Tommy Thompson, Health and Human Services secretary, spun a tangled trade policy recently when he threatened to break Bayer’s patent on Cipro, the antibiotic that treats anthrax exposure.
Thompson did not threaten Bayer because the firm refused or was unable to supply Cipro. He simply wanted to buy it cheaper. “Price is the question, not the supply,” Thompson reportedly told a congressional hearing.
While his position found some support in both major parties, it was made moot by a decision to promote the use of other broad-spectrum antibiotics, such as doxycycline, as a treatment for people who may have inhaled anthrax spores.
But Thompson’s threat left trade and health officials in developing nations chortling with joy. It is not every day that a U.S. Cabinet official steps in on your side in a trade dispute with his own nation.
For years, developing countries such as India, Brazil and South Africa have allowed or wanted to allow drug manufacturers in their own countries to manufacture unlicensed copies of patented drugs made by large pharmaceutical firms based in wealthier countries, such as the United States, Germany, Switzerland or the United Kingdom.
The poorer countries argued that First World drug giants charged so much for patented drugs that sick people in poor countries were unable to afford them and that these firms also were unwilling to license their rights to Third World manufacturers.
Claiming the needs of the poor supercede patent rights, India and Brazil authorized firms in their countries to legally produce unlicensed copies of important drugs, including the expensive anti-retrovirals needed to treat HIV patients.
The United States, with strong support from Germany, France, Switzerland and Britain, has resolutely opposed such actions and threatened trade sanctions under the aegis of the World Trade Organization to punish countries that authorized such copying.
The United States has repeatedly argued in international forums that health emergencies, such as the AIDS epidemic, are no reason to ignore patent rights. Any erosion in those rights, U.S. trade representatives said, would fatally undermine the incentives for research and development that patent protection provides.
Now a U.S. Cabinet official has argued that patent rights can be waived to save the U.S. government a few bucks, even when the total expenditure is minor compared to what developing country governments spend on anti-AIDS drugs.
Trade, diplomatic and health officials in developing countries were quick to take notice.
Within two days after Thompson’s remarks, editorials appeared in newspapers in Pretoria and Johannesburg, South Africa; New Delhi, Mumbai and Bangalore, India and in numerous Brazilian cities mocking the inconsistency of the U.S. position. One Brazilian trade official stated sardonically, “It is good that the U.S. has come around to accept our position.”
Regardless of the fact that Thompson did not carry through on his threat, the U.S. negotiating position on drug patent rights no longer will have any credibility. Any time we challenge countries that authorize production of unlicensed copies of patented drugs, statements made by Thompson and several members of Congress will be thrown in our faces.
That may not be all bad. Patents condone something that is bad for society – monopoly power – to achieve something that is good—research and investment. Out of administrative necessity we give patents for a fixed term, 20 years, whether the product is a cure for cancer or an improved lawn rake.
There is nothing magical about the 20-year period, which effectively is much shorter for drugs since patents must be applied for long before the product is approved for sale. The optimal period to balance costs and benefits to society may well be shorter than 20 years or perhaps longer. There is no clear evidence.
This story is not completely over yet. India has traditionally been a vocal opponent of Third-World submission to wealthy countries’ patent standards. But earlier this week, officials in India announced development of the first recombinant DNA anthrax vaccine.
The inventors have filed for patents, and it is being rushed into the international approval process. As India’s growing biochemical research capability hits its stride, that country may begin to change its position on the evils of excessive protection of drug patent holders. Other old adages, such as the one about the shoe being on the other foot, may soon apply.
© 2001 Edward Lotterman
Chanarambie Consulting, Inc.