APRIL 2001

In a recent major series that ran over four days (from 12 to 15 February) titled ?Dying For Drugs?, the British daily, The Guardian, exposed how the West’s pharmaceutical giants are capitalising on ?intellectual property agreements? and ?making too much money for the West?. They are even selling the new anti-retroviral Aids drugs at a higher price in Africa than in the West. New African asked Osei Boateng to summarise The Guardian’s series for our readers who may not have seen it.

?Big Pharma did not invent these lifesaving drugs that they have patented and arbitrarily overpriced. Anti-retrovirals were for the most part discovered by publicly-funded US research projects into other diseases, and only later entrusted to pharmaceutical companies for marketing and exploitation.?

John le Carr?, the famous novelist, was one of the giants wheeled out by The Guardian to write in support of the campaign to expose the excessive profits being made by what Le Carr? calls ?Big Pharma? at the expense of Africa and the developing world.

Le Carr?’s new book, The Constant Gardener, portrays Big Pharma as an industry devoid of morality. And the charge was proved beyond reasonable doubt by The Guardian in the four days that the series lasted.

In fact, the origins of the campaign should be credited to Oxfam, the British NGO, which is now fed up to the teeth with the immorality of Big Pharma.

Oxfam singled out the British multinational, Glaxo SmithKline, the world’s leader in pharmaceuticals (with annual sales of $22.8bn, Research and Development costs of $3.75bn, and profits of $7.6bn) for censure. Oxfam (based in Oxford, England), interestingly, has part of its pension funds invested in Glaxo SmithKline (GSK).

Yet Oxfam accused GSK and the other drug giants of abuse of patents. It said they were ?systematically using patent rules to squeeze low-cost copies of branded medicines off the market.?

A recent successful attempt by Big Pharma to block the importation of inexpensive copies of the Aids drugs by Ghana and Uganda from an Indian company, Cipla, and the decision by 39 drug companies to sue South Africa in an attempt to stop it from acquiring the generic drugs cheaply, were cited by Oxfam as the last straw that broke its back.

The Guardian appeared to have benefited immensely from Oxfam’s research, and justifiably went for Big Pharma’s throat in a big way.

The cast

John Le Carr? was one of the cast for the opening day of The Guardian’s series. He wrote:

?I had not been exploring Big Pharma for more than a couple of days before I was hearing of the frantic recruitment of Third World ?volunteers’ as cheap guinea pigs.

?Their role, though they may not ever know this, is to test drugs, not yet approved for testing in the US, which they themselves will never be able to afford even if the tests turn out reasonably safe. And then to disappear.

?In the US, it costs on average $10,000 per patient to conduct a clinical trial, in Russia $3,000, and in the poorest parts of the world, still less.

?I learned also of how Big Pharma in the US had persuaded the State Department to threaten poor countries with trade sanctions to prevent them making their own cheap forms of the patented lifesaving drugs that could ease the agony of 35 million men, women and children in the Third World who are HIV-positive...?

The big question that immediately arises here is: Why does the State Department, an important organ of an American government which is supposedly at the forefront of the fight against Aids, and whose immediate past vice president, Al Gore, chaired last year’s big United Nations meeting in New York that declared Aids a ?national security? issue, allow itself to be used in this way by Big Pharma? Is the American ?concern? about Aids all a gimmick?

Le Carr?’s next paragraph was even more disturbing: ?Big Pharma did not invent these lifesaving drugs that they have patented and arbitrarily overpriced,? he wrote. ?Anti-retrovirals were for the most part discovered by publicly-funded US research projects into other diseases, and only later entrusted to pharmaceutical companies for marketing and exploitation.?

The question that logically flows from this paragraph is: Why did the American government do that? For an answer, we have to continue reading Le Carr?.

?Once the pharmals had the patent,? he explained, ?they charged whatever they thought an Aids-desperate Western market would stand: $12,000 to $15,000 a year for compounds that cost a few hundred to run up... Nobody said it was a massive confidence trick. Nobody remarked that, while Africa has 80% of the world’s Aids patients, it comprises 1% of Big Pharma’s market.?

Lamivudine, one of the HIV-Aids drugs, is 20% more expensive in Africa than in the West.

