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Experts Disagree on Potential Impact of Generic Drug Agreement - 2003-09-04


When the World Trade Organization meets in Cancun, Mexico, September 10-14, it will have one less contentious issue to deal with. August 30, the WTO broke a two-year deadlock in the struggle between intellectual property rights and public health.

Supporters say the agreement should help poor countries get access to cheap versions of drugs to fight AIDS, malaria, tuberculosis, and other diseases. But some of those on the front lines of the war on disease warn that the WTO agreement could make cheap drugs more scarce than ever.

Naisiadet Mason, of the National Association of People with AIDS, rattles a little square metal box with a heart painted on top. The box holds the day's medications for a typical person with HIV, like herself.

"There's a pill here, Combivir, and there's Virimmune, that's another pill. Two pills here," she explains. "They would cost, in this country, about $1,400 per month."

Ms. Mason says in some countries like Kenya, where she is from, the government has negotiated with Western drug makers to bring the price down to about $250 a month. But she says that's still much more than most people can afford.

"In a place like Africa, in many parts of the developing world, people are living on less than a dollar a day. So $250 is still a whole lot of money," she says.

On the other side of the argument are the pharmaceutical companies in the United States. These companies invest millions of dollars inventing and developing lifesaving drugs for HIV, malaria, tuberculosis, and other diseases that ravage the developing world. Drug discovery is a risky business, according to senior vice president Shannon Herzfeld, of the Pharmaceutical Research and Manufacturers of America (PhRMA). "For every 15,000 molecules that our companies look at, three become medicine suitable for human use, and one turns a profit," she says. "Those are the types of odds that we're looking at in order to get a drug from an idea to somebody's medicine chest. And that's why the cost is so high."

Inventing the drugs is the expensive part. Manufacturing them is not nearly as costly. Drug companies in India and Brazil, for example, manufacture and sell copies of the drugs, called generics, for a fraction of the cost of brand-name drugs. But existing World Trade Organization rules make it difficult for them to do so.

In December, the United States blocked a deal at the WTO to make it easier for countries facing a public health crisis to get generic medicines. Critics said the U.S. pharmaceutical industry was sacrificing poor people's lives in the name of profits. But Director-General Harvey Bale of the International Federation of Pharmaceutical Manufacturers Associations, says the proposal threatened to make a leaky system worse.

"AIDS drugs are being donated and supplied very cheaply by brand-name companies," he points out. "These products are now being found back in Europe, having been diverted from the patients by arbitragers, traders, or outright thieves."

August 30, the WTO reached an agreement that should make it easier for poor countries to get generic drugs. PhARMA's Shannon Herzfeld praised the deal.

"We're very pleased that we've come to an agreement that allows medicines to get to the very poor, while being able to close off potential avenues for abuse," she says.

To break the deadlock, the American pharmaceutical industry insisted on controls to keep cut-rate drugs from being diverted from developing-world patients who need them to rich-world pharmacies. Generic drug manufacturers will need to make their pills look different from the brand-name versions. And the country receiving the generics will need to do extensive record keeping to prevent their distribution systems from leaking.

But for senior policy advisor Gawain Kripke of the advocacy group Oxfam, the agreement is a bad deal for developing countries. "The deal that's been negotiated creates a lot of red tape, a number of major bureaucratic hurdles for poor countries in order for them to get access to affordable medicines," he says. "And it's unfortunately kind of a bureaucratic solution to a real humanitarian problem."

Mr. Kripke says the new requirements will make it difficult for poor countries to get access to the medicines they need. Harvey Bale of the drug makers' trade group agrees there will be additional requirements. But he notes they are a function of improving public health services.

"These additional measures are part and parcel of managing a good health care system," he says. "So if we have additional drugs, like AIDS drugs, malaria and tuberculosis drugs coming in, sure, there are additional obligations and actions that need to be taken. But it comes with the additional volume." The WTO also stipulated that member countries should not use the agreement to reap profits for the pharmaceutical industries in their countries.

"The entire thrust of this provision was to find more ways to get drugs to those very vulnerable populations who need them. This is not, and never has been, intended to be a new avenue for profit-making in various parts of the developing world," says Shannon Herzfeld.

But executive director Nicholas de Torrente of the advocacy group Doctors Without Borders notes that without a profit motive, "there's really no incentive in this agreement for the generic drug industry to continue to work and to continue to supply these drugs."

According to Mr. de Torrente, the net effect of this provision may be to reduce the number of generic drug makers willing to manufacture badly-needed drugs.

Naisiadet Mason, of the National Association of people with AIDS, agrees there are problems with the agreement. But, she calls it "an encouraging first step." "It is welcome because, you know, for a long time we know they had been at a deadlock," she says. "And even though there are going to be a number of barriers or challenges, at least it's the beginning of opening doors."

The WTO agreement is not the last word on the subject. The body is still working on a final document on intellectual property rights, including public health issues.