Pandemics and panaceas: the World Trade Organization’s efforts to balance pharmaceutical patents and access to AIDS drugs

On June 5, 1981, the United States Centers for Disease Control and Prevention reported the initial cases of a “mysterious new disease.” (1) This strange new disease would later be named acquired immunodeficiency syndrome or AIDS, (2) and would quickly develop into a global pandemic. Twenty years later, the United Nations calculates the total number of deaths worldwide from AIDS at twenty-two million. (3) The death rate is not slowing either

In the United States and other developed countries, the diagnosis of AIDS or HIV-positive status is not the death sentence it once was. Since 1995, patients in developed countries can take a combination of antiretrovirals, known as a “triple cocktail,” which can drastically improve health and life expectancy. (7) In fact, these combination therapies are so effective at reducing the HIV count in the bloodstream that an individual who may have tested HIV-positive for the past ten years can actually test negative for the virus while taking the combination therapy. The levels of HIV in the blood become so low as to be undetectable. (8) As a result of this new therapy, AIDS deaths in the United States were reduced by seventy percent in the three years following 1995. (9) However, a regime of such drugs is extremely complicated and must be adhered to painstakingly. (10) Patients must take numerous pills each day, at specific times of day, some to be taken with food or water, and others without. The patient must contend with significant negative side effects. Furthermore, the antiretroviral combination therapies are expensive

However, the vast majority of the thirty-six million individuals worldwide who are infected with HIV or have AIDS do not live in developed countries, and do not have access to the antiretroviral therapies. Approximately ninety-five percent of the individuals who are infected live in developing countries. (12) Approximately seventy percent of the thirty-six million infected individuals live in Africa. (13) Within the next ten years, it is estimated that forty million African children will be orphaned because of AIDS. (14) In some sub-Saharan countries, life expectancy is expected to decrease by seventeen years because of AIDS. (15)

Meanwhile, the per capita income in Africa is less than $50 per month. (16) The African governments often spend less than $10 per person per year on health care matters. (17) Therefore, most people in the developing world who are infected with HIV/AIDS cannot afford combination antiretroviral therapies at United States prices. For example, in Africa, only about 10,000 of its twenty-five million infected citizens were receiving combination antiretroviral therapies as of 2001, according to the World Health Organization (WHO). (18) The issue is further complicated by the fact that developing countries often have poor infrastructure, poor health care systems, political instability, poverty, and a host of other factors that negatively impact the ability to distribute and administer anti-AIDS drugs, even if available.

As a result of this disparity in access to medicines between the developed and developing worlds, the international community is confronted with a difficult dilemma how to balance the problem of drug accessibility in the developing world with the need to promote and fund research and development of new drugs in the developed world. The large pharmaceutical companies, who developed the brand-name antiretrovirals and own patents to these pharmaceuticals in various countries, (19) contend they must be able to charge premium prices for patented drugs to recoup the high cost of research and development of these drugs and to fund and develop new medicines for AIDS and other diseases. (20) On the other hand, the developing nations insist they must have access to inexpensive versions of these drugs in order to address public health issues and save lives.

In 2001, drug accessibility and drug pricing in the developing world became high-profile political and economic issues. The United Nations, UNAIDS, world governments, world health organizations, and numerous AIDS and human rights advocates pressured the pharmaceutical companies to reduce pricing on the brand-name antiretrovirals. In order to gain access to more affordable versions of these drugs, governments sought the right to import inexpensive versions of the anti-AIDS drugs into their countries and the right to manufacture the drugs domestically, without the patent holder’s permission if necessary. (21) Despite the significant lobbying power of the pharmaceutical industry, (22) the pharmaceutical industry and the developed nations were forced to make many concessions in 2001.

First, the pharmaceutical industry made concessions in the form of price reductions. In February 2001, Cipla, Inc., a leading manufacturer of generic drugs in India, offered to sell to the South African government generic versions of the antiretrovirals at a fraction of the cost in the United States. In response to Cipla’s offer, the large pharmaceutical companies in the United States and Europe significantly reduced their drug prices in Africa. Companies such as Merck & Co., Inc. (Merck), Bristol-Myers Squibb Company (Bristol-Myers), Abbott Laboratories (Abbott), Glaxo-SmithKline PLC (Glaxo), and Pfizer

Likewise, on March 31, 2001, Merck agreed to drastically reduce prices in Brazil on its anti-AIDS drugs, after Brazil threatened to begin domestically manufacturing and distributing versions of Merck’s anti-AIDS drugs. On August 31, 2001, after threats from Brazil to produce a version of its AIDS drug, the Swiss drug company, Roche Holding, Inc. (Roche), agreed to reduce the price of Viracept in Brazil by forty percent. (24)

Second, the United States and the pharmaceutical industry made significant legal concessions in 2001 by dismissing several lawsuits relating to international patent protection. Thirty-nine pharmaceutical companies had filed a lawsuit in 1998 to stop the implementation of South Africa’s 1997 Medicines Control Act, which arguably allowed the importation into South Africa of inexpensive versions of the anti-AIDS drugs and the manufacture in South Africa of such anti-AIDS drugs, even if patented. Due to an international outcry, all thirty-nine pharmaceutical companies dropped the suit on April 19, 2001. (25)

Likewise, in early 2001, the United States filed a complaint against Brazil with the World Trade Organization, challenging a provision of Brazilian law that allows the Brazilian government to manufacture a patented drug in the event the medicine is not produced domestically in Brazil within three years. (26) On June 26, 2001, the United States suddenly withdrew the complaint, in order to pursue negotiations directly with Brazil. (27)

Finally, the developed nations made important political concessions in the context of the World Trade Organization. During the week of November 9-14, 2001, the members of the World Trade Organization held the Fourth WTO Ministerial Conference (28) in Doha, Qatar, to discuss various international trade issues. One of the most contested items on the agenda concerned the issue of balancing intellectual property protection with access to drugs and medicines. The United States and Switzerland contended the WTO’s existing international laws on intellectual property (known as the Agreement on Trade-Related Aspects of Intellectual Property Rights, or TRIPS) sufficiently addressed the issue of access to patented drugs by developing nations. AIDS activists and developing nations responded that TRIPS needed to be clarified to give public health issues priority over patent law. In order to achieve broader economic objectives in other trade areas being negotiated at the Doha Conference, the United States and the European Union agreed to a WTO declaration acknowledging, among other things, that the AIDS disease has created an international public health crisis. The language of the declaration is intentionally vague and has been heralded by the developing nations as a weakening of existing international patent laws. (29)

Ironically, in 2001, concerns over drug accessibility threatened the developed world as well. In September of that year, letters containing anthrax spores were mailed to various United States recipients, including media figures and politicians, such as Senator Tom Daschle, Democrat of South Dakota. Suddenly, the issue of accessible and affordable access to the antibiotic ciprofloxacin became a crucial issue. Despite the fact that Bayer A.G. (Bayer) holds a patent in the United States on ciprofloxacin, (30) Tommy Thompson, U.S. Secretary for Health and Human Services, threatened to issue licenses to allow domestic manufacture of the drug unless Bayer lowered its price. (31) Finally, the United States agreed to buy its needed supply of ciprofloxacin all from Bayer, but only after the Swiss manufacturer agreed to a steep U.S. discount to $0.95 per tablet, from its original price of $1.75 per tablet. (32) Developing countries at the Doha Conference argued that the actions of the United States presented a double standard on the issue of balancing patent protection against drug accessibility. (33) A spokesperson for the United States pharmaceutical industry stated the pharmaceutical industry also was deeply “disappointed” by the actions of U.S. Secretary Thompson in apparently attempting to override Bayer’s U.S. patent and “talking only about pricing.” (34) Nevertheless, it is drug pricing that garnered the most focus in 2001.

This article addresses the impact of the 2001 political and economic concessions on drug accessibility and patent protection. Part I focuses on the impact of the Fourth WTO Ministerial Conference on international patent protection. Part II focuses on the impact of the above-mentioned recent events in India (Part IIA), Brazil (Part IIB), and South Africa (Part IIC) on international patent protection. Part III discusses other political, societal, and economic barriers to effective resolution of the AIDS pandemic besides drug pricing. In Part IV, it is concluded that, while the 2001 compromises will have minimal impact on patent protection, the concessions themselves will not significantly alleviate the public health crisis of AIDS because of other political, societal, and economic impediments.

I. THE IMPACT OF THE DOHA DECLARATION ON THE AGREEMENT ON TRADE-RELATED ASPECTS OF INTELLECTUAL PROPERTY RIGHTS

In 1994, the then 140 member nations of the WTO (35) adopted the TRIPS Agreement, (36) which requires member countries to adopt minimum standards of intellectual property protection for patents, copyrights, and trademarks. All WTO member nations must comply with the minimum standards of TRIPS or they cannot belong to the WTO. (37) Nevertheless, since the TRIPS Agreement presents minimum, rather than maximum standards, member countries do have some flexibility in how they implement their domestic laws. (38) In fact, countries are free to enact even stronger intellectual property standards than those outlined in TRIPS. (39)

TRIPS has been called a compromise between the interests of the developed and developing world. The developed world aggressively pursued strong global intellectual property protection and the developing nations, such as India and Brazil, resisted even minimum standards of required protection. (40) Ultimately, in order to obtain the passage of TRIPS, the United States, the European Union, and other industrial nations made concessions in agriculture and textile trade positions for reciprocal concessions from the developing countries in agreeing to the minimum intellectual property standards of TRIPS. (41) The same dichotomy of interests and atmosphere of compromise likewise existed at the Doha Conference in 2001.

According to TRIPS, the objective of the Agreement is that the “protection and enforcement of intellectual property rights should contribute to the promotion of technological innovation … in a manner conducive to social and economic welfare, and to a balance of rights and obligations.” (42) From the outset, TRIPS recognized the need to balance intellectual property protection with social welfare issues. One of the most adversarial aspects of TRIPS has always been the conflict between TRIPS’ requirement to grant pharmaceutical patents and the need to access medicines to protect public health.

A. Basic Patent Protection Provisions

The basic provision of TRIPS is the requirement in Article 27 that all member nations make patents “available for any inventions, whether products or processes, in all fields of technology,” (43) subject to standard requirements of novelty, usefulness, and nonobviousness. Pursuant to the broad language of this basic provision, all members must extend full patent protection to pharmaceuticals.

