Patents Against People: How Drug Companies Price Patients out of Survival

Patents Against People: How Drug Companies Price Patients out of Survival

As our television screens toggle between pundits squabbling over Obamacare’s insurance rules and ads for erectile dysfunction remedies, another health care battle rages in village clinics and corporate boardrooms. Multinational brands and technocrats are concocting supranational policies to hold poor patients hostage to pharmaceutical markets across the Global South through elaborate intellectual property schemes in international trade.

Protest against the unaffordability of Novartis drugs (Carlos Capote, 2007, Flick creative commons)

As our television screens toggle between pundits squabbling over Obamacare’s insurance rules and ads for erectile dysfunction remedies, another health care battle rages in village clinics and corporate boardrooms. Behind the seductive commercials for breakthrough treatments, multinational brands and technocrats are concocting supranational policies to hold poor patients hostage to pharmaceutical markets across the Global South through elaborate intellectual property schemes in international trade. And while the industry sutures the future of medicine to the business of exploiting disease, poor countries serve as an incubator for neoliberal policies that boost the industry’s power in Washington, capitalizing on regional inequality to degrade public health on a global scale.

The struggle for access to medicine presents a legal and ethical minefield for rich and poor countries alike—one that is being fought out as humanitarians challenge corporations over intellectual property rights. A recent landmark decision by the Indian Supreme Court thrust that conflict into popular awareness. The ruling blocked a request by the global pharmaceutical giant Novartis for a patent on a Leukemia drug, Gleevec. The company claimed to be introducing a new formulation of the drug that warranted a fresh patent. But the court determined that the new Gleevec was virtually identical to the old one. This cleared the way for mass production of a much cheaper generic version. While a cancer patient in the United States might spend around $70,000 for Gleevec, India’s version could cost as little as $2,500.

The defeat of Novartis sent shockwaves across the drug industry. Companies have long structured their profit systems around an obscure set of intellectual property controls, and the ruling represented a growing global pushback against their political and commercial hegemony. The case raised a preeminent question in the struggle for global health equity: when the laws of commerce override the human right to medicine, can society protect public health from unbridled private markets?

In the United States and other rich industrialized nations, “big pharma” is already the gatekeeper for life-saving medicines. The Global South is the next frontier in the patent war, where public health advocates form the front line against an industry seeking to colonize nascent health care markets. The Novartis ruling is just one of many legal showdowns that have embroiled the drug industry in recent years. Meanwhile, corporations are pushing back through trade deals and other intellectual property reforms. The outcome could be devastating—stripping government and citizens of authority over health care costs and lavishing more market power on top drug manufacturers. The mechanisms by which the drug companies pursue this power, however, are off the public radar, designed by international bodies determined to evade democratic control.

Though the Novartis case jarred drug makers, their lobbyists have been working for years to secure their global market share with regional and bilateral “free trade” agreements aimed at erecting draconian transnational intellectual property regimes. Just as the ink was drying on the Novartis decision, the European Union was hammering out a pending free trade deal with India that would harden intellectual property protections. Commercial rules etched into the deal would encourage the “evergreening” of medicine patents, where companies can repeatedly extend patents (often by inserting, for instance, a new inert ingredient) and thereby undermine efforts to sell the same drugs at cheaper prices—precisely the kind of corporate practice that the Indian court rebuffed.

India’s patent landscape is pivotal because it is one of the world’s largest generic drug producers, supplying much of the Global South’s medicine markets with cheaper analogs of their exorbitantly priced Western counterparts. The Indian generics industry is on track to grow from about $11 to $74 billion by 2020, according to industry financial estimates, making up for low prices with sheer volume. And since India’s patent law structure is still developing, many Western brand-name drugs like Gleevec were first marketed there without a patent and are finding local health authorities resistant to those drugs’ conversion into pricey, brand-name equivalents.

