After failed negotiations with multinational drug company Merck, Brazil has signed a "compulsory license" that will allow the production of a generic version of the patented antiretroviral drug known as efavirenz. This controversial decision will reduce the annual cost of treatment per patient from $580 to $165 in Brazil, where HIV treatment is provided free by the government. Although compulsory licenses are legal under World Trade Organization (WTO) rules, big pharmaceutical companies like Merck argue that forcing developed countries alone to bear the costs of essential drug development will jeopardize future innovation.
Percent of HIV-Infected People Receiving Antiretroviral Treatment in Select Developing Countries
Source: EarthTrends 2007, using data from World Health Organization, 2006.
Intellectual Property under the WTO
Patents have been used for centuries in the industrialized world to reward those who invest in research and development with a temporary monopoly for the production and sale of a given invention. This incentive system is particularly vital in the pharmaceutical field, where drug development is an extremely risky, expensive, and time-consuming endeavor. With globalization, the patent and copyright systems in many developed countries have been threatened by weak or non-existent rules in other parts of the world. In 1994, the WTO created the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) to regulate copyright and patent laws at the global level.
Compulsory Licensing
With the spread of HIV and other life threatening diseases in the developing world, access to essential drugs has been a controversial issue under TRIPS. Specifically, the existence of patents often makes vital disease prevention or treatment drugs unaffordable in the countries where they are most needed. As a result, compulsory licensing was introduced under TRIPS, allowing a government to produce a patented product under certain circumstances without the consent of the patent owner. The patent owner usually receives some royalties from the licensing government, and the product must be used for non-commercial purposes such as the protection of public health.
Percent of Adult Population Living with HIV/AIDS
Source: World Health Organization 2006
Controversy Continues
Brazil's controversial May 4th decision followed a similar action by Thailand in December concerning the same HIV drug, efavirenz, as well as two others. Those in support of big pharmaceuticals are warning of serious consequences for future drug research and development, and criticize Thailand for not accepting offers to sell efavirenz at the "no profit" price of $237.25 per patient per year. The U.S. government has placed Thailand on its Priority Watch List of countries it deems are not adequately protecting intellectual property, which can discourage foreign investment and influence export tariffs.On the other hand, many argue that efavirenz and other essential medicines were invented with U.S. and European markets in mind, and that developing country sales are not needed to recoup research costs. Such arguments often cite the fact that comparatively little investment has been made in inventing drugs for diseases that exist almost exclusively in developing countries, such as malaria.
RELATED LINKS:
Joint United Nations Programme on HIV/AIDS
World Health Organization: Public Health, Innovation and Intellectual Property
WTO: Trips and Pharmaceuticals Fact Sheet
EarthTrends