Although Article 27 does not mention pharmaceuticals specifically, reference to Article 70(8) clarifies the intent of the Agreement. On January 1, 1995, when TRIPS became effective, many developing nations did not grant patent protection for pharmaceuticals. Consequently, in those countries, the generic production of patented pharmaceuticals, parallel importing, and piracy of patented drugs often was commonplace. (44) Article 70(8) of TRIPS requires a member nation not yet giving “patent protection for pharmaceuticals … commensurate with its obligations under Article 27” to provide a process to collect patent applications for pharmaceuticals during the member’s transition to full TRIPS compliance. (45) This specific reference to pharmaceutical patents in connection with the basic patent provision in Article 27 makes it clear the drafters of TRIPS intended to include pharmaceuticals under the definition of patentable inventions. One of the most significant victories in TRIPS for the pharmaceutical industry was the inclusion of pharmaceuticals as patentable inventions. (46)

According to TRIPS, patent protection must be offered for at least twenty years from the date of filing the patent application. (47) The rights conferred upon the patent holder are the exclusive rights to “prevent third parties not having the owner’s consent from the acts of: making, using, offering for sale, selling, or importing for these purposes that product,” (48) and to assign or transfer the patent and to enter into licensing contracts. (49) These broad rights reflect the most important aspect of a patent. Owning the patent is of no value if the owner cannot prevent others from making, using, or selling the patented item.

However, to the disappointment of the Western pharmaceutical industry, TRIPS also contains certain exceptions to Article 27’s broad patent coverage. Of most relevance to this article, exceptions exist for certain public health issues, for compulsory licensing, and for parallel importing, topics that were of paramount importance at the Doha Conference.

B. The Doha Conference and the Doha Declaration

The WTO’s Fourth Ministerial Conference met in Doha, Qatar, during the week of November 9-14, 2001, to discuss numerous international trade issues. (50) One of the most divisive objectives of the meeting was “to clarify what governments can do under the TRIPS Agreement, and to reduce their uncertainties about using the flexibilities that are built into the agreement.” (51) Many developing countries contended that the exceptions to Article 27 in TRIPS needed to be clarified so such countries would be more willing to implement the exceptions. (52) The developing nations stated they previously had hesitated to implement parallel trading or compulsory licensing for fear of trade sanctions or legal actions by Western governments and pharmaceutical industries. Pharmaceutical companies from the United States, Switzerland, and certain European Union countries lobbied against any changes, contending that TRIPS already contained adequate language to address the issue. (53) For example, TRIPS already included a statement that “[m]embers may … adopt measures necessary to protect public health and nutrition, … provided that such measures are consistent with the provisions of this Agreement.” (54)

Separate drafts were presented by groups of developed nations and developing countries. Finally, after much debate, (55) on November 14, 2001, the 142 members of the WTO adopted the Declaration on the TRIPS Agreement and Public Health (Doha Declaration). (56) The issue was so significant for the membership that it warranted its own declaration, separate from the main ministerial declaration adopted at the Conference to address other trade related issues.

In balancing the issues of patent protection and public health, the Doha Declaration promoted access to medicines while reaffirming generally intellectual property protection and the WTO’s commitment to TRIPS. The Doha Declaration states:

We agree that the TRIPS Agreement does not and should not prevent
Members from taking measures to protect public health. Accordingly,
while reiterating our commitment to the TRIPS Agreement, we affirm
that the Agreement can and should be interpreted and implemented in
a manner supportive of WTO Members’ right to protect public health
and, in particular, to promote access to medicines for all. In this
connection, we reaffirm the right of WTO Members to use, to the
full, the provisions in the TRIPS Agreement, which provide
flexibility for this purpose. (57)

As mentioned, TRIPS contains several exceptions to the basic patent coverage of Article 27 which give member nations the flexibility to access pharmaceuticals consistent with TRIPS. The Doha Declaration attempted to clarify these exceptions.

C. Public Health, Exceptions

Two TRIPS exceptions to the basic patent provision in Article 27 directly relate to public health. First, Part II of TRIPS states that members can deny patent coverage to protect public order and morality, including protection of human life or health. (58) There is no clearly articulated definition of public order. Therefore, drug companies fear that any circumstance where human life is implicated, which is usually the case with pharmaceuticals, would be considered a “public order” situation, warranting the setting aside of patent coverage for pharmaceuticals. Such a broad interpretation would totally eviscerate the intent of Article 70(8), as discussed above.

Secondly, TRIPS contains an exception to patentability for diagnostic, therapeutic, and surgical methods of treating humans. (59) This exception, taken to its extreme, would allow nations to refuse to grant or enforce pharmaceutical patents, because pharmaceuticals are therapeutic methods of treating humans. This is not the most consistent interpretation of the provision, as patent protection for pharmaceuticals is clear from Article 70(8). (60) Nevertheless, this exception remains and there is little precedent to govern its application at this time. The language of the Doha Declaration permitting nations to utilize TRIPS flexibilities “to the full” may encourage developing countries to be aggressive in their interpretation of these provisions

D. Compulsory Licensing

Under certain circumstances, including a “national emergency,” TRIPS allows countries to force a patent holder to issue a license, known as a compulsory license, to the government or a third party. (61) This compulsory license allows the government or third party to manufacture a generic version of the patented drug and to sell it domestically, possibly in competition with the patented product. This often occurs in situations where the patent holder is not using the patent in the
country or the government concludes the patent holder is doing so inadequately. (62) As Robert Sherwood states,
A compulsory licensing system is a policy contradiction. In effect,
the state, having bestowed an exclusive property right for an
innovation in order to serve the public good, then exercises its
discretion to reduce the value of that right through compelled
sharing of the property right under defined circumstances,
also to serve a public good. (63)

The TRIPS agreement does not contain the term “compulsory licensing.” However, Part II of TRIPS, Article 31, clearly contemplates usage of a patented product without the consent of the patent holder. Article 31 states as follows:

Where the law of a Member allows for other use of the subject
matter of a patent without the authorization of the right holder,
including use by the government or third parties authorized by
the government, the following provisions shall be
respected … (64)

Article 31 then proceeds to outline the “provisions” or conditions the member nations are required to “respect” prior to implementing compulsory licenses. The more relevant provisions are as follows. The proposed user must first make efforts to obtain an authorized license from the patent holder on “reasonable commercial terms and conditions.” (65) However, this requirement may be waived by a member in the event of “a national emergency or other circumstances of extreme urgency or in cases of public non-commercial use,” provided the patent holder is so informed. (66) In the event that an authorized license cannot be obtained, a license may be granted without the patent owner’s permission, but the scope and duration of the license must be limited to the purpose for which it was originally authorized. (67) Likewise, authorization may be terminated, but is not required to be terminated, when the circumstances which led to the original grant no longer exist. (68) The patent holder must be paid “adequate remuneration in the circumstances of each case, taking into account the economic value of the authorization.” (69) The authorized use under the compulsory license is to be “predominately,” but not necessarily exclusively, for the domestic market of the member country authorizing the compulsory license. (70)

Therefore, compulsory licensing is allowed under TRIPS so long as there is a reasonable attempt made to obtain a license first from the patent holder (absent national emergency or nonuse, in which case no such attempt need be made) and the patent holder is paid adequately based on the economic value of the license. Many nations, including Brazil and South Africa, have laws permitting compulsory licensing, although it is arguable whether these laws comport with the limiting conditions outlined in TRIPS. (71)

In encouraging Member nations to take advantage of the flexibilities in TRIPS to provide access to medicines, the Doha Declaration includes a statement regarding compulsory licenses: “Each Member has the right to grant compulsory licenses and the freedom to determine the grounds upon which such licenses are granted.” (72) Taken to its extreme, this provision could be interpreted to imply that none of the Article 31 limitations on compulsory licensing apply anymore. However, the Doha Declaration most likely did not intend to abrogate the limitations included in Article 31, as it also refers to and attempts to clarify the “national emergency” condition. More likely, the Doha Declaration was meant to insure that each member can determine the reasons for granting a compulsory license. If those grounds include a reason other than national emergency or nonuse, then TRIPS still requires the member to try first to obtain a license from the patent holder on reasonable commercial terms. If the grounds are nonuse or national emergency, such requirement is waived. The other conditions in Article 31 for issuance of a compulsory license, including payment to the patent holder, should continue to apply.

Regarding the clarification of “national emergency,” the Doha Declaration states that each Member has the right to determine what will constitute a national emergency in that nation:

Each Member has the right to determine what constitutes a
national emergency or other circumstances of extreme urgency,
it being understood that public health crises, including those
relating to HIV/AIDS, tuberculosis, malaria and other epidemics,
can represent a national emergency or other circumstances
of extreme urgency. (73)

Countries like the United States and Switzerland argued that any clarification of the TRIPS provisions should be limited to AIDS only, not “to the point that poor countries can manufacture cheap generics for any illness.” (74) These developed countries (75) submitted proposed draft declarations that limited any clarifications to major pandemics, such as HIV/AIDS, tuberculosis, and malaria, and pointed out that treatment of pandemics requires economic, social, and health policy solutions as well. (76) Minister Luis Ernesto Derbez Bautista of Mexico, the Chairperson for the Qatar Negotiations on TRIPS and Public Health/Access to Medicines, stated that the main debate was whether the scope of the Doha Declaration should “cover public health as a whole or focus on specific problems such as pandemics.” (77) However, the language of the final Doha Declaration leaves the determination to each member nation while providing examples of the types of crises that could warrant a national emergency.

Some developing countries, including Brazil, lobbied for the ability to export the generic drugs manufactured by one country under compulsory license into other countries. As noted, TRIPS currently requires that products manufactured under a compulsory license must be supplied primarily for the domestic market. The WTO members acknowledged that while the Doha Declaration allows countries to manufacture low-cost generics under a compulsory license, many of the poorest countries do not have the factories and other facilities necessary to allow domestic manufacture. A compulsory license would be useless to them. The Doha Declaration acknowledged that “WTO Members with insufficient or no manufacturing capacities in the pharmaceutical sector could face difficulties in making effective use of compulsory licensing.” (78) The Doha Declaration instructed the Council for TRIPS to resolve this issue in the future. (79)

E. Parallel Importing

Parallel importing occurs when the importing country purchases a product in another country, generally at a lower cost, and then distributes that product in the importing country in direct competition with the patent holder or authorized distributor. (80) Finding a lower-priced version of a pharmaceutical is not difficult. Routinely, “pharmaceutical companies charge different prices to consumers based on their geographic location. In other words, pharmaceutical companies divide the world into discrete geographic regions and charge different prices to consumers based on the region in which they buy the product,” with cheaper prices usually being charged in the least-developed markets. (81) This practice is known as differential pricing. Also, cheaper unauthorized generics are made in countries which do not yet recognize patent protection for pharmaceuticals, such as India, and then exported globally. TRIPS requires the latter practice to cease not later than January 1, 2005 for developing nations, including India and Brazil.

TRIPS does not directly address parallel importing. The issue was so controversial that the WTO drafters left the matter to be decided among the member nations. (82) TRIPS merely states in Article 6 that “for the purposes of dispute settlement under this Agreement, … nothing in this Agreement shall be used to address the issue of exhaustion of intellectual property rights.” (83) Because the issue is not addressed, governments are prohibited from bringing issues relating to parallel importing for dispute resolution via the WTO’s mandatory dispute resolution process. (84)

The issue of exhaustion of intellectual property rights to which TRIPS refers may be explained as follows. When a patent holder initially sells a product domestically, he has no right to control the further sale and distribution of that particular item or product in the country of original sale. However, the patent holder may hold patents in several countries, and the item may be further sold into another country where a patent is held. The issue of whether the patent holder can block the importation of the product into the other country depends upon whether the importing country’s laws reflect national or international exhaustion of patent rights.

