Treatment Action Campaign (TAC) Electronic Newsletter 27 February, 2001 *********************************************************************** Dear Subscribers The International Day of Action is on 5 March. Events will be taking place around the world, including (but hopefully not limited to) Australia, Brazil, Canada, France, Germany, Italy, South Africa and the United States. The main demands of activists on this day will be that * the Pharmaceutical Manufacturer's Association and 40 multinational pharmaceutical companies drop their legal action to prevent the South African government's Medicines and Related Substances Control Amendment Act (90 of 1997) from being enacted, and * the United States government drop its WTO complaint against Brazil's patent law. Details about global events on 5 March can be found at www.tac.org.za. TAC and Action for Southern Africa (ACTSA, the former British anti-apartheid movement) are asking for organisational endorsements for an open letter to be sent to newspapers around the world. If your organisation has not done so yet, please get them to sign up before Friday. The letter is reprinted below. To endorse it, please email campaigns@actsa.org (ORGANISATIONAL ENDORSEMENTS ONLY PLEASE). The TAC website, www.tac.org.za has been extensively updated. The archives page contains the affidavit TAC filed to the Pretoria High Court, as part of its application to be a friend of the court in Monday's hearing. Regards, Nathan Geffen To subscribe: subscribe@tac.org.za For information: info@tac.org.za Website: www.tac.org.za ********************************* IN BRIEF SECTION ################ IN BRIEF: Right-winged journalist Simon Barber criticised TAC and MSF's stance on the US complaint against Brazil at the WTO. Jonathan Berger wrote a response which was poorly edited by the Business Day. We reprint part of Barber's original article and Berger's full response. (See IN DEPTH) IN BRIEF: TAC has produced a statement on the legal issues of the US complaint and why it is potentially damaging to the Brazilian generic pharmaceutical industry. Thank you to Jonathan Berger for his advice on this matter. (See IN DEPTH) IN BRIEF: Toby Kasper of MSF has investigated Glaxo SmithKline's claim to a patent on its AZT/Lamivudine medicine in Ghana. He has found the claim to be untrue. (See IN DEPTH) IN BRIEF: A Nairobi orphanage has stated that it will import AIDS medicines from Cipla. (See IN DEPTH) IN BRIEF: Please endorse TAC and ACTSA's open letter which will be distributed on Friday. Here it is: To: The Editor Today [5 March] over forty of the world's largest pharmaceutical companies; including Boehringer-Ingelheim, GlaxoSmithKline, Merck, Bristol-Myers Squibb and Roche - take the South African government to court. They are fighting a law, that was passed by the South African parliament and approved by Nelson Mandela, which would allow life-saving medicines to be imported from countries where they are cheaper. They claim that the law infringes intellectual property rights. Nearly five million South Africans are living with HIV. But few can afford the drugs which have enabled richer countries to transform the disease from a killer into a manageable illness. These companies, with the support of some Western governments, are protecting their monopolies at the expense of millions of lives. This legal action shows that the pharmaceutical industry is more concerned with staving off competition and protecting their high profit margins than with genuinely increasing access to medicines. We believe that this lawsuit is legally flawed and morally reprehensible. We call on the companies involved to drop the case and on Western Governments to provide clear support to the South African Government as it strives to tackle the urgent HIV/AIDS epidemic. To endorse, email your organisation's name and contact details plus a contact person to campaigns@actsa.org. ********************************* IN DEPTH SECTION ################ Here is part of Simon Barber's article, followed by Jonathan Berger's response. Below Berger's response is a TAC statement on the legal aspects of the case. Thanks to Berger for assisting us with this. (Reprinted for fair use from Business Day, 12 February 2001) [SNIP] [C]ontrary to claims by Teixeira himself, and groups like Médecins sans Frontières and SA's Treatment Access Campaign, the local office of the US trade representative is not trying to stop Brazil adopting such tactics and is not racing to Merck's defence. Treatment Access Campaign says: "This callous action by the US threatens the lives of millions of people living with HIV/AIDS." Indeed, millions will die, but not because the trade representative stands in the way of their receiving affordable treatment. The US trade representative has hauled Brazil before a World Trade Organisation (WTO) dispute panel because of a section of its patent law. But a top US trade official stressed the case has nothing to do with Brazil's compulsory licensing threats. A compulsory licence is a government order transferring a patent right from its registered owner to a third party. Article 71 of Brazil's industrial property law authorises the procedure "in cases of national emergency or of public interest where the patent owner or his licensee do not satisfy such need." This, said the US official, was the provision, "permissible under Trips (the WTO agreement on intellectual property)," which