Author:	Terri Nderitu Murdoch University School of Law
Subjects:	HIV Infections HIV Patients Civil Rights (Other articles) Patents (Other articles)
Issue:	Volume 8, Number 3 (September 2001)
Category:	Refereed Articles

Contents:

• Introduction
• The AIDS crisis in the Third World
• The Intellectual Property Regime in Africa
• The International Intellectual Property Regime
• Conclusion
• Notes
• Bibliography

Introduction

1. The developing world faces a health crisis whose proportions threaten to overcome any economic and social gains it may have had after independence: HIV/AIDS. In spite of the hundreds of people dying daily, the continent (especially sub-Saharan Africa) has been faced with a lack of medicine, medical personnel, expertise and infrastructure to deal with the dilemma.

2. The first world has not been merciful in its application of patent laws that they have imposed on pharmaceuticals thereby making the drugs too expensive and therefore out of reach for many affected developing countries.

3. This paper seeks to portray the desperate situation which Africa presently finds herself in, including the inadequacy of her laws to deal with the international Intellectual Property regime devised by the developed world, in particular the USA. It will also be shown that the international system proposed is a continuation of colonialism and only seeks to enslave the developing world farther, even though the TRIPS agreement allows for remedies to address disputes and national emergencies.

   The AIDS crisis in the Third World

4. There are 36 million people in the world living with HIV/AIDS, ninety percent of whom live in developing countries. It is estimated that in sub-Saharan Africa alone, 26.5 million children and adults are living with HIV/AIDS, and the figure is rising exponentially between the 15 to 49-age bracket.[1] In Botswana, a country untouched by war and with a relatively stable economy, life expectancy rates fell by twenty years over a period of just five.[2]

   In Cameroon, Ghana and South Africa - where 4.2 million people are living with HIV/AIDS - the prevalence rate among adults has increased by more than half in the last two years...in the countries where 15% of the adults are currently infected, no less than one third of the young people who are 15 years old today will die of AIDS.[3]

5. There have been great leaps in the treatment of HIV/AIDS since the beginning of the pandemic. "Combination therapies drastically reduce disease progression for immune-compromised patients,"[4] but in spite of this, for the majority of the 36 million people affected, treatment is largely inaccessible and out of reach because of the cost. Most of these people will die having had no access to pharmaceuticals.

6. In Thailand, patients cannot get drugs such as Fluconazole and Amphotericine B., used to treat fungal infections common among HIV sufferers ("including cryptococcal meningitis, and P.marneffei which progresses rapidly and is almost 100% fatal without treatment") - or ddl, essential for antiretroviral combinations.[5] Previously, the prices of these drugs were subsidized by the government, and therefore more readily available to many HIV sufferers. Currently, the cost of the Fluconazole treatment which is produced by Pfizer, is 100,000 Baht or $US2, 500.[6] The price makes these drugs unobtainable for the majority of HIV patients.

7. In Zambia, the wholesale price for Combivir is $163, but is sold locally at between $300 and $500.[7] Few clinics in the country have money to stock the antiretroviral drugs as a typical consignment costs about ZK50 million ($16,500).[8]

8. As a result, doctors such as Dr. Mushikita Nkandu a cancer specialist who operates his own private HIV/AIDS clinic, is cautious about prescribing the antiretroviral drugs to patients who cannot sustain the treatment.[9] Furthermore, the antiretroviral drugs are not the only form of medication needed by HIV/AIDS sufferers. Drugs for infections such as tuberculosis, oral candiasis and pneumonia - which accompany the HIV virus, are also unavailable, or too expensive for many people.