Under national exhaustion, the patent holder has the right “to prevent importation of the sold product into another country where he has a patent.” (85) Under international exhaustion of rights, “once a patented product has been sold anywhere under the authority of the patent holder, the patent holder has no right to prevent further sale or importation on a global basis.” (86) Under either scenario, the patent holder’s permission is not needed to resell the particular item in the country of original sale. However, under national exhaustion of rights, the patent holder could block parallel imports into another country. Under international exhaustion, the patent holder could not. International exhaustion is often challenged on the basis that patents themselves are granted on a national, not international, basis. (87) Therefore, it is argued, exhaustion of rights logically should be decided on a national, not international, level.

Again, TRIPS does not attempt to answer this question. Therefore, member nations are free to adopt laws that reflect international exhaustion of rights, and thus permit parallel importation. (88) It is not clear how the question of exhaustion relates to Article 28, which outlines exclusive rights conferred upon the patent holder, including the exclusive right to import. The pharmaceutical industry has made the argument that TRIPS prohibits parallel importing altogether because TRIPS gives the patent holder the exclusive right to control importation in Article 28.

At the Doha Conference, the European Union, Switzerland, and the United States contended that parallel imports would destroy differential pricing because cheaper drugs would move into the developed country markets. (89) However, the Doha Declaration reaffirms TRIPS’ “hands-off” policy regarding parallel importing. The Doha Declaration states:

The effect of the provisions in the TRIPS Agreement that are
relevant to the exhaustion of intellectual property rights
is to leave each Member free to establish its own regime for
such exhaustion without challenge, subject to the [most favoured
nation] and national treatment provisions of Articles 3 and 4. (90)

Article 3 of TRIPS provides that each member must give the nationals of other member countries the same treatment it affords its own nationals with respect to protection of intellectual property. (91) Article 4 of TRIPS provides that if an advantage or privilege regarding the protection of intellectual property is given to the nationals of one member, it must be offered to the nationals of all members. (92) Thus, a country is free to allow parallel importing, as long as the practice is applied equally to all members.

One reason parallel importing is particularly appealing is that, unlike compulsory licensing, parallel importing obviates the need for a country to establish its own domestic manufacturing capabilities. The country simply searches internationally for the cheapest version of the product and then imports it for domestic consumption. However, some studies show that parallel importing does not result in a reduced price to the consumer. A study of the National Economic Research Associates found that “the major beneficiaries of parallel trade are the parallel traders who, on average, claim about 70 percent of the price difference between a parallel import product and the local price. Other direct beneficiaries are pharmacists and, to a much lesser extent, payors. The consumer hardly benefits at all.” (93) According to a spokesperson for the pharmaceutical industry,

parallel importing is terrible for the interests of the people.

Parallel imports don’t flow to those most in need of cheaper drugs.

They flow to where the seller can get the most money for the drug.

One of the few places where there is widespread parallel importing
is Spain. There are periodic drug shortages in Spain because of
resale into other EC countries, not to Spain’s people. The
sellers can get more money selling to other countries. (94)

Nevertheless, the Doha Declaration leaves such issues to the discretion of each member nation.

F. Phase-In Periods for Compliance

Despite strong dissent from the developed countries, TRIPS contains a phase-in provision. Developed countries were to be in compliance within one year, by January 1, 1996, but other countries were allowed a transition period to achieve compliance with TRIPS. (96)

The developing nations, such as India and Brazil, were to be in compliance by January 1, 2000. (97) The TRIPS Council currently is reviewing the TRIPS-related laws implemented by the developing nations to meet the 2000 deadline. (98) Finally, the least-developed nations were given ten years to achieve compliance and are to be in compliance by January 1, 2006. (99)

As previously mentioned, Article 70(8) of TRIPS requires member nations not giving adequate protection to pharmaceuticals to provide a process to collect patent applications during the transition period. (100) Those developing countries that did not previously provide patent protection for prescription drugs were given until January 1, 2005 to achieve coverage of such technologies. (101) The least-developed countries were expected to be in compliance with respect to pharmaceuticals by their original January 1, 2006 deadline. (102) The Doha Declaration extended the compliance deadlines for least-developed countries. Such countries were given an additional ten years, to 2016, to implement the TRIPS patent provisions regarding pharmaceuticals. (103)

G. Mandatory Dispute Settlement and Enforcement Capabilities

One of the most significant aspects of the WTO framework is its enforcement capability. All TRIPS disputes are to be enforced through the WTO’s mandatory dispute resolution process. (104) If a country does not comply with the decision of the WTO in such a process, the WTO can give the prevailing nation permission, authorized by the WTO, to impose trade sanctions on the noncomplying member. (105)

The United States has been involved in several WTO dispute resolutions related to TRIPS. (106) Approximately sixty percent of the disputes are settled at the consultation level and do not proceed to review by an arbitration panel. (107) The issue of compulsory licensing of pharmaceutical patents has not been addressed yet by the WTO Dispute Settlement Body, (108) and the issue of parallel importing, because it is not addressed by TRIPS, may not be brought before the WTO. Certain developing nations (109) submitted draft declarations at the Doha Conference proposing that members not be allowed to bring legal disputes to the WTO on any subject related to public health policies. (110) The developing nations were not successful in obtaining such a provision in the final Doha Declaration.

H. Impact of the Doha Declaration

The developing nations, AIDS activists, and international pharmaceutical companies all hailed the Doha Declaration as an acceptable compromise. Therefore, the Doha Declaration provided something of value to all parties.

The least-developed nations won the political battle they came to the meetings to achieve. They were successful in negotiating a document that expressed the strong moral position that “the TRIPS Agreement does not and should not prevent members from taking measures to protect public health.” (111) Furthermore, the Doha Declaration gave the developing nations the “right to protect public health and, in particular, to promote access to medicines for all.” (112)

Too often in the past, the least-developed nations made speeches advocating their position at WTO conferences, then retreated to the sidelines to complain silently that their needs and interests were being ignored by the industrialized nations of the world. On this issue, they were heard. They formed coalitions, gained the support of the European Union, and strongly advocated for their position throughout the Fourth Ministerial Conference. They left the conference issuing victorious press releases to their constituents that they had gained a seat at the world economic table. (113)

The pharmaceutical industry (and by extension the intellectual property community) also claimed victory because the Doha Declaration achieved its political objectives without overthrowing the world’s existing intellectual property framework. Other than granting a ten-year extension for the poorest nations in the WTO to conform their patent laws regarding pharmaceuticals with that of the world intellectual property community, nowhere in the Doha Declaration does the document modify the language of TRIPS adopted in 1994. The Doha Declaration speaks clearly (with three specific references) to a reaffirmation of the validity of TRIPS. While each of the carefully drafted statements confirming TRIPS was framed by public health concerns for HIV/AIDS and other epidemics of the least-developed countries, no aspect of TRIPS was changed, except for the United States–sponsored ten-year compliance extension for least-developed nations. (114) The critical concerns of the intellectual property community regarding compulsory licensing and parallel imports were not materially weakened in Doha. To the extent that TRIPS previously constrained compulsory licensing primarily to situations involving national emergencies, and its use “predominately for the supply of the domestic market,” those constraints still exist. TRIPS was originally silent on the controversial issue of parallel imports, and remains silent on that issue.

As a practical matter, the Doha Declaration did not significantly change TRIPS or international patent protection. Therefore, while the United States made concessions at Doha, it did not concede more than it originally offered at the Fourth Ministerial Conference.

II. THE IMPACT OF THE 2001 PRICE AND LEGAL CONCESSIONS ON PATENT PROTECTION FOR PHARAMCEUTICAL PRODUCTS

The adoption of the Doha Declaration in November 2001 was the culminating event in a series of price and legal concessions made in 2001 by the United States and the pharmaceutical industry. As stated earlier, in 2001, the developed nations and the pharmaceutical industry also made concessions in drug pricing and forwent legal positions relating to patent protection. These concessions centered upon events in three countries: India, Brazil, and South Africa, each of which has adopted its own unique approach to addressing access to AIDS medicines and TRIPS compliance.

A. India

1. India’s Role as Supplier of Inexpensive Pharmaceuticals

India (115) 15 has previously denied patent coverage for pharmaceuticals, and therefore has developed an extensive generic manufacturing industry. Historically, India’s weak patent laws allowed Indian manufacturers to make inexpensive copies of existing pharmaceuticals. Because the information already existed and merely needed to be copied, Indian companies did not need to invest in research and development expenditures. (116) Indeed, Indian pharmaceutical companies usually spend one percent of sales on research and development, while their Western counterparts spend about fifteen percent. (117)

India’s generics industry has eighty-five percent of the Indian market and makes approximately $900 million a year from sales in India alone. (118) However, Indian companies have not stopped with supplying drugs to fellow countrymen. India is also the world’s largest manufacturer of generic anti-AIDS drugs, with an overall generics industry of $4 billion. (119) India is of concern to the Western pharmaceutical industry because India can supply cheaper versions of patented drugs to countries seeking low-cost parallel imports.

2. India’s Role in the African Price Concessions

One of the more well-known Indian generic manufacturers is Cipla, Inc. In February 2001, Cipla offered to sell to the South African government generic versions of eight of the fifteen antiretroviral drugs. The low price of the generics made an entire anti-AIDS regime available for $600 a year, (120) versus the $10,000 to $15,000 annual cost in the United States.

