TCS Daily

What's Mine is Mine; What's Yours is Negotiable

By Jeremiah Norris - August 12, 2004 12:00 AM

A drug manufacturer in a country that does not recognize drug patents has pioneered a new concept. The Indian-based pharmaceutical firm Cipla has now secured a patent... on products already under patent.

Cipla's Joint Managing Director declared to Reuters in Bombay on July 19: "the patent has been granted in South Africa ... this is our invention."

The patent has been granted for a fixed dose combination AIDS drug called Triomune. Triomune takes three separately patented products -- GlaxoSmithKline's lamivudine, Bristol-Myers Squibb's stuvudine, and Boehringer Ingelheim's nevirapine - and rolls them into one dose. The drug firms holding the individual patents on the antiretroviral (ARV) medicines never cross-licensed a fixed dose combination. Since they have not done that, Cipla simply stole those companies' intellectual property, collectivized the theft and brought the new concoction under one patent: theirs.

Is this some kind of an "invention" or what? (Well, it is some kind.)

Assisting in this expropriation of private property is the World Health Organization (WHO). On December 1, WHO announced a plan to treat 3 million AIDS-infected patients by the end of 2005. Triomune is the cornerstone of this plan, the drug of choice -- WHO's choice. Unfortunately for poor patients, WHO found it necessary to announce on May 27 that one of the products in the fixed-dose combination, Cipla's lamivudine, had to be de-listed from the WHO's Prequalification list of medicines it approves for use. The reason? WHO could not guarantee the copy drug's bioequivalence to the patented product.

Further assisting Indian companies in the theft of this property is the Clinton Foundation which has boasted since October 2003 of a plan to help procure Triomune for less developed countries at $140 per person per year. Despite boasting of having negotiated this price on behalf of poor countries, not one sale at that price has been reported. Lest facts get in the way of happy talk, on August 9th at the 3rd Annual Pharmaceutical Awards in Boston, the Award for Advancement in the Cause of Worldwide Health was given to the William J. Clinton Foundation for having 'announced' agreements with major companies to reduce prices: a Dream Conferred

Although WHO's Prequalification program lists both patented and generic drug products, the selection criterion used in procurement tenders by UN agencies limits them to the purchase of generics. The reason: none of the pharmaceutical companies making patented drugs produce generic versions of those same drugs. Thus far, the only companies Prequalified by WHO to produce generic knock-offs of patented products are located in India. Other countries also produce these knock-off drugs, but they have not yet been Prequalified by WHO.

The current WHO policy, however inadvertent, has bestowed a sort of Most Favored Nation status on one of its Member States, India, while imposing non-tariff barriers against competition from other Member States. Approved manufacturers must sell their products to approved buyers at the lowest bid price offered by any buyer. Sellers must sell at the requested price or leave the market. Since sellers of generic drugs are currently limited to India, WHO has authorized a de facto cartel to regulate production, selection, pricing, and the marketing of goods in international commerce.

It is not immediately obvious how WHO policies can help the development of a viable market, sustain it over time, ensure that new innovations in therapeutic medicine will continue to benefit the poor, or how any of this can provide to the poor that essential ingredient of freedom: choice.

This much is clear, though: South Africa is the current epicenter of global HIV/AIDS in terms of prevalence rates; but India, with more than 5 million cases, is rapidly overcoming it. Of the estimated 23,000 Indian nationals under antiretroviral treatment, only 1,000 are being treated by its government, leaving the vast majority to private providers. Yet, WHO has endorsed Indian pharmaceutical manufacturers as the global exemplar in the provision of drugs for AIDS treatment. Why is it of no consequence to WHO that the Indian cartel is so dismissive of needs in its own country? Or that once this cartel was elevated into a competitive position through a WHO-sanctioned dispossession of others' intellectual property, the leading member, Cipla, quickly reverted to established procedures in patent law to protect its commercial interests?

Perhaps a small percentage of Cipla's sales resulting from its South African patent can be designated to expand AIDS treatment in India.

Jeremiah Norris is Senior Fellow, the Hudson Institute, Washington, DC.


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