The struggle for access to medicine presents a legal and ethical minefield for rich and poor countries alike—one that is being fought out as humanitarians challenge corporations over intellectual property rights.

In April Cambodian activists issued a statement in opposition to the EU trade deal with India, warning that the price of medicine would skyrocket and cost lives. The coalition of self-described representatives of “garment workers, sex workers, entertainment workers, people living with HIV, LGBTs, university students, feminists and human rights activists from different networks and organisations” told the European negotiators of the importance of made-in-India drugs for millions of people. The trade deal, they argued, “must stop right now. It is a true example of putting profits before people’s lives and [taking] advantage of people’s illness for corporate profits. Our lives should not be regarded as a business opportunity.”

Their protest comes in the face of an even larger pending agreement: the Trans-Pacific Partnership Agreement (TTP), a free trade scheme central to the Obama administration’s “pivot to Asia.” Intellectual property provisions in the leaked draft of the agreement seem designed precisely to preempt “trade barriers” that protect access to medicines. Covering twelve countries in the Pacific Rim (Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam, and the United States), the TPP has triggered worldwide opposition, with many anti-globalization groups warning that it would entail an array of neoliberal policies aimed at undermining the autonomy of national governments, eviscerating protections for local industries, and attacking health and environmental regulations.

Negotiators are now weighing numerous provisions that could dramatically impact future access to affordable drugs. According to an analysis by public health advocates with Médecins Sans Frontières, the proposed policies “would make it extremely difficult for generic competitors to enter the market, keeping prices unaffordably high, with devastating public health consequences.”

The pharmaceutical industry’s chief aim, activists fear, is to establish a new global standard for governing the control of patents, empowering companies to control medicine markets more expansively and for longer periods of time.

The TPP would set a broad standard patent term of twenty years, with opportunities for extensions. Moreover, at the behest of U.S. negotiators, it could tighten the exemptions allowed under the Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement, a set of rules governing patents, intellectual property, and copyright set by the World Trade Organization (WTO). Expanding TRIPS is a key plank in Washington’s market-liberalization agenda to dismantle trade barriers and encourage corporate consolidation in emerging markets in technology and medicine—ironically, under the banner of making trade more “free.”

The “U.S. proposal for the TPP would make it more difficult to reject” evergreening patents such as the one involved in the Novartis case, says Krista Cox, a staff attorney with the intellectual property policy think tank Knowledge Ecology International. That would pave the way for drug industry giants to avoid the kind of public interest challenges at issue in the Indian court, thus easing market expansion throughout the Pacific Rim.

One especially harsh proposal raised in the ongoing trade talks would bar a legal mechanism known as “pre-grant opposition,” which currently enables civil society groups to oppose pending patent applications by challenging the validity of the proposal. Without pre-grant opposition, a patent would typically have to be challenged via the courts, which could stymie generic competition for years as the litigation is pending, even if the patent is ultimately found to be invalid.

Though the TPP has not been finalized, U.S. and EU negotiators are working to shape a framework that would affix in international law the structural asymmetries in health care access between rich and poor nations. Activists say these deals aim not only to penetrate “emerging” pharmaceuticals markets in participating countries, but to spread neoliberal policies around the world that would bolster corporate power.

“We’re concerned that the TPP is, in part, a closed-door hemispheric rule-making against public health,” says Peter Maybarduk, director of Public Citizen’s Global Access to Medicine program. The Obama administration’s free trade agenda, he adds, actually threatens to unravel some of the hard-fought gains in access to medical treatment that were initiated under the Bush administration’s international HIV/AIDS initiatives.

From an economic development perspective, “middle-income” countries that produce generics, like India, could face a double blow: patients would be hit with overpriced brand-name drugs in domestic markets, and their generic medicine industries would face an assault from multinationals.

But the politics of free trade in drug markets have a way of creeping northward from the Global South as well. Health advocates say free trade deals enable rich states to implement pro-corporate policy frameworks abroad and then import them back home under the guise of neoliberal “reform.”