In response to Cipla’s offer, large pharmaceutical companies began discounting their drug prices in Africa. This response was due in part to negative political pressure on the industry and in part to ward off the parallel importing of Cipla’s products into African countries. On March 7, 2001, Merck offered to sell two of the most widely used anti-AIDS drugs to certain developing countries at cost: $600 per year for Crixivan and $500 per year for Sustiva. (121) On March 14, 2001, Bristol-Myers stated it would reduce the price of its AIDS drugs, Zerit and Videx, in African countries to a combined price of $1 per day, a price Bristol-Myers says is below its cost to manufacture the drugs. (122) Perhaps of equal importance, Bristol-Myers also stated it would no longer try to stop generic drug makers from selling generic versions of Zerit in Africa. (123)

On March 27, 2001, Abbott stated it would sell two of its AIDS drugs, Norvir and Kaletra, in Africa for a price per drug of less than $1000 a year. Abbott stated this would result in no profit to Abbott, as such a price reflected only the cost to manufacture, distribute, and pay import duties. (124) Shortly thereafter, Glaxo offered to sell Combivar for $730 in Africa. (125) In June 2001, Pfizer agreed to donate its antifungal drug, Diflucan, to AIDS patients for free in fifty of the least-developed countries. It has been suggested that Pfizer chose to give the drug away for free, rather than risk revealing profit margins by lowering the price. (126)

The dramatic drug price reductions in Africa did not stop with AIDS drugs. On May 3, 2001, Novartis, a Swiss drug company, discounted the price in Africa of Riamet, a malaria drug, to $2 for a complete treatment, which it claims represents its direct cost to manufacture the drug, exclusive of research and development costs. (127) The same drug sells for $20 per treatment in the United States. (128)

Despite the fact that many of the pharmaceutical companies offered their drugs in Africa for prices that reflected cost only, none of the pharmaceutical companies offered discounts as low as Cipla’s prices. Still, Cipla has stated that few African nations are buying its discounted drugs, leading to the conclusion that even at Cipla’s low price, the drugs are still too expensive for many African countries. (129) In South Africa, the government’s health spending is only $50 per person per year. (130) Another reason for poor sales of Cipla’s drugs, in addition to price, is quality concerns. (131) Although the larger generics manufacturers, such as Cipro, hire the U.S. Food and Drug Administration (FDA) to certify the quality of their facilities, the majority of the smaller manufacturers are unregulated and India’s safety standards in general are considered to be lax. (132)

The impact of the African price reductions on the pharmaceutical companies has extended beyond pricing in Africa. As a result of the discounts and the resulting disclosures of profit margins, many of the drug companies exposed themselves to further criticism for the high prices they charge for the same drugs in developed markets. For example, in 2001, after the drug discounting began, United States college campuses staged protests of drug-company pricing. At least forty states called for price-control legislation. Eight states are reviewing pooling into regional purchasing powers that could command discounts from the pharmaceutical companies for drugs sold in the United States market. (133) These kinds of profit disclosures fuel the debate on differential pricing, but without such pricing, the pharmaceutical industry contends it will not be able to recoup its investment in patented drugs and continue to generate new drugs and medicines.

3. Reluctant Compliance with TRIPS

Now that India is a signatory to TRIPS, the country will be forced to undergo substantial changes to its laws in the next few years to provide patent coverage to pharmaceuticals, and its position as the world’s largest manufacturer of generic AIDS drugs may end. India must offer patent coverage to pharmaceuticals under TRIPS by January 1, 2005. In order to comply with TRIPS, Indian companies should either manufacture generic drugs only after the patents lapse or invest in research to develop their own drugs. (134) However, most Indian generics manufacturers are not sufficiently advanced to engage in research and development efforts. Thus, there is a significant incentive for India to find a way to continue to support its generic industry.

India is moving slowly toward its TRIPS obligations. In 1997, the United States, via the United States Trade Representative (USTR), brought a complaint against India with the WTO. The USTR alleged that India had not set up a “mailbox” system to receive patent applications on pharmaceutical products, as required by Article 70(8), and that India had not implemented exclusive marketing rights, as required by Article 70(9). (135) In September 1997, the WTO issued a panel decision in which it determined India was noncompliant with both Article 70(8) and (9). (136) India appealed, (137) but the Appellate Body upheld the decision in December 1997. (138) In January 1998, the Dispute Settlement Body formally adopted the decision. (139) In 1998, India agreed to the recommendations of the Dispute Settlement Body and passed amendments to its patent laws in 1999 which brought it into compliance with the recommendations. (140)

India continued to move toward compliance at a pace unacceptable to the pharmaceutical industry. (141) In late December 2000, India introduced legislation to amend its patent law. (142) The new law allows the government to issue compulsory licenses in national emergencies, situations of extreme urgency, and public noncommercial use, but does not contain the required TRIPS limitations, such as attempting to obtain a voluntary license first and compensating the patent holder for the reasonable value of the license. (143)

The new law also allows parallel imports: the Indian government can parallel import a pharmaceutical that is patented in India without the patent holder’s permission, if the importation is for the government’s use, for a government hospital’s use, or for use by a private hospital specified by the government. (144) Arguably, this provision discriminates against a field of technology in violation of TRIPS, Article 27, as it applies only to pharmaceuticals. Article 27 provides that patent rights are to be “enjoyable without discrimination as to … the field of technology.” (145)

The new Indian patent law leaves much to be desired in terms of compliance with TRIPS and reflects further reluctance by India to participate fully in the requirements of TRIPS. In addition, India did not recognize patent protection for pharmaceuticals in existence prior to 2005 and TRIPS does not require it to do so retroactively. Therefore, according to a U.S. pharmaceutical spokesperson, after 2005, “India can still make generically all drugs in existence prior to 2005, even if such drugs might be introduced into the market as late as 2015.” (146) All the current antiretrovirals existed prior to 2005 and thus India’s generics industry will have a large potential market even alter 2005. Nevertheless, this potential market most likely will continue to be constrained by quality and pricing concerns.

B. Brazil

1. Brazil’s Aggressive AIDS Program

Brazil has implemented a very aggressive program of producing and providing generic versions of AIDS drugs to its citizens. Since 1997, the Brazilian government has offered free antiretrovirals to AIDS patients. In 2000, the government spent $303 million in providing such medicines to approximately 100,000 persons. (147) Since 1998, the government has been purchasing the active ingredients of brand-name AIDS drugs and manufacturing generic versions of these drugs in Brazil. (148) State-owned laboratories now produce generic copies of eight of the drugs used in the triple cocktail therapy, at a small percentage of the prices charged by large pharmaceutical companies. (149) For example, in Brazil, a gray market version of zidovine sells for only one-fourteenth of the United States price. (150)

The Brazilian program has been successful. As a result of the program, the AIDS death rate has been lowered by fifty percent in four years, the transmission rate has been lowered, and the spread of the HIV virus has been greatly curtailed. (151) in 2001, Brazil had about 210,000 cases of HIV/AIDS, but through its aggressive approach, it has held the HIV infection rate at less than one percent of the population. (152)

2. Price Concessions in Brazil

In March 2001, Brazil threatened to begin manufacturing and distributing generic versions of Merck’s anti-AIDS drugs, Sustiva and Crixivan, even though Merck has a valid patent on Sustiva in Brazil. (153) Merck warned the Brazilian state laboratory, Far-Manguinhos, that it would take appropriate legal action if the laboratory began to manufacture the drug in violation of international patent laws, but Far-Manguinhos had already bought some of the ingredients to make Sustiva from India. (154)

On March 31, 2001, in response to the threat, Merck agreed to reduce prices in Brazil on those AIDS drugs. Sustiva will be offered to Brazil for $920 a year and Crixivan for $1,029 per year.(155) In the United States, Sustiva typically sells for approximately $4,700 a year and Crixivan for approximately $6,000 a year. (156) This discount is estimated to save the Brazilian government sixty percent, or about $38 million per year on the cost of these two drugs. (157)

Likewise, Roche Holding, a large Swiss drug company, finally capitulated to Brazilian pressure to lower prices or lace a compulsory license. On August 22, 2001, after the failure of lengthy price negotiations between Brazil and Roche, Brazil threatened to issue a compulsory license on Roche’s anti-AIDS drug, Viracept, thus breaking the patent held by Roche on Viracept in Brazil. Health Minister Jose Serra stated he had started the process to issue such a license to allow Far-Manguinhos to produce Viracept pursuant to a provision of Brazilian law that allows such a license in the event of abusive prices. (158) The Minister stated that Brazil bought eighty-two million units of Viracept each year for $88 million, or twenty-eight percent of the entire government spending for a year on its AIDS program. (159) The government estimated domestic production would save it forty percent, or $35 million a year. (160)

Roche spokespersons expressed surprise at the announcement, noting that Brazilian prices were already fifty percent of the cost in the United States, the current negotiations concerned Brazil’s needs for Viracept in 2002, and Roche had plans to begin producing Viracept in Brazil in 2002. (161) In fact, Roche’s current contract with Brazil did not even expire until 2002. (162) Nevertheless, in short order Roche capitulated. On August 31, 2001, the company announced that it had reached agreement with Brazil to cut prices on Viracept by an additional forty percent, to a final price which is thirty percent of the United States’ cost. (163)

3. Legal Concessions by the United States

Even when threatened with a patent complaint filed against it by the United States with the WTO, Brazil held firm to its position. In early 2001, the United States filed a complaint based on a provision of Brazilian law that allows the government to issue a compulsory license in the event a medicine patented in Brazil is not produced domestically in Brazil within three years. (164) The United States based its argument, in part, on Article 27 of TRIPS which states that patents “shall be available and patent rights enjoyable without discrimination as to the place of invention, the field of technology, and whether products are imported or locally produced.” (165) The pharmaceutical industry supported the initial decision of the USTR to initiate the WTO dispute, applauding the efforts of the USTR to ensure member nations live up to their responsibilities under TRIPS. (166)

On June 25, 2001, the first day of the United Nations General Assembly on AIDS, the United States unexpectedly withdrew its patent complaint against Brazil in the WTO and agreed to a procedure to settle out of court by forming a joint panel to deal with the issue. (167) In exchange for dismissal of the suit, Brazil agreed to give the United States advance notice of any plan to apply the compulsory licensing provision in Brazil’s patent law. (168) The pharmaceutical industry supported the bilateral consultation forum eventually agreed upon by the USTR and Brazil. (169) The withdrawal was due in part to sustained negative public pressure against the United States and its pharmaceutical industry. AIDS activists expressed great pleasure over the withdrawal of the complaint in favor of negotiations. (170)

4. Expansion Plans

On September 12, 2001, Doctors Without Borders announced it was working with Brazil to export the country’s aggressive anti-AIDS program and its locally manufactured drugs to other developing countries. Bernard Pecoul, President of Doctors Without Borders, and Brazil’s heath minister, Jose Serra, signed a letter of intent to recreate the Brazilian program in Africa, Asia, and parts of Latin America. (171) Presumably this will include the production and sale of generic drugs and the free distribution of them to patients. As mentioned, Brazil already makes eight of the drugs used in antiretroviral therapy. (172) Doctors without Borders has also said it intends to buy these drugs from the Brazilian state laboratory, Far-Manguinhos. (173) Brazil is hoping the Doha Declaration and the mandated 2002 negotiations will enable it to export its low-cost generics to other countries lacking the resources to manufacture their own generics. (174) However, as noted, Brazil cannot export its drugs yet to other countries because TRIPS currently requires that production of pharmaceuticals under a compulsory license must be primarily for domestic use, not export.

C. South Africa

1. South Africa’s Belated Attempts to Address Its AIDS Crisis

While India is the world’s largest supplier of generic antiretrovirals, South Africa is the largest source of demand for such products. South Africa has the highest rate of infection in the world (4.2 million or one in every eight persons infected). (175) By the year 2005, it is estimated that almost twenty percent of the workforce will be infected with the virus. (176) However, because the average annual income in South Africa is less than US$3,000, the average South African cannot afford AIDS medicines at United States prices. (177)

Historically, South Africa has done very little to address its AIDS crisis. In fact, South African President Thabo Mbeki has resisted declaring AIDS a national emergency, has stated AZT is too toxic for regular use, and even has questioned whether HIV causes AIDS. (178) Finally, in 1997, South Africa introduced the 1997 Medicines and Related Substances Control Act (Medicines Act) (179) that allowed the parallel importation into South Africa of generic anti-AIDS drugs and the manufacture in South Africa of such generics, pursuant to a compulsory license if necessary. Prior to this law, South Africa had stronger patent protection provisions in place, (180) but the severity of the AIDS epidemic in that country caused South Africa to change its position.

