The Indian pharmaceutical industry is a success story
providing employment for millions and ensuring that essential drugs at
affordable prices are available to the vast population of this sub-continent.
However, the new 'trade' rules of the World Trade Organisation now pose a
serious threat to the industry and to the millions who are dependent on it for
their health and livelihood.
Richard Gerster
INDIA has a highly efficient pharmaceutical industry,
which started blossoming thanks to the virtual absence of patent protection of
medical drugs. It produces, for example, its own AIDS drugs, which are sold
much more cheaply than the original products from abroad. The new rules of the
game of the World Trade Organisation (WTO) benefit the pharmaceutical
multinationals from countries such as the USA, Great Britain and Switzerland,
and threaten India's achievements. The people paying for this are AIDS patients
- in poor countries.
'In India, eight million people are estimated to be
HIV-positive,' Dr Raman Shetty explained to me. The official estimate is still
at 3.5 million. Eight hundred thousand of these people have already developed
AIDS. It was only in 1987 that the first HIV-positive case was registered in
India, yet India already shows the highest number of HIV-positive people in the
world. In the red-light districts of the megacity Mumbai (formerly Bombay) and
along the truck routes, the epidemic is spreading particularly fast. Ignorance
and poverty are the most important causes of this. Often, AIDS patients die of
tuberculosis, an illness still prevalent in India, because they lack the
necessary resistance.
Prohibitive costs
While the term HIV is used to describe the virus, AIDS
is the name for the most severe phase of the illness triggered by the virus.
There is no cure (yet) for HIV/AIDS. The number of HIV/AIDS deaths has,
however, dramatically decreased in the USA and in Europe. Take Switzerland as
an example: the number of AIDS deaths annually has dropped from a peak of 686
(1994) to far below 100 (1999). This must be attributed in the first place to
the revolutionary drug combination therapy, which disturbs the life cycle of
the HI-Virus. A disciplined taking of a combination of medical drugs can
prevent the outbreak of AIDS or at least delay it for years. In particular, the
transmission of the virus from a mother to her unborn child can be prevented
with suitable medication.
In India, only 500 of 100,000 HIV/AIDS patients at
most are getting medical treatment. Sexuality and, along with it, AIDS are
taboo subjects.
There is a widespread lack of hospitals and clinics,
of personnel, of medical equipment, of medical drugs. The cost of individual
AIDS-combination therapy, at more than US$300 per month, is prohibitively high.
There are no compulsory medical insurance schemes in India. AIDS is
particularly common in the lower-income groups. These people often do casual
work only. A monthly income of less than US$100 has to cover the basic
necessities of life. There are often two infected persons per family but the
savings are hardly sufficient for the treatment of one. 'Although women and men
are equally affected by HIV/AIDS, 85% of our patients are men.
According to the Indian patriarchal culture they get
preference. Second in line are children. Women sacrifice themselves for the
others.' This is how Dr Subhash K Hira, director of the AIDS Research and
Control Centre (ARCON) in Mumbai, describes the everyday situation.
Successes of the Indian pharmaceutical industry
A few years ago, the costs of treatment were, at far
above US$700 per month, more than twice as high as they are today. But then, in
1993, Cipla Ltd., an Indian pharma-firm rich in tradition, introduced the AIDS
drug Zidovudine. Stavudine and Lamivudine followed (the latter in 1998).
Nevaripine is going to be launched soon. They are all elements of the
successful virus-inhibiting combination therapy. Cipla offered the AIDS drugs
at significantly lower prices than other companies. This in turn provoked the
lowering of prices by the international competitors on the Indian market.
Today, a packet of ten 100-milligramme capsules of Zidovudine, produced by
Cipla in India, costs less than US$5 (150 rupees). The original product of the
British firm Glaxo Wellcome is sold for more than double the price in India,
Pakistan and Indonesia - and costs five to six times more in the USA and Great
Britain.
The Indian pharma-industry is a success story. Five
hundred thousand people are employed in this sector, in roughly 20,000 firms.