When it comes to the trade in medicine, the Global South—with an anemic regulatory infrastructure and legions of desperately poor patients—makes a perfect petri dish for such “policy laundering.” Intellectual property rules that expand the already enormous U.S. and European drug industry might provoke opposition if aired on the floor of the U.S. Congress, but might be eased through in a closed-door session among non-elected international trade representatives. This kind of shadow politics is illustrated in Washington’s promotion of “anti-counterfeiting” protections in trade deals, which parallel similar digital piracy policies that lawmakers unsuccessfully tried to push in Congress amid fierce public outcry. Even though digital-rights activists prevailed against the Stop Online Piracy Act on Capitol Hill, the same kinds of structures are at play internationally in more shadowy political arenas: insider negotiations over intellectual property rules in pending U.S.-backed trade accords, including the TPP, have threatened to bolster transnational monopolies in software and other products.

“That’s one of the things that sometimes people in the U.S. don’t realize,” says Brook Baker, a senior policy adviser at the Health Global Access Project, an HIV/AIDS-focused advocacy group. “These trade agreements not only tie our trade partners’ hands, they tie our hands, too, in terms of policy. It’s really a back door effort by big pharma and other IP [intellectual property] industries…[T]hey seek all these heightened IP protections in trade agreements, and then they come back and bite us.”

Free Trade Rules

The purported idea behind intellectual property protections is to create market incentives for innovation—in the case of the pharmaceuticals industry, guaranteeing a return on sales for drugs. The value proposition gets muddy when humanitarian needs and market dynamics diverge—when malaria treatments for a rural village, for example, turn vastly less profit than the hot new anti-depressant. Or when a drug’s price is derived almost entirely from the label on the box.

The generic drug sector operates on a different tier of the market. With production driven in large part by India-based firms, it still operates within a market-based system, but generics are exponentially more affordable for poor communities compared to the prices charged by dominant pharmaceutical brands. Cheap generics are the crux of global campaigns to expand HIV/AIDS treatment and other medical solutions for patients in poor countries, supplying UNICEF and the U.S.-sponsored PEPFAR program.

The medicine-related provisions of TRIPS, crystallized in the 2001 Doha Round of WTO talks, ensure some political flexibility for governments to circumvent patent protections on public health grounds. The agreement exempts poorer countries from regular patent enforcement rules so that governments can expand access to affordable medicines by granting compulsory licenses to produce generics, which override foreign companies’ patents. For now, the poorest countries are generally exempted from the WTO’s major patent enforcement policies, thanks to an interim grace period that allows governments to adjust their regulatory systems.

Nonetheless, TRIPS sets the framework for future drug marketing and manufacturing in poor countries. Public health advocates, including World Health Organization (WHO) officials, contend that TRIPS and related free trade agreements containing various “TRIPS-plus” provisions are designed to expand monopoly power and maximize profits, deepening the health gap between nations where new treatments are developed and poor regions where preventable scourges still flourish.

The HIV/AIDS epidemic is one such “marketplace” for drugs. While movements have grown to expand treatment access, corporations have bulked up artificial barriers through intellectual property laws. Today, 26 million people worldwide are still not getting proper treatment, and the WHO has recently pressed wealthy donor states for a major infusion of aid for treatment programs. Yet those same programs are sliding on a collision course with powerful pharmaceutical monopolies. Activists warn that existing TRIPS protections for access to basic anti-retrovirals will not cover newer, more advanced therapies, including “second-line” anti-retrovirals, which are deployed when patients develop drug resistance.

Other emerging disease threats may similarly intensify under the industry’s commercial barriers. Health experts warn that obstacles to treatment access for non-communicable diseases, such as diabetes and cancer (which are spreading rapidly in the Global South but tend to attract less political attention than do infectious epidemics), will engender the next crises in global medicine in poor countries.

