Killing the poor
The WTO's latest verdict has made it possible for the Western pharmaceutical giants to continue to put profits before people, writes Faiza Rady
Before leaving Geneva on Friday to start off the New Year in style, US World Trade Organisation (WTO) negotiators made sure the multinational pharmaceutical industry got its well-deserved Christmas bonus. Following long months of haggling over the finer points of whether to allow poor countries to overrule patents and import cheap generic drugs -- not only for epidemics like HIV/AIDS, malaria and tuberculosis, but also for other critical diseases like cancer, diabetes and asthma -- the US team finally put its foot down and vetoed the proposal.
American negotiators thus saved the pharmaceutical industry from losing billions of dollars in annual profits. Their argument: that the multinational pharmaceutical companies (pharmas) cannot afford to be displaced by the upstart discount sector, which could slash prices by 95 per cent or more.
This is serious business indeed and the stakes are staggering. Take a high-profile drug like Ciprofloxacin (or Cipro). A best-seller among antibiotics, Cipro is effective against anthrax and other bacteria. In 1999, Bayer -- the patent holder of the antibiotic until 9 December 2003 -- sold $1.04 billion worth of Cipro in the US alone. When demand is high, as it was during last year's anthrax scare in the US, one tiny Cipro pill retailed for as much as seven dollars in America, while its generic counterpart sold for $0.13 in India. Or, take an annual supply of AIDS medication. The generic package costs $200 in India, while the patented version retails for as much as $20,000 in the US.
This kind of massive profit-taking surely merits a measure of muscle flexing at the WTO. After all, pharmaceutical companies have risen to dazzling heights of fame and fortune and are now the most profitable industry in the US. Their profits have soared by 36 per cent over the past few years and the rate of return on investment is more than twice the US average. Their bosses certainly worked hard to get them there. They also worked hard to derail the developing world's attempts to limit the impact of WTO-imposed trade related intellectual property rights (TRIPS) on life-saving drugs for the poor.
Considering that corporate magnates and their acolytes put in long hours to lobby hard against last year's Doha conference proposal to lift TRIPS for poor countries, the US WTO team only did 'what is right' by siding with the big boys. At the end of the day, hard work and good money always pay off.
Worldwide, the economic weight and political pull of the pharmaceutical giants is mind-boggling. Corporate Watch, a London-based NGO, reports that the capitalisation of the world's five top corporations is twice the combined GDP of all of sub-Saharan Africa.
But being rich is not all. The important thing is to make it to the top and stay there. In this context, it is noteworthy that the industry invests its money wisely. Represented by the Pharmaceutical Research and Manufacturers Association (PhRMA) in the US, the industry spent 70 per cent of its $24.4 million campaign fund bankrolling the Republican Party. In the US House of Representatives, PhRMA deploys 297 lobbyists -- one for every two members of Congress. Corporate Watch describes the association as a pressure group that is "breathtaking for its deep pockets and aggression, even by the standards of US politics". Consequently, PhRMA walks tall and usually gets its way with the Bush administration and appointed WTO representatives.
Thus, US trade negotiators in Geneva made sure the hordes of have-nots understood exactly where 'it's at'. On Friday, after vetoing the proposal to derail TRIPS, American WTO Ambassador Linnet Deily harshly reprimanded poor countries for their exorbitant demands and attempts to profiteer from the pharmaceutical industry. An industry that Deily ultimately credits for saving millions of lives through large scale investment in research and development. "By threatening patents for all pharmaceuticals for almost all countries [they] destroy the incentive for the research and development that creates new drugs and that helps people cope with critical ailments around the world," Deily said.
Notwithstanding the US ambassador's moral tone, a number of attending delegates remained sceptical. "I think we will receive harsh criticism collectively at the WTO [round]," commented Sergio Marchi, the Canadian ambassador who chairs the ruling WTO General Council. Ostensibly referring to the two billion people who live under the poverty level -- 15 million of whom die each year from curable infectious diseases -- and the 40 million suffering from HIV/AIDS, Marchi said: "I also feel sorry for the people who had some hope in all this. I think we let them down tonight."
Notwithstanding the tragic question of preventable death tolls, is it credible to assume that the industry's profit margins are justified by their research and development (R&D) which will ultimately save millions of lives?
Prominent political writer Noam Chomsky disagrees, dismissing the alleged R&D investment as an ideological myth propagated by neo-liberal, so-called free-marketeers. Throughout his career, Chomsky has documented in great detail how the US government intervenes in the manufacturing and service sectors and heavily subsidises competitive big business. "Like other competitive sectors of the economy, the pharmaceutical and health industries have always benefited from a state-organised subsidy for research, development and marketing, with the public paying the cost up to product development," explains Chomsky. He describes this system as, "state welfare capitalism for the rich". A system that aims to give US corporations a competitive edge over global markets. Funded by billions of taxpayer dollars, the drugs produced by the pharmaceutical industry's research are priced beyond the reach of those who subsidised their development, let alone the majority of the world's poor.
Drafted with the help of PhRMA, TRIPS has contributed to further inflate the stakes. Once TRIPS is fully enforced, US corporations expect to gain $61 billion from the South -- a further drain on poor countries' resources, in addition to their existing debt burdens.
Since its inception at the WTO, TRIPS has triggered a corporate stampede towards the South. Over the past few years, the pharmas and agrobusinesses, in particular, have pirated indigenous medicinal and agricultural knowledge. Piracy consists of genetically modifying a product to satisfy TRIPS requirements, patenting it for exclusive monopoly rights, then producing and retailing it at massively marked up prices. A process that deprives indigenous people of their traditional medicinal know-how and agricultural base.
Denied the waiver of intellectual property rights for patented medicines and plundered by the machinations of genetic engineers on the take, the Southern poor have definitely lost out on TRIPS.
