Globalization of intellectual property rights: Implications of the TRIPs agreement for access to HIV/AIDS drugs in Africa

Authors


Abstract

During the past few decades, western countries have pushed for strengthening intellectual property (IP) rights, as well as enforcing them uniformly across the globe. This push came to a climax when the IP was removed from the World Intellectual Property Organization (WIPO) to become a trade issue under the World Trade Organization (WTO). Western countries were instrumental to crafting the Trade-Related Aspects of Intellectual Property Rights (TRIPs) as an item in world trade negotiations and agreements through WTO in 1995. Although many of the TRIPs requirements seemed favored producers as opposed to consumers of IP, developing countries have nevertheless been obliged to enact domestic legislation to implement the requirements of TRIPs. This paper examines the implications of the TRIPs Agreement on access to HIV/AIDS drugs in African countries, and offers a framework for analyzing the international and domestic factors which offer constraints and opportunities for relevant public health policy development and implementation in Africa.

Introduction

The emergence of a global knowledge society has facilitated the blurring of national borders and thrust to the fore issues of the globalization of intellectual property (IP) regimes. The origins of globalized IP regimes may be traced to the economic downturn of the 1970s and 1980s which heightened power asymmetries between the industrialized and developing countries (Sell, 1998). Although both groups were adversely affected by the economic crisis, the developing countries were rendered more vulnerable due to their debt burdens. These countries therefore adopted economic reform policies prescribed by international financial institutions such as the World Bank and International Monetary Fund, and western creditor nations such as the U.S. These economic reform policies called for open markets, liberal trade and investment, private public sector enterprises, and greater protection for IP (IP) rights, among others. Touted as the only road to economic recovery and national development, these market reforms promoted the integration of developing economies into the global economy (Kiggundu, 2002).

This paper outlines a framework for investigating the impact of globalized IP regimes on public health in Africa. Specifically, it will trace the evolution of the Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement of 1995 and subsequent amendments. Their implications for access to drugs needed to contain the current scourge of HIV/AIDS in Africa, with particular reference to South Africa will also be reviewed. The framework outlined in this presentation guides a field investigation into the policy, legal and economic processes of facilitating access to HIV/AIDS drugs for populations in African countries within the framework of the TRIPS Agreement.

Globalization of Intellectual Property Rights

Intellectual Property has become a key issue in the global political economy. Conceived as a new mechanism for globalizing property, and a substitute for earlier forms of trade protection such as tariffs and industrial subsidies, IP issues raise vital economic, cultural and moral questions for contemporary society. The key features of this society which lends significance to IP include:

  • (i)The globalization of production and massive increases in the mobility of capital;
  • (ii)The digital technology and subsequent growth of information and service-based economies;
  • (iii)The dominance of the free market doctrine and competition between trading blocs and national economies;
  • (iv)The increasing interdependence of environmental ecosystems in a shrinking world;
  • (v)The reinvention of government and advent of civil society and private sector agents as power brokers in public policy formation (Doern, 1998).

IP is often divided into two fields: industrial property which includes protection by means of patents, trademarks and industrial designs) and copyright which protects the works of authors and other creators of works of the mind. Drahos (1997) identifies three stages in the evolution of IP: (i) The first stage is the national or territorial era at which there were no international regimes; (ii) The Paris and Berne Conventions at the latter part of the 19th Century ushered in an international regime which was still territorially based and extended the rights of creators through treaties; (iii) U.S.-led pressure by the mid–1980s elevated IP onto a higher plane on the international global economic and regulatory trade agenda. The establishment of the WTO and its TRIPs is illustrative of this third phase in the evolution of IP.

The WTO was established in 1995 to “oversee an integrated dispute settlement regime and to undertake a proactive trade policy surveillance role” (Trebilcock and Howe, 1995, p. 38). The TRIPs Agreement sets standards concerning the availability, scope and use of IP rights for copyright and related rights, trademarks, geographical indications, industrial designs, patents, among others. Throughout the 1960s and 1970s, attempts to spread IP protection policies at multilateral forums such as the World Intellectual Property Organization (WIPO) and United Nations Conference on Trade and Development (UNCTAD) Prompted by various corporate interests, the U.S. led the industrialized west in tightening the linkage between trade and IP by amending the Trade and Tariff Act in 1984 and 1988. Under Section 301 of the Trade Act of 1974, the U.S. could threaten trade retaliation via trade sanctions, to induce policy changes in countries with inadequate IP protection. This enabled the U.S. to link its political and economic power to the on-going market reforms in developing economies.

