How Big Pharma Forced Poor Countries to Keep Drug Prices High


Source: The Fix
A new cache of Wikileaks docs claims that American pharmaceutical companies successfully strong-armed dozens of smaller, poorer nations to keep drug prices and profits high, often with the help of hapless U.S. diplomats.
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Among the hundreds of thousands of secret US State Department cables recently released by WikiLeaks, the controversial whistleblower website, a cache reveals US diplomats defending the interests of big pharmaceutical companies, even at the risk of the hosting nation’s own public health priorities. The memos dutifully detail the many embassy meetings with local Big Pharma reps, during which US officials are presented with laundry lists of issues to raise with one or another local government ministry. Invariably the goal of the exercise is for pharma to pressure the US to pressure the host country to give favorable treatment to expensive brand name drugs, typically by preventing in-country manufacturing or marketing of far cheaper generic versions.
Separate cables show such industry profiteering tactics threatening to taint US diplomatic relations in emerging nations such as Hong Kong, the Dominican Republic, the PhilippinesTurkeyVenezuelaSaudi Arabia, and India. Overall, a familiar picture emerges of a diplomatic corps if not held hostage by, at least a captive audience to, the financial interests of the biggest American pharma companies as they come into covert conflict with developing nations that quite naturally prioritize the health care of their people over the high margins that Big Pharma has come to expect. With several hundred drugs and vaccines in development to treat addiction, the scourge of hundreds of millions worldwide, the affordability and accessibility of these innovative (and, no doubt, expensive) medicines will become a pitched battle in global public health over the next decade. The outcome of the skirmishes sketched in the WikiLeaks cables will help decide whether profits or people prove victorious.
The cables by no means paint a uniform portrait of government lackeys doing industry’s bidding. Many memos betray a between-the-lines irritation at pharma’s monomaniacal self-interest. Still, there is a disturbing silence on the obvious moral or ethical objections to industry demands for high price, long patents, and other protections despite the cost in human lives. Only a single cable—from the outgoing US ambassador to Poland in 2009—lays bare the vast greed that drives these complex, highly technical negotiations.
The developing nations, contrary to what you might expect, in many ways hold the best cards in this political game. Emerging nations have the fastest-growing economies, the most upwardly mobile middle classes, and the biggest untapped markets in the world. And in their impressive pushback against Big Pharma, India has been the 800-pound gorilla over the past decade. A democracy with well-educated but relatively inexpensive brain power, the pharma industry views India not merely as a market but as a potential new hub of drug development and testing.
There is a disturbing silence on the obvious moral objections to industry demands for high prices, long patents, and other protections despite the cost in human lives. Only a single cable lays bare the vast greed that drives these complex, technical negotiations.
Aware of its advantage, India has played hardball, starting with its approval of local generic HIV drugs for its hundreds of thousands of citizens with the virus—a defiant challenge to Big Pharma, which had refused to discount its own brand-name AIDS drugs to affordable levels. (In the US, HIV treatment costs as much as $15,000 a year; the Indian generic knocked out knockoffs with a $350 price tag.) In addition, India’s supreme court has been fearless in shooting down foreign pharmas when they sue for patent infringement by Indian generic companies. When an emerging nation’s entire legal and legislative apparatus unite to oppose industry interests, the company can either fold its hand or fold up its tent. When drug companies retaliated by boycotting India and refusing to sell new drugs there, they attracted universal opprobrium for denying sick people medicines.
Typically, the WikiLeaks memo from the US embassy in New Delhi detail a laundry list of complaints by the Organization of Pharmaceutical Producers of India, including a new price-control regime to keep drug costs more affordable and a wholesale rejection, over US objections, of so-called data exclusivity, allowing a generic firm to bring knockoffs to market as soon as a branded patent ends.
Drug prices are only one of the issues raised in the cables. Equally important to Big Pharma is obtaining patent protection in new markets. Patents, which confer market exclusivity on a product, are especially dear to drugmakers because truly innovative medicines are among the riskiest and most expensive investments around; a company spends, on average, $1 billion and 10 years to bring a new drug to market, and the rate of failure in late-stage development is more than 50%. Without a patent to allow the manufacturer a monopoly to sell the drug for a limited period of time, a competitor could copycat the molecule virtually overnight. 