9. In the west, the HIV virus was kept in relative control by prescribing a combination of powerful drugs. The first of these was AZT, a nucleoside reverse transcriptase inhibitor.[10] Although the drug is well established in the AIDS treatment, it is now considered to be on the "old side", and instead patients are given a triple cocktail of highly active antiretroviral therapy, or Haart. Two of them are nucleoside reverse transcriptase inhibitors like AZT, and the other is a protease inhibitor.[11]

10. Unfortunately, the drugs cannot get rid of the HIV virus, but may keep the viral load down and stop it from damaging the immune system. The virus may become elusive and may remain hidden in places such as lymph nodes, thereby necessitating lifetime treatment.[12] However, the virus also mutates quickly if one takes the wrong combination of drugs, misses a dose or if the medication is not taken at the right time each day.[13]

11. The possibility of grappling with different viral "families" for many developing nations is frightening. Furthermore, research on the AIDS vaccine focuses on the First World and, as Dr. Amir Attaran says, "without research dedicated to the specific viral strains that are prevalent in developing countries, vaccines for those countries will be slow in coming."[14]

12. With this crisis as a backdrop, developing countries interest in cheaper generic drugs and in ways of circumventing international trade agreements has been fueled, in a bid to obtaining drugs for their dying populations. Bigger developing countries such as India, Brazil, Thailand, Egypt and, Argentina, have taken steps to make their pharmaceutical industry more self reliant [15] and poorer nations then benefit by importing these cheaper drugs even if they do not have manufacturing capacities.

13. In spite of the extent of the current AIDS disaster and the number of people dying in the third world, the four pharmaceutical companies that dominate the industry: Eli Lilly, Merck, Pfizer and Glaxo SmithKline, which operate like a cartel and seek to monopolise the market, are incensed by the threat of competition which would constrain the companies to reduce their prices. With every step towards progress that the third world countries make, there seems to be an opposite and unequal backlash from these pharmaceutical companies and donor countries like the US, as the next examples illustrate.

14. In the early nineties, Brazil faced an escalating AIDS crisis with over 3 million of its population infected with the virus. The newly elected government decided to circumvent international trade agreements and manufactured, bought and distributed antiretroviral drugs. Now almost 90,000 HIV positive Brazilians receive free treatment. In 1994, the World bank sanctioned a œ115m loan to help pay for Brazil's medical bill, and a similar loan in 1999, making Brazil the second largest recipient of overseas HIV focused loans after India.[16]

15. However, the US has taken Brazil to the WTO Dispute Settlement Body where it is facing legal challenges for manufacturing and distributing drugs for free to victims of AIDS. Medicins sans Frontieres has accused the US of using the WTO to undermine Brazil's successful national program for combating AIDS.[17]

16. In another case, the Indian company Cipla Ltd. in Bombay offered to supply AIDS drugs to African countries at a low cost that would force the western companies to reduce their prices. The company has offered to sell their triple cocktail therapy for US$350 a year, compared to US$10,000, the normal cost of the AIDS drug in the US.[18] Glaxo SmithKline warned Cipla that it may take action against the firm since it claims that it has exclusive marketing rights over Lamivudine, one of the drugs involved in the cocktail.[19]

17. South Africa too has not been left unaffected. Her conversion to democracy has not been without its obstacles to economic and health sectors. The country has the highest number of HIV/AIDS victims in the world and currently affects about an eighth of its population or 4.2 million people.[20] With a lack of advanced medicines and the risk of variant forms of the virus looming, the emergency almost seems out of hand.

18. In response to this crisis, the South African government passed the South African Medicine Act (1997), which contained the Medicines and Related Substances Control Amendment (1997). The Act would allow the South African Health Minister to override patent rights to allow compulsory licensing and parallel importation.[21] By issuing these compulsory licenses, the Minister hoped to reduce the price of AIDS drugs and make them more affordable. The Act would also allow the government to import AIDS drugs from countries that do not enforce intellectual property rights.[22]

19. A patented medicine refers to one that is made and sold exclusively by a pharmaceutical company that retains that patent and marketed under a brand name. A generic drug on the other hand is one whose formula belongs to the public and marketed under its chemical formula, rather than by its brand name. The price of generics is usually 30% less than the original patented version. Parallel importation refers to the situation where importation of a patented medicine, not directly from the owner of the patent, but rather from a third party to whom better conditions have been offered, than those available locally. Compulsory licensing on the other hand is when a government issues a license to use a patent, authorising the licensee to produce, sell and import the patented product, without the patent holders permission.