Since these developing economies were more dependent on U.S. markets, than vice versa, the former were rewarded with preferential access to U.S. markets for effective IP protection. These countries also need to construct IP institutions from the ground up, including IP legislations, policies, and culturally relevant associations and programs. India and Brazil led the challenge to the agenda of U.S. pharmaceutical and information technology sectors on IP, investment and services. In 1988, a 301 investigation of Brazilian patent protection for pharmaceutical products led to increased tariffs on Brazilian goods in the same year. The increased tariffs were terminated in 1990, after Brazil agreed to enact the legislation requested by the U.S. Trade Representative. According to Sell, such externally induced policy change attained through economic or market power asymmetries in the international IP arena is not based on beliefs or convictions and may therefore be reversible when opportunities arise (1998). Lester Thurow argued that although there might be value in a global system of IP rights, “the Third World's need to get low-cost pharmaceuticals is not equivalent to its need for low-cost CDs” (Thurow, 1997, p. 103). This moral seems to inform the power asymmetries in the international IP arena with respect to procuring drugs to combat the HIV/AIDS epidemic in Africa within the framework of the TRIPS Agreement on patents for pharmaceutical products.

The TRIPS Agreement and Access to HIV/AIDS Drugs in Africa

TRIPS has been criticized from its inception for affirming the IP of western corporate interests over the public interest, particularly the welfare of the citizens of developing countries. The most recent area of contest has been the restrictive impact of the patent rules on access to vital drugs in poor countries. The statistics reveal a stark reality. Whereas one third of developing country populations do not have regular access to essential drugs, tropical diseases account for less than 1 per cent of the global health-research budget. TRIPS was unlikely to address this market failure in R&D because although they constitute 75% of the world population, developing countries account for only about 10 per cent of global pharmaceutical drug sales. Thus, while more than 14 million people die every year from treatable diseases, excluding the scourge of HIV/AIDS, those most in need of health care in developing countries are least able to afford treatment (Mayne, 2002).

A global campaign on access to medicinal drugs led to a pro-public health interpretation of the TRIPs Agreement in the Doha Declaration of 2001. Its text which states that the Agreement “does not and should not prevent governments from taking measures to protect public health and …to promote access to medicines for all”, could be said to affirm the primacy of public health over IPR. Specifically, these safeguards (“ flexibilities”) granted by the TRIPS in relation to public health include the right for governments to (i) grant compulsory licences and the freedom to determine the grounds upon which such licences are granted, (ii) determine what constitutes a national emergency or other circumstances of extreme urgency, such as public health crises, and (iii) determine their own policies for exhaustion of IPR using parallel imports without challenge. It also required developing countries to amend their legislations to provide pharmaceutical patent protection by a new and extended deadline of 2016. (WTO, 2001).

The Political landscape

The challenges that confront African nations in their bid to combat the HIV/AIDS epidemic within the framework of the TRIPS are multidimensional and cover policy, legal, and economic terrains. In the area of policy making for example, the challenges may range from bad government policies, and a lack of political will. South Africa records the highest prevalence rate in the world with about 21.5% of her 43 million estimated to be living with HIV/AIDS. In 2002, 1600 people were said to contract the AIDS virus on a daily basis in South Africa, which was at that time the highest rate of infection in the world (Bass, 2002). Not only was little done to combat the epidemic before 1994 under the Apartheid government, Thabo Mbeki, a post-Apartheid President of South Africa, demonstrated an unorthodox attitude as he towards questioned the causal relationship between HIV and AIDS. The health minister at the time, Manto Tshabalala-Msimang also promoted a particular diet as a means of treating AIDS rather than the use of antiretroviral medication.