2. The South African Medicines and Related Substances Control Act of 1997

A significant goal of the Medicines Act was to encourage lower-cost generic medicines to address the AIDS crisis. The Medicines Act allows the South African government to issue compulsory licenses to protect the health of the public. Under Section 15(C)(a) of the Act,

[the Minister of Health] may prescribe conditions for the supply of
more affordable medicines in certain circumstances so as to protect
the health of the public, and in particular may, (a) … determine
that the rights with regard to any medicine under a patent granted
in the Republic shall not extend to acts in respect of such medicine
which has been put onto the market by the owner of the medicine, or
with his or her consent. (181)

The pharmaceutical industry, the United States, and certain European countries complained that Section 15C(a) was so broad it allowed the Minister of Health to permit compulsory licensing at will, in violation of any South African patent right. (182) Of particular concern is the language that drug patent rights “shall not extend to acts in respect of such medicine which has been put onto the market by the owner of the medicine.” The United States feared this language could be interpreted to allow the Minister of Health to grant compulsory licensing as soon as the patent holder offered the drug for sale anywhere in the world. (183) Furthermore, compulsory licensing is permitted by TRIPS only subject to certain restrictions. For example, as discussed in Part I above, the patent holder must be compensated according to the economic value of the license, and there must also be an attempt made to agree to reasonable terms for a voluntary license. South Africa’s law contains none of these requirements. (184)

Section 15C(b) of the Medicines Act also provides for parallel imports of pharmaceuticals. Section 15C(b) allows the Minister of Health to
prescribe the conditions on which any medicine which is identical
in composition, meets the same quality standard and is intended to
have the same proprietary name as that of another medicine already
registered in the Republic, but which is imported by a person other
than the person who is the holder of the registration certificate of
the medicine already registered and which originates from any site
of manufacture of the original manufacturer as approved by the
council in the prescribed manner, may be imported. (185)

While TRIPS does not address parallel imports, it does include a provision in Article 27 that patent rights are to be enjoyed without discrimination as to the field of technology. (186) Arguably, this provision discriminates against a field of technology in violation of TRIPS, Article 27, as it applies only to pharmaceuticals.

As a result of its concerns over South Africa’s new law, the United States and the pharmaceutical industry pursued efforts to stop the implementation of the Medicines Act.

3. Legal Concessions in the Pharmaceutical Industry Suit

Upon passage of the Medicines Act, the United States government approached the WTO on behalf of the United States pharmaceutical industry to challenge the Medicines Act. The United States then engaged in direct negotiations with South Africa to bring about the repeal of Article 15C. (187)

In 1998, during these negotiations between South Africa and the United States, PhRMA and thirty-nine other companies brought suit against South Africa in the Constitutional Court of South Africa to have the new Medicines Act repealed and to compel South Africa to honor its TRIPS obligations. (188) Plaintiffs included Merck and Bristol-Meyers. The plaintiffs argued that the law as written was vague and ambiguous and granted overly broad powers to the Minister of Health to set aside patent rights. (189)

In September 1999, as a result of pressure from the WTO and lobbying from the United States government, South Africa agreed to an understanding with the United States. The United States agreed to remove economic sanctions and South Africa agreed to amend its Medicines Act to comply with international standards of intellectual property protection. (190) South African Minister of Health De, Tshabalala-Msimang acknowledged that the Medicines Act needed to be redrafted to comply with TRIPS and agreed to request the legislature to make such amendments in early 2000. (191)

The promised amendments to the Medicines Act were not made in early 2000. Nevertheless, the United States ceased its strenuous pursuit of this matter, due in large part to negative publicity and pressure from the global marketplace. (192) Meanwhile, intense international pressure also came to bear on the pharmaceutical industry. Former South African President Nelson Mandela and Secretary General Kofi Annan of the United Nations requested the companies to drop the lawsuit. (193) The European Union, WHO, and France’s National AIDS Council, as well as other international groups, supported South Africa’s position. (194) Thousands of protesters, including AIDS activists, doctors, lawyers, and African officials, marched repeatedly in South Africa, demanding cheaper prices for anti-AIDS drugs and a dismissal of the suit. (195) About 300,000 persons and 140 groups from 130 nations signed a worldwide petition demanding that PhRMA drop the suit. (196)

On April 19, 2001, due to the intense negative publicity, PhRMA and all thirty-nine companies dropped the lawsuit. (197) The plaintiffs were required to acknowledge that the South African law was not in violation of TRIPS and could therefore be enforced as written, without amendment. (198) The plaintiffs even agreed to pay the legal expenses of the South African government incurred in the lawsuit. (199) According to a spokesperson for the U.S. pharmaceutical industry, “South Africa was not about AIDS drugs. It was a constitutional challenge on the capricious nature of the law. What the industry got out of the dismissal was South Africa’s commitment to pass regulations relating to the new law that are in compliance with its international obligations.” (200) Whether such regulations are passed and clarify the Medicines Act to reflect full TRIPS compliance remains to be seen. Meanwhile, South Africa still has not made significant efforts to address its AIDS crisis.

D. Impact of the 2001 Concessions

The Chief Executive Officer of Glaxo-Smithkline, Jean-Pierre Garnier, has stated, “without patents, the industry ceases to exist.” (201) Nevertheless, in 2001 the pharmaceutical industry had to sacrifice prices and legal positions in many countries in order to avoid intense negative publicity associated with its approach to AIDS in the developing world. The most significant concessions in 2001 may have been the retreats in Brazil and South Africa from valid legal challenges to the TRIPS compatibility of those countries’ laws because of such negative publicity. The legal issue of whether these laws are TRIPS compliant was lost in the 2001 price wars and media campaigns.

It appears that the multinational drug companies realize the value of patience, as well as the political impact of continuing to fight importation of AIDS drugs in sub-Saharan Africa. In exchange for providing humanitarian aid (in the form of free or low-cost drugs) to help fight the epidemic in the least-developed nations, the pharmaceutical industry is hoping to improve its public image in the developed nations (where its profit potential is much greater). This strategy preserves the status quo of patent protection in profitable international markets while joining the world health community in its fight against the spread of AIDS. In the long term the developing nations will be required to meet international patent standards imposed by TRIPS or be subject to future legal challenges pursuant to the WTO dispute resolution process. While future WTO challenges may occur, the pharmaceutical industry currently has little choice but to retreat from such legal challenges and join the battle.

III. THE AIDS PANDEMIC REQUIRES A HOLISTIC APPROACH

All the trade concessions and compromises by the United States and the pharmaceutical industry made in 2001 will not effectively address the public health issue of AIDS. Patents are not the impediment to access to medicines, and the availability of inexpensive anti-AIDS drugs is not a panacea to the AIDS pandemic. Simply reducing the prices of patented drugs alone (via discounts, compulsory licensing, or parallel importing) does not begin to address the complicated issue of AIDS in the developing world. Drugs that cure tuberculosis and malaria are available in the developing world at a cost of only pennies a day, but these diseases still are listed among the world’s leading causes of death. (202) Access to cheap medicines has not solved the problem of these diseases in the developing world. Furthermore, the majority of the antiretroviral drugs are not even patented in the African countries. (203)

The events of 2001 primarily addressed the cost factor in accessing medicines. In order to provide their citizens with access to medicines, developing countries also must address issues such as poverty

A. Issues Related to Poverty and Infrastructure

Most African countries have budgets too small and health systems too weak to take advantage of the availability of inexpensive drugs, even at Cipla’s discounted rates. (204) Cipla’s generic AIDS drugs, despite their significantly lower price, have sold very poorly. Venkat Kamalakar, general manager of international operations for Aurobindo, another Indian generic drug manufacturer, has likewise stated that the “rock-bottom prices” charged by Aurobindo are too expensive for most African countries. (205) Legal debates over compulsory licensing and parallel importing are of minimal use to many African countries too poor to afford anti-AIDS drugs at any price.

Many African countries lack the infrastructure to distribute the medicines properly, even if available. Portions of many developing nations lack decent roads and transportation systems, electricity, sewage, and clean water. For example, in South Africa, many rural clinics do not have running water, electricity, or a reliable supply of medicines. (206) Twenty percent of the world’s population does not have access to safe drinking water and an estimated twenty-five million people die every year from diseases related to the consumption of unsafe water. (207)

In addition, many developing countries lack the health care infrastructure needed to educate patients about proper usage of a complicated regime of antiretrovirals, and to monitor for the numerous side effects. (208) The triple cocktail therapies “require taking a dozen or more pills every day at precise intervals without fail, plus high-tech monitoring for viral resistance, plus still more drugs to control side effects.” (209) The type of medical involvement and monitoring required will be very difficult to achieve in developing nations with limited health care infrastructure. There are fewer than three doctors per 10,000 patients in many sub-Saharan countries. (210) As of March 2001, in South Africa, forty percent of the clinics did not have the means even to offer HIV tests. (211)

To illustrate these difficulties, consider the poverty and lack of infrastructure in the small town of Hlabisa, South Africa. In Hlabisa, over sixty percent of the population obtains its drinking water from rivers and rainwater. (212) Dr. Smangaliso Hlengwa is the only private doctor in the village. He says his patients often must choose between buying food or medicine. One patient only managed to pay for a few months of a particular drug before he exhausted his funds and had to stop the regime in midstream. (213) In the local hospital, forty percent of the nursing positions are open, and the staff that is available cannot provide HIV counseling, testing, and monitoring to the patients they currently have. Physicians and nurses cannot even track whether the tuberculosis patients have completed their six-month regimes, let alone track the complicated regimes of AIDS patients on antiretrovirals who must take these pills the remainder of their lives. (214)

B. Issues Related to Health

Although developing countries focus on increased compulsory licensing and parallel importing to address the AIDS pandemic, there are major health concerns related to the quality of the drugs acquired via these methods. Poor quality imitations may contain contaminants that harm and even kill. (215) Sometimes, counterfeit drugs that have expired and should have been destroyed are repackaged and sold as parallel imports. (216) Such drugs also may contain inadequate or inappropriate instructions, or information in another language, all of which can contribute to improper and potentially dangerous usage. (217)

Regulation of generic drug manufacturers in many developing countries is poor. As mentioned, Cipla has been certified by the U.S. FDA. However, many generic drug manufacturers in India and elsewhere have not had a similar quality control check, and many developing nations do not have an internal regulatory body similar to the FDA. (218) As one spokesperson for the pharmaceutical industry stated, explaining why Cipla’s drugs have not sold well, even at their deeply discounted prices, “Africans don’t want to buy from India. It’s a quality issue, not a price issue. There are about 29,000 drug companies in India. Nobody is regulating them.” (219)

Kenya allowed parallel imports until 1997 and then banned them after being overwhelmed with unsafe, poor quality drugs. (220) Kenya found “alarming evidence” of counterfeit drugs and had difficulty making effective recalls of the drugs. Ultimately, Kenya changed its laws to prohibit parallel imports altogether. (221)

Another concern with simply flooding the developing world with cheaper drugs is that without proper monitoring and supervision, new strains of AIDS that are resistant to the antiretrovirals will emerge. New resistant strains of AIDS may develop if people do not follow the complicated dosage regimes correctly, stop taking the medicines midstream, or take imitation versions that are not full strength. (222) In developing countries with poor health infrastructures, the public health system likely will not be able to monitor usage properly. (223)

This is not a hypothetical concern. Scientists note that some strains of HIV are already developing resistance. (224) In the United States, the dramatic decline in death rates from 1995 to 1999 is due to the widespread use of antiretroviral therapy, not to behavioral changes. (225) Thus, many patients in the developed nations are likewise at risk if new resistant strains emerge. Many of the gains made by antiretroviral therapy stand to be lost in the developed and developing nations if such resistant strains emerge.