America in the dock

On the second day of The Guardian’s series, the paper’s correspondent in Washington, Julian Borger, expanded on John le Carre’s revelations.

Borger wrote: ?In fact, much of the R&D [research and development] work on new drugs is government-funded. A study by the Boston Globe newspaper in 1998, found the [US government’s] National Institutes of Health (NIH) laboratories spent $1bn on drug and vaccine development in the 1996 tax year [alone], but only took in $27m in royalties.

?In September 1999, it was pointed out to the director of the NIH, Harold Varmus, that six HIV/Aids drugs, as well as anti-malarial treatments and other medicines of vital interest to the developing countries, had been invented with [US] public funds. The [US] government, therefore, had the right under US law to use the drugs in public health initiatives.

?James Love, who runs a Washington-based group called the Consumer Project on Technology, sees the responses [by Big Pharma that it has to charge more to offset R&D costs] as nonsensical because it was the NIH which did the hard work of discovering and synthesising the drugs in question. ?The rest of the world will have to go many years more of paying an astronomical sum for something invented by the United States government. How can we expect Glaxo to share its intellectual property if the US government won’t share its intellectual property to save millions of people. What does that say about the moral character of the American public. We are responsible.?

This should come as a shock to the peoples of the world. Why did the American government hand the Aids drugs over to Big Pharma after discovering and synthesising them?

Was Washington afraid that critics and so-called ?conspiracy theorists? would link the invention of the drugs to the still unsubstantiated claim that HIV was invented as part of the US government’s germ warfare programme ? a kind of ?they invented the virus in the first place and so know how to fight it??

On paper, America appears so concerned about fighting Aids. So why didn’t Washington just donate the patents of the drugs to the world, so that any country able to manufacture them locally could do so cheaply? Wouldn’t that have gone to enhance even more America’s ?leadership? of the world?

More questions than answers

Madeleine Bunting, one of the cast on the first day of The Guardian campaign, tried to explain the American ambivalence. She wrote:

?The impetus for an international system of intellectual property protection was the rise of the knowledge economy. Countries such as the US wanted to maximise their returns on knowledge through licences on their patents across the globe.

?Seventy per cent of US export earnings are now linked to intellectual property ? on everything from Aids drugs to brands such as Disney, McDonald’s and Microsoft.

?The US needed an international regulatory regime to reap the benefits of its economic and cultural hegemony, and it is working: Between 1991 and 1997, the value of royalties to the US doubled to more than $33bn a year...

?It becomes harder and harder for developing countries to catch up. They can’t copy ? they have to import the technology and pay royalties on the licences. The flow of revenue is one way, from poor to rich.?

And the vehicle facilitating the flow ?from poor to rich? is the World Trade Organisation (WTO). Larry Elliott, another member of The Guardian cast, shows how. He wrote:

?The financial muscle of the pharmaceutical companies also gives them enormous political leverage. So, during the Uruguay Round of trade talks, they lobbied hard for tougher rules protecting intellectual property, which provided patent protection for a minimum of 20 years for ?new and inventive’ products.

?Where previously around 50 developing countries and several developed countries had excluded medicines from being patented, the Trade Related Intellectual Property Rights (Trips) deal made both pharmaceuticals and biotechnology part of the global regime.

?Infringements of the Trips agreement are heard by a WTO disputes panel, and unlike a criminal trial, the burden of proof is put on the defendant country.

?In itself, the Trips ? a projectionist clause in what was supposed to be a free trade agreement, roused suspicions about the way in which the rules were being skewed to suit powerful interest groups in rich countries. [However], countries could cite a national emergency as a reason to infringe the Trips agreement.

?Effectively, this provided two loopholes. Countries could either manufacture cheap drugs themselves, using what are known as compulsory licences to override patents, which is what Brazil is trying to do, or they could import a patented drug from wherever it was sold cheapest, the method favoured by South Africa.

?All quite simple, you might think. If the HIV/Aids pandemic does not constitute an emergency, it is hard to know... [But] what is happening now is that the US is using every available means to close the WTO loopholes...

?For example, the US offers a special deal to the Dominican Republic for exports of textiles. It is now threatening to withdraw this privilege unless the country scraps plans for compulsory licensing and parallel importing [of drugs]. Brazil and India have been warned that they could face sanctions under America’s bilateral ?Super 301’ legislation.?