It was only in November of 2003 that the South Africa Government rolled out a national plan that will allow affordable access to antiretroviral drugs. The plan was called the Operational Plan for Comprehensive HIV and AIDS care, management and treatment for South Africa. The plan covers four core areas namely: prevention, treatment, research and human rights (2003:2). A joint Health and Treasury Task Team was established to investigate the feasibility of the plan. This plan was not very successfully implemented under the leadership of Thabo Mbeki and his Minister of Health Manto Tshabalala-Msimang. In 2005 it was estimated that only 104 000 South Africans had access to anti-retroviral drugs. This number is in sharp contrast to the estimated 830 000 South Africans that were in desperate need of these medication (Kahn, 2008). They were both replaced in 2008 and it will have to be seen how the new administration under President Jacob Zuma addresses the AIDS issue in South Africa.

Some challenges derive from inadequate collaboration, information sharing, coordination, and accountability in planning and delivery of services by government agencies. In Nigeria, for example, Peterson and Obileye observed in 2002 that that there is little understanding of the TRIPS Agreement among policy makers in government with respect to its relationship to health and parallel importation as a patent law concept for examples. There is also inadequate collaboration and exchange of information between government agencies responsible for health, commerce, and justice, as well as the federal government level where policies are made, and the state and local levels responsible for their implementation. Finally, accurate and comprehensive statistics on which policies should be based are often h

The legal landscape

African governments find themselves in a difficult situation balancing demands for cheap drugs and protecting the patent rights of multinational pharmaceutical companies (Bass, 2002). South Africa, along with India and Brazil are currently leading in efforts to make drugs more affordable for people in the developing world. They are not only taking on large pharmaceutical companies but also engage in the production of cheaper generic alternative drugs (Kahn, 2008). Until 1997, almost all medication sold in South Africa were under patent protection and were selling between 10–12 times the price of generic medication – a fact that makes it simply impossible for the majority of South Africans to have access to much needed drugs. It is against this background that the South African parliament promulgated the Medicines and Related Substances Control Amendment Act of 1997. The implications of this act can be summarized as follows (Kahn, 2008):

  • Generic substitution: It compels pharmacists to prescribe cheaper generic medicines that are no longer under patent protection.

  • Compulsory licensing: It makes provision for the issuing of compulsory licensing to local companies to manufacture generic drugs.

  • Transparent pricing: It introduces a transparent pricing mechanism that will force pharmaceutical companies to explain and justify their pricing policies.

  • Parallel importing: It allows for the importation of cheaper brand-name drugs for countries where it is produced much cheaper.

The Act is in compliance with the TRIPS agreement in the sense that it also allows for compulsory licensing for the manufacturing of drugs by a government. The implication of the TRIPS agreement is that a government can grant a production license to another pharmaceutical company to manufacture a generic drug with the consent of the original patent holder. In most cases the patent holder will then receive a token royalty (Khan, 2008). Section 15 (c) of the Act empowers the Minister of Health to “compel a particular drug's patent holder to license another company to produce its drugs, if that can be done cheaper than buying them from the patent holder” (Bass, 2002: 4)

The main intention of the Act is therefore to allow the use of cheaper generic drugs on a mass scale and, based on the TRIPS agreement; it provides South Africa the flexibility to opt out of TRIPS agreement based on the specific clause that provides for waivers in cases where there is a national emergency. The moral motivation behind this legislation was therefore to legitimately produce generic medicine for domestic use due to the national AIDS crises in the country. South Africa has not yet declared the AIDS pandemic a national emergency which would have allowed the country to request compulsory licensing. According to the TRIPS agreement all member states are obligated to allow at least 20 years of patent protection for medicine and should not allow the production of any generic products unless in case of a national emergency (Kahn, 2008).

The introduction of the new legislation was met with severe criticism from both the USA government as well as international pharmaceutical companies who felt that their intellectual property rights were under threat by this new legislation. In 1998, the USA government put South Africa on the watch list for those countries that disregard international IP rights with respect to US products. The following year, the US Office of Trade instituted trade pressures against South Africa. This was based on an interpretation that the 1997 Act contravenes the TRIPs agreement. The Bush Administration eventually abandoned this line of action, and adopted a policy to support the struggle of developing countries, including South Africa against the AIDS epidemic. However, it maintained that South Africa must still comply with the World Trade Organizations treaties (Bass, 2002).

