A big pharma gaffe

A recent article in Bloomberg Businessweek is sympathetic to the perspective of research pharmaceutical (RP) companies, who face the prospect of India deciding to compulsorily license their patents on three of their blockbuster drugs, for diabetes, HIV and arthritis. It fails to even mention that India is allowed to do so, under WTO rules established by the Doha Declaration, as a developing country in cases of public health emergency.

India is certainly taking an expansive view of what counts as a ‘public health emergency’, but one consistent with the values expressed in the Alma-Ata Declaration on Health for All (WHO, 1978) (PDF) and the growing recognition of non-communicable diseases (NCDs) such as breast cancer, diabetes and arthritis in developing countries as an emerging global health crisis.

In characteristically blunt language the Dutch-born CEO of Bayer AG denounced the Indian proposal:

Bayer Chief Executive Officer Marijn Dekkers called the compulsory license “essentially theft.”

“We did not develop this medicine for Indians,” Dekkers said Dec. 3. “We developed it for western patients who can afford it.”

This is an exceedingly callous remark from the leader of an organisation that claims to be “committed to operating sustainably and addressing our social and ethical responsibilities as a corporate citizen.” (source)

However, it can also be understood as a Kinsley gaffe revealing the essential correctness of the balance struck in the Doha Declaration. This refers to the situation when “a political gaffe reveals some truth that a politician didn’t intend to admit” (Wiki) — in other words, the accidental release of too much truth.

The truth accidentally revealed in Dekkers’ remarks is that Bayer AG has very little to lose by compulsory licensing in India, because it never anticipated much profit there in the first place.

What’s actually going on is less about protecting the revenue from blockbuster drugs in countries where most can’t afford them anyway, and more about protecting and extending the length of patent coverage in developed countries.

Christopher Scott Harrison, in The Politics of the International Pricing of Prescription Drugs, describes lobbying by the Pharmaceutical Research and Manufacturers Association (PhRMA) to use global trade law and negotiations to export, and therefore, crucially, re-import, regulations that are tougher than the US Congress would be willing to vote for domestically.

This strategy follows on from the extraordinary success of book, film and music publishing industries in copyright term extension, twenty years at a time, so that profitable properties like Disney films and To Kill a Mockingbird never revert to the public domain.

When patent laws were first enacted, their framers sought to strike a compromise between the interests of developing industrial societies — which at the time included the United Kingdom and United States — in widespread access to new technologies, and allowing sufficient monopoly period with windfall profits as an incentive to inventors.

This calculation should always be kept in mind; it clearly supports the case-by-case breaking of patents to provide enormous benefits to people in countries which offered little prospect of windfall profits in the first place.

What we’re seeing now is the use of international trade agreements to strengthen a regime that seeks to revise this balance in favour of research pharmaceutical companies. It is accomplished by means of the original WTO agreement on Trade Related Intellectual Property Rights (TRIPS), unilateral trade sanctions of questionable legality applied via the US Trade Representative’s watch list procedure, and more recently, a variety of bi- and multi-lateral trade agreements, potentially including the Trans-Pacific Partnership Agreement.

Although progressive activists have long viewed the WTO through a lens of ‘bigger is not better’, the shift towards a patchwork of bi- and multi-lateral investment agreements probably reflects a feeling in the US that WTO processes affords too much bargaining power to developing countries.

I have some sympathy myself for research pharmaceutical developers — they have to gamble big money on very uncertain outcomes, although perhaps not as much as some have claimed, and drug research and development is getting harder and more complex, because the easy discoveries may have all been made: the ‘low-hanging fruit’ has been picked. 

But some are in such tricky corporate terrain because they pursued a decades-long spree of ill-advised mergers and acquisitions, and seeking ever-longer patent terms looks, in this light, like a clear-cut case of rent-seeking.