But what is a fair compromise between an innovator’s need to recoup profits from an invention and the public’s need to access medicine at an affordable price? In the US, with its political system owned and operated by corporations, the answer is, as much as the market will bear—one reason that our health-care is the most expensive and the least efficient in the developed world. But it turns out that most nations in the rest of the world are far less servile to Big Pharma than Uncle Sam.
In the Dominican Republic a group of Big Pharma reps met with a US counsel to request a speedup in the very slow rate at which the small nation’s patent approval office was stamping drugmakers’ filings: out of 700 filed over the past decade, fewer than 10 had been processed! The diplomat penning the memo, which was all analysis and no action, commented wryly that the Dominican Republican was evidently waiting to see if the anti-corporate winds blowing across Latin America marked a lasting change in the political weather. 
The politics of patent protection of pharmaceuticals tend to make for tedious reading, as do the details of the World Trade Organization’s treaty called the Trade-Related aspects of Intellectual Property Rights (TRIPS) agreement, which gives private companies broad protections for their medicine monopolies, including a guarantee of 20-year patent protection before competitors can flood the market with generics. (A monopoly is, by definition, not a free market.)  But, as longtime consumer activist James Love, who heads the Knowledge Ecology International organization, explained to The Fix,“All the things the US is doing is whatever benefits a handful of companies like Pfizer, Abbott, Merck, and so on. The US basically pushes for anything they want.” Whenever they score a major victory for these companies, they try to push it further. Love explained, “What does the US want? The US wants more.” 
Although under the TRIPS agreement, pharmaceutical companies could register their drugs for 20-year patents in any nation via that country’s regulatory apparatus. But they don’t want to risk the sly Dominican Republic–style delay. So they want more. They want automatic monopolies in every country. In practice, the easiest way to get these monopolies is by having the State Department pressure governments in the developing world to grant them long periods of data exclusivity. The data at issue consists of the mountain of information from the numerous clinical trials showing safety and efficacy to win approval from the FDA. By demanding data exclusivity, Big Pharma is essentially trying, Love explained, “to create an intellectual property right over the very knowledge that a drug is safe and effective—something that is completely independent of a patent.”
A generic-drugmaker would be forced to repeat the entire clinical-trials process, an immense waste of time and money since the work has already been done, in order to get stamped OK to market. This is why American diplomats sought to write in data exclusivity clauses into trade agreements with countries like India, which India has simply scoffed at, enabling the country to begin manufacturing generic AIDS drugs.
The Wikileaks documents reveal that the data-exclusivity controversy—given the intense pushback by emerging nations against granting pharma de facto monopolies even where they do not have patents over their drugs—is a concern verging on an obsession of the industry, which in turn does its best to rally in-country US officials to the issue.
But to little effect. In the Philippines, for example, was having none of Big Pharma’s knowledge monopoly. The author of the cable noted drily that it was passing laws that “respect the letter but not the spirit” of TRIPS on data exclusivity and “new use patents” (patent protection for already-approved drugs that get additional OK’s for new conditions, such as the antidepressant Cymbalta a.k.a. the anti-pain treatment Lyrica for fibromyalgia). In the US, when Cymbalta’s antidepressant patent runs out, generic companies will cannibalize its sales with cheap versions, but the Lyrica/fibromyalgia patent will still have several years of life, so while doctors may prescribe generic Cymbalta for either medical condition, many insurance companies will not cover the generic as an anti-fibromyalgia, even though it amounts to chump change, because of Lyrica’s patent.
As the WikiLeaks memo from the Manila embassy indicates, even after a meeting with a high-level US trade official, the Philippine legislators refused to budge on the “new use patent” issue, citing India’s new legislation, which bars such foreign patents. One reportedly told the trade rep, “Is the US going to go to the mat with India over this issue?”
The case of Poland provides unique insight into the role of US diplomatic efforts in advocating for Big Pharma. Because many medicines are too expensive for Poles to purchase without government subsidies, the Polish government—like most EU nations—maintains a list of drugs that it will subsidize. Getting a drug on this list is a pharma’s top objective as it is a prerequisite for penetration of the Polish market. 
“While pharmaceutical companies often assert that they would be happy with a transparent process, even if it led to decisions not to fund their drugs, in practice they seem to resent all government measures aimed at cost containment, as these limit sales,” Ambassador Ashe wrote.
