TCS Daily

Doctors Without Economics

By James K. Glassman - October 30, 2003 12:00 AM

While the WTO's ministerial meeting in Cancun in September failed to make progress on lowering trade barriers in agriculture, the conference wasn't a total flop. All 148 member-countries of the World Trade Organization agreed to a plan to provide emergency patented medicines to the poorest countries.


The deal was two years in the making, and it was widely hailed, significantly by African nations ravaged by HIV/AIDS and by the World Health Organization.


But the reaction was not so favorable among officials of non-governmental organizations (NGOs) and other activists in richer nations. On Oct. 13, Naomi Klein, writing in The Guardian, said that the deal requires "countries wanting to import generics [to] jump through multiple hoops to prove they are truly in need" -- which may be "why U.S. trade representative Robert Zoellick praised the agreement."


Then she accused the Bush Administration, which pledged to offer an unprecedented $15 billion for AIDS relief in Africa and the Caribbean, with trying to "sabotage" the Cancun deal -- which Klein doesn't like anyway.


But political editorialists are one thing. NGOs with reputations for sacrifice and diligence are something else entirely.




It's hard to think of a worthier cause than Doctors Without Borders, which has sent 15,000 volunteer M.D.s and other medical professions into dangerous war and epidemic zones to bring care to the poor in 80 countries. Currently, for example, the organization, usually known by its French name, Medecins Sans Frontieres, or MSF, has dispatched staff to fight a cholera outbreak in the Democratic Republic of the Congo, to help flood victims in Pakistan and to bring life-saving supplies to war-ravaged Liberia. The head of MSF's medical mission to Dagestan, in the former Soviet Union, was kidnapped by gunmen a year ago and is still missing.


But lately, MSF has been playing another role -- one that seems violently at odds with its merciful missions around the world. In Cancun, MSF was the most vocal opponent of the agreement to get patented drugs to poor countries, and the group continues to attack the deal vigorously on its website.


MSF's language is inflammatory, its claims inaccurate. For example, MSF said in a joint statement with another non-governmental organization, Oxfam: "The deal is disastrous.... It may not work at all... [It] offers little comfort for poor patients."


Ellen t'Hoen, the MSF official who heads the Globalization Project of the Campaign for Access to Essential Medicines, says that the drug agreement "was designed to offer comfort to the U.S. and the Western pharmaceutical industry. Unfortunately, it offers little comfort for poor patients. Global patent rules will continue to drive up the price of medicines."


...Sans Economics


Curious about the economics of such rhetoric, we decided to attend an MSF press conference during the WTO meeting on the drug agreement, which is part of TRIPS, for Trade Related Aspects of Intellectual Property Rights. The deal that was struck in Geneva in August and then ratified unanimously in Cancun.


Drug companies in developing countries will have the right to produce the patented drugs of other companies and sell them at low prices if a national health emergency (such as the AIDS epidemic) is threatening their own sick citizens or those of other poor countries. In other words, Western pharmaceutical firms, most of them based in the U.S., will give up their intellectual-property rights in order to get drugs inexpensively to sick people in poor nations.


The agreement tries to protect these research-drug firms by forbidding the export of these emergency drugs from developing countries back to developed richer countries. The Western drug companies are taking a risk. The Hindu Business Line, an online Indian daily, recently noted that "the danger is clearly there that cheap drugs manufactured by companies in countries such as India and Brazil are liable to find their way into markets serviced by the patent-companies themselves."


The agreement was a Solomonic solution to an immensely difficult problem -- one which, though extraneous to the critical trade issues the WTO faces, threatened to derail the talks. (As it turned out, they were derailed anyway.) Instead, a deal was made before the delegates even arrived. It was warmly embraced, especially by the Africans who will benefit from it most. For example, Amina Mohamed, ambassador to the WTO from Kenya, told the Globe and Mail of Canada, "It's...especially good news for the people of Africa, who so desperately need access to affordable medicine."


The economics are not hard to understand. Drugs are costly to develop -- an average of nearly $1 billion for every compound that's approved -- so firms will not make the investment and take the risk unless they have a shot at making a profit if they are successful. That profit depends on a guarantee of intellectual-property rights. Otherwise, competitors could easily and cheaply re-engineer a drug developed with costly research. The architects of the TRIPS agreement believe they have come up with a system that both gets drugs to the poor in emergencies and protects property rights.


But at her briefing in Cancun, t'Hoen portrayed the TRIPS agreement as a satanic plot to steal medicines from dying patients in developing countries. Her message was striking and confrontational: Patents kill.


But what evidence does MSF have that drug prices will rise under the agreement or that patents hurt the poor? When we asked her at the briefing, t'Hoen vaguely cited studies available on the MSF website. (We checked and found no such studies.) Nor, when we asked, could she cite a specific example of a current drug that would no longer be available in the developing world because of the agreement.


Nowhere is there a serious analysis that purports to demonstrate the negative economic impact of the agreement. Nowhere is there a serious analysis that shows that patents hurt drug development. To the contrary. Patent rights are the main incentive for making the huge investment in research and development of new drugs, including the roughly 200 now being used to combat HIV/AIDS. It is the ideological threat to those rights, by MSF and others around the world, that is starting to discourage further R&D on AIDS.


Some non-patent-holding drug producers complain that the protective stipulations for exports to poor countries may add to their costs. True, but the costs are low.


If the economics of the TRIPS deal discourage the production of generic drugs, as MSF claims, then why do the key generic players support it? The Wall Street Journal quoted Linda Philip of Aspen Pharmacare of South Africa as saying about the TRIPS deal, "The news means a double boost for the country.... It will not only make more drugs available to more people and save lives, but will also boost the economy."


And a spokesman for Ranbaxy, the largest Indian generic-drug company, was quoted by Bloomberg Business News: "This is very good news for Ranbaxy, Dr. Reddy's and Cipla. What this deal means is that most of [the restrictions on] the producers for making these drugs for the poor have been relaxed and there is a greater chance that they may be able to get good-quality medicines without any major fuss and delay.... All generic drug makers in India and Brazil will benefit."


Further proof of the promise of the new TRIPS agreement is that all the countries that face severe health emergencies (in fact, all the countries in the WTO), have signed on. No one forced them. They think it's a good deal. So does the World Health Organization, which issued this statement: "This a good step forward. Based on this, we can work further so every person who needs medicines can have them at an affordable price."


'Not Going to Be the Death Sentence'


What's still baffling is the opposition of the MSF. How can health-care professionals in poor nations oppose cheap, new drugs for suffering people?


As it turns out, they don't. Recent interviews reveal a rift between the headquarters bureaucrats like t'Hoen and the MSF workers in the field. For example, Mara Darter, an MSF worker in South Africa, told the Wall Street Journal on Sept. 1, "South Africa could now provide vital AIDS drugs to other countries in the region which have no drug manufacturing capacity."


And Alice Rousseaux of MSF in Mozambique, commented on the agreement to BBC News, "If from the moment you know you are sick, [you also know] that you [will] receive drugs, then it's not going to be the death sentence that it is now."


By using faulty -- or non-existent -- economics to stoke opposition, not merely to the TRIPS deal but to free trade in general, MSF runs the risk of helping to lock poor people of the world into a cycle of poverty and disease. In the end, MSF's antagonism toward the drug agreement and to trade could hurt many more people than the organization saves with its worthy medical relief programs.

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