20. In response to the government's action, the Pharmaceutical Manufacturer's Association of South Africa (which represents the major pharmaceutical companies) quickly moved to halt the implementation of this Act, and filed a suit in the Pretoria High Court against the South African government.[23] The pharmaceutical companies argued, "the law was unjust, unnecessary and unwise."[24]

21. Unjust as the law allowed the expropriation of intellectual property rights and the evasion of patent rights. Unnecessary as the government could utilize tier pricing to obtain the drugs at costs lower than those offered to the private sector. Unwise because the law would rob the companies of income, which they would plough back into research and development, discourage investment and, endanger consumers by encouraging importation of substandard drugs.[25]

22. On the second day of the trial, the trial judge in the suit, Justice Bernard Ngoepe, ordered the pharmaceutical companies to reveal the closely guarded secrets of their business practices, including pricing policies. Mark Heywood of the Treatment Action Campaign (TAC) held that this was a significant victory. But the pharmaceutical companies counsel, Fannie Cilliers hinted that the "patent protected research industry" would prefer to keep its secrets. The companies later dropped the suit.

23. Additionally, the USA represented by the United States Trade Representative (USTR) strongly opposed the move to grant compulsory licenses. Their main objections were seemingly altruistic: promotion of scientific R&D in developing countries, the protection of the consumers from administration of potent pharmaceuticals and, the fealty to the international agreements on IP law. But their most unwavering accusation was that the compulsory licenses violated IP law, which the TRIPS agreement proscribed.[26]

24. In order to determine whether the USTR's and industry's arguments stack up, and whether the steps the developing countries have taken are justified legally, it is essential to understand the intellectual property regime; from its foundation to its current status. Furthermore, an examination of the developing countries' legal systems (Africa in particular) and their ability to cope with the international IP system will be made in order to determine whether the impact of the IP laws is impartial in its effect on the playing ground of all nations.

25. "By any standards, the level of underdevelopment of Africa, particularly that of countries in the sub- Saharan region, is among the worst ...regardless of whatever yardsticks are used, all the features of economic and technological backwardness and stagnation are to be found there."[27]

26. As a result, the developing countries' attendant IP problems stem from the inadequacy and premature nature of its national laws to cope within the international economic, legal and social arena. These problems have their roots in the colonial era and it is argued that the current IP laws are an extension of "ukoloni maendeleo."[28]

    The Intellectual Property Regime in Africa

27. The 'Scramble for Africa' in which European nations cast lots for territories in Africa, without due regard for the peoples of those lands and without their consent, culminated in the Berlin Conference of 1888. In this conference, the formalisation of the ascendancy of the European powers in Africa and the establishment of the requirement for the transfer of law into the colonies was made into reality.

28. It is often forgotten that the colonies had their own laws and enforcement institutions before the European powers divvied the continent. Their legal institutions

    ...were evolving, more rapidly than is sometimes appreciated, on a tribal or local basis. Each was autonomous, though there was some cross-cultural influence...The laws were unwritten...although deriving mainly in theory from ancient custom, in practice the indigenous laws relied in the contributions of legislation by state, tribal, or local authorities and on judicial formulation by adjudicators or arbitrators for many of their detailed rules and for the modification of rule to suit changing circumstances[29]

29. The "underlying assumption in the imposition of the foreign laws was partly that the laws already in force before colonialism...were undeveloped and served no purposes for the colonial powers."[30] The new laws were seen as a prerequisite for the 'promised progress'.

30. The importation of the colonial laws greatly impacted the colonies. Mann and Roberts assert "colonialism changed African law - its rules, institutions, procedures and meanings. It affected as well the way African peoples perceived and understood law."[31] Esiemokhai concurs "colonialism distorted the historical process of development of colonial peoples world wide. It achieved this by imposing foreign values and a counterfeit culture upon indigenous populations."[32]

31. After gaining independence from their colonial masters, most African countries retained the imported laws without much substantive adaptation of the laws to the local conditions or to the countries' needs. Crabb elucidates at great length that

    ...to a substantial degree independence in Africa has involved principally a formal change of leadership at the top rather than a reordering of the structure of society. It has not altered the fundamental structures of these legal systems or the nature of the relationship between their European and customary parts. Colonial laws governing the juridical systems were merely replaced by national institutions and statutes containing similar dispositions. Still, this transition has caused varying degrees of disruption and difficulty with regard to the operation of the legal systems ...independence has meant substituting national for colonial control of the juridical institutions without modification of the institutions themselves of the tendencies of their development.[33]

