[Ip-health] Robert Naiman in the Huffington Post: Brazil Should Lead on Access to Essential Medicines

thiru at keionline.org thiru at keionline.org
Mon Oct 18 07:25:33 PDT 2010


Brazil Should Lead on Access to Essential Medicines

By the greater use of compulsory licenses, Brazil could lower drug  
costs not only in Brazil, but in developing countries overall. At a  
time when the New York Times is reporting that "the global battle  
against AIDS is falling apart for lack of money," it is absolutely  
essential that the price of lifesaving medicines in developing  
countries be driven down to the absolute minimum possible.

With this in mind, I gave the following presentation on Oct. 11 at a  
conference of doctors and health care workers in Sao Paulo.


I want to begin by establishing some context that I think is important  
for understanding what it is that I am trying to communicate today and  
what it is that I am urging you to do.

If you ask yourself, how did it come to pass that important social  
reforms were won, an important part of the story is that groups of  
people banded together to pursue what they perceived to be a  
collective self-interest. You can't explain social change if the only  
possible actor in your head is an individual who is either  
individually self-interested or individually altruistic. Around the  
world, human slavery used to be commonplace, now it is not, how did  
that come to pass? You can't tell a story that makes sense without  
collective action based on perceived collective self-interest.

If you look at the anti-slavery movement in the United States,  
important leaders were themselves former slaves. You might say: That's  
no surprise, they knew what they were talking about. But if they were  
only acting on the basis of their individual self-interest, why  
bother? They were already free. Why not simply enrich themselves and  
tend their gardens?

Why is there a labor movement in Brazil or the United States? Why do  
some people join such a movement? Why do some people apparently spend  
so much of their free time trying to advance such a movement? Can we  
really explain their behavior on the basis of individual  
self-interest? There's clearly something else going on: a motivation  
to act on the basis of a perceived collective self-interest.

In the United States, for example, when the government raises the  
minimum wage, the major political force pushing the change is the  
labor unions. You might say: That's obviously in their interest. But  
very few union members are paid the minimum wage; most are paid  
significantly more. Raising the minimum is not going to raise the  
wages of many union members.

You could say, there is an indirect interest, because union members'  
wages are determined in part by competition with non-union workers, so  
if the wages of non-union workers fall too much, it's going to put  
pressure on the wages of union workers. That's certainly true. But  
it's important to understand that the unions, in pushing for an  
increase in the minimum wage, are promoting a collective self-interest  
that is broad, that extends beyond their own members. In the U.S.,  
people in the labor movement call this "solidarity." I'm trying to  
advance my interests, but I'm also trying to advance yours; you're  
trying to advance your interests, but you're also trying to advance  
mine. We're trying to advance together.

You could say all the forgoing observations should be obvious, and I  
would emphatically agree. But they are not as commonplace as they  
should be. You can go to college for years, take lots of classes, read  
newspapers and books and magazines, listen to radio and TV, and never  
or rarely see or hear anyone talking about the fact that important  
social reforms occur because groups of people band together to pursue  
a collective self-interest.

And thinking in terms of collective self-interest is essential for  
understanding what I am about to say, and what I am going to ask you  
to do.

You all know that we are in a new moment in world relations. The  
relative power of the United States and Europe is declining. Brazil  
and other "emerging powers" are starting to exercise more influence on  
the world stage.

What is Brazil going to do with its new influence? The short and  
obvious answer is: Brazil is going to pursue the national  
self-interest of Brazil, just like every other country does. If we  
asked every Brazilian candidate for federal office, do you think that  
Brazil should pursue its interests? I would expect them all to say yes.

But how shall Brazil define the national self-interest that it  
pursues? Shall it define that national self-interest narrowly, or  
broadly? Here you have a real debate.

For example, a few months ago there was a spirited debate in Brazil  
about Brazil's role in international diplomacy concerning Iran's  
nuclear program. Some politicians and voices in the Brazilian media  
said: Why is Brazil messing around with this? Brazil should mind its  
own business. This reflected what the U.S. government and much of the  
U.S. media were saying: Why is Brazil interfering in our turf?