C. Issues Related to Religion and Culture

Social and traditional practices create great hurdles to making medicines accessible to all. The availability of low-cost antiretrovirals will not impact social customs. In many developing nations, there is an incredible social stigma attached to the AIDS disease, which causes those infected to keep it hidden and not seek testing or treatment, for fear of losing jobs, families, and friends. (226) Even prevention programs suffer because of the stigma associated with the disease. (227) Many religious groups oppose the use of condoms and believe in abstinence as the only acceptable form of prevention. For this reason and issues related to cost, condom usage in many African nations is extremely low. Although the average South African has their initial sexual encounter at approximately fourteen or fifteen years old, if such a teenager were to ask for condoms in an average clinic, let alone anti-AIDS drugs, he or she would be chastised and told to practice abstention. (228)

Lack of education about the disease is also a contributing factor to people not seeking treatment. Many women in rural African villages do not know the names or symptoms of many sexually transmitted diseases. (229) This is particularly disturbing when compounded with the fact that in many cultures, women are not educated and are illiterate. Finally, armed conflict and political unrest in parts of Africa also undermine the ability to provide access to anti-AIDS medicines. (230)

Clearly, reducing the price of drugs alone is not the sole solution to the problem of access to medicines in developing countries. A holistic approach that addresses all the relevant hurdles is required. Without such efforts, the recent concessions by the United States and the pharmaceutical companies are not liable to impact the AIDS pandemic significantly.

D. Issues related to Economics

A holistic approach to the AIDS crisis must include a consideration of the economic and societal importance of pharmaceutical patents. Thus, the recent demands of the international community for lower-priced drugs must be balanced against the need to maintain incentives for the pharmaceutical industry to continue to develop new medicines.

The pharmaceutical companies express a need to engage in premium pricing and differential pricing to recoup the high costs of research and development. According to studies cited by the pharmaceutical industry, the cost to discover and develop a new pharmaceutical is estimated at $500-$600 million. (231) A recent study from the Tufts Center for the Study of Drug Development at Tufts University estimates the average cost of development of a new pharmaceutical to have “more than doubled since 1987, to $802 million,” with much of the increased cost being due to the increase in costs for human test trials. (232) The study also stated it takes about twelve years from the time a new chemical compound is first synthesized until it is approved by the FDA for marketing, and that “of every 5,000 potential new drugs tested in animals, only 5 are promising enough to be tested in humans … and only one of those five is eventually approved for marketing.” (233) In addition to the cost of development and clinical trials, the cost of pre-launch marketing to doctors and customers has increased to around $400 million per drug. (234) However, according to studies cited by the pharmaceutical industry, the cost to demonstrate the bioequivalence of a generic product in the United States is currently estimated at only approximately $1 million. (235)

Firms in the pharmaceutical industry typically invest ten percent or more of their sales into research and development. United States firms invest an even higher amount, estimated to be between 16% and 20.8% of revenue. (236) In the United States in 2001, drug companies are estimated to have invested $30.5 billion in research and development costs, an 18.7% increase over 1999 levels. (237) Approximately thirty-six percent of global research and development in the area of pharmaceuticals is conducted by United States companies, (238) and forty-five percent of the 152 major drugs developed between 1975 and 1994 were developed in the United States. (239)

Despite the significant cost of research and development, only three of ten approved drugs, on average, recoup their research and development costs, according to the pharmaceutical industry. (240) Most are discarded because they cause serious side effects or are not effective.

There are currently over 1000 drugs being developed by United States pharmaceutical companies. (241) The United States pharmaceutical industry had ninety-eight medicines for AIDS being developed in 2001, including fourteen potential vaccines. (242) A commentator noted:

Without strong patent protection in developing countries, we risk
making future research into life saving drugs financially
unattractive. The loss of a possible AIDS vaccine or drug that would
ameliorate the effects of malaria seems unconscionable. Yet, this
very possibility results from making drug research unviable due to
overly high costs that cannot be recouped without sufficient patent
protection. (243)

The economic question of profitability becomes even more compelling when one takes into account that a patent does not grant a monopoly on the treatment of a disease. It merely grants the patent holder the exclusive rights to market the patented drug for a specified period of time. A substitute drug which does not operate in the same way that the patented drug operates may also treat the disease, but the sale of such a substitute drug would not violate the original patent. (244) A new competitive drug, often almost identical, usually comes out in less than a year, such as the almost interchangeable arthritis medicines Celebrex (from Pharmacia) and Vioxx (from Merck). (245) Zantac and Tagamet are both patented treatments for ulcers that can be substituted for one another. (246) Thus, the ability to recoup the cost of research and development becomes even more critical considering that competition usually will occur within a year or two. Furthermore, the twenty-year patent term is limited for pharmaceuticals as it takes approximately ten years from the time a drug is developed and patented until it is approved for market to humans. (247)

Studies have shown that countries with stronger patent protection attract greater investment and interest from the developed countries. (248) For example, approximately ninety-three percent of the United States, German, and Japanese chemical and pharmaceutical companies surveyed in a World Bank Study reported that they definitely consider the strength of a nation’s patent and intellectual property system before deciding to invest in research and development operations there. (249) By contrast, India performs only 0.001% of global pharmaceutical research and development. (250) A 1996 McKinsey study on India’s pharmaceutical industry noted that corporations restricted their activity in India’s market as soon as India adopted its weak patent laws in 1970. Some only offered products for sale in India if the patent had already expired. (251)

The pharmaceutical industry argues that research and development “is a global joint cost that serves all consumers in all countries of the world that use the product.” (259) Everyone suffers if the incentive to perform costly research and development and seek patent protection loses its economic value.

IV. CONCLUSION

The year 2001 saw major activity in the struggle to balance patent protection and access to medicines with the culminating event being the adoption of the Doha Declaration. The Doha Declaration is an impressive example of contemporary global diplomacy. It reflects the “heart” of a global village that recognizes the massive tragedy of AIDS in developing nations, and particularly in Africa and Asia, while at the same time “reiterating our commitment to the TRIPS Agreement.” (253)

After the Doha Declaration, global intellectual property rights remain intact, with a humanitarian exception for those least-developed nations ravaged by the AIDS pandemic. The political compromises made in 2001 by the pharmaceutical industry by dismissing its litigation in South Africa, by the United States in addressing its claim against Brazil outside a formal WTO process, and by the pharmaceutical companies in making certain price concessions, cooperate with the spirit of the Doha Declaration.

Nevertheless, the AIDS pandemic will not be conquered without significant additional weapons. (254) Practically, those additional weapons will have to be provided as “part of the wider national and international action to address these problems.” (255) As discussed, public health infrastructures, clean water, and AIDS awareness and education are all required to fight the AIDS pandemic effectively. It will be a difficult task merely to deliver and assure compliance with the complex regimen of anti-AIDS medicines now being used with modest success in the more developed nations. Without development of the public health infrastructure significantly beyond its existing scope, drug delivery will be a frustrating failure for most of those persons currently infected. Each of the components of an AIDS campaign will be expensive, and the world health community will have to be committed to providing the resources to those in need in order to contain the spread of the disease and extend the lives of those currently infected. Making AIDS drugs affordable to poor nations is important, but will not solve the real problem of the epidemic without massive financial support from the world health community, and ultimately from those nations and citizens who have the desire to provide that support voluntarily. (256)

There are signs that the United Nations and WHO are actively seeking the necessary international cooperation and funding to effectively fight the AIDS epidemic. A recent UNAIDS and WHO initiative labeled “Accelerating Access” has produced agreements between ten sub-Saharan African nations and pharmaceutical companies to provide antiretroviral AIDS drugs at a reduction of eighty-five percent from previous prices. (257) Another initiative of WHO, “The Global Fund,” received commitments from Japan of $3 billion annually, as well as seed funds of $200 million from the United States (with an additional $1.5 billion promised by Congressional leaders) during 2001. The goal of this international effort is to raise $10 billion a year in new funds to support national efforts to create a health care and delivery framework. (258) Likewise, at the UN special session on AIDS in June 2001, the General Assembly asked both nations and private industry to donate the money and resources needed to combat AIDS successfully. (259)

Through TRIPS and the Doha Declaration, a framework for affordable drug access has been established. It remains to be seen how long it will take before the health care infrastructure is put in place to minimize further transmission of the disease and to deliver effectively the appropriate drug regimes to have an impact on the crisis.

Meanwhile, as part of this holistic approach, the WTO also must continue to promote research, and development of pharmaceuticals. As one author stated, “the misguided belief that innovation will always be with us and does not need to be incentivised could lead to needless tragedy at a time when new innovations and genetic discoveries hold such rich promise for humanity.” (260) Solving the issue of AIDS in the developing world is a global concern, but so too is maintaining a viable patent system that promotes innovation, research and the development of future vaccines and cures that will benefit us all. (261) While the 2001 events in and of themselves do not destroy the economic incentive to patent, further calls for broader legal protections might result in such a negative consequence. Policy makers should remember this as continuing attempts are made to reform and amend the TRIPS Agreement in the future.

The authors wish to acknowledge the assistance of Karen Conch, Georgia State University J.D./M.B.A. candidate, June 2002.

(1) 20 Years of HIV/AIDS, (NEWSLETTER AM. FOUND. FOR AIDS RES., New York, N.Y.), Summer 2001, at 1.

(2) Acquired immunodeficiency syndrome “is a disease in which the body’s immune system breaks down and is unable to fight off certain infections … and other illnesses that take advantage of a weakened immune system.” Am. Found. For AIDS Res., Facts About HIV/AIDS (2001), at http://www.amfar.org/cgi-bin/iowa/programs/prevention/record.html?record=92 (Past visited Sept. 14, 2003) (on file with authors). HIV is the human immunodeficiency virus that causes AIDS. Id.