Brazil was using to contend with its "health crisis". The US trade representative had no complaint about it. The dispute was over Article 68, which is more about local production than patents. It permits the compulsory licensing of any patent "not worked" in Brazil within three years of going into commercial use. Generally, a patent is held to be "worked" in a country if the product to which it relates is made locally or imported. Article 68 narrows the definition to being made in Brazil. Trips says patent rights are to be "enjoyable whether products are imported or locally produced." The conflict is clear. "This is about whose workers get to make the patented technology," the official said. "It's a protectionist measure, not a health measure." ... [SNIP] (12 February, 2001) Former law clerk to Justice Kate O'Regan of the Constitutional Court, Jonathan Berger is pursuing graduate studies at the University of Toronto, with a focus on the impact of international intellectual property law on access to essential drugs. Here is his response to Barber's article. RESPONSE TO SIMON BARBER In his article "US eyes Brazilian generics policy" (Business Day, 12 February 2001), Simon Barber rushes to the defence of the office of the United States Trade Representative (USTR) and its recent request that the World Trade Organization (WTO) convene a panel to rule on whether Brazil's "local working" requirement in its patent law is in violation of the Agreement on Trade-related Aspects of Intellectual Property Rights, better known as TRIPS. Barber is quite correct in stating that the matter before the WTO does not deal with compulsory licenses issued expressly to allow for the production of cheaper generic versions of expensive and inaccessible drugs: in short, the USTR complaint is limited to concerns raised by the local working requirement in Brazilian law (which can only be satisfied by the local production and not the importation of the patented subject-matter) which empowers the Brazilian government to issue compulsory licenses in respect of unworked patents. But, says Barber, "Trips says patent rights are to be 'enjoyable whether products are imported or locally produced.' The conflict is clear." Or is it? While it is true that article 27.1 of TRIPS says what Barber says it says, Barber conveniently fails to mention that article 27.1 is but a small part of a much larger package of interconnected provisions. Take article 7 for example, which sets out the objectives of TRIPS-it expressly mentions that the "protection and enforcement of intellectual property rights should contribute to the transfer of technology". In a similar vein, article 8(2) recognizes that measures may be taken to "prevent the abuse of intellectual property rights and the resort to practices which affect the international transfer of technology." And finally, article 30 provides that member states "may provide limited exceptions for the exclusive rights conferred by a patent, provided that such exceptions do not unreasonably conflict with a normal exploitation of a patent and do not unreasonably prejudice the legitimate interests of the patent owner, taking account of the legitimate interests of third parties." It does not take an expert to see that the clear conflict seen by Barber is not at all clear. Indeed, there are very strong legal arguments supporting the finding that the Brazilian measure is fully TRIPS-compliant. Further, article 2(1) incorporates by reference certain provisions of the Paris Convention for the Protection of Industrial Property, 1967, with article 2(2) stating that TRIPS shall not "derogate from existing obligations that members may have to each other under the Paris Convention". The Paris Convention recognizes that "working" the patent is not usually understood as being satisfied by the importation or sale of the patented article, or of an article manufactured by a patented process. At minimum, what the reference to the Paris Convention means is that well-established interpretations of articles in the Paris Convention should be used to clarify any ambiguities in TRIPS regarding similar subject matter." Suffice it to say, the Paris Convention shatters Barber's assertion that the conflict is clear-under that Convention, while importation alone is not a sufficient ground to forfeit a patent, member states are nevertheless empowered to pass legislation to mandate local working of patents within their area of jurisdiction. But Barber's article goes beyond bad law. Implicit in his account is the accusation that coordinator of Brazil's National AIDS programme Paulo Teixeira, Nobel Peace Prize-winning Médecins Sans Frontières and South Africa's Treatment Action Campaign (TAC) are guilty of misrepresentation in their condemnation of the USTR action. But who is really doing the misrepresenting? In distinguishing between these two forms of compulsory licensing, Barber implies that there is no connection between access to drugs and the issuing of compulsory licenses in response to a failure locally to work a patent. He quotes a USTR official's spin on the Brazilian measure as being "about whose workers get to make the patented technology . It's a protectionist measure, not a health measure." This is a sheer mischaracterization of the internationally recognized purpose of local working requirements, which is to ensure that foreign patentees situate production facilities within the