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New Trade Deal Would Benefit Big Pharma At AIDS Programs' Expense

Us Trade Deal Aids Drugs

First Posted: 10/ 5/2011 1:36 pm Updated: 12/ 5/2011 5:12 am

This piece is a continuation of The Huffington Post's collaboration on trade issues with The Dylan Ratigan Show, called Trading Our Future.

WASHINGTON -- In 2003, with the AIDS pandemic developing into one of the most severe humanitarian crises in modern history, President George W. Bush pledged billions of dollars in relief funding for citizens of the world's poorest countries. Seven years in, the initiative, called the President's Emergency Plan for AIDS Relief (PEPFAR), is widely regarded as an outstanding success, responsible for saving millions of lives in 15 developing nations.

Vietnam has received more than $320 million from the program since 2004, giving thousands of people living with HIV access to critical, life-saving medicine for the first time. But a new trade deal the Obama administration is pushing to complete with Vietnam and seven other Pacific nations threatens to seriously hinder both U.S. and international efforts to combat AIDS -- including the government's own efforts in Vietnam.

According to leaked documents from the talks, U.S. negotiators are seeking to impose a set of restrictive intellectual property laws that would help American drug companies secure long-term monopolies overseas. The result? Higher prices for drugs. That's good for corporate profits, but disastrous for relief programs like PEPFAR that depend on cheaper generic medications to treat the global poor.

"This U.S. trade policy is going to undermine U.S. AIDS policy by driving up medicine costs and keeping new HIV/AIDS drugs monopolized for longer periods of time in Vietnam," says Peter Maybarduk, director of Public Citizen's Access to Medicines project. "We're setting up U.S. taxpayers to pay more for the same result or just accomplish less."

While the potential repercussions are most obvious in Vietnam, the trade talks have broader implications. Trade experts at Public Citizen, the Health Global Access Project and other nonprofits view the current negotiations, dubbed the Trans-Pacific Partnership, as part of the Obama administration's "beachhead strategy" to establish a new international trade standard on drug access -- just as the North American Free Trade Agreement did for scores of trade issues in 1993.

The Office of the U.S. Trade Representative, the federal agency with formal responsibility for the negotiations, is aware of the concerns. But a USTR spokesperson said the agency needs restrictive patent standards in order to "incentivize" drug companies to supply medicine. "Patents covering new methods of use or new forms incentivize development of adaptations of drugs that are often highly valued in developing countries, such as heat-stabilized medicines for places that lack reliable refrigeration capacity," she said.

The same view is frequently voiced by U.S. pharmaceutical giants, many of which have close ties to USTR and the Obama administration through key staffers who had careers at the Big Pharma heavyweights before moving to their government positions.

And plenty of economic data suggest that the American patent regime does not foster useful medical innovation. Pharmaceutical companies spend about twice as much money marketing their drugs as they do on researching and developing them, and a tremendous portion of drug research is conducted by universities and the federal government's National Institutes of Health. Much of the research pharmaceutical companies do conduct is simply not relevant to public health concerns, with money pouring into projects for hair loss, for instance, while funding for diseases that primarily afflict the poor, like tuberculosis, stays in perpetual short supply.

"The drug companies would say it generates research, but the evidence is very questionable, because much of the research is not directed at important diseases," says Nobel Prize-winning economist Joseph Stiglitz.

USTR's efforts have alarmed some congressional Democrats, eight of whom wrote a letter to USTR head Ron Kirk emphasizing that the Obama administration's trade proposals are significantly more restrictive than the access-to-medicine terms negotiated in trade deals with Peru, Panama and Colombia under President Bush in 2007.

"The 2007 bipartisan 'May 10th agreement' was an important step in moving U.S. trade policy back toward a more balanced approach to promoting innovation and health in trade agreements with developing countries," the Aug. 2 letter reads. "We are concerned about reports that the balance is once again shifting away from the progress achieved in those past efforts ... a move that would jeopardize treatment goals and millions of lives."

Nevertheless, in several rounds of negotiations, the Obama administration has continued to press for a hard-line patent regime, claiming that stricter rules build on existing requirements that encourage innovation.