But the Brazilian government said: We are minding our own business. If  
some people in the U.S. government want to use war, the threat of war,  
or sanctions to prevent Iran from enriching uranium, that's Brazil's  
business, because Brazil enriches uranium, and therefore, it is in the  
interest of Brazil to defend the right of Iran to enrich uranium. By  
defending Iran's rights, Brazil was defending its own. As President  
Lula said, "When we look at Iran, we see ourselves."

I give this example of a dispute over how broadly Brazil should  
perceive the self-interest that it pursues because it's an example  
that one could easily know about from watching the news or reading the  
newspaper. Regardless of what one thinks about Iran's nuclear program,  
this example shows there is a serious dispute, in Brazil and in the  
world, about how Brazil should perceive its self-interest, narrowly or  

But there is another very important example which one rarely sees  
discussed unless one is looking for it, and that is the dispute  
between countries like Brazil and countries like the United States  
over what national laws and policies a country like Brazil should have  
regarding intellectual property claims, in particular, regarding the  
intellectual property claims of corporations headquartered in the  
United States and Europe.

The US and Europe have worked to institutionalize globally a  
particular set of rules and expectations regarding intellectual  
property claims. This is a fairly recent phenomenon. Twenty years ago,  
establishing rules regarding intellectual property claims was largely  
considered a national affair.

But in 1994, when the World Trade Organization was created, the US and  
other developed countries successfully added something called the  
TRIPS agreement to the founding rules of the WTO. The TRIPS agreement  
extended to developing countries in the WTO strong protections for the  
intellectual property claims of corporations based in the US and  
Western Europe. The promise of the WTO for developing countries was  
that it would guarantee their access to sell in the markets of the  
rich countries. So, essentially the US and Europe used the leverage of  
access to their markets to impose a global set of rules on the  
treatment of intellectual property claims.

It's important to understand that the addition of the TRIPS agreement  
to the WTO had nothing to do with the classical theory of "free  
trade." There is a longstanding, spirited debate about the theory of  
free trade, and whether the grand claims that have been made about how  
removing restrictions on international commerce would promote economic  
growth were oversold. But the TRIPS agreement has nothing to do with  
the principles of free trade.

When a government grants a patent or a copyright, it's granting a  
legal monopoly, barring anyone from producing something besides the  
patent or copyright holder. Granting a patent or copyright doesn't  
lower prices through increased competition, the way free trade is  
supposed to; it raises prices by removing competition. The grant of a  
monopoly through a patent can raise the price of a patented drug  
hundreds or thousands of times above what the competitive market price  
would be.

There are arguments to be made in favor of patents and copyrights --  
one can argue that they encourage innovation, for example, by  
increasing the reward for the person who gets there first. But the  
virtues of free trade are not among these arguments.

Note that I refer to "intellectual property claims," and not to  
"intellectual property rights." I believe that you have the same  
distinction in Portuguese. The brand-name pharmaceutical companies  
love to talk about "intellectual property rights," as if these are an  
inherent fact of nature. But patents and copyrights are not natural  
rights, given by God or human nature. They are rights granted by  
governments, with specific purposes. Historically, they were supposed  
to promote the public's interest in the creation of useful inventions.  
Having a particular policy with respect to patents or copyrights is a  
policy choice, which should be evaluated according to whether it  
promotes the public interest more or less than alternative policies.

To see that these are not natural rights, as most people would  
understand it, you can compare them to things that we would all  
consider to be natural rights. For example, I have a natural right not  
to be killed. Note that it is permanent. I have a right not to be  
killed today, next year, 20 years from now, as long as I am alive.  
There's never going to be a law that says, you can't kill me now, but  
you can kill me in 20 years.

Patents and copyrights aren't like that. They expire. Even in the  
U.S., even under TRIPS, patents and copyrights expire. That indicates  
that they are not natural rights. They are contingent. They are rights  
granted by government for a particular time and purpose.

Dr. Jonas Salk, who developed the polio vaccine, was once asked who  
owned the patent for the vaccine. Salk replied, "Well, the people, I  
would say. There is no patent. Could you patent the sun?" Note that  
Salk didn't say, well, I gave away my rightful patent because I love  
humanity. He responded that the idea that it there would be a patent  
on the polio vaccine struck him as ridiculous. That suggests that  
patents are not natural rights. A natural right should be self-evident.

