatment for HIV/AIDS and that manufacturing under compulsory licenses is legal despite negative ramifications for those who pay for research and development, what is the best way to profit from the situation? If growing nations with the infrastructure in place to manufacture generics were allowed to produce and export the drugs that less developed nations need, this would help both the nations in need of healthcare and the economies of the producing nations. However, at what point does the capability to produce such drugs at lower than the cost of research and development cause a backlash in new inventions? Brazil has already cited a decline in the research sector of its pharmaceutical industry because it is primarily a copycat nation in terms of production. Another concern in relation to a growing unauthorized generic market is that they will leak into nations that don’t qualify for compulsory licensing, leaving researchers high and dry. This fear has even led to seizures of generic drugs en route to developing nations when they had to pass through developed ones to get there.8
The message remains: proceed with caution. Although the TRIPS Agreement has striven to protect both intellectual property rights and global health needs, more can still be done within its scope to produce affordable pharmaceutical equivalents for the world’s developing nations. However, it is important that this production does not impede further research and development by taking too much away from the original patent holders. While it is unethical to refuse people AIDS treatment, there is a fine line between treating a pandemic and disregarding patents for discoveries that often take years to develop. With proper regulation, middle-income nations can fill the niche of cheap generic production while developed nations continue to honor patents through parallel trading. This should allow for a balance between economic growth and AIDS treatment.
1 CIA. 2009. South America :: Brazil. The World Factbook. https://www.cia.gov/library/publications/the-world-factbook/geos/br.html (accessed September 30, 2009).
2 “Generic Drugs in Brazil Are a Hard Pill for Big Pharma to Swallow,” Universia-Knowledge @Wharton (Jan 16, 2006), http://www.wharton.universia.net/index.cfm?fa=viewArticle&id=1086&language=english (accessed September 30, 2009).
3 Henry J. Kaiser Family Foundation, “Brazil Authorizes Importation of Generic AIDS Drugs; Move Could Reignite WTO Debate,” The Body (September 5, 2003), Henry J. Kaiser Family Foundation • International News, http://www.thebody.com/content/policy/art11300.html (accessed September 30, 2009).
4 “Generic Drugs in Brazil Are a Hard Pill for Big Pharma to Swallow,” Universia-Knowledge @Wharton (Jan 16, 2006), http://www.wharton.universia.net/index.cfm?fa=viewArticle&id=1086&language=english (accessed September 30, 2009).
5 Ricardo Vicente,“Opportunities and Challenges for Bioequivalent Generic Drugs in Brazil,” Episcom Business Intelligence Ltd (April 2007), in Research and Markets, http://www.researchandmarkets.com/reportinfo.asp?report_id=455657 (accessed September 30, 2009)
6 “Generic Drugs in Brazil Are a Hard Pill for Big Pharma to Swallow,” Universia-Knowledge @Wharton (Jan 16, 2006), http://www.wharton.universia.net/index.cfm?fa=viewArticle&id=1086&language=english (accessed September 30, 2009).
7 WTO TRIPS Agreement, Article 31, Other Use Without Authorization of the Right Holder, (Doha 2001) http://www.wto.org/english/docs_e/legal_e/27-trips_04c_e.htm (accessed September 30, 2009).
8 FDA News,“Seizures of Generic Drugs Protested by Health Groups,” Generic Line, Vol. 26, No. 6, (March 18, 2009), in LexisNexis, http://www.lexisnexis.com.proxy.library.cornell.edu/us/lnacademic/results/docview/docview.do?docLinkInd=true&risb=21_T7473671020&format=GNBFI&sort=BOOLEAN&startDocNo=1&resultsUrlKey=29_T7473671023&cisb=22_T7473671022&treeMax=true&treeWidth=0&csi=304272&docNo=2 (accessed September 30, 2009).