Perhaps most insidiously, new cutting-edge medical technologies, like genetic material, have already become new prospects for enrichment for multinationals. Legal scholars have warned that the system’s public interest protections do not adequately protect against abuse of gene patents. A recent U.S. Supreme Court decision restricts but does not ban the commercial patenting of genetic material, which may complicate the regulatory scope of TRIPS.

According to Knowledge Ecology International’s analysis of the draft TPP proposals, though the agreement has not explicitly tackled gene patent issues, “the U.S. has proposed very low patentability standards and also would require patents for diagnostic, therapeutic and surgical methods,” which might affect policies on using genetic information in diagnostic testing.

So who will police these new medical frontiers? In the TPP negotiations occurring as of this writing, business representatives are granted special access to negotiators. Cox explains that designated “advisers” from the drug industry are able to “see the text, make proposals, and comment on proposals.” Yet on the advisory committee for intellectual property issues, “Not a single academic or civil society group is represented….As a result, the secretive trade negotiations make it easier for pharmaceutical companies to get the provisions they are lobbying for.”

Courtroom Battlegrounds

International trade deals have set up powerful legal structures to seal corporate power into the enforcement of trade rules.

To ensure “free” access to domestic markets, corporations can litigate patent claims through opaque supranational investor-state tribunals. Since patent protections are designed to protect drug monopolies, public health advocates say the legal arenas that review patent disputes are inevitably rigged to serve industry at civil society’s expense.

Free trade deals enable rich states to implement pro-corporate policy frameworks abroad and then import them back home under the guise of neoliberal “reform.”

While these quasi-courts have often operated outside of public purview—even when their arbitrations relate to public welfare issues like environmental protection—they can change public policy through legal settlements that interfere with domestic court rulings or regulations. Pharmaceutical giant Eli Lilly, for example, recently announced plans to use NAFTA’s extra-judicial dispute-settlement system against the Canadian government, in order to seek taxpayer compensation following the government’s invalidation of patents on the attention deficit hyperactivity disorder medication Strattera, along with another lost patent for the schizophrenia drug Zyprexa. For those two patent cases, the company now seeks a total of $500 million in payback, claiming that Canada’s legal basis for reviewing patents violated NAFTA treaty obligations by using overly stringent requirements for proof of the medicine’s efficacy. In other words, the company is wielding trade rules to punish a government for regulating its drug sector too tightly.

Some trade agreements have also established special “data exclusivity” legal restrictions that preempt generic competition. As a report from Public Citizen explains, this mechanism enables incumbent drug makers to bar other producers’ access to crucial research data needed to obtain authorization to market a medicine. Without that regulatory data, a big-name manufacturer can simply stonewall or delay the entry of a generic competitor.

According to a recent study on Colombia’s generics market, data exclusivity has allowed drug companies to siphon an extra $412 million from consumers compared to what they would have paid in a drug market with more price competition.

Since TRIPS was enacted, bilateral trade deals between the United States and Chile, El Salvador, and various other Global South countries—which build on the WTO’s baseline trade rules—have led to agreements to adopt data exclusivity policies that could preempt or delay generic entry into the market for years.

As an alternative to compulsory licensing, some companies have tried to establish so-called voluntary licensing agreements, which enable generics to be sold in designated countries in exchange for royalty payments to the company. Still, such arrangements, which might impose tight coverage restrictions, have sometimes been criticized as a tool for corporations to retain influence over domestic markets that are opening to generic competition.

To the humanitarian organizations doing frontline medical work in poor regions, all these efforts to limit the availability of generic medicine are effectively pricing patients out of survival. “Generic competition has proven to be the best way to reduce prices and improve access,” says Rohit Malpani, Director of Policy and Analysis with Médecins Sans Frontières’ Access Campaign. “With restrictions to generic competition, as potentially imposed by the TPP, costs for treatments may go up and fewer people will have access to treatment.”