Because the TRIPS agreement was an add-on to the WTO pushed by the  
rich countries, an add-on that had nothing to do with "free trade," an  
add-on that implied a big transfer of resources from poorer nations to  
richer nations who held patents and copyrights, it has been very  
controversial. But far and away the most controversial aspect of the  
TRIPS agreement has been its impact on the availability of essential  
medicines in developing countries.

As you all know, some life-saving drugs are covered by patents, and  
there might not be another drug available that has the same effect  
that isn't covered by a patent. In this case, if you want the  
life-saving effect, you have to pay a high price. This is a big  
problem in the rich countries, but of course it is a much bigger  
problem in developing countries. In some poorer countries, if a  
life-saving drug is covered by patent, that is likely to mean that  
many people simply won't be able to  afford it. They won't get the  
life-saving effect, and they will die.

Developing country governments knew this at the time the TRIPS  
agreement was created. So a mechanism was put in to allow governments  
to curb the power of patents to protect the public interest. The main  
mechanism is the compulsory license. When a government issues a  
compulsory license, it gives someone else besides the patent-holder  
the legal ability to produce, while paying a small royalty to the  
patent holder. That competition drives down the price.

But after the TRIPS agreement was signed, the same forces in the  
developed countries that wanted the TRIPS agreement in the first  
place, particularly the brand-name pharmaceutical companies, fought to  
limit the ability of governments to use this mechanism in practice.  
Working  through the developed country governments, they threatened  
trade sanctions and other punishments against countries that wanted to  
use these mechanisms.

So in November 2001, under pressure from developing country  
governments and treatment advocates, the WTO issued the Doha  
Declaration on the TRIPS Agreement and Public Health. It reaffirmed  
the ability of member states to limit patent rights to achieve better  
access to essential medicines. It specifically affirmed the right to  
issue compulsory licenses.

The Doha Declaration increased the political space for developing  
countries to exercise their rights. But it did not end efforts by  
multinational pharmaceutical companies and Western governments to  
bully countries into not exercising their rights.

In August 2001, Brazilian Health Minister Jose Serra announced the  
Brazilian government would issue a compulsory license for the  
manufacture of the antiretroviral drug nelfinavir, whose brand name  
was Viracept. This announcement came after unsuccessful negotiations  
between the Brazil and Roche, the patent holder, to lower the price in  
Brazil. A week later, Brazil and Roche reached an agreement that Roche  
would sell the drug in Brazil at a 40% discount, and Brazil withdrew  
its threat to issue the compulsory license.

I realize that you are at the height of your election campaign. I saw  
the commercials on TV this morning. I mention Serra's name, rather  
than just saying "Brazil's Health Minister," not because I am a Serra  
supporter, which I am not, but because I want to document that, at  
least to the level of threats, the use of compulsory licenses is a  
longstanding Brazilian government policy, supported by both major  
political blocs. In the Brazilian context, this is a mainstream idea.  
What is at stake here is whether or not Brazil will pursue the policy  
of compulsory licenses aggressively.

With one exception in 2007, the pattern for Brazil's use of compulsory  
licenses has been that set by Serra in 2001: it never actually issued  
one, but used them as a threat to force the drug companies to lower  
prices in Brazil. As Mariangela Simao, the director of Brazil's  
program against HIV-AIDS, told National Public Radio in 2008, "the  
Brazilian way is always to negotiate prices."

In May 2007 Brazil issued a compulsory license for the anti-AIDS  
medication Efavirenz, for which Merck had a patent. Brazil had been  
negotiating with Merck for three years to bring down the price of  
Efavirenz in Brazil. Brazil complained that Merck was charging Brazil  
$1.59 per capsule while Thailand was paying only 64 cents per capsule.

