APPENDIX 18
Memorandum submitted by Action for Southern
Africa (ACTSA)
HIV/AIDS AND ACTSA
Action for Southern Africa (ACTSA), the successor
to the Anti-Apartheid Movement, campaigns to support peace, democracy
and development. It is supported by thousands of individuals,
national and local trade unions, churches and other NGOs. It is
the current Chair of the European Network for Information and
Action on Southern Africa. While HIV/AIDS is a significant threat
across the developing world, Southern Africa is at the very epicentre
of the disease, where over a third of the world's people with
HIV/AIDS live. As this note will show, South Africa itself is
also currently a key focus in the wider issue of patents and access
to drug treatments. ACTSA has worked with other development and
HIV/AIDS groups in Britain in developing its campaign and with
government and NGO bodies in Southern Africa, including the Treatment
Action Campaign (TAC) in South Africa.
THE IMPORTANCE
OF INCREASING
AFFORDABLE ACCESS
TO DRUG
TREATMENTS
The high price of effective patented drugs to
treat HIV/AIDS-related illnesses is increasingly being acknowledged
as a major obstacle to effective strategies to tackle the spread
and impact of the disease in developing countries.
In developed countries such drugs have radically
reduced the level of AIDS mortality—allowing people to live
longer, continue to contribute to their society and so not occupy
expensive hospital beds. But they are beyond the means of most
people and governments in a region like Southern Africa. In the
face of the apparently insurmountable cost barriers, many policy
makers have argued that the only current option for such countries
remains prevention and basic palliative care.
There is a growing realisation of the brutal
political morality inherent in such an approach—amounting
to writing off even attempting to bring life-saving treatments
now routine in developed countries to the 24 million HIV-infected
people in Africa alone. But it is also becoming clear that it
overlooks the links between access to treatment and the success
of prevention programmes, and the huge costs brought by not providing
drug treatments.
Mechanisms exist to achieve large, systematic
and sustainable reductions in the prices of HIV/AIDS drugs, without
recourse to unfeasibly large injections of aid to subsidise drug
purchases. The question is whether the political will can be mobilised
to curb the drive by the large pharmaceutical companies, with
support of developed country governments, to exclude from developing
country markets price-reducing competition by producers of generic
drugs.
LINKS BETWEEN
PREVENTION AND
TREATMENT
Improving access to medicines is vital to help
prevent the spread of the disease and to prove to people that
there can be life with HIV/AIDS. If treatment is not available,
being diagnosed HIV-positive is little short of a death sentence.
People do not get tested, preferring not to know their status.
There is growing evidence from developing countries that access
to treatment would encourage people to come forward to be tested
and help reduce the stigma of the disease—both key elements
of the success of prevention and education.
COSTS ON
NON-TREATMENT
Furthermore, the cost of extending access to
drugs to people with HIV/AIDS, must be weighed against the major
costs of not doing so. Primary health and hospital services in
Southern Africa are struggling under the weight of providing even
basic care to the huge numbers of people with HIV/AIDS and related
infections who are sick and dying because they do not have access
to drug treatments. There is also the cost of tackling the growth
of diseases like TB in the non-HIV positive population spreading
from those with HIV/AIDS. Further weighed in the balance must
be the cost for the economy as a whole of a workforce that is
getting ill and is dying earlier because of lack of access to
treatment.
Access to cheaper drugs is not an answer in
isolation from other fronts in the war against the epidemic in
developing countries—prevention, upgrading the resourcing
and efficiency of health delivery systems, palliative care and
the development of a vaccine are all crucial. But, as a key part
of an integrated strategy, the role of increasing access to affordable
drugs can no longer be ignored.
DRUG PRICING
AND PATENTS
Many key medicines to treat HIV/AIDS and opportunistic
infections are simply too expensive for people and governments
in many parts of the developing world such as Southern Africa.
A key reason why prices are so high for many of these relatively
new medicines is that the drug patent system provides the large
pharmaceutical companies with exclusive control over their sale
while the patent is in force. As international pressure for developing
countries to accept and implement protection of patented drugs
produced in developed countries has grown, companies in developing
countries have increasingly been prevented from producing or importing
cheaper generic versions of drugs. With a lack of competition
in the marketplace, prices are high for the branded drugs.
By contrast, in some developing countries, such
as Thailand, India and Brazil, generic versions of anti-retroviral
drugs and medicines for the treatment of opportunistic infections,
with proven quality, have been produced at substantially lower
prices. In Brazil they have been the basis of a national programme
of universal access to antiretroviral therapy launched in 1996
that has been credited with cutting AIDS deaths in a city like
São Paulo by 53 per cent.