In the pre- and post-production sector, a further 2.5 million jobs are thought
to be involved. Compared to the general price index, drug prices have risen
much less in the last 15 years and remain far below average. 'Worldwide, India
is a country of very low ... prices (for) high-quality medicines,' Nihchal H
Israni, president of the Indian Drug Manufacturers' Association (IDMA), states
proudly. Self-sufficiency with regard to pharmaceuticals is far above 70% - in
spite of the policy of a more open economy pursued by India since 1991.
The secret of this success is the Indian patent law of
1970. India had entered independence with the patent system of the British
colonial masters. This secured the Indian market for the British industry;
pharmaceuticals were largely imported from abroad and local production was
minimal. The 'architect' of the patent law of 1970, S Vedaraman, then director
of the Indian Patent Office, summarises the principle as follows: 'We are not
against patents. And we are prepared to pay decent licence fees. But we in
India cannot afford monopolies.' Since then, India has done without product
patents for pharmaceuticals, with the exception of production processes that
may be patented for seven years. In addition, the law allowed for compulsory
licences granted by the state, in the case of a patent holder's not granting
voluntary licences on fair conditions. India profited from a large section of
well-qualified experts who made good use of the new opportunities.
These moves did not find much favour with the
multinational pharma-industry. It should not be forgotten, though, that in many
industrial countries, the protection of inventions through patents was only
developed in the last 30 years. The Swiss pharmaceutical industry, in
particular, fought the enactment of a patent law at the end of the 19th
century, in order to be able to imitate foreign drugs, such as Aspirin. In the
German Reichstag (Parliament), Switzerland was considered a 'state of robber
barons'; in France, it was labelled a 'country of counterfeiters'. Product
patents for medical drugs have only been known in Switzerland since 1978. It is
very clear whose interest they serve. Technology exporters profit from patent
protection, which shields them from low-cost competition. Technology importers
- in other words, most of the developing countries - want access to technical
innovations as freely and cheaply as possible, i.e., no patent protection which
creates monopolistic barriers. Indeed it was in this way that the economies of
Japan, Korea and Taiwan were able to thrive, due to the beneficial absence of
patents.
'recolonisation'
In spite of this, patent protection is gaining the
upper hand against the interests of developing countries. The vehicle in this
crusade of the industrial countries for a global patent protection system is
the WTO. One of the WTO agreements (the Agreement on Trade-Related Aspects of
Intellectual Property Rights - 'TRIPS') prescribes worldwide minimal standards
for patent protection. No country adopting a market economy and keen to be
integrated in the world economy can do without WTO membership and so has to
swallow the TRIPS pill as well. 'WTO/TRIPS stands for a re-colonisation of the
economically weak countries. The patent right is an obstacle in the fight
against the AIDS epidemic. These economic rules of the game are partly to blame
for the fact that people are dying,' says Dr Hira, of ARCON.
India, too, became a WTO member in 1995 and will have
to apply the new TRIPS rules for medical drugs in its national patent
legislation by 1 January 2005 at the latest. First steps have already been
taken in the patent law of 1999. But the US pharma-producers still call India a
'centre of commercial piracy'. Israni of the IDMA considers the situation very
bleak unless the Indian government makes a countermove: 'Indian producers are
being pushed out of the market and multinational suppliers are going to
dominate the market with far higher prices. Jobs will be lost and India's
balance of trade in the area of pharmaceuticals will in future be in deficit -
in brief, a situation similar to the one before the patent law of 1970.' Israni
is appealing to the Indian government to exhaust fully those positive options
that are still contained in the international TRIPS rules and especially to
provide for effective enforced licences.
Export hurdles
The Cipla philosophy has for decades been to promote
the principle of relying on one's own strength. 'For India, this means striving
for a high degree of self-sufficiency in vital areas of health and nutrition,
and for our business practice, it means aiming for the fulfilment of the needs
of the Indian population, (and) the use of indigenous raw materials and of
local personnel,' says Cipla managing director Y K Hamied. This philosophy,
combined with technical expertise, must have been the reason why the Indian
Council for Medical Research suggested to Cipla in 1990 that the AIDS drug
Zidovudine be produced locally. Due to the state investing its limited means in
prevention, the market remained small. In India, approximately US$1 million is
turned over yearly for AIDS drugs. Of this, Cipla has a share of about 80%.