Thailand had issued a compulsory license for Efavirenz in November  
2006. Thus, when Brazil took its action in May 2007, it benefited in  
two ways from the previous action by Thailand: Thailand set a  
precedent by issuing a compulsory license for Efavirenz, and Thailand  
set a benchmark for how low the price of the drug could go, which  
Brazil was able to use in negotiating with Merck and then in  
justifying politically its action to issue a compulsory license.

This positive spillover effect of the Thai compulsory license on  
Brazil -- what economists might call a "positive externality" --  
illustrates why for years treatment advocates have been lobbying  
countries like Thailand and Brazil to issue compulsory licenses: not  
just to lower the prices of lifesaving medicines in their own  
individual countries, but also to lower the prices of lifesaving  
medicines in developing countries overall. They wanted to set  
precedents that would make it easier for other countries to act.

In the set of developing countries, Brazil is relatively privileged.  
It can stand up to the U.S. and get away with it. Some poor country in  
Africa might not be able to do the same. This fact creates a  
responsibility -- privilege creates responsibility.

It might seem reasonable at first glance for Brazil to prefer to  
negotiate with the drug companies more rather than move directly  
towards promoting the production of generics. But that path has a cost  
for Brazil and for other developing countries. Brazil negotiated with  
Merck for three years before issuing a compulsory license. During  
those three years, Brazil was paying significantly more than it could  
have. If Brazil simply negotiates a lower price in Brazil, that may  
not lower the  price as far as it could go, and the effect of the  
lower price may be largely limited to Brazil. If Brazil would  
aggressively promote production of generic alternatives, it would  
result in lower prices for Brazil, and lower prices for others.

Brazil, like India, has a generic pharmaceutical industry, but many  
countries don't. It doesn't do you any good to have the right to issue  
a compulsory license if you have no one to give the compulsory license  
to who can produce a generic version of the drug. When developing  
countries issue compulsory licenses to produce generic versions of  
lifesaving medicines, the recipient of the compulsory license is often  
the Indian generics manufacturer Cipla. This is a role that Brazilian  
generics manufacturers could perhaps be playing, helping to improve  
the accessibility of lifesaving medicines in other countries. There  
have been some announcements by Brazil in the past that it would  
provide lifesaving medicines to poorer countries, but as actually  
implemented, these policies seem to have been very limited in scale  
compared to the need.

If Brazil would issue more compulsory licenses, drug prices in Brazil  
would be lower, from both direct and indirect effects. Thailand's  
compulsory license helped bring about lower drug prices in Brazil. If  
Brazil issued more compulsory licenses, others would too, and Brazil  
would benefit.

As we all know, money is scarce. If Brazil negotiates a 60% reduction  
in the price of a drug, one might be tempted to think, hey, Brazil got  
a pretty good deal. But if the price of the drug could have been  
reduced 90%, then 30% of what Brazil was spending on the drug is money  
that Brazil left on the table for some foreign corporation to have,  
instead of using that money, which belongs to the Brazilian people,  
for the benefit of the Brazilian people.

There is a rich debate about patents and copyrights. It is argued that  
patents and copyrights are necessary to encourage innovation, that  
drug companies wouldn't spend money on research without the prospect  
of patents and copyrights.

It is argued in response that there are alternative mechanisms for  
funding research that would be more efficient. Indeed, in the U.S. the  
government already spends more on biomedical research than the drug  
companies do, and the current patent system encourages unproductive  
and even destructive behavior by drug companies. Unproductive behavior  
includes a research focus on lucrative copycat drugs or lifestyle  
drugs at the expense of drugs that would be more socially useful but  
not as profitable. Destructive behavior includes a tendency to mislead  
governments and the public about the safety and efficacy of their  
patented drugs, because the profits from doing so are so high.

But regardless of what one thinks about these arguments in general,  
making lifesaving medicines available in developing countries does not  
require taking on the whole system of patents as it now exists. There  
is already a legal mechanism for making these drugs available, and the  
drug companies are not going to come crashing down or stop developing  
new drugs if developing countries make use of this mechanism. Drug  
companies created new drugs before the TRIPS agreement was put in  
place, and they will continue to do so if the power they gained from  
the TRIPS agreement is reduced by the widespread implementation of  
legal mechanisms to curtail the power of patents in the public interest.