32. The direct superimposition of alien European laws on local ways, through colonialism or by voluntary assumption of the laws after independence, is largely responsible for the mismatched and ill-fitting laws that Africa has currently. Another problem is the high regard with which western legal systems are held in Africa and transplanted into the local scene without any reflection for its needs. This has not only discouraged the formulation of indigenous laws, but also the establishment of local perspectives and modes of legal development.[34]

33. The "flurry of law-making and transplantation that began with colonialism...has continued to this day,"[35] with pressure from donor countries (especially the USA) and international organs ensuring the reformulation and extensive legislation programs which were held out to be requisites for modernization.

34. At the Berlin conference, there was also the automatic extension of the Paris and Berne conventions, which would later deal a fait accompli to the colonies' IP system. After independence the former colonies were advised to maintain their IP laws on the grounds that they would be relevant to the post-colonial situation.[36] This mentality was reinforced by the view that adoption of western laws, which had facilitated the IC's development, would similarly be beneficial in their own African context.

35. The former colonial powers then tried to offset the loss of their colonies by resorting to the effective use of IP:

    reserving markets through patents rather than the flag...territory was divided, not by pope or treaty but through cartel agreements by business corporations. In effect, one kind of colonization supplanted another, and countries politically free became economic dependencies.[37]

36. Vaughan continues that this arrangement has sanctioned the subsequent control of the markets "as through a colonial relationship..." with an added leverage: "...the upkeep of such markets is limited to the expense of obtaining and maintaining patents and retaining secret know-how."[38]

    The International Intellectual Property Regime

37. The early foundations of the International IP system lie in the period after the First World War, when the Allied forces called for a universal patent system to protect their damaged economies. They therefore established the Central Patent Bureau to process international applications. The organization did not come to a fruitful end.[39] The debate, however, continued but with wide skepticism that the "complete unification of intellectual property laws [could not] be accomplished, due to the differences in patent laws and economic and social foundations."[40]

38. In 1965, a commission was established in the US to look into workings of a patent system that would be applicable throughout the world.[41] In contrast to other major industrialized nations, the US spearheaded and dominated calls for the establishment of a global IP system. The primary motivation of the US was to strengthen its technological superiority and to maintain the absolute competitive edge it continues to have over all other countries.[42]

39. On the home front, the US revised its trade laws to protect its export market from unfair trade practices. Section 301 of the Trade Act of 1974 gave the President authority to enforce trade agreements and to curtail imports unequally to non-compliant countries if necessary. Dekieffer holds that the US moves to impose economic sanctions on recalcitrant countries is nothing new, as they have been used as instruments of foreign policy since the last century.[43]

40. The Omnibus Trade and Competitiveness Act of 1988 further strengthened section 301, by making access to US markets conditional on adoption, implementation and compliance of stronger IP laws. The section (called 'Super 301') empowered the USTR "to initiate (on its own or upon complaint) unfair trade practice investigation into, and to take measures against, countries deemed to be lacking in IP laws or not enforcing them as effectively as the US would like them to."[44]

41. The penalties to be enforced by the section included suspension, withdrawal or prevention of trade concessions, imposing duties or other import restrictions on goods and services. The USTR also places 'offending' countries on the 'watch list' or 'priority watch list' as a first step to taking retaliatory measures.[45] The US then initiated moves to cover IP enforcement actions within the GATT agreement (now known as WTO). Such use of GATT provided "a convenient means of reducing IP issues to trade issues and of applying measures ordinarily conceived to resolve trade distortions"[46]

42. The US proposal of October 1987 and revised in 1988, abolished national treatment and minimum protection, replacing them with material reciprocity by which trading partners would be required to have similar IP law. This would put the first world countries at a much stronger position than the weaker, third world nations.[47] The proposal also required member nations to assent to the Paris and Berne Conventions.

43. The GATT agreement did not take into account the degree to which IP should be legally protected, and each country was allowed to formulate its own IP laws. The universal system that the US called for, therefore, emerged and was codified in the Uruguay Round Agreement on Trade-related Aspects of Intellectual Property Rights (TRIPS).

