The generic ripoff

How Geneva agreement to make generic drugs available represents
disaster for world's poor

Geov Parrish -

08.29.03 - Reading the American and foreign press, you'd think two
separate agreements were being reached this week to allow poor
countries to buy generic versions of life-saving pharmaceutical drugs.

In the first agreement, as reported by the New York Times, the pact,
intended to "improve the access of millions of people in [poor]
countries to expensive patented medicines for AIDS and other
diseases," stands to "enhance the Bush administration's international
standing." The Bush Administration, which had blocked a similar
agreement last December, had reversed itself, we learn; this
represents a tremendous victory for the world's poor, a victory won
over the outraged protests of Big Pharma and in stark contrast to the
White House's previous intransigence.

Well, set aside for a moment how much money has been made in the last
nine months by U.S. pharmaceutical companies like Pfizer -- which led
the global lobbying against the use of generics -- or how many people
who might otherwise have survived died because of the delay in the
agreement. No, let's turn instead to that other agreement -- the one
which Ellen t'Hoen of the volunteer doctors' organization Medecins
sans Frontires called "disastrous." The one that Oxfam's Michael
Bailey says "isn't really anything to cheer about."

Both quotes appeared in the British press, which is considerably more
skeptical about the Bush Administration's "concession." So which is

To be sure, the Bushies needed an agreement. The rift between
Washington and poor countries over this issue was threatening to
derail next month's meeting of the World Trade Organization in
Cancun, Mexico. In the preliminary negotiations for that meeting,
Washington has been pushing hard to lock in trade advantages for
itself on a host of issues, from intellectual property to
privatization of public services to the dumping of agricultural
goods. But especially in the wake of the AIDS pandemic, no issue is
more contentious, or more a matter of life and death, than poor
countries' access to cheap generics. Washington's stubbornness on the
issue threatened to provoke a repeat of the revolt by poor and
especially African nations at the 1999 Seattle WTO ministerial, a
trauma which nearly killed the organization.

That was the rock on one side of the White House. The hard place
opposite it was the pharmaceutical industry, among the Bush
Administration's biggest campaign donors heading into an election for
which the White House has begun to raise $200 million.

Big Pharma won. The world's poor lost.

Under the Geneva deal, manufacturers of generics would be allowed for
the first time to export their products to countries which don't have
an internal drug industry. This has been at the heart of the matter,
particularly since countries like India and Brazil have begun
manufacturing generic equivalents of U.S.-patented anti-AIDS drugs.

But the agreement's fatal flaw, according to the NGOs on the front
lines of health care in the South, is the export process itself. It
involves having the manufacturing country issue a license overriding
foreign patents -- a process that might be too cumbersome for the
manufacturers, and that leaves exporting countries susceptible to
pressure to not grant the licenses.

Countries wealthy enough to make their own generic drugs are
currently allowed, under WTO rules, to override foreign patents
within their own borders during a health emergency. The U.S. itself
came close to taking this step during the 2001 anthrax murders. It's
only the poorest countries, the ones without the capacity to make
such drugs, that are left helpless by the exorbitant prices of
patented drugs. The same countries are the ones with the worst public
health infrastructure for dealing with nightmare scenarios like AIDS
-- and the least political or economic leverage for being able to
expedite a licensing process that is under the control of the
exporting government.

"It poses so many hurdles and hoops to jump through that we are
really worried it may not work at all," t'Hoen was quoted as saying
in the Guardian. "We need more industrial activity and greater
competition in the market. That is the mechanism which is being

But here in America -- one of the countries whose export licensing
process might just conceivably be influenced by lobbying from the
likes of Pfizer -- everything's pretty much rosy, and the world
appreciates Bush anew. Here's the New York Times again: "After weeks
of intensive negotiations, the United States won assurances that
countries would not take advantage of the arrangement to increase
exports of generic drugs to nations that are not poor and do not have
a medical emergency."

Heaven forbid cheap drugs be made available more widely. But we did
learn, from the Times, that U.S. pharmaceutical companies are
satisfied with the agreement -- which in itself suggests that there's
a catch, since such companies have a long history of basing their
pricing on what the market will bear. Thus, economies of scale
notwithstanding, their prices tend to go up, not down, in a medical
emergency. If they're happy, something's wrong.

The catch, of course, is in the very process of trade negotiation --
a point which was made emphatically both inside and outside those
now-notorious meetings in Seattle. Here we have an issue upon which
the global public health of hundreds of millions, even billions of
people may rest -- and it is being decided not by the World Health
Organization or some similar international public health agency, but
by an institution, the WTO, devoted to protecting commercial
interests, in this case the sanctity of intellectual property.

It's like having the IRS decide tax law. Commercial interests will
win, because by definition they have greater priority to the WTO.

The very process itself is thus designed, in the case of generic
drugs, to consign millions of poor people to unnecessary death. There
isn't a lucrative enough market for keeping them alive. That's the
principle that for the last nine months, the Bush Administration has
gone to the mat to fight for.

Chances are pretty good they've won. This week's agreement will
surely help in some instances, but it's far too little and quite a
bit too late. Until global health decisions are made on the basis of
keeping the afflicted alive, not on the basis of keeping Pfizer's
stockholders happy, people will keep right on dying needlessly.