Nationally and internationally, health budgets are finite. This past  
week, the Global Fund to Fight AIDS, Tuberculosis and Malaria failed  
to reach even its lowest "austerity level" fund-raising target which  
it had said it needed just to keep putting patients on treatment at  
current rates. The New York Times described this as "another signal  
that the global battle against AIDS is falling apart for lack of  
money." This shows why the price of AIDS drugs must be driven down to  
the absolute lowest level possible in developing countries: the status  
quo, the road that we are now on, is that some people are going to die  
for lack of treatment.

So, I hope you see now why I started out talking about collective  
self-interest. Brazil can advance further by advancing together with  
other developing countries.

In the dispute over international diplomacy around Iran's nuclear  
program, Brazil showed that it was capable of effectively advocating a  
broad notion of self-interest. It might seem remarkable that in such a  
high-profile confrontation with the U.S., Brazil did not back down.  
And yet, with respect to making life-saving medicines more widely  
available, Brazil is pursuing a far more cautious course.

I think that part of the reason for this is that issues of war and  
peace get more publicity than issues of economic violence. Political  
violence grabs our attention in a way that economic violence does not.  
If you deny someone lifesaving medicines, you kill them as surely as  
if you dropped a bomb on their house. But if you drop a bomb on them,  
more people will notice.

I think Brazilian doctors and health care professionals have a unique  
role to play here, a unique role in bringing these issues to public  
attention and in shaping public opinion and the opinions of  
policymakers. If you look at the remarkable success of efforts to  
change policies in many countries to discourage smoking, public health  
advocates played a big role. At some point in the past whether people  
smoked cigarettes was largely considered a lifestyle choice of  
individuals; a bad thing, perhaps, but not something that public  
policy should be overly concerned about. Public health professionals  
had a lot to do with turning this around.

I think Brazilian doctors and health care professionals could play a  
similar role here, moving public opinion and policymakers in the  
direction of a more robust campaign to make lifesaving medicines  
affordable, not just in Brazil, but around the world.

This is not a pie-in-the-sky utopian project. In April 2010, Ecuador  
issued a compulsory license for lopinavir/ritonavir, an AIDS  
medication. When Ecuador announced its intention to issue compulsory  
licenses last fall, it was praised by the health ministers of the  
UNASUR countries, including Brazil. So this is not a wild, radical  
idea; it's an idea that the Brazilian government officially supports.  
The question is how aggressively Brazil will pursue it.

At the time Ecuador issued this compulsory license, the patented  
version of the drug cost Ecuador's public health sector roughly $1,000  
per patient per year. As a result of the compulsory license, Ecuador  
was expected to be able to access generics for half that cost. For a  
country like Ecuador, saving $500 per patient per year is a very big  
deal. Actually, saving $500 per patient per year should be a big deal  
for every country. If it were revealed that a developing country  
health ministry were handing over $500 per patient per year to a  
foreign corporation for nothing, would this not be a scandal? But in a  
sense, that's what Ecuador was doing before it issued the compulsory  

So, this is my appeal, that you take this up. I know that all your  
plates are already full. It's the way of the world. It's the  
already-busy who move things forward. I'm asking you to consider, as  
Brazilian doctors and health care professionals, what you can do to  
help move public opinion and government policy in Brazil in the  
direction of a more aggressive policy towards making lifesaving  
medicines more widely available. About what you can do, you know  
better than me. But any effort, large or small -- a presentation, an  
article, a letter to the newspaper, resolutions by professional  
organizations -- could help tip the balance.

This is a critical time to try to expand this discussion in Brazil, as  
the country is about to change presidents. The new president is going  
to have some choices to make in foreign policy. One of those choices  
will be how aggressively to push back against the intellectual  
property regime promoted by the United States. Public opinion,  
especially opinions expressed by advocates in the health sector, could  
shape the outcome. Both major political blocs in Brazil have had a  
policy of pushing back somewhat; both could have done more.

The last few years have already seen significant changes in the  
international dynamics around these issues; the limited efforts so far  
have led to some big decreases in prices. If the government of Brazil  
would make this a priority, it could have a huge impact in the world.

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