This is only a small percentage of Cipla's total turnover of US$150 million.
Cipla is very interested in the export of its
pharmaceuticals. More than 95% of all HIV-infected people - 34 million
worldwide - live in developing countries. Each day, 16,000 more people are
infected, each year six million more. It could be attractive for other
countries to buy high-quality imitation products from India at reasonable
prices. But free trade is hampered by national and international patent rules.
For a patent constitutes the sole right not only to produce a product but
also to import it. That is why Glaxo Wellcome can prevent the import of cheaper
Zidovudine produced by competitors.
Until recently, there was no patent system for
pharmaceuticals in Brazil. The new patent law of 6 October 1999 provides the
possibility of issuing compulsory licences. On this basis, Brazil plans to buy
raw material for AIDS drugs from abroad to the amount of US$300 million this
year. Cipla has made an offer.
US interventions
Two-thirds of all HIV/AIDS patients, i.e. 23 million,
live in Africa south of the Sahara. On this continent, AIDS has already
replaced wars and malaria as the most frequent cause of premature death. The
World Health Organisation (WHO) expects that average life expectancy in
Southern Africa will, in the next decade, decrease by 17 years to the age of 43
years, instead of increasing to 64 years. This is why AIDS in Africa is more
than a health problem. AIDS signals a real social and developmental crisis.
South Africa has recognised that countermeasures using
all possible means are necessary and has therefore launched a 'Partnership
against AIDS Programme'. In addition to preventative measures, South Africa
wants to facilitate the import of reasonably priced, good-quality AIDS drugs
and to stimulate production of AIDS drugs inside the country. A new health law
was intended to enable the government to grant enforced licences for the
production of vital medication. A joint company called Cipla-Medpro, consisting
of Cipla and a local firm, has already submitted an application in South
Africa. Jerome Smith, chairman of Cipla-Medpro, wrote to the government: 'We
are able to bring the newest drugs into South Africa but patents are preventing
us from doing it.' In effect, Cipla-Medpro already produces Zidovudine,
Stavudine and Lamivudine for export to countries whose laws allow for the
import of imitation products.
The American pharma-industry did not like this
project. That is why in 1999 the USA intervened several times against the new
patent law in South Africa and threatened massive trade sanctions. In the past,
there had been similar moves against Indonesia and Thailand. It was US
vice-president and presidential candidate Gore who was in the forefront of this
campaign. American AIDS interest groups therefore attacked him directly during
election campaign events. Some of the banners carried the slogan 'Gore's greed
kills'. When the media eventually reported less about Al Gore's election
campaign than about the AIDS conflict with South Africa and his role in it, the
USA stopped their interventions and threats against South Africa after a few
weeks. Will it be possible for the Indian-South African from Cipla-Medpro to
supply AIDS patients in South Africa with reasonably priced drugs in the near
future?
World Bank subsidies
India's tight resources for AIDS have, up to now,
mostly been spent on prevention. In this regard, it is of essential concern to
strengthen the self-confidence of women. There is hardly any money left for
treatment. In October 1999, the World Bank granted India a loan of US$198
million for financing AIDS prevention and treatment for the years 1999-2004.
Fifteen percent of this is reserved for treatment measures. The World Bank
budget has been calculated on the basis of prices for Cipla drugs. In spite of
this, the first commission went to the international competition.
Within the worldwide pharmaceutical market, with its
turnover of US$350 billion, India's US$3 billion constitutes barely 1%. One
billion Indians, male and female, spend the same amount on medical drugs per
year as seven million Swiss men and women. 'The amount spent on drugs here in
India roughly corresponds to the profit made by Novartis in the past year,'
says IDMA president Israni. 'Why can't the North concede to the South the same
autonomy with regard to the protection of inventions which Switzerland in
particular has for decades claimed for itself and used for its own
benefit?'
Richard Gerster, Dr. oec. (Richterswil/Switzerland, holds a PhD Econ from the University of St Gallen (Switzerland).
Richard Gerster, Dr. oec. (Richterswil/Switzerland, holds a PhD Econ from the University of St Gallen (Switzerland).