patent granting country so as to facilitate the transfer of technology. This, as has already been mentioned, is one of the key objectives of TRIPS. It is difficult, if not impossible, to imagine how the importation, marketing and sale of drugs alone facilitates technology transfer. Without mandatory local working, patent granting countries are left at the mercy of foreign patent holders who will decide on the basis of their own profit-motivated interests whether or not to transfer technology. Without this technology transfer and the development of local expertise, the sustainability of national treatment programmes is placed at risk. This is especially important in the case of Brazil. In terms of its obligations under TRIPS, Brazil has recently extended patent protection to pharmaceuticals. Brazil was successful in developing a national pharmaceutical industry as a direct result of the exclusion of pharmaceuticals from patentability. Under the new regime, a prohibition on mandatory local working requirements threatens to undermine these local industries and leave the market open to supply by foreign patentees. At the very least, local working requirements coupled with the sanction of compulsory licensing for non-compliance could be effective in ensuring that at least some technology equivalent to that which was previously used by domestic producers continues to be exploited, even though the right to supply the local markets is no longer held by nationally based suppliers. In his castigation of TAC, Barber states that "[o]ne of the fears raised by Treatment [Action Campaign] is that the US action will prevent Brazil from becoming an exporter of lowcost, compulsory licensed AIDS drugs to SA and other developing countries in a so-called 'south-south' parallel trading scheme." This, Barber assures us, is "not an issue before the WTO in this case." Technically, Barber is right. But he misrepresents the legitimate fear TAC expresses-the chilling effect of threatened action. If local working generates such hysteria in the USTR, one can hazard a guess at the response to the export of compulsorily licensed drugs. Further, with confidence in the WTO particularly low in the developing world, and given some particularly disturbing WTO panel jurisprudence (such as the Canadian Stockpiling Exception case, recently criticized by a leading international trade academic), it is not difficult to see the threats of trade disputes as an incentive to offer stronger patent protection than actually required by TRIPS. Indeed, official USTR policy has been to pressurize developing countries to legislate stronger patent protections than required in terms of their TRIPS obligations. While the effects of this policy in Africa were somewhat mitigated by former US president Clinton's Executive Order 13155 of 10 May 2000 which forbids the US Government from seeking TRIPS-plus protection for HIV/AIDS drugs in sub-Saharan African nations, the USTR has applied its TRIPS-plus protection requirements to Brazil. Notwithstanding the narrowness of the WTO challenge, the US has continued-through bilateral pressures-to pressurize Brazil to drop its compulsory licensing provisions. Indeed, as the Washington DC-based Consumer Project on Technology reports, such pressure was indeed placed on the Brazilian government last year during a visit by then Commerce Secretary Daley, travelling with executives from drug companies Merck and Pfizer. So much for Brazil's new patent law being "applauded by US drug companies." If anything, the application of USTR policy is expected to increase under the Bush administration. Couching the US-Brazil trade dispute as a narrow technical challenge to a non-health-related concern is not only inaccurate, but also misleading and dangerous. The action should be seen for what it is: the continuation of a long history of bullying weaker nations in pursuit of narrowly defined US commercial interests. References: 1. Michael Halewood, "Regulating Patent Holders: Local Working Requirements and Compulsory Licences at International Law" (1997) 35 Osgoode Hall L.J. 243 2. Consumer Project on Technology, Press Release, "Statement on the Trade Dispute Between the United States and Brazil" (6 February 2001), online: Consumer Project on Technology (date accessed: 14 February 2001). ************ TAC Statement on US Complaint Against Brazil ############################################ TAC Statement on US Complaint Against Brazil at WTO The United States has recently complained to the World Trade Organization (WTO) that Brazil's "local working" requirement in its patent law is in violation of the Agreement on Trade-related Aspects of Intellectual Property Rights, better known as TRIPS. The US argues that the local working requirement violates TRIPS as it gives the Brazilian government the power to issue compulsory licenses or import either the patented product or the product obtained from the patented process when companies fail to work their patents locally. The local working requirement thus applies when drug companies import patented drugs rather than produce them locally, but only if the companies cannot show that it is economically or legally unviable to produce locally. Local Working and Transfer of Technology to Prevent Patent Abuse While it is true that TRIPS states that patent rights are to be "enjoyable whether products are imported or locally produced", TRIPS permits local