The USTR spokesperson tells HuffPost that Vietnam, in particular, already has some patent requirements in place and that those standards have not hampered the U.S. AIDS relief effort.

That claim directly conflicts with PEPFAR's official 2010 report (PDF) on its operations in Vietnam. Generic HIV drugs, which cost around $100 a year per patient, constitute 98 percent of the medicines that the U.S. buys for the Vietnam relief program, according to the report.

But the remaining 2 percent of drugs that are patented -- and thus far more expensive -- are a significant financial burden. Many of these patented medicines are "second-line" drugs, which patients need to combat HIV once the infection develops resistance to standard treatments. PEPFAR has expressed particular concern about Kaletra, a key second-line drug produced by Abbott Laboratories, one of a handful of multinational pharmaceutical companies with influence over the Trans-Pacific talks thanks to its position on a USTR advisory board.

"A key driver is the cost of Abbott products," reads the 2010 report on AIDS relief in Vietnam. "Expectations that the cost ... would fall by 50% in 2009 due to the introduction of generic versions were dashed when it was discovered that Abbott has patents pending in Vietnam and that Abbott intended to use the patents to prevent the procurement of generic alternatives."

"Work is continuing with intellectual property experts ... to determine if there are any legal grounds to enable the procurement of generic [Kaletra]," the report continues. That suggests patented medicine is a big financial hurdle for the program, contrary to USTR's claim. PEPFAR declined to comment for this article.

The framework proposed in a leaked draft of the Trans-Pacific pact builds off the U.S. patent regime, long maligned by public health advocates for fueling the highest drug prices of any nation. In Vietnam, such policies could end up extending already long-held monopolies on life-saving drugs, including Kaletra.

The World Trade Organization requires all countries to grant 20-year patents on medicine, but gives nations substantial leeway over which specific drugs actually receive patents. Less-developed countries with pressing epidemics often do not permit patent protections for drugs that receive monopoly rights in the U.S. Further, medicines that governments purchase for state-run health care programs are currently exempt under WTO patent rules.

According to leaked documents from the Trans-Pacific talks, the U.S. wants to require the eight other Pacific countries in the negotiations to grant patents on a wider swath of drugs and bestow a host of secondary patents that go beyond the simple chemical compound for the drug. These secondary patents can cover almost any characteristic of a particular medicine, from the color of a pill to a capsule's ability to resist heat.

Public health advocates refer to these types of patents as "evergreening patents" -- or even "junk patents" -- because they allow companies to extend their monopolies beyond the 20-year WTO window without actually creating a new medicine. The World Health Organization frowns on these secondary patents and has said they should be rejected.

But USTR is expressly seeking to require countries to issue patents on "any new form, use, or method of using a known product ... even if such invention does not result in the enhancement of the known efficacy of that product," according to the leaked draft of the trade agreement.

"It's an invitation to the pharmaceutical industry to extend drug monopolies and charge unaffordable prices for medicines," says Rohit Malpani, director of Oxfam's Access to Medicines campaign. "Not only do these restrictions deny affordable medicines to poor people in developing countries; they also encourage drug companies to focus on extending monopolies for existing medicines, instead of investing in research and development to develop the new medicines needed to improve treatment outcomes around the world."

The USTR spokesperson tells HuffPost that these secondary patents encourage companies to develop new uses for drugs and improve on existing drugs in ways that benefit developing nations. The agency also argues that even if a company obtained such secondary patents, the original compound would be available for generic competition.

But public health advocates say that, in practice, drug companies do extend their monopolies for years with these patents, by filing for protection on secondary aspects of existing drugs -- sometimes repackaged under a new brand -- that are essential for use in a certain regions. The heat-stable version of Kaletra, for instance, is prized by doctors in Africa and hot Asian nations such as Vietnam, but under secondary patent regulations could remain cost-prohibitive for decades to come.

"USTR wants to create brand-new monopolies on older drugs, for formulations that are developed with the U.S. and European market in mind," says James Love, director of Knowledge Ecology International, a nonprofit focusing on how intellectual property rules affect the poor. "The fact that these formulations are more valuable in a country with poor cold storage isn't a reason to block generic competition in places where people live in shacks and depressing poverty."

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