(3) Tracking the Numbers, (NEWSLETTER AM. FOUND. FOR AIDS RES., New York, N.Y.), Summer 2001, at 4.

(4) Rosalyn Park, The International Drug Industry: What the Future Holds for South Africa’s HIV/AIDS Patients, 11 MINN. J. GLOBAL TRADE 125, 127 (2002)

(5) 20 Years of HIV/AIDS, supra note 1, at 1.

(6) Mathilde Drim & Jerome Radwin, A Message From the Foundation, (NEWSLETTER AM. FOUND. FOR AIDS RES., New York, N.Y.), Summer 2001, at 5.

(7) This combination or “cocktail” therapy utilizes a protease inhibitor in combination with other drugs. Am. Found. for AIDS Res., Facts About HIV/AIDS, supra note 2. The first protease inhibitor, saquinavir, was approved by the FDA in 1995. See Pharmaceutical Industry Profile, 2001 PHRMA 8. In the US, even individuals without health insurance may have access to these drugs. In 1987, Congress passed the AIDS Drug Assistance Program to assist those individuals with AIDS who were not qualified for Medicaid. The program is funded through the federal Ryan White Care Act, and the funds are given to the states to provide access to the anti-AIDS drugs to qualifying patients. States may contribute to this fund also. In 1999, the fund supported over 61,000 patients. The federal and state expenditures for this program have tripled from $208 million in 1996 to $666 million in 1999, in large part due to the high cost of the combination antiretroviral therapies. Id. at 75.

(8) Pharmaceutical Industry Profile, supra note 7, at VI.

(9) Id. at 8.

(10) See Sheryl Gay Stolberg, In AIDS War, New Weapons and New Victims, N.Y. TIMES, June 3, 2001, at A20, which outlines a sample regime consisting of at least twelve pills as follows: Lamivudine (one 150 mg tablet twice a day), Stavudine (one 40 mg tablet twice a day), Indinavir (two 400 mg tablets every twelve hours) and Ritonavir (two 100 mg tablets every twelve hours). In addition, additional drugs may need to be taken lot HIV-related infections and side effects.

(11) Expanding Global Access to HIV/AIDS Treatments: An Overview of the Issues, (NEWSLETTER AM. FOUND. FOR AIDS RES., New York, N.Y.), Summer 2001, at 2

(12) Tracking the Numbers, supra note 3, at 4.

(13) Id.

(14) Am. Found. for AIDS Res., Special Report: AIDS in Africa, (2001), at http:// www. amfar .org/ cgi-bin/ iowa/ programs/ globali/ record.html?record=34 (last visited Sept. 14, 2003) (on file with authors).

(15) Id.

(16) Park, supra note 4, at 149.

(17) Expanding Global Access to HIV/AIDS Treatments: An Overview of the Issues, supra note 11, at 2.

(18) Sheryl Gay Stolberg, Africa’s AIDS War, N.Y. TIMES, Mar. 10, 2001, at A4.

(19) For example, GlaxoSmithKline owns patents on Retrovir, Combivir, and Epivir

(20) The pharmaceutical industry trade group, the Pharmaceutical Research and Manufacturers of America (PhRMA), estimates the cost of discovering, researching and developing a new drug to be approximately $500-$600 million. PhRMA, The Pharmaceutical Industry Primer (2001), at http:// www. phrma. org/ publications/ publications/ 10.08.2001.528.cfm (last visited Sept. 14, 2003) (on file with authors). Patents give the patent holder the exclusive right to make, produce and distribute the patented product lot a specified number of years, generally twenty. During this period, drug companies charge premium prices to recoup research and development costs. Id. In addition, some of the potential drugs produce revenues in the billions per year. For example, Pfizer earned $23.1 billion in 2000 from worldwide sales of its prescription drugs. Brian O’Reilly, There’s Still Gold in Them That Pills, FORTUNE, July 23, 2001, at 58, 61.

(21) Expanding Global Access to HIV/AIDS Treatments: An Overview of the Issues, supra note 11, at 2.

(22) For example, the United States pharmaceutical industry has approximately 625 registered lobbyists, over half of whom previously served as either members of Congress or Congressional staff members. The industry’s budget for lobbying efforts and campaign contributions in 2000 was $197 million. See Leslie Wayne & Melody Petersen, A Muscular Lobby Rolls Up its Sleeves, N.Y. TIMES, Nov. 4, 2001, [section] 3, at 1-3.

(23) For a more detailed discussion, see Part II(A) infra. The issue of price reduction actually began earlier, in 1998, when UNAIDS, the United Nations agency formed to address AIDS, and WHO requested that the pharmaceutical companies drastically reduce the price of their AIDS antiretroviral drugs. In response, Merck and Bristol-Myers, Boehringer Ingelheim, GlaxoSmithKline, and Hoffman-LaRoche offered to sell their AIDS drugs to certain developing countries at reduced prices, some as low as ninety percent off of the Western pricing structure. See Stolberg, supra note 18, at A4. Hoffman-LaRoche offered a “preferential price list” to African nations, but has not disclosed that list. GlaxoSmithKline offered certain African countries up to ninety percent off the price of certain drugs. For example, Glaxo offered Combivar for $2 a day, instead of the U.S. price of $17 a day. However, few countries have purchased Combivar even at such a discounted price. Merck offered discounts to all subSaharan countries and to certain other poor countries with an adult infection rate of one percent or more. Id. However, these efforts were criticized as doing too little, too slowly. Tim negotiations were conducted on a country-by-country basis and usually involved the attempted imposition by the drug companies of parameters relating to health care and distribution systems and infrastructure. As a result, as of March 10, 2001, only Uganda, Rwanda, and Senegal had entered into completed negotiations to obtain the discounted drugs under this effort. Id.

(24) See also Jennifer Rich, Roche Reaches Accord on Drug with Brazil, N.Y. TIMES, Sept. 1, 2001, at BI.

(25) Expanding Global Access to HIV/AIDS Treatments: An Overview of the Issues, supra note 11, at 2. For a detailed discussion, see Part II(C) infra.

(26) Jennifer Rich & Melody Petersen, Brazil Will Defy Patent on AIDS Drug Made by Roche, N.Y. TIMES, Aug. 23, 2001, at C6.

(27) Barbara Crossette, US Drops Case Over AIDS Drags in Brazil, N.Y. TIMES, June 26, 2001, at A4

(28) See The Fourth WTO Ministerial Conference, at http://www.wto.org/english/thewto_e/ minist_e/min01_e/min01_10nov_e.htm (last visited Sept. 14, 2003) (on file with authors). For a more detailed discussion, see Part I(B) infra.

(29) Declaration on the TRIPS Agreement and Public Health, WTO Ministerial Conference, 4th Sess., WT/MIN(01)/DEC/2 (Nov. 20, 2001), at http:// www. wto. org/ english /thewto_e/ minist_e/ min01_e/ mindecl_trips_e.htm (last visited Sept. 14, 2003) (on file with authors). Not only the WTO, but also the United Nations, addressed the issue of drug accessibility in 2001. On June 26 through 28, 2001, the United Nations General Assembly met to discuss the global AIDS epidemic. This assembly was the first United Nations General Assembly ever convened to discuss a specific disease. At the Assembly, the members adopted a “Declaration of Commitment on HIV/AIDS” which sets forth a plan for addressing the disease at the global level. See Declaration of Commitment on HIV/AIDS, U.N. GAOR, 26th Special Sess., Agenda Item 8, U.N.Doc. A/RES/S-26/2 (2001), available at http:/ /www. un. org/ ga/ aids/ docs/ aress262.pdf (last visited Oct. 28, 2003). The delegates agreed to launch a global fight against AIDS, including a call for spending $7-10 billion a year. The current level of spending as of that date was $2 billion per year. Kofi Annan, supra note 4, at A21. The agreement contained a target goal that by 2003, each country will develop a national program to increase drug availability and address drug pricing for anti-AIDS drugs. See The Associated Press, Agreement Reached on AIDS Declaration, at http:// www. nytimes. com/ aponline/ national/ AP-UN-AIDS-Conference.html (last visited June 7, 2001) (on file with authors). The issues of drug costs and drug availability occupied most of the official debate time. Jennifer Steinhauer, U.N. United in AIDS Fight but Split Over What to Do, N.Y. TIMES, June 27, 2001, at A10. Critics of the UN General Assembly’s focus of discussion on drug pricing found such discussions “irrelevant in many areas where there are no clinics to distribute [the drugs], no clean water or food to take them with and a lack of even basic antibiotics to stave off the less onerous infections that stem from H.I.V.” Id.

(30) Bayer’s United States patent on ciprofloxacin expired on December 9, 2003, and Bayer also has patented the drug in certain African counties, such as South Africa and Kenya, where it is used to cure secondary infections in AIDS patients. Donald McNeil, Jr., Ripples in Demand for an Anthrax Drug, N.Y. TIMES, Oct. 17, 2001, at B7.

(31) Geoff Winestock & Helene Cooper, Deal Will Allow Poor Nations to Ignore Patents to Meet Public-Health Needs, WALL ST. J., Nov. 14, 2001, at A2. Under United States federal eminent domain law, “when the United States government needs a patented product, any official authorized to make purchases can ignore the patent and license someone else to make it.” See McNeil, supra note 30, at A1. The patent holder’s only recourse is to sue for damages, which a judge will base on lost value, not the highest possible commercial price. Id. at B7. The United States Army in the 1960s took such action to obtain supplies of a tranquilizer, meprobamate, by purchasing a generic version that cost only $1.55 for 500 capsules from a Danish company and paying the U.S. patent holder, Carter-Wallace, which sold the drug for $34.25 for 500 capsules, a small royalty, Id.

The United States also made inquiries into buying Indian generic versions of Cipro, which sell for only twenty cents per pill. The CEO of New Delhi’s Ranbaxy Laboratories Ltd., Brian Tempest, received a telephone call on October 16, 2001, from U.S. Senator Charles E. Schumer, Democrat of New York, asking if an emergency shipment of the generic ciprofloxacin could be rushed to the U.S. Manjeet Kripalani & Pete Engardio, Opportunity Knocks for Knock-Off Drugs, BUS. WK. ONLINE, Nov. 19, 200l, at http:// www. businessweek. com/ magazine/ content/01_47/ b3758133.htm (last visited Sept. 14, 2003) (on file with authors). A month’s supply of ciprofloxacin costs approximately $350 in the United States, but an Indian generic version costs only about $10. See McNeil, supra note 30, at A1.

(32) Keith Bradsher, Bayer Halves Price for Cipro, But Rivals Offer Drugs Free, N.Y. TIMES, Oct. 26, 2001, at A1.

(33) AIDS activists in the United States and abroad noted the paradox of United States trade policy abroad and its threatened homeland actions to subvert the ciproflaxin patent during the anthrax scare earlier in the year. Seco Gerard, the EU liaison on medical-access issues for the private agency Medicines Sans Frontiers, referred specifically to the hypocrisy of the United States’ double standard regarding ciproflaxin. Nicole Itano, At Trade Talks, Generic-Drug Key Issue, THE CHRISTIAN SCIENCE MONITOR, Nov. 9, 2001, [section] World, at 1.

