Inter Press Service - November 26, 2001
Praful Bidwai

The multinational corporations, including Swiss giant Hoffmann La Roche -- one of the world's largest producers of vitamins -- were found guilty on Nov. 21 of forming a cartel. This, the EU body said, milked consumers by systematically raising prices of vitamins used in products ranging from special dietary supplements to breakfast cereals and multivitamin pills.

The fine is the heaviest penalty ever to have been imposed by the EU on any corporate business.

In the past too, large multinational corporations, or 'Big Pharma' companies, overcharged a number of European state agencies responsible for drug procurement for public healthcare systems.

Many have become notorious for rapacious practices such as ''transfer pricing'', which violate free or fair trade principles, and allow corporations to rig high returns on sales manipulated through their own subsidiaries on the basis of paper transactions and artificial prices.

However, no less rapacious and unethical have been Big Pharma's gains from monopolistic patents, with which they profiteer from illness and death, not only in the rich countries of the global North, but especially in the global South, where billions lack secure access to essential medicines.

Nothing highlights this rapacity more starkly than the outbreak of anthrax in the United States in the wake of the Sep. 11 terrorist carnage, which raised the question of procuring the recommended drug, ciprofloxacin, at a reasonable price.

And nothing more effectively shows up the anomalies of the international intellectual property rights (IPR) system, of which patents are a part.

The discovery of anthrax spores in postal envelopes produced large-scale panic in the United States, although only five people have died so far. The government recommended treatment with two 500 mg pills of ciprofloxacin for 60 days.

In the United States, the German transnational Bayer AG holds the patent for the drug until December 2003. It sells each 500 mg pill for 4.67 U.S. dollars (wholesale). However, thanks to panic buying, the street price shot up to as much as 7 dollars a tablet.

But the four-dollar-plus price bears no relationship with production costs, or with the now-amortised 20-year-old investment in research.

Bayer sells the same pill in Canada for 1.58 dollars, in Poland for 1.51 dollars, and in India for just 13 cents. Even more dramatically, India-owned companies retail the identical product for as little as six cents, or one-eightieth of the price in the U.S. market.

Many Indian companies, including Cipla, Ranbaxy and Dr Reddy's, which export high-quality generic (non-patented) medicines to the United States, offered to sell cipro at 6 cents or less per pill to that country.

The offer was particularly attractive when made in October, because Bayer, with its limited facilities, could only have produced one- sixth of what the authorities estimated as the U.S. need: 1.2 billion pills over 60 days.

The U.S. government has enough legal powers to license other companies to make cipro, overriding Bayer's patent or after paying it a reasonable royalty. It can also import as much cipro as it likes at a lower price.

But Health Secretary Tommy Thompson took the irrational way out. Not wanting to rock the IPR-patents boat, he asked Bayer to lower the price of cipro for government purchase, which it gladly did.

While lower, that price is still 30 times higher than the cipro available from generic producers, like those in India.

The 'trick' lies in the fact that India does not allow strict product patenting in pharmaceuticals. It only allows process patenting: if you make the same product by another, more efficient, cheaper process, you can reap profits. This is the good news--a policy that has enabled India to build an internationally competitive drug industry, while keeping medicine prices low.

The bad news is that a World Trade Organisation (WTO) treaty will oblige countries like India to switch by 2005 to strict -- and monopolistic -- product patents, and thus raise drug prices to extremely high levels, making them unaffordable.

The treaty, called Trade-Related Intellectual Property Rights (TRIPs), was negotiated in 1994 and has since become part of the WTO's architecture. It is precisely the kind of agreement that makes capitalist globalisation obnoxious and unpopular, and gives the WTO a bad name -- as an agent of Big Pharma.

Many people and governments would readily reward inventors with patents or in some other way for creating a new product or process that saves human life or cures illnesses. But nobody would want Big Pharma to use such property rights to deny life-saving medicines to the people -- by grossly overcharging them.

Nobody would accept that the poor should die from HIV/AIDS simply because the available anti-retroviral treatment is made too expensive by Big Pharma patents.

That is precisely what happened in sub-Saharan Africa, the world's worst AIDS-affected region. South Africa alone has 4.7 million people with HIV, of whom 300 die everyday from the infection. Consumers there formed associations and forced the government to import the anti- retroviral drugs cheaply.

But 39 Big Pharma companies sued the state so that they could continue to charge 10,000 to 15,000 dollars for a year's supply of the anti-retrovirals per patient.

However, Indian company Cipla signed up with Medicins sans Frontieres (Doctors without Borders) to supply the same drug combination at 350 dollars a year. Such was the popular disgust with Big Pharma companies that they dropped their suit some months ago. The people won. (Since then, Indian companies have further reduced prices to about 200 dollars a year.)

This episode dramatically highlights the contradiction between patents and patients, between Big Pharma interests and people's needs.

Big Pharma is among the world's most profitable industries, according to 'Fortune' magazine. Its profits exceed the combined profits from banking and beverages.

Its unethical practices are equally stark. They have impelled the world's 11 top professional medical journals to formulate a new policy in respect of publishing Big Pharma-sponsored medical research so as to avoid airing exaggerated claims or shoddy results.

At the WTO conference at Doha earlier this month, Big Pharma- oriented IPR policies came under flak from the developing countries, which forced First World governments to concede that TRIPS should not prevent access to cheap medicines in situations such as a health emergency. This was not written down in words into the TRIPs agreement, but the principle is accepted.

Even the World Bank recommends that the least developed countries should be given another 10 years to move toward strict product patents.

This is not adequate. Many Southern countries have a permanent health emergency. For instance, less than two-fifths of the people of India, Bangladesh or Southern Africa have access to modern medicines.

Unless their costs are reduced, the medicines will remain out of the people's reach. That demands a radical review of TRIPs. The world's sorry experience with Big Pharma demands nothing less.

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