Stephanie Burgos, a policy adviser with Oxfam America, said that when trade agreements are allowed to dominate domestic intellectual property policy, “monopoly protections for corporations are codified in a country’s legislation.” She added that in some cases, “Depending on the specific provisions in the trade deal, it may be technically possible for a government to invoke a public health safeguard, such as a compulsory license….However, most governments are intimidated by pharmaceutical companies into refraining from even considering such action.”

Reclaiming Medicine

While the WTO has long militated against the sovereignty of vulnerable countries’ health systems, some governments in the Global South are learning to resist monopolies while working within the market to keep medicines affordable.

In recent years, public health groups in Asia, Latin America, and the United States have launched campaigns to break the monopoly of Abbott Laboratories, a major manufacturer of anti-retrovirals Kaletra and Aluvia, and to promote access to generic versions of these critical medicines. Some advocates have filed formal requests for generic licensing; in Brazil and India, health organizations have waged legal challenges to the company’s patent claims in order to break its monopoly. Treatment providers and health groups in China, Malaysia, and Vietnam have also formally requested permission for generic manufacturing. Public Citizen notes that Ritonavir, one of Abbott’s lucrative AIDS drugs, is in fact a product of U.S. government–supported research, underscoring the fact that many of the innovations that have been monopolized by pharmaceutical brands were cultivated in publicly financed laboratories.

Indonesia, home to some 380,000 HIV/AIDS patients, enacted a presidential decree in March authorizing compulsory licenses for medications not only for HIV but also Hepatitis B. Predictably, the Switzerland-based International Federation of Pharmaceutical Manufacturers and Associations criticized the move as an abuse of compulsory licensing rules that could “reduce the incentive to invest” in future research and development. Activists have nonetheless continued to campaign for Indonesia’s prerogative to determine how medicines are priced in accordance with its public health priorities.

And in South Africa, officials are considering an overhaul of domestic intellectual property regulations to stop patent evergreening, with the aim of preventing the kind of IP trickery that the Indian courts struck down in the Novartis case.

The pushback against corporate patent regimes is just one facet of an emerging public debate about global health justice. Seeking more radical solutions to corporate drug hegemonies, some advocates envision alternative systems for developing medicines to serve the highest-need communities—focusing on, say, children with untreated HIV instead of middle-aged consumers of brand-name sleep aids.

Some health activists are envisioning democratized pharmaceutical production systems. A global “patent pool,” for example, would safeguard public access to scientific discoveries and technologies that could be used for developing treatments. The system would be based on open-access medical publishing and free exchange of research, without the traditional proprietary restrictions. One alternative research model, proposed to the WHO by Bangladesh, Barbados, Bolivia, and Suriname in 2009, is a centralized innovation fund, which would pool research and develop treatments like antibiotics and vaccines aimed at serving vulnerable communities. For HIV/AIDS drug development, the Medicines Patent Pool, based in Switzerland and funded by the United Nations, has already established a global knowledge-sharing platform to expand production of low-cost medicines.

Since so many treatments are generated through publicly funded research, some say the corporations that eventually commercialize those innovations should be forced to reinvest in public, open scientific research, thus returning some of their profits to the public institutions.

“Can we do better than the existing system,” asks Public Citizen’s Maybarduk, “where we treat pharmaceutical company interests as proxies for the public interest, and allow those companies to design the rules that they find most appropriate and charge the prices that they find necessary, and [to] set that out as the deal?”

A truly global health system would invert that profit structure and move medicine back into the control of the public trust.

But today, the idea of medicine as a social good is overshadowed by the commodification of health itself. Under the global intellectual property regime, the world’s poorest patients—those who pay their life savings for a life-saving cancer treatment, or line up to vaccinate their children from diseases that more fortunate nations eradicated generations ago—are priced out of a medical market that thrives on the pathology of capital.

Michelle Chen is a contributing editor at In These Times and associate editor of CultureStrike. Follow her on Twitter @meeshellchen.