CPE Globalization Briefs Center for Popular Economics PO Box 785 Amherst MA 01004 413 545 0743 www PopularEconomics org TRIPS and HIV AIDS Y ou don t usually think of multinational corporations and the World Trade Organization as trying to restrict international competition but in the case of intellectual property rights that is just what they are doing Attempts by the global pharmaceutical industry to stop developing countries from producing generic drugs for their citizens infected with HIV AIDS is a disturbing illustration of this paradoxical battle as well as an inspiring example of how collective action can work to counterbalance the dominance of corporate interests TRIPS which stands for Trade Related Aspects of Intellectual Property Rights is an agreement under the purview of the WTO It covers a wide range of subjects that relate to intellectual property from copyrights and trademarks to pharmaceuticals It stipulates that WTO member countries must provide patent protection for approved inventions for at least 20 years severely restricting competition and granting monopoly power to the patent holder This protection was a significant victory for pharmaceutical companies who lobbied hard during the Uruguay Round of the GATT which established the WTO to get intellectual property rights enacted Prior to this many developing countries did not patent medicines at all and domestic producers were free to make and market prescription drugs There are some exceptions written into the TRIPS agreement In the event of national emergencies or other circumstances of extreme urgency or if the patent holder is practicing anti competitive policies countries can manufacture the drugs them selves without the permission of the patent owner this is known as compulsory licensing There is also nothing in the TRIPS agreement that expressly prohibits what is called parallel imports when one country purchases drugs from another country that imports the drug at a lower price rather than importing from the pharmaceutical company itself The TRIPS agreement does not specify what constitutes a national emergency but it is clear that drug companies consider compulsory licensing a major threat their patent protected profitability And the stakes are really high Only four companies dominate the pharmaceutical industry Merck Pfizer Glaxo SmithKline and Eli Lilly and their profits are huge The New England Journal of Medicine described the rate of return on assets the profit rate of the pharmaceutical industry to be the highest of any other industry The TRIPS agreement comes at time when the developing world is being challenged by the plague of HIV and AIDS Eleven million people in poor countries will die of infectious diseases this year and half of them will be children under age five Just over one quarter 2 6 million people will die from HIV AIDS Most of these people live in Africa of the world s population living with HIV 70 of adults and 80 of children live in Africa and more than 3 4 of the people who have died of AIDS are from Africa 20 million But fewer than 25 000 or onetenth of 1 receive the life saving antiretroviral therapies that are standard issue in developed countries It is taking a tremendous toll In the year 2010 Regional HIV AIDS end of 2000 Adults children living with HIV AIDS Adults children newly infected with HIV Adult prevalence rate 25 3 million 3 8 million 8 8 North Africa Middle East 400 000 80 000 0 2 South South East Asia 5 8 million 780 000 0 56 640 000 130 000 0 07 1 4 million 150 000 0 5 Caribbean 390 000 60 000 2 3 Eastern Europe Central Asia 700 000 250 000 0 35 Western Europe 540 000 30 000 0 24 North America 920 000 45 000 0 6 15 000 500 0 13 36 1 million 5 3 million 1 1 Region Sub Saharan Africa East Asia Pacific Latin America Australia New Zealand TOTAL The proportion of adults 15 to 49 years of age living with HIV AIDS Source UNAIDS and WHO 2000 AIDS epidemic update December 2000 p 5 South Africa one of the richer countries on the continent will be almost one tenth poorer in terms of GDP than if AIDS had never existed And HIV AIDS is becoming more serious in other parts of the world that cannot afford public health interventions as well India has four million infected but it could have five times that many The Caribbean has the second highest rate of infection after sub Saharan Africa In Eastern Europe and the former Soviet Union the number of infected nearly doubled in the last year See the table below for a regional portrait of HIV AIDS But some developing countries are fighting this global health crisis and winning thanks largely to their decision to stand up to the global pharmaceutical industry Brazil Brazil is Latin America s largest and most populous nation In 1997 using the TRIPS compulsory licensing loophole in the case of national emergency Brazil began to produce generic AIDS medicines and distribute them for free Today it is estimated that 580 000 Brazilians out of a population of 167 million have HIV When the virus first surfaced in Brazil two decades ago it was estimated that the infected population would be 1 2 million by now but infection rates have returned to 1995 levels Over the past five years AIDS related deaths have plummeted by half and each AIDS patient is only one quarter as likely to be hospitalized as before A program that was originally criticized due to Brazil s lack of medical infrastructure and the 2 government s reputation for corruption and inefficiency is now widely acknowledged as a great success Brazil has offered to transfer its technology and provide training in how to treat patients to other countries that want to provide these services to patients for free Moreover Brazil s domestic production has driven prices down since 1996 the price of AIDS drugs manufactured only by multinationals has declined a mere 9 but the cost of medications that must compete with Brazil s domestic production has declined by 79 A typical treatment of antiretroviral drugs the medicines known in the U S as AIDS cocktails costs Brazil 3 000 a year to manufacture and could drop to as low as 700 a year or less In the U S similar treatment ranges between 10 000 and 15 000 India Before joining the WTO India allowed patents only for manufacturing processes and it made 70 of its own drugs Cipla India s largest domestic drug manufacturer has offered to sell generic versions of patented HIV AIDS medicines at 5 to 10 cents on the dollar as a global public service
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