In effect, as Larry Elliot says, ?the dirty work for the drug companies is being done by the US government, although there is little doubt who is really behind it all.?

Big Pharma runs the show

Julian Borger took up the story from Washington. He wrote on the second day of The Guardian’s campaign:

?There was a time not long ago when the corporate giants that PhRMA represents were merely the size of nations. [PhRMA is the Pharmaceutical Association of America]. Now, after a frenzied two-year period of pharmaceutical mega-mergers, they are behemoths that outweigh entire continents.

?Until recently, the industry hedged its political bets, backing the Democrats and Republicans more or less evenly at election time. But at the [recent] election [won controversially by George Bush The Son], PhRMA gambled. With billions at stake in a heated debate over prescription drug prices at home and a growing number of patent disputes abroad, the drugmakers stacked their chips disproportionately behind George Bush. The industry spent nearly 70% of its unprecedented $24.4m campaign war chest on the Republicans.?

Borger went on to show that the industry played a significant role in the drafting of the WTO’s Trips. PhRMA has also made it a priority to ensure that the US government enforced the Trips rules in a manner beneficial to its neighbours.

?In 1998, for example, it was revealed that Al Gore had bullied the South African government with threats of sanctions if it bought cheaper generic alternatives to brand-name Aids drugs, even though South Africa had the right to do so under Trips,? Borger wrote.

He quoted the Democratic congresswoman, Sherwood Brown, as saying in a recent memo to her staff: ?PhRMA doesn’t need to lobby. The industry is in the White House already.?

The worrying aspect of the US government-Big Pharma relationship was unwittingly laid bare in a letter by one Dick Bentley of Southampton (England) who wrote to The Guardian on the second day of the campaign, defending the drug companies. Bentley said matter-of-factly:

?Drug companies are just that ? companies formed to invent and market medicines. Their boundaries are defined by commercial law; they exist to make profits for their shareholders, not to save the world.?

It may well be so, but why then, in that case, do the drug companies use people from the developing world as guinea pigs (and not their shareholders) in the testing of the drugs?

On the third day of The Guardian campaign, Julian Borger, again, showed how one of the drug giants ?tested 590 patients in 1994 across Africa, the Middle East and Central & Eastern Europe. This year [2001] the company expects to run tests in those regions on 7,309 patients.

?There are fears that this mushrooming of Third World trials is leading to a loosening of the tight regulations that exist in the West. Recent US-government funded studies in Africa designed to show the effectiveness of the anti-Aids drug, AZT, in preventing the transmission of HIV from mother to infant during pregnancy, included a placebo group ? a practice that would have been unacceptable in the US or Europe.?

In defence of drug companies

The Guardian’s expose forced Jean-Pierre Garnier, chief executive of Glaxo SmithKline, to rise in defence of his company and its competitors. He wrote to The Guardian on the third day of the campaign, explaining that ?patent protection fundamentally underpins the continued research and development for new and better medicines... Undermining intellectual property rights could have serious implications for the flow of new treatments and vaccines.?

He said GSK had been ?offering preferential prices for HIV/Aids medicines in Africa since 1997 and last year increased the price reduction offers as part of the UN-led ?accelerating access initiative’.

?Our prices in Africa are at a level with, if not better than, those offered by generic manufacturers... Senegal, Uganda and Rwanda are already obtaining anti-retroviral treatments from us under the initiative at very substantially discounted prices, and others will follow.?

Tactically, Garnier refused to add that only 130 of an estimated 80,000 HIV-positive people in Senegal have access to GSK’s ?price reduction offers?. If GSK scores 130 marks out of 80,000 in an exam, Garnier, for sure, will not be proud of it. In effect, the ?UN-led accelerating access initiative? is not something to write home about.

As The Guardian’s Malcolm Dean showed in his piece published on the same day as Garnier’s article, while the drug companies ?exaggerate? their R&D costs, they ?underplay the role that public institutions such as the [US] National Institutes of Health (NIH) have made in drug breakthroughs.

?Two of the key drugs in the triple therapy for Aids were invented by the NIH, and several other [drugs] relied on NIH clinical trials.?

Doctors for sale

Another worrying aspect of the drugs saga is the money paid to doctors by drug companies to act as salesmen for their products.