working requirements. Some of the objectives of TRIPS are that the "protection and enforcement of intellectual property rights should contribute ... to the transfer of technology" as well as socio-economic development. TRIPS also recognizes that measures may be taken to "prevent the abuse of intellectual property rights and ... the resort to practices which ... affect the international transfer of technology." Further, TRIPS allows countries to "provide limited exceptions for the exclusive rights conferred by a patent, provided that such exceptions do not unreasonably conflict with a normal exploitation of a patent and do not unreasonably prejudice the legitimate interests of the patent owner, taking account of the legitimate interests of third parties." When read together, these (and other) provisions mean that the Brazilian local working requirement is fully TRIPS-compliant. A point raised by drug company apologists is that there is no connection between access to drugs and local working requirements. Nothing could be further from the truth. The purpose of local working requirements is to encourage the transfer of technology by making sure that foreign patent holders set up production facilities within the patent granting country. Technology transfer is necessary for the sustainability of existing treatment programmes as it ensures that the local Brazilian pharmaceutical industry will be able to produce anti-retrovirals without the assistance of the patent-holder when the patent expires or in the event of a compulsory license being necessary before the patent expires. Pharmaceutical companies will be much more cautious about abusing patents if they know that Brazil has the knowledge, skills and capacity to manufacture a generic version of a patented drug. In addition, local working encourages sustainability by helping to insulate the price of patented medicines against currency devaluations, as well as supporting the development of local expertise which is vital in addressing local needs. Without local working requirements, many countries are left at the mercy of foreign patent holders who will decide on the basis of their own profit-motivated interests whether or not to transfer technology. Without this technology transfer and the development of local expertise, the sustainability of national drug programmes is placed at risk. This is especially important in the case of Brazil. Under TRIPS, Brazil has recently had to extend patent protection to the pharmaceutical industry. Brazil was able to develop a national drug industry and a free treatment programme for people with HIV/AIDS precisely because it did not grant patents for drugs. With drugs now protected by patents, a prohibition on local working requirements threatens to undermine these local industries and leave the market open to supply by foreign drug companies at exorbitant prices. At the very least, local working requirements would help to ensure that Brazilian technology maintains its current levels of development, and that affordable medicines are available to Brazil's predominantly poor population of 165 million people. Intimidating Tactics by the US on behalf of the Pharmaceutical Industry But the US action is far more dangerous than its potential to force Brazil to abandon its local working requirements. One need go no further than the challenge of the Pharmaceutical Manufacturers' Association of South Africa (PMA) to the implementation of the Medicines and Related Substances Control Amendment Act, 90 of 1997, to see the chilling effect of threatened action. Just by lodging court papers more than three years ago (and without obtaining any order of court), the PMA has successfully prevented a democratically elected government from doing what the Constitution requires it to do: taking reasonable measures to realize the right of access to health care services. The US initially supported the drug companies by threatening trade sanctions against South Africa. Only activist pressure in the US, South Africa and elsewhere has reversed the US government's position. But the current US position regarding Brazil is different. While the US may have taken only one issue to the WTO, its official policy is to pressurize developing countries outside of Africa to grant stronger patent protections than required in terms of their TRIPS obligations. Through bilateral pressures, it has continued to pressurize Brazil into dropping its compulsory licensing provisions designed to increase access to essential treatments. As the Consumer Project on Technology reports, such pressure was placed on the Brazilian government last year during a visit by then Commerce Secretary Daley, travelling with executives from drug companies Merck and Pfizer. If anything, the application of this policy is expected to increase under the Bush administration. It would be wrong to see the US-Brazil trade dispute as a narrow technical challenge to a non-health-related concern. Such an approach is not only inaccurate, but also misleading and dangerous. The US action is aptly described by the Brazilian trade representative at the WTO: "[T]he TRIPS Agreement reflects a delicate balance that took developing countries to the limits of acceptability. This delicate balance was reflected, in the case of Brazil, in internal legislation which is fully consistent with the letter and the spirit of the Agreement. The United States is now seeking an