Increases in the price of pharmaceuticals sold by companies like Bayer and Pfizer have driven developing countries to develop cheaper and more accessible drug copies. The World Health Organization estimates that low and middle-income countries have only 35% of the essential medications available. Drugs that treat non-communicable diseases are especially inaccessible because of the high pricing. Yet, by producing cheaper copied drugs, developing countries, such as India and South Africa, have become entangled in patent conflicts with pharmaceutical companies.
Passed by the World Trade Organization (WTO) in 1995, the Agreement on Trade Related Aspects of Intellectual Property (TRIPS) serves as the authoritative document for patent rules. At the time, developing countries felt they were at a disadvantage from the agreement. Due to limited resources, they encountered difficulties in passing medical patents that could improve public health without infringing on the rights outlined in TRIPS for an industrialized country with a preexisting patent. As a result, in November 2001, the WTO passed the Doha Declaration with the goal of increasing access to drugs in developing countries by making regulations more flexible. Special regulations were made for circumstances of emergency involving HIV/ AIDS, tuberculosis, malaria, and other epidemics.
Despite global recognition that pharmaceuticals should be more accessible, many countries have not followed the Doha declaration. A Guardian article in 2006 detailed how the non-governmental organization Oxfam criticized rich countries for blocking cheap drugs for developing countries. Oxfam’s report stated that the U.S. tried to tighten the regulation of intellectual property protection in developing countries and pressured other countries to do this as well by using the threat of trade sanctions. Additionally, Oxfam criticized the EU for not doing enough to enforce the rules of Doha or to eliminate monopoly behavior of pharmaceutical companies.
Tight regulations and high prices from western companies motivate developing countries to develop cheaper drugs. This practice is particularly prevalent in India. India did not recognize pharmaceutical patents for more than thirty years before it joined the WTO. Even with membership, India allows policies that permit firms to make cheaper versions of drugs. The Guardian reported that Indian firms drove down the price for drugs that treat HIV from $10,000 to less than $150. This generic copy of the drug was distributed to Africa as well. Times of India recently reported in January that a cancer drug Nexavar, developed by Bayer, was designed for western patients who could pay higher prices, making it unaffordable to many Indians. The Indian government granted a domestic pharmaceutical company, Natco Pharma, permission to produce a copy of Nexavar that sold at a 97% discount from the original price. In this instance, India issued a “compulsory license” for the first time. Compulsory licensing permits companies to use the patent of another company without pursuing the permission of the holder but pays the holder a set fee for the license.
Whether through compulsory licensing or not, generating cheaper copies of medicines leads to clashes between big pharma and national governments. In 2012, The Economist reported an ongoing lawsuit issued by the company Novartis to preserve its monopoly over the cancer drug Glivec in India. In this lawsuit, India accused the company of “ever- greening,” making minor changes to an already existing drug, Imatinib. Selling the drug with minor improvements would drive up prices by replacing cheaper generics in the market. India had the backing of the non-governmental organization Doctors Without Borders, which asserted that Novartis should not receive patent protection for a drug with only slight improvements.
While much of international attention focuses on pharmaceutical lawsuits in India, similar situations have occurred in other developing countries. The Guardian reported that Pfizer challenged the Philippines government to preserve the company’s monopoly on the drug Norvasc. The Economist Intelligence Unit in 2013 reported that South Africa followed Brazil and Thailand in a global trend of developing patent policy opposing ever-greening. The Economist report also described the competition between Novartis and the Indian drug company Cipla to sell Glivec in South Africa. Cipla won the patent in 2013 and now sells the drug at a price 46% lower than that of Novartis. But the prices of Glivec are still 91% higher in South Africa than in India. Indeed, South Africa has also considered issuing a compulsory license for vital medicines. India is encouraging China and the Philippines to do the same.
While reducing the prices of pharmaceuticals would greatly aid bleak situations in developing countries, it may not be a permanent solution. The International German broadcaster, Deutsche Welle, quoted the director of the Federation of German Industry in 2012 who said that driving prices down would not improve medical care in the long run. Development of health infrastructure is crucial to improve medical access. The Federal Coordination of Internationalism, an organization that includes 130 German action and solidarity groups that work on behalf of developing nations, suggests more research and development in drugs for “neglected disease” in poor countries like tropical infections and tuberculosis. The organization points out that most drugs created by pharmaceutical companies target diseases contracted by rich people.
High prices of pharmaceuticals hinder countries from saving many lives. Patent laws created by the WTO through TRIPS and Doha along with individual policies created by the governments of developing countries should be revised to prevent disputes with pharmaceutical companies and allow vital medicine to be distributed in a clearer manner. Hopefully, the prices of medicine will go down as countries and companies recognize this problem. In the long term, both governments and pharmaceutical companies should invest in sustained development and produce drugs that target low-income populations.
Neha Anand is a freshman in Ezra Stiles College at Yale University.