44. "The Agreement [established] minimum standards on almost all areas of IP rights in terms of both the availability of rights and their enforcement"[48] that countries must conform to including the duration of a 20 year patent monopoly on innovative products including medicines. The policies set forth were to be integrated into every country's national law by 2006.

45. TRIPS requires a significant substantive and procedural change in the member countries' laws. For developing countries, this means a massive overhaul and substantial change into its existing laws. As TRIPS also contains enforcement rules, the member countries "not only face the task of drafting and obtaining parliamentary approval of new legislation, but compliance with the Agreement also calls for the revision of national laws in respect of civil, criminal and administrative procedures, as well as redefining the role of police and custom authorities."[49]

46. Endeshaw notes three principal objections to the TRIPS agreement. First of all, all countries would be forced to adopt IP legislation as it appears in the major industrialised countries (IC's). Secondly, although the uniform laws will appease the IC's, the non-IC's will be forced to circumvent these laws for other standards and measures to ensure their survival. Thirdly, forcing the non IC's to implement and enforce laws that protect the IC's would place a great strain on the economies of the non IC's.[50]

47. The third world countries then find themselves between a rock and hard place. On the one hand, amending and drafting new legislation and implementing the enforcement provisions require not only diverse legal expertise which is often lacking, but also involves substantial costs in establishing an effective institutional structure. On the other hand, any deviation from the norms of the TRIPS agreement would result in a violation being found and further sanctions or suits being made against these countries by the developed nations.

48. The argument by the USTR and the drug industry that scientific research in developing countries will be adversely affected by the move to grant compulsory licenses to developing countries is a claim that has not been proved in practice. The drug industry's calculus in apportioning its resources is cold-blooded.

49. Surplus profits, which could be ploughed into research instead goes to stockbrokers, and promotion ($10.8 billion in 1998) and to lobbying the government ($74.8 million in 1997).[51] The Pentagon budgets 9 million per year on malaria research about a fifth of the amount set aside to supply troops with Viagra.[52] But because AIDS also affects the first world, it is the subject of intense research. Nevertheless as was stated earlier, the research for a vaccine mainly focuses on the first world and not on the strains found in the developing countries.

50. Although the pharmaceutical industry cannot be blamed for all the developing world's woes, for these companies to realize any profits, they have to manufacture the drugs in the developed nations. Developing countries usually lack the resources and expertise required for pharmaceutical production and research and there would therefore be no need to duplicate facilities offshore.[53]

51. Contrary to the view that a patent system induces investment, foreign patentees prefer to manufacture in IC's and import into non-IC's on the strength of the patent granted to them in these countries.[54] Such a patent then "enables foreign patentees to the convert host country into a captive market for their products manufactured elsewhere, mainly in developed countries."[55]

52. There is a need for the expedient call to reform the IP policies as they affect the availability and provision of pharmaceuticals to the third world. Most importantly because the lives of millions of affected people lie on the balance between the saving of human lives and accumulation of corporate profits in the face of the HIV/AIDS emergency.

53. There are various ways in which pharmaceuticals can be made available to the Third World nations. TRIPS formulates the blueprint of guidelines to be respected by member nations before compulsory licensing can be allowed. Section 31(b) removes the requirement to seek permission from the patent holder in cases of national emergency.

54. Section 31(b) also conditions the granting of a compulsory license on an initial attempt to obtain a voluntary license[56] from the patent holder through commercial terms and failure to obtain authorisation within a reasonable time. However, to this day, where HIV/AIDS treatments are concerned, no pharmaceutical company has granted a voluntary license to any interested government.

55. However, the most effective and fastest way to get these drugs to the suffering millions, lies in the governments use of the parallel importation provision in the TRIPS agreement. Governments' could also supply their affected citizens with medication obtained by shopping around the international market for the best prices, and then selling the drugs to its citizens at a subsidised and lower price.

    Conclusion

56. The present international IP system suggests the existence of one interpretation of IP that is applicable to all nations of the world, whatever their social or economic status. This leaves developing countries especially in sub-Saharan Africa burdened with the onus of changing her legal systems and incurring huge financial costs in implementing the IP system. There is an urgent call to reform the laws especially in the wake of the HIV/AIDS disaster before more numbers suffer and perish unnecessarily when remedies exist.