Nonetheless, there may be some hope for real action here, if only because the drug companies are up against a wall — in the face of what is a crisis of huge proportions, the South African government may finally take the step of declaring a national emergency (which it has been reluctant to do, apparently afraid of alienating both international investors and the U.S. government) which would entitle it under the WTO TRIPS agreement to manufacture generic versions of AIDS drugs regardless of patentholder objection. More detail on the WTO and pharmaceutical patents, and some additional commentary, inside.

The ongoing struggle between pharmaceutical companies and activists concerned with the spread of AIDS in the Third World entered its next stage, as the World Health Organization and the World Trade Organization stepped in to try to hammer out some sort of deal. As leftist economist Dean Baker (of Economics Reporting Review fame) notes, "On previous occasions, the drug industry has made offers of low cost AIDS drugs that turned out to have very limited effect, since they applied stringent conditions on the countries receiving the drugs."

Nonetheless, there may be some hope for real action here, if only because the drug companies are up against a wall — in the face of what is a crisis of huge proportions, the South African government may finally take the step of declaring a national emergency (which it has been reluctant to do, apparently afraid of alienating both international investors and the U.S. government) which would entitle it under the WTO TRIPS agreement to manufacture generic versions of AIDS drugs regardless of patentholder objection. More detail on the WTO and pharmaceutical patents, and some additional commentary, inside. To repost something I wrote on Metafilter, largely for my convenience should I want to consult it in the future:


They’re true… what South Africa wants to do would threaten the drug companies’ patent rights. That’s their property, those patents. Don’t we have a right to defend our property?

One might well argue that intellectual property isn’t the same as physical property, and that the idea of "property protection" shouldn’t apply to intellectual property the way it does to physical property. If one wasn’t willing to go that far — which the WTO obviously isn’t going to do — one might still note the existance of eminent domain, which allows governments to seize physical property after giving fair compensation to the owner.

Article 31 of the TRIPS Agreement has very explicit language allowing this sort of eminent domain over intellectual property. It is

only… permitted if, prior to such use, the proposed user has made efforts to obtain authorization from the right holder on reasonable commercial terms and conditions and… such efforts have not been successful within a reasonable period of time. This requirement may be waived by a Member in the case of a national emergency or other circumstances of extreme urgency or in cases of public non-commercial use.

(Emphasis added.) I understand why pharmaceutical companies would be upset about this, but South Africa is playing within the rules.

Brazil (which didn’t allow patents on medicine until the mid-Nineties) licensed local manufacturers to turn out generic versions of certain AIDS drugs which were unprotected by patent in Brazil, and pharmaceutical companies were upset about that, too, to the extent of getting America to threaten trade sanctions as a result of Brazil’s perfectly legal actions. Brazil, meanwhile, developed what’s probably the best AIDS-related public health infrastructure in the Third World, and it wouldn’t have happened without cheap, generic AIDS drugs.

From what I’ve read recently in the Wall St. Journal and the New York Times, the pharmaceutical industry has moved towards being less antagonistic in Brazil (offering local licensing and the like) which is encouraging, as I do understand that they need to recoup huge fixed overhead of R&D. Really. I’d like to see Merck, Pharmacia, whoever, thrive, and continue to pour money into research.

But Third World countries usually don’t pay as much for drugs as First World countries, simply because they can’t; the market already addresses this in many ways — it’s one of the reasons that Americans, without a national health care, pay more for prescriptions than Canadians, for instance. America is a good market for the pharmaceutical companies to make their money. Brazil and, especially, sub-Saharan Africa, aren’t. You’ll note that malaria research hasn’t been a top priority, for instance.

And for Brazil and many countries in Africa, the AIDS crisis is very, very real — in Malawi, one million people are HIV-positive. I’d say that qualifies as a "national emergency or other circumstance of exteme urgency."


And that one million figure in Malawi is dwarfed by South Africa; I’ve read various figures, the lowest of which estimates that 10% of the South African population is HIV positive. I have a vested interest in the system, here; I’m a shareholder in health-care giant Johnson & Johnson. I’d be thrilled if JNJ invented an AIDS vaccine and profited by it. But to behave as though there’s no moral calculus involved in the expectation that a sovereign nation is expected to let 10% — or 5%, or 1% — of its citizens sicken and die in an effort to avoid irritating multinational companies through perfectly legal action is, not to mince words, disgusting. Repellent and repressive dictatorships shouldn’t be the only ones willing to make a move on this issue; I continue to hope that Merck and the rest do the right thing, regardless of their reasons.