In the initial WTO negotiations, the pharmaceutical industry lobbied hard to have patent protection extended to cover pharmaceuticals. This was accepted with certain important safeguards that governments could use to balance public interest with the claims of patent holders. For example, "compulsory licensing" allows governments to exploit a patent without the owner's consent if it is justified by public interest.
The Brazilian AIDS policy, which includes providing free drugs to people with HIV/AIDS has been highly successful because of Brazil's ability to manufacture affordable medicines through compulsory licensing. But a country needs a reasonably sophisticated pharmaceutical industry to do this, and must be able to achieve economies of scale to make them affordable.
Nepal, like most developing countries and smaller economies, fails on both counts. Countries that lack the infrastructure to make available locally-produced pharmaceuticals could import generic drugs from the cheapest source by what is called 'parallel importing.' The option of parallel importing from a generic manufacturer in a large country is restricted unless compulsory license has also been issued in the exporting country to manufacture the product. It is important that member countries have the flexibility to grant compulsory licenses to foreign markets and be free to determine the grounds upon which to issue them. But in the past, even when countries have acted within the scope of existing agreements to ensure public health for their nationals, they have met with strong opposition from developed countries, especially the US and its pharmaceutical lobby.
Developed countries argue that TRIPS will lead to positive results in terms of an increase in the flow of technology transfer and foreign direct investment (FDI), leading to an increase in the resources devoted to R&D of needed new drugs. This, they claim, ensures a dynamic pharmaceutical industry to the benefit of the developing countries, and possibly an end of "brain drain" caused by the absence of patent protection in developing countries.
But a market for lifesaving drugs simply doesn't exist in developing countries although 90 percent of all deaths and suffering from infectious diseases occur here. Of the 1,223 new drugs brought into the market between 1975 and 1997, only 13 were for tropical diseases. For many tropical illnesses and other disease that affect the poor, low income levels deter private investors. And since developed countries and their multinational corporations are the main users of patent protection (only 3 percent of world patents are owned by inventors in the developing countries) they will also be the major beneficiaries of the strict patent laws in developing countries. This will likely lead to a transfer of income from less developed countries to developed ones, further widening the income disparities between the two.
Though Nepal spends 42 percent of its national health budget on drugs, most Nepalis can't afford essential medicines. With public health being threatened by new diseases and drug resistant varieties of old killers, WTO patent rules will likely further reduce the access of the poor to modern medicines. By restricting the right of governments to allow the production, marketing and import of generic drugs, competition is restricted, leading to price increases and further reduction in the already limited access of poor population to vital medicines.
Nepal needs adequate domestic infrastructure to strengthen the country's legal frameworks to meet the public health challenges posed by globalisation.
(Ravi Rauniyar is with the Joslin Diabetes Center, Harvard Medical School.)