For example, fluconazole is a drug used to treat
meningitis and thrush infections in people with HIV/AIDS, patented
by the US company Pfizer. One 200 mg tablet costs US$4.10 in the
public sector in South Africa (and over US$13 across the counter
in a private chemist). A generic version can be bought for 30
cents in Thailand. Glaxo-Wellcome's AZT, an important antiretroviral
drug costs US$20 in South Africa, its Thai equivalent just 30
cents.
IMPLICATIONS FOR
RESEARCH AND
DEVELOPMENT
Pharmaceutical companies defend strict protection
of patents by arguing that high prices reflect high investment
made in research and development of the new product. "Any
threat to intellectual property rights will undermine the future
flow of innovative medicines", argued the UK pharmaceutical
industry memorandum to the Select Committee's previous inquiry
on After Seattle. ACTSA recognises the need to provide for patent
protection to stimulate and reward research and development of
new medicines, but it also argues that a balance must be struck
with protecting the rights of poor people to gain access to life-saving
treatment. In an economically-divided world, blanket application
of such patents effectively means key HIV/AIDS drugs will be largely
unavailable in poor countries.
It should be noted, too, that there have been
challenges to the industry's figures on how much research and
development costs represent within the prices charged—with
one US study indicating that it represented no more than 7.4 per
cent of sales income. The amount that publicly-funded research
and pre-clinical trials contributes is also often overlooked (leading
to disputes between public health bodies and companies seeking
to patent drugs including some antiretrovirals such as AZT). Furthermore,
according to WHO, drug companies spend only 10 per cent of their
investment on diseases that affect 90 per cent of the global population.
It is also unlikely that drug companies would lose much profit
by allowing African countries access to cheaper drugs because,
at current prices, they cannot buy them anyway—only 1.5
per cent of their total sales income comes from sub-Saharan Africa.
Indeed, royalties on low-price, but large-volume sales they could
receive under compulsory licence schemes (see below) allowing
generic production could potentially even bring them more income
than on current high-price low-volume sales of their own branded
drugs.
COMPULSORY LICENCES
AND PARALLEL
IMPORTING
Mechanisms used to achieve lower priced generics,
in fact, have a long track record in developed countries. One
key method has been compulsory licensing under which a governmental
body grants a manufacturer the right to produce and sell a safe,
generic version of a drug without the agreement of the patent
holder. Usually this is only after the patent holder has been
requested—and has refused—to grant a voluntary licence
and entails an obligation on the licence-holder to pay a royalty
to the patent-holder. And while compulsory licence provisions
have existed in many countries' law, relatively few have had to
be issued. Usually the capacity for issuing them has been enough
to ensure that licences are agreed on reasonable terms between
the parties. The issuing of licences also has to be justified
on specific grounds, notably countering anti-competitive practices
and public health emergencies. The role of this mechanism has
been thrust into the limelight anew for developing countries simultaneously
trying to tackle the health emergency which HIV/AIDS represents
(and for which most key treatments are under patent), while under
pressure to implement tight patent protection for drugs.
Parallel importing is another arrangement under
which the purchase of drugs is authorised from a third party in
another country, instead of buying them directly from the manufacturer,
to take advantage of the fact that pharmaceutical companies charge
different prices in different countries; again a practice widely
used in EU countries.
TRIPS IMPLICATIONS
ON ACCESS
TO DRUGS
However, the large pharmaceutical companies
and the governments of the countries in which they are based have
sought to ensure such practices are prevented and their markets
are protected—with some success. For example, Canada, which
set up a compulsory licence system in 1923 and used it widely
for decades—leading to millions of dollars worth of savings
on national drugs bills and the growth of a major generic drug
industry—had to abrogate it in 1993 when it joined NAFTA.
A further reflection of this general trend is
the Agreement on Trade-Related Aspects of Intellectual Property
rights (TRIPs), concluded as part of the Uruguay Round, which
requires all WTO members to adapt their national laws to the minimum
standards it sets out on recognising and enforcing minimum 20
year patent protection—within an agreed period (2005 for
most developing countries, 2006 for the Least Developed). However,
its provisions also include safeguards acknowledging the legitimacy
of moderating patent protection to ensure competition and protect
consumers' interests; especially in the health sector where these
may have—literally—life-or death consequences. In
particular, Article 31 of TRIPs allows governments to override
patents (including by using compulsory licences) on the basis
of public interest, national emergency, anti-competitive practices
or other grounds defined in national law.
However, the ability of developing countries
to use such measures in practice is very different. Large pharmaceutical
companies and developed country governments have either simply
resorted to bilateral threats and pressure outside the multilateral
WTO system or have put different or vague interpretations on what
TRIPs specifies in this area. The objective has been to press
developing countries to adopt legislation more restrictive than
required by TRIPs in order to protect domestic economic interests.