There was also some domestic opposition to the 1997 Medicines Act by the Pharmaceutical Manufacturers' Association representing 39 transnational pharmaceutical companies. Their main legal arguments were based on section 15 (C) of the 1997 act which they argued would allow the Minister of Health to permit the reproduction of cheaper generic medicine at the expense of their intellectual property rights – in particular patent rights. According to them, parallel importation of drugs contravenes Article 27 of TRIPs agreement, which deals with compulsory licensing. This will, according to these companies, breach South Africa's patent commitments as is explained under the WTO patent rules. They expressed a specific legal concern that South Africa would disregard foreign patents by means of this article, and thereby the right of the Pharmaceutical Manufacturers' Association to be compensated for their intellectual property. They also made a case that the Act was unconstitutional since it would allow the Minister of Health the power to overrule the 1978 South African Patents Act. Their argument was based on the interpretation that the South African Patent Act allows for compulsory licensing only in those cases where it can be proven that patent holders abused their power – something they claim they are not guilty of (Khan, 2008).

In its response to the planned legal action from the pharmaceutical companies, the South African government argued that they had a moral as well as constitutional responsibility to care for the health of its people. The government also stated that it will only use the Act in compliance with the TRIPS agreement. This position was supported by OXFAM, Action for Southern Africa, TAC, South African Trade Unions and Medicines sans Frontieres (Bass, 2002; Kahn, 2008). Oxfam issued a stern statement on the case, observing that “…Oxfam believes that the companies' legal proceedings are an unwarranted intrusion into the democratic process of law in South Africa, and a dangerous attempt to interpret the TRIPS agreement in their own interests. If they win the case, this will severely compromise the government's duty to provide its citizens with access to affordable medicines. It would also send a chilling message to other governments not to use the existing safeguards in TRIPS, nor to implement national pro-poor health legislation, even if these are WTO-complaint.” (South Africa vs. the drug giants http://www.oxfam.org.uk/resources/policy/health/drugcomp_sa.html)

It is also interesting to note that the South African High Court ruled that AIDS activists could join the Government in defending the Act. This decision was based on the argument that this case is not only limited to intellectual property rights but also involves public health and is therefore a matter of social justice. Based on this ruling the TAC became a amicus curiae of the court (friend of the court). This collaboration between the South African Government and TAC are in sharp contrast to previous criticism of the government by TEC, which even called for the resignation of the Minister of Health.

There was also other international support for the South African government, including the World Health Organization (WHO) and the member countries of the UE, in particular Germany, who denounced their legal arguments and strategies and called upon the pharmaceutical companies to withdraw their case. The EU parliament made a similar call requesting the companies to end their legal actions (Kahn, 2008)

It is interesting to note that three of the major pharmaceutical companies at the same time (of the court hearing) strategically decided to decrease the price of their AIDS drugs significantly in developing countries in an apparent attempt to gain public support for their case. They were not successful and in April of 2001 the case was settled out of court. Pharmaceutical companies agreed to do research and development on new medicine and vaccines that are more affordable (Bass, 2002). According the Minister of Health at that time (Manto Tshabalala-Msimang) the settlement did not involve renegotiating the Act itself, but only as far as it refers to drawing up the regulations including the controversial section 15 (C). According to her the pharmaceutical companies were asked for their input. The following joint statement was issued: “…the referenced applicants recognize and reaffirm that the Republic of South Africa may enact national laws or regulations, including regulations implementing Act 90 of 1997 or adopt measures necessary to protect public health, and broaden access to medicines in accordance with the South African Constitution and TRIPS.” http://www.iol.co.za/index.php?set_id=1&click_id=13&art_id=qw98767614291N652

Conclusion

Peter Drahos described IP standard-setting as “an insiders' game dominated by a few producers of IP supported by states with the most to gain” (2002, p. 174). The rise of non-state and non-business actors such as non-governmental organizations, humanitarian organizations and civil society groups during the past two decades have however diffused the leverage of asymmetries of power based on political and market forces alone. These non-state actors as in the case of access to HIV/AIDS drugs have begun to influence international and domestic policies and legislations by the ethical and moral power of their ideas and values. They have also registered their influence in IP issues related to biodiversity and agriculture. Their advent to the discourse of IP have helped to give voice to the voiceless and the powerless by representing interests that were hitherto absent, or disclosing information on the full implications of the standard-setting process, as well as offering funds, education and consulting services to ill-prepared negotiating parties. National standard-setting regimes developed by IP stakeholders consisting of governments, consumer groups, and non-state actors in developing countries would therefore be more impactful on regional and ultimately international IP standard-setting.

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