Sarah Boseley, health editor of The Guardian, wrote on the last day of the campaign that throughout the Western world, doctors are paid handsome fees by drug companies to speak at conferences and in their daily encounters with patients, to put in a good word for the products of the drug companies that pay them the fees.

Boseley cited one incident in Britain where a new drug for the treatment of heart failure was tried in a London hospital and elsewhere by doctors paid by the drug manufacturer. During the trial, ?some patients suffered gastrointestinal disturbances, liver failure and problems with their immune system.

?The company asked us not to publish our adverse findings,? one of the doctors in the trial told Boseley. ?Then when we said we had to publish, they threatened us with legal action. When you are threatened by a multinational with infinite amounts of money, some people might find that a good reason not to go ahead.?

Boseley says the doctor’s ?team published. Others with similar results did not, after senior cardiologists told them their findings were out of line with everyone else’s. The drug was withdrawn [in Britain] on safety grounds in 1984, but was sold over the counter in the Philippines and Africa until 1986.?

Boseley quoted from the latest declaration of interests by doctors to the British government’s advisory body responsible for drug safety, the Committee on the Safety of Drugs, which shows that 15 of the 36 doctors who so declared their interests had ?either shareholdings, fees or paid consultancies from drug companies?.

Not to save the world?

The Guardian rounded off its excellent campaign with a leader comment on 15 February headlined, ?Millions of lives at risk ? Drug companies must temper their power?.

Among other things, the paper said: ?Equally disturbing is the way the US government blatantly disregards Trips when it chooses. There are now 16 countries being threatened by the notorious ?301? legislative clause under which the US can impose trade sanctions without going through the WTO. All the disputes involve drug patenting.

?The reason for this aggression on the part of the US government is not difficult to discern. The pharmaceutical industry, as we reported earlier this week, is a powerful operator within the Washington establishment. In just two years, members of the US pharmaceutical association spent a staggering $236m on lobbyists and a further $14m went to political parties. This is likely to get still worse under a Bush administration, which includes several members with close links to the drug companies...

?Jean Pierre Garnier, the president of Glaxo SmithKline, pointed out on our pages yesterday, that drug companies cannot solve the problem of global poverty. True. But what he can certainly do is to pull out of the lawsuit against South Africa.?

Glaxo SmithKline has since announced that it would make ?price reduction? a priority. Under intense pressure from its institutional investors after The Guardian and Oxfam’s campaign, the company promised on 21 February ?to present a new policy framework outlining its stance on affordable medicines by the end of June.?

Oxfam said: ?It’s a welcome step in the right direction. It’s a very public recognition by a world drugs leader that prices are a key issue to millions of sick people.?

The Guardian quoted Jean-Pierre Garnier as saying on 21 February: ?Glaxo SmithKline is a new company. I have made it a priority from day one to urgently review what more we can do to significantly help in [the Aids] epidemic.?

Glaxo sells four of the 10 Aids drugs currently in use. On the same day as Garnier promised to ?review what more? the company could do, Glaxo revealed annual profits of ?5.32bn ? ?equivalent to more than ?14m a day?, said The Guardian. ?Glaxo’s sales of Aids drugs rose 14% to ?1.15bn, although this included only ?114m from countries outside Europe and the US.?

The last word

The Guardian’s Letters Page had the last word. Phil Bloomer, Oxfam’s head of advocacy wrote on 15 February: ?According to Jean-Pierre Garnier, patents do not have the effect of increasing prices. In which case, why until recently, was his company selling the anti-Aids drug Combivir in developing countries at twice the price of a generic equivalent?

Anne Alexander, writing from Liverpool, provided the coup de grace: ?Let’s get a few things straight. The pharmaceutical companies did not fund the initial trials into anti-HIV drugs. It was left to cash-starved public health laboratories and radical campaigners to wring research grants from the US Food and Drugs Administration, which was afraid to release funds to study a ?gay disease’.

?It is largely thanks to a courageous and determined campaign by early Aids activists that anti-HIV drugs are available in the US and Europe at all. The drug companies were prepared to write off the lives of thousands of people infected with HIV in the 1980s because they were either gay or injecting drug users. We must not allow them to do the same in 2001 because this time those who are ill are too poor to be profitable.?

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