interpretation of TRIPs that threatens to upset such balance." The action should be seen for what it is: the continuation of a long history of bullying weaker nations in pursuit of narrowly defined US commercial interests. ********************* >From Toby Kasper: Status of Glaxo SmithKline claim to a patent on AZT/Lamivudine in Ghana. Dear all, There has been some confusion recently about the patent status of GlaxoWellcome (now GlaxoSmithKline) products in Ghana. The below is a technical explanation of some information I gathered during a visit to the headquarters of the African Regional Industrial Property Organization (ARIPO), the regional body that Glaxo has claimed issued patents for Glaxo products in Ghana. In a letter to Amar Lulla, Managing Director of Cipla, Ltd. (available at www.cptech.org/ip/health/africa/, along with several other documents pertaining to this case), the Head of Patents in Glaxo's Intellectual Property Rights Division, G.G. Brereton, wrote that "Glaxo Group Limited has exclusive rights under the following patents that cover lamivudine and zidovudine formulations in Ghana: AP11, AP136, AP182, AP300." This statement is untrue. Glaxo sought to protection for these patents in Ghana, but it was not successful, for a simple reason: Until the introduction of the Patent Law of December 30, 1992 (which entered into force on June 18, 1993), Ghana did not allow the patenting of pharmaceutical products. Patents numbers AP11, AP136, and AP182 were all granted before this date (December 22, 1987, October 29, 1991, and June 30, 1992, respectively), meaning that under ARIPO regulations, they cannot be in force in Ghana. Patent AP300 is a different case: it was applied for before Ghana allowing the patenting of pharmaceutical products (on June 2, 1992), but was only granted on January 20, 1994, after Ghana's new patent law entered into force. The legal validity of such a patent is debatable, although the Head of Examinations at ARIPO, Christopher Kiige, clearly stated his position when he told the Wall Street Journal on December 1, 2000, "If [Glaxo officials] went to court they would lose". Moreover, as Cipla stated in a September 22, 2000 letter to Glaxo, "The fourth patent (AP300) was granted after the abovedate [when Ghana introduced patent protection], but it relates only to crystalline lamivudine." The Cipla product that Glaxo alleged infringed its patent was coformulated AZT/3TC, which is a different formulation (and made by a different process) than crystalline lamivudine. Thus it is difficult to understand how Glaxo can claim in good faith that the importation of Cipla's coformulated AZT/3TC into Ghana represents an infringement of any patents held by Glaxo. Best, Toby Kasper Médecins Sans Frontières - South Africa *********************** Nairobi Orphanage to Order Patented Medicines from Cipla (Reprinted for fair use from the BBC website) Wednesday, 21 February, 2001, 18:51 GMT Kenyan challenge to Aids drug prices Millions of sufferers urgently need treatment In what could become a important test of international law, an orphanage for HIV-positive children in Kenya has announced it will order Aids drugs from Cipla, an Indian drug manufacturer supplying medication at an affordable rate. The Nairobi orphanage's director, Father Angelo d'Agostino, says his decision was prompted by the "outrageous" cost of official treatment - currently $3,000 per month. Buying cheaper drugs, he says, will enable him to treat an additional 20 children every month - but the move will bring him into direct conflict with the Kenyan government, and international drugs companies. The Indian group makes cheap 'generic' copies of drugs that are patent-protected elsewhere in the world. The United States says this is illegal and has complained to the World Trade Organisation. Father d'Agostino said the children in his care could wait no longer and that the continuing high prices of official drugs reflected the "darker side of capitalism". Africa 'held to ransom' He accused the big pharmaceutical companies of holding Africa to ransom and described the children in his care as "on the brink." "Some of them have skin problems and lung problems, respiratory problems which we can more-or-less control, but every day the virus is increasing in number and it's only a matter of time until it overcomes them," he added. Bringing generic drugs into the country may not be a problem for Father d'Agostino if they had been donated. But buying them breaks Kenya's current laws, and could invoke the ire of the international drug companies. Price anger His move comes amid demands from non-governmental organisations (NGOs) in Kenya for the companies to honour a commitment made last year to reduce their prices. The NGOs say an offer by drug companies last year to reduce prices by up to 85% has not been followed through, and what price reductions there have been are being offered piecemeal to individual doctors. On Wednesday, drug firm Glaxo Smith Kline, announced that it would offer HIV drugs at up to 90% discount to non-profit organisations, as long as these organisations take on the task of delivering the medicine to the patients. But a spokeswoman for the medical group Medecins Sans Frontieres in Nairobi said this was not enough. She said most NGOs were not in a position to medically supervise the distribution of the drugs and an across-the-board slashing of prices was urgently needed.