THE CASE
OF SOUTH
AFRICA: MEDICINES
ACT 1997
The case of South Africa is an important illustration
of this reality. In 1997 the South African Parliament passed the
Medicines and Related Substances Control Amendment Act, changing
its law on patents to allow the use of compulsory licensing and
parallel importing as a means to achieve more affordable prices
for key drugs, such as those for people with HIV/AIDS. The Government
faced an onslaught of action from developed countries which has
prevented—to this day—these potentially life-saving
measures from being put into practice including:
— legal action launched by the Pharmaceutical
Manufacturer's Association of South Africa (representing local
affiliates of the large international drug companies) in 1998
arguing that the law undermines patent protection and constitutional
property rights which has tied it up in the courts and prevented
it from being put into practice (though the case is now set to
be heard in court in March 2001).
— an intense lobbying effort by the
US Government at the highest level, with measures including the
US Trade Representative putting South Africa on its "Watch
List", the withholding of preferential GSP tariff treatment
from certain South African exports and threats to block aid (though
the US Government sought to modify this overtly aggressive stance
in the face of mounting public outcry in the run up to the US
elections through a presidential Executive Order).
— pressure from both individual EU
Member States and the then European Commissioner Leon Brittan
who wrote to the Vice President Mbeki in March 1998 warning: "I
am concerned that the new law might conflict with the objectives
of the Trade and Co-operation Agreement under negotiation between
South Africa and the Community. Section 15c of the law in question
would appear to be at variance with South Africa's obligations
under the WTO Agreement on TRIPs and its implementation would
negatively affect the interests of the European pharmaceutical
industry".
In parallel to this concerted pressure, has
been more high-profile announcements by the large pharmaceutical
companies to offer drugs at reduced prices or even free of charge
in Africa. (For example, Pfizer's December 2000 offer to provide
Fluconazole free of charge in South Africa. The drug has been
at the centre of a high-profile campaign by the Treatment Action
Campaign illegally to import a generic version from Thailand in
order to highlight "unjust patent laws"—and, in
a significant move, was granted a temporary licence for use in
treating HIV/AIDS patients by the South African Medicines Control
Council).
A number of the major headline-grabbing announcements
by the companies for such deals in Africa remain as yet unfulfilled.
In part this is because, on closer inspection, the offers are
problematic—they can be very time-consuming to negotiate
country-by-country and drug-by-drug, are normally set for a limited
period, cover only the public sector and often come with many
strings attached. HIV/AIDS drugs need to be taken in precise dosages
and if the treatment regimes are interrupted, there is a high
risk of generating resistant forms of HIV. As one concerned South
African health official also said: "Are we to provide the
drug free for a time, only to have to tell people we are having
to take it away again?" There are also fears that such case-by-case,
voluntary deals will include conditions that countries abrogate
their rights to use compulsory licensing or a parallel importing.
A more reliable and sustainable basis is needed if drugs are to
be available regularly and in the necessary quantities within
a national programme of distribution.
THE NEED
FOR CLARITY
This problem will remain unresolved until there
is clear, common interpretation of the TRIPs agreement. Developed
countries need to cease bilateral bullying of developing countries
seeking to use measures such as compulsory licensing as part of
an HIV/AIDS strategy, and instead explicitly support them on development
grounds. This is all the more important in a context where developing
countries like South Africa seeking to attract foreign investment
can suffer from a perception of "irresponsible" trade
policy within developed country markets—even if they are
fully complying with WTO and TRIPs rules. Important current initiatives
within the G8 and the EU, in which Britain is taking a key role,
to mobilise international support for other action needed to tackle
the scourge of HIV/AIDS—such as the development of a vaccine
and support for developing country health systems—are compromised
without addressing this issue.
POLICY RECOMMENDATIONS
ACTSA believes that the British Government should
build on its strong role on the issue of HIV/AIDS and global communicable
diseases by:
1. Working to ensure affordable access to
drug treatment is given higher priority as an approach to combating
HIV/AIDS in developing countries;
2. Issuing a clear public statement supporting
Southern African countries seeking to use measures such as compulsory
licensing to reduce prices for vital drugs for people with HIV/AIDS
and related diseases as provided under the safeguards contained
within the WTO TRIPs agreement, and taking a lead within the European
Union to secure this at an EU level;
3. Entering into dialogue with the large
pharmaceutical companies to encourage them to revoke their current
legal action against the South Africa Government over the 1997
Medicines Act provision to allow compulsory licensing and parallel
importing;
4. Offering technical and legal assistance
to Southern African countries on patent protection legislation
to ensure that they make full use of the provisions allowed under
TRIPs to introduce competition to ensure the reduction of prices
for HIV/AIDS drug treatments.
ACTSA
September 2000
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