When George W. Bush appointed his former Yale roommate, Victor Ashe, as ambassador to Poland, this issue became a constant demand on his time. Almost as soon as he arrived in Warsaw, the former Knoxville, Tennessee, mayor became the obedient mouthpiece of American drug companies’ interests, writing a letter urging the Ministry of Health not to lower the prices of the drugs on that list. Each year of his tenure, his office would obsess over the announcement of that list, sending detailed cables to Washington about which companies and products had gained access to the Polish market. (“None of Eli Lilly’s products were added, a blow to the company. Eli Lilly’s officials observed that the Ministry has offered no explanation.”) 
Ashe’s office also had to negotiate meetings between the Ministry of Health and Big Pharma representatives about the list of subsidized drugs. The industry via Ashe complained about a lack of transparency—a legitimate concern given that not only Poland’s health ministry but that of many other countries made its decisions behind closed doors. Big Pharma is, like most industries, addicted to clear-cut quid pro quo with US elected officials, and when it encounters resistance from other governments, the industry tends to be dumbfounded.
Finally, in 2009, after Obama had been elected and Ashe was packing up his office, he sent a remarkably blunt cable to Washington lamenting the unreasonable avarice of US pharma companies in the face of grave budget constraints for health care: “The situation in Poland should be assessed in light of the general European background. While Polish spending on health care has been increasing (Poland now spends…about $3 billion on pharmaceuticals), the cost of pharmaceuticals also continues to increase. The Polish government has to make tough policy choices regarding which drugs to fund, and at what level. While pharmaceutical companies often assert that they would be happy with a transparent process, even if it led to decisions not to fund their drugs, in practice they seem to resent all government measures aimed at cost containment, as these also inevitably limit drug companies’ sales.”
Although this cable is striking for its candor, it cannot be dismissed as the ranting of a disgruntled outgoing official; rather, this is the conclusion reached by a thick-skinned US politician whose tolerance for industry profiteering was simply exhausted by Big Pharma.
When price or patent negotiations between a pharma and a nation fail, and the nation lacks the purchasing power to access essential medicines, TRIPS allows it to institute a “compulsory license”—to shred the patent if the disease, left untreated, constitutes a public-health emergency. Such an action routinely sparks dire ire from American diplomats, as it did in Thailand, when the Thai government broke the monopoly on a prohibitively expensive HIV drug and instead imported a cheap Indian version. Offended that Thailand resorted to this option without first entering into price negotiations with the drugmaker, the US embassy began to pressure the Thai government to do so. The cable is frank about how this action would be perceived by the Thai people: “Their [for-profit medicines providers] role in saving lives through innovation has been almost totally obscured, replaced with the image of rich foreigners taking advantage of sick, defenseless Thais. Taking control of technology through a CL is, in this climate, perceived as a brave (and virtuous) act.”
In nasty retaliation, the US government placed Thailand on a “watch list” for countries that violate international trade rules, a punishment that could have serious negative effects on its economy. In2008, a new “pro-business” Thai government assumed power, and on its first day in office, agreed to review the compulsory licenses. 
The most arresting of the WikiLeaks cable may be the one from the US embassy in Venezuela, alerting the State Department to a threatened move by the loose-cannon socialist President Hugo Chavez to trash the intellectual property rights of all pharmaceutical products by publicizing on the Internet the technical information contained in each patent. Such a move would have made the molecular engineering involved in many brand name drugs available worldwide—an open source of pharma secrets. But as is so often the case with Chavez, his fighting words carry little force. Yet many Venezualans were outraged at the what the WikiLeaks cable revealed about US efforts at intervention.
Dr. Drummond Rennie, the deputy editor of the Journal of the American Medical Association and a professor of medicine at the University of California, San Francisco, said, “What worries me is the monolithic overuse of power to push pills. That’s not a future we should encourage. It’s the worst possible future.”
James Love is worried about this projection of American power abroad. As he said, “I think it’s just horrible. Everybody has their own take, and some people [in the US] don’t care about the lives of people in developing countries. I think it says something about us as a people.”
Jed Bickman is a frequent contributor to The Fix. He also writes for The Nation, CounterPunch and other websites and magazines. Walter Armstrong is deputy editor at The Fix.

This entry was posted in BigPharma, Biotechnology and Pharmaceuticals, Business, Pharmaceutical, Pharmaceutical industry, Pharmaceutical lobby, United States, Wikileaks. Bookmark the permalink.

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