A Bitter Pill for the WTO

Recent actions by the US and Canada to obtain Cipro have further complicated a contentious global debate over drug patents — a debate which threatens to derail high-profile trade talks.

Image: AP


LEVERKUSEN, GERMANY — Inside Bayer AG’s sprawling international headquarters overlooking the Rhine River is a section of the factory that never stops working. There, technicians in white suits, face masks and latex gloves manufacture Cipro, America’s anthrax-fighting antibiotic of choice.

Designed to combat infections from the lungs to the urinary tract, Cipro is increasingly being prescribed to treat people exposed to anthrax — or to reassure those frightened by the prospect of being exposed.

As demand for Cipro has soared, the US and other western countries have taken unorthodox steps to stockpile the drug. Those steps have in turn thrust Cipro — formally known as Ciproflaxin — to the center of an already charged worldwide debate over patents enforcement.

That debate has flared again as the World Trade Organization meets this weekend in Doha, Qatar. There, advocates for the developing nations are prepared to argue that the manner in which the US and Canada have obtained stores of Cipro indicate a clear double standard.

In Doha for the trade talks, Ben Lilleston of the Institute for Agriculture and Trade Policy says the fight over drug patents is shaping up to be “the most contentious issue” of the session.

The issue of drug patents has long been a life-or-death one for countries in sub-Saharan African, where more than 24 million people are infected with HIV or AIDS. South Africa faced the threat of US trade sanctions and a lawsuit by 41 pharmaceutical companies in 1997 after it adopted legislation designed to lower the cost of medications. That law required doctors to prescribe generic versions of AIDS drugs whenever possible and allowed the government to import brand-name drugs sold more cheaply in other countries. The drug companies dropped their suit last year.

“It’s become one of those areas where people look at the difference between rich countries and poor countries and they question the profits made,” says Jo-Anne Collinge of the South African Department of Health.

Faced with growing concerns about the anthrax threat, health officials in the US and Canada pressured Bayer to provide Cipro at far below the asking price. The Canadian government took steps to override the Bayer patent, licensing a Canadian pharmaceutical firm to make a generic version of the drug. In the United States, Bayer officials slashed their asking price for Cipro to 95 cents a tablet, down from an original retail price of approximately $4.50 per tablet.

Even at the lower price, the new demand for Cipro will mean a tidy windfall for Bayer. In Leverkusen, the company’s pharmaceutical machines spit out 15 million of the oblong white tablets each week. By the end of the year, the company will deliver 100 million of the pills to the US Department of Health and Human Services.

“We can continue as long as the demand is as high as it is in the moment,” says Herbert Stillings, senior vice president of production for Bayer in Germany. “Especially now, for the demands of Cipro and to help our colleagues in the US, we are producing Cipro at the moment 24 hours a day.”

Bayer officials declined to comment on their decision to reduce the price of Cipro, and a spokesman for the Canadian Department of Foreign Affairs and International Trade says the government later agreed to exhaust supplies of the patented Cipro before turning to the generic tablets.

The WTO’s current agreement on trade-related aspects of intellectual property rights, or TRIPS, allows governments to bypass patents in national health emergencies. It was that provision which both Ottawa and Washington cited in their negotiations with Bayer. While the Cipro patent was not actually set aside by either the US or Canada, Lilleston said Washington’s maneuvering has made the already thorny fight over drug patents even more contentious.

“I think (developing nations) were already upset and that really pushed them over the edge,” says Lilleston. “Particularly since it was the US, which has been the main force behind protecting these patents.”

There are enough unanswered questions about the TRIPS accord that ministers attending the meeting in Doha had already planned to issue a new statement specifically addressing patents and health. A draft statement backed by the United States, Canada, Australia, Japan and Switzerland emphasizes the protection of patents so drug companies can recoup the cost of developing new medicines.

The US-sponsored measure would provide nations in sub-Saharan Africa with some protection from trade sanctions. A group of 60 developing countries, however, are pushing a different draft that would provide much broader protections.

The draft proposed by the developing nations would strengthen a country’s authority to override patents and import generic drugs to meet established public health needs. Brazil and India, both of which manufacture generic versions of AIDS drugs, are key proponents of the measure.

Not surprisingly, drug manufacturers have criticized the developing nations’ proposal, saying it would unfairly punish companies that invest in drug research and reward companies in India and Brazil for producing generic versions of drugs patented by companies in other countries.

“The only reason (India and Brazil) are doing this is to further their own local industries,” says Mark Grayson of the Pharmaceutical Research and Manufacturers of America. “If this was AIDS drugs it would be one thing. But they’re not talking about AIDS drugs, they’re talking about all drugs.”

Given the wide range of important differences on key trade issues ranging from TRIPS to agricultural products and textiles, some economic observers suggest the Doha meetings will produce little if any real progress.

“I don’t think this whole round is going anywhere,” says Mark Weisbrot of the Washington-based Center for Economic and Policy Research. “It’s hard for governments to make agreements that hurt people, especially if they hurt more people than they help, in a time of slow economic growth.”

Weisbrot suggests that developing countries could, if they wish, use the TRIPS disagreement to scuttle the entire WTO agenda. But Lilleston said he does not believe the US delegation will leave the Doha meeting without at least an agreement to hold future talks. Trying to block that agreement, he suggests, could hurt the developing countries.

“The US wants a new round of talks very badly. If they can’t get a new round through the WTO, they’ve made it clear they would pursue other trade agreements,” Lilleston says. “Now, the reason that these developing countries are part of the WTO is because they want to be. They want trade rules to protect them. So they’re in a difficult position.”