By Ayesha Jacub · 17 Feb 2014
Private profit versus public interest: the distinction may seem binary and simplistic but the divergence between big pharma and public health interests are increasing in polarity. Big pharma, like most big actors on the international trade scene have their interests firmly secured through lobbies touting big money, slanting legislation in their favour. With international trade legislation having direct effects on health issues in nation states, is the South African government doing enough to safeguard the health of its citizens?
The issue of Intellectual Property (IP) and big pharma resurfaced after the Department of Trade and Industry’s draft legislation on IP was opened for public comment last year. A subsequent leaked proposal concerning a public relations campaign to challenge South Africa’s proposed new IP laws, which was being considered by local big pharma interest group the Innovative Pharmaceutical Association of South Africa (Ipasa), has evoked some dramatic criticism from Health Minister Aaron Motsoaledi. The proposed campaign appears to have been devised by a US-based public relations company, evidently, working in support of big pharma. Motsoaledi referred to the proposal as being of ‘satanic magnitude’. Ipasa has denied accepting the public relations proposal but the battle lines have already been drawn. It may seem ironic that the very actors responsible for creating lifesaving drugs find themselves accused of standing against public health.
The interests of big pharma are secured and promoted on the international level through treaties like TRIPS (The Agreement on Trade Related Aspects of Intellectual Property Rights) administered through the World Trade Organisation. The U.S government adopted a policy drafted by a big pharma commissioned lawyer as its policy stance on intellectual property in global IP negotiations. This industry favourable stance on IP then went on to influence international law. These laws are firm on patent protection – citing the safeguarding of ‘innovation’. The problem lies in the phenomenal profit margins claimed by big pharma. Strong patents and patent extensions keep generic drugs off the market for extended periods, granting pharmaceutical companies free reign over pricing. This may seem like fair business, except that the commodity being traded affords improved or prolonged health: a basic human right some may say.
So who is safeguarding public interest on the national level, given that international trade treaties influence South Africa’s trade operations and consequentially access to essential medicines?
In the case of IP, it appears as though the government through the Department of Trade and Industry has risen to the challenge by forwarding draft legislation on IP. Aside from this draft, South Africa has no clear IP legislation meaning that issues of IP are subject to laws like the TRIPS agreement, without a clear focus on South Africa’s specifics interests.
This draft IP legislation clearly defines how these international trade treaties should relate to the South African context. It takes full advantage of and crystalizes public health safeguards outlined in the Doha Declaration such as the issuing of compulsory licensing and parallel importation.
The proposed legislation stresses the importance of balancing public health and trade interests, although closer inspection reveals a slant towards prioritizing public health concerns. The draft paper boldly states (regarding patent reviews) that "a cost and benefit analysis should be conducted … benefits should not only be calculated in monetary terms as access to public health does not necessarily translate into monetary value."
Concern from the drug companies can be somewhat placated by the fact that the legislation emanates from the Department of Trade and Industry and not the Department of Health, so in its development and implementation, there will be a definite eye on trade and economic growth.
Big pharma is concerned that the policy position taken by South Africa will influence the IP workings of other emerging economies – rightly so. The public relations proposal, which got minister Motsoaledi so worked up, says that "The principles of the draft … may also provide the model for other developing nations, inside and outside Africa, including such important aspiring economies such as India and Brazil. South Africa is now ground zero for the debate on the value of strong IP protection." South Africa maintains a measure of moral authority in the health sphere especially around the issue of access to essential medicines. This is largely due to the work conducted by NGO’s such as the Treatment Action Campaign and Médecins Sans Frontières. The gains by NGO’s in securing access to ARV’s is widely cited in international public health circles, shifting the power balance slightly away from being Big Pharma heavy. This moral authority could influence IP issues in other developing countries.
India, however, wasn’t waiting on South Africa’s lead when it ruled against Novartis’ patent request for the cancer drug Gleevec last year. Indian courts ruled that the drug was not really a novel drug but a modification on an existing formulation – a process known as ‘evergreening’. Whether India’s decision primarily stands to benefit Public Health or its large generic manufacturing industry or both is debatable.
In making a case against the new IP legislation, big pharma lobbies rehash some old arguments. They claim that the phenomenal profit margins are warranted, and that they offset the expense of research and development. However, in a journal article titled, The Cost of Pushing Pills: A New Estimate of Pharmaceutical Promotion Expenditures in the United States Marc-André Gagnon and Joel Lexchin conclude that "it appears that pharmaceutical companies spend almost twice as much on promotion as they do on R&D." These extensive profit margins mean that lifesaving drugs are often priced out of the range of those who may need it most – like citizens of the developing world.
Big pharma continuously remind us that big money is the price that must be paid for big ideas. Probing the question of where actual 'new knowledge' stems from leads us into a grey area where it's difficult to filter out public from private knowledge. Tax breaks afforded to pharmaceutical companies for R&D means that the public forfeits some of its entitlements and can then lay claim to some the fruits of 'innovation'. Marcia Angell, the former editor of the New England Journal of Medicine, claims that many drugs marketed by big pharma were discovered by universities or small biotech companies and are sold to the public at inflated prices. Mother Jones magazine cites the example of "Taxol, the cancer drug discovered by the National Institutes of Health’ it was ‘sold by Bristol-Myers Squibb for $20,000 a year, reportedly 20 times the manufacturing cost. The company agreed to pay the NIH only 0.5 percent in royalties for the drug."
In the battle between public health and private pharmaceutical interests, South Africa seems to be asserting its sovereignty and formalizing intellectual property legislation in the favor of public health interests. While big pharma is digging its heels in and clutching firmly onto its massive profit margins at the expense of better health for all.