The developing nations also criticized Canada for similar actions. On October 18, 2001, despite not having experienced an attack of anthrax, the Canadian government declared a national health emergency, announced it would override Bayer’s patent on ciprofloxacin, and ordered a million tablets of the generic version of the drug from a Canadian company, Apotex, Inc. See Amy Harmon & Robert Peru

(34) Telephone Interview with Mark E. Grayson, Senior Director of Public Affair’s, Pharmaceutical Manufacturers of America (Nov. 15, 2001) (transcript on file with the authors).

(35) On April 15, 1994, 117 nations signed the Uruguay Round Agreement, which created the World Trade Organization. See John Harrelson, TRIPs, Pharmaceutical Patents, and the HIV/ AIDS Crisis: Finding the Proper Balance between Intellectual Property Rights and Compassion, 7 WIDENER L. SYMP. J. 175, 179 (2001). The WTO now governs the General Agreement on Tariffs and Trade and other multinational agreements. For a general discussion of the history of GATT, the WTO, and The Agreement on Trade-Related Aspects of Intellectual Property, see Matthew Kramer, Comment, The Bolar Amendment Abroad: Preserving the Integrity of American Patents Overseas After the South African Medicines Act, 18 DICK. J. INT’L L. 553, 556-62 (2000). The WTO is an extremely important international organization because it has significant enforcement powers–it can authorize the issuance of trade and other economic sanctions against noncompliant member countries, Id. at 558.

(36) Agreement on Trade-Related Aspects of Intellectual Property Rights, Apr. 15, 1994, Marrakesh Agreement Establishing the World Trade Organization, Annex 1C, LEGAL INSTRUMENTS–THE RESULTS OF THE URUGUAY ROUND, available at http://www.uspto.gov/web/offices/com/doc/uruguay/finalact.html. TRIPS became effective on January 1, 1995.

(37) Natsu Saito, From Slavery and Seminoles to AIDS in South Africa: An Essay on Race and Property in International Law, 45 VILL. L. REV. 1135, 1182-83 (2000).

(38) Naomi Bass, Note, Implications of the TRIPS Agreement for Developing Countries: Pharmaceutical Patent Laws in Brazil and South Africa in the 21st Century, 34 GEO. WASH. INT’L L. REV. 191, 191-92 (2002). Some Members, such as the United States and the European Union, have adopted strong intellectual property laws. In 1994, the United States enacted the Uruguay Round Agreement Act, which approved TRIPS and made certain changes to United States patent law to make it TRIPS-compliant. Uruguay Round Agreements Act, Pub. L. No. 103-465, 108 Stat. 4809, 4814 (1994). For a detailed discussion of the changes to United States patent law as a result of TRIPS, including the adoption of a twenty-year patent term, see Adam Hasson, Note, Domestic Implementation of International Obligations: the Quest for World Patent Law Harmonization, 25 B.C. INT’L. & COMP. L. REV. 373, 380 (2002). Hasson notes that, unlike many other nations, the United States refused to grant a patent to the first applicant to file a patent application, retaining instead its “first to invent” rule. Upon severe criticism from the European Union, the United States retained its “first to invent” rule, but amended it to allow a foreign applicant to rely on his/her work and activities in any Member country to establish himself/herself as the first to invent, Id. at 383, 386.

In contrast, other countries have adopted far less stringent laws. In order to meet its TRIPS obligations, Brazil enacted the Industrial Property Law in 1997. As noted above and discussed more fully in Part II(B) infra, the United States brought a complaint to the WTO alleging that the Brazilian law did not meet TRIPS standards because it limited patent protection to foreign patent holders that manufacture their pharmaceuticals within Brazil. Bass, supra at 192. Likewise, as discussed in Part II(C) infra, numerous pharmaceutical companies brought suit in protest of South Africa’s Medicines and Related Substances Control Act of 1997 because, among other things, it permitted compulsory licensing.

(39) Andrea Curti, Notes and Comments, The WTO Dispute Settlement Understanding: An Unlikely Weapon in the Fight Against AIDS, 27 AM. J.L. & MED. 469, 471 (2001).

(40) F. M. Scherer, The Law and Economics on Intellectual Property Rights: The Pharmaceutical Industry and World Intellectual Property Standards, 53 VAND. L. REV. 2245, 2249-50 (2000).

(41) Joel Trachtman, Institutional Linkage: Transcending ‘Trade and …,’ 96 AM. J. INT’L L. 77, 78-79 (2002). See also Jose Alvarez, The WTO as Linkage Machine, 96 AM. J. INT’L L. 146, 147-49 (2002).

(42) TRIPS, supra note 36, pt. I, art. 7.

(43) TRIPS, supra note 36, pt. II, [section] 5, art. 27(1).

(44) See Bass, supra note 38, at 192.

(45) TRIPS, supra note 36, pt. VII, art. 70(8). This required system for filing patent applications for pharmaceuticals is often referred to as a “mailbox” system. According to TRIPS, the applications can he filed in the mailbox system, but do not have to be examined until after January 1, 2005 for developing countries and January 1, 2006 for least-developed countries. If the subject matter of the patent is found to be patentable when examined, a patent must be issued for the remainder of the patent term, counting from the original filing date, not the grant date. See Technical Note, Pharmaceutical Patents and the TRIPS Agreement, at http:/ /www .wto. org/ english /tratop_e/ trips_e/ pharma_ato186_e.htm (last visited Sept. 14, 2003) (on file with authors). Thirteen WTO members have notified the TRIPS Council of their “mailbox” systems, and other members should have done so hut have not. In essence, such a notification indicates the notifying country has no current provision for patent protection for pharmaceuticals. The notifying countries are Argentina, Brazil, Cuba, Egypt, India, Kuwait, Morocco, Pakistan, Paraguay, Tunisia, Turkey United Arab Emirates, and Uruguay. Of these countries, some, such as Brazil, have implemented legislation granting patent protection to pharmaceuticals. See Fact Sheet: TRIPS and Pharmaceutical Patents, Developing Countries’ Transition Periods, at http:/ /www. wto. org/ english/ tratop_e /trips_e/ factsheet_pharm04_e.htm (last visited Sept. 14, 2003) (on file with authors).

(46) The U.S. pharmaceutical companies closely monitored the negotiations at TRIPS and protested aggressively over any provisions they felt harmful to their industry. See Robert Weissman, A Long Strange TRIPs: The Pharmaceutical Industry Drive to Harmonize Global Intellectual Property Rules, and the Remaining WTO Alternatives Available to Third World Countries, 17 U. PA. J. INT’L. ECON. L. 1069, 1085-88 (1996).

(47) TRIPS, supra note 36, pt. II, [section] 5, art. 33. TRIPS also requires all member nations to comply with Articles 1 through 12 and Article 19 of the Paris Convention of 1967. TRIPS, supra note 36, pt. I, art. 1

(48) TRIPS, supra note 36, pt. II, [section] 5, art. 28(1)(a).

(49) TRIPS, supra note 36, pt. II, [section] 5, art. 28(2). Exceptions may be made to the exclusive rights conferred as king as such exceptions do not “unreasonably conflict with a normal exploitation of the patent and do not unreasonably prejudice the legitimate interests of the patent owner …” TRIPS, supra note 36, pt. II, [section] 5, art. 30.

For example, the WTO Panel Report in the dispute resolution, Canada– Patent Protection for Pharmaceutical Products, Mar. 17, 2000, WT/DS114/R, Doc. # 00-1012 (2000) (adopted by the WTO Dispute Settlement Body on Apr. 7, 2000), utilized this exception in upholding a Canadian law which permitted a generic manufacturer to use a patented product, without the patent holder’s permission and prior to the expiration of the patent, in order to gain regulatory approval of the generic version. Tiffs type of law is sometimes referred to as a “regulatory exception” or as a “Bolar” provision. See Technical Note, supra note 45

(50) The WTO’s Charter, the Marrakesh Agreement Establishing the World Trade Organization, requires the Ministerial Conference, the highest decision-making body of the WTO, to meet “at least once every two years.” See The Fourth WTO Ministerial Conference, supra note 28. The WTO’s first special discussion meeting to address “Intellectual Property and Access to Medicines” occurred on June 20, 2001, in preparation for the Doha Conference. At this meeting, Switzerland pointed out that “if there were no patents, there would be no new medicines, and there would therefore be no discussion on affordable medicines.” WTO News: 2001 News Item, TRIPS Council, June 20, 2001, Governments Share Interpretations on TRIPS and Public Health, at http:// www. wto. org/ english/ news_e/ news01_e /trips_drugs_010620_e.htm (last visited Sept. 14, 2003) (on file with authors). Additional meetings occurred on September 19 and 21, 2001, with the end result being a decision to submit the matter for a formal declaration at the Fourth WTO Ministerial Conference. WTO News: 2001 News items, TRIPS Council, September 19, 21, 2001, Members Discuss Drafts for Ministerial Declaration, at http:/ /www. wto. org/ english/ news_e/ news01_e/ TRIPS_drugs_0l0919_e.htm (last visited Sept. 14, 2003) (on file with authors).

(51) Doha WTO Ministerial 2001: Briefing Notes, Negotiations, Implementation and TRIPS Council Work, at http:/ /www. wto. org/ english/ thewto_e /minist_e/ min01_e/brief_e/brief08_e.htm (last visited Sept. 14, 2003) (on file with authors). Mike Moore, Director General of the WTO, highlighted the importance of the matter: “The issue of TRIPS and public health–this could well be the deal breaker at this conference.” Itano, supra note 33, at 1. The head of WHO, Gro Harlem Brundtland, echoed the concerns of the WTO with a statement that “the stakes are high: the lives and well-being of millions will be affected as a result of WTO members reconciling their divergent views and positions.” World Health Chief Says “High States” at Play in WTO Declaration, AGENCE FRANCE PRESSE, Nov. 9, 2001, International News, available at LEXIS, News Library, by Individual Publication, Agence France Presse (English). Brundtland stated that she welcomed efforts to reach a “common understanding” on TRIPS parameters in “ways that do not infringe on the rights of patent holders.” Id.

(52) Prior to the WTO Ministerial Meeting of November 2001, Manto Tshabalala-Msimang, Health Minister of South Africa, publicly urged the revision of TRIPS “because it is a crime against humanity for poor people to die because life-saving medicines are too expensive.” Companies & Markets: SA Urges WTO to Change AIDS Drug Deal, THE FIN. GAZETTE, Nov. 1, 2001, available at LEXIS, News Library, Global News Wire. Health Minister Tshabalala-Msimang added that her country was seeking amendments to TRIPS so that developing countries could use generic substitution of patented drugs, compulsory and voluntary licensing of drugs, and parallel importing of cheaper drugs. Id.

(53) Celia Dugger, A Catch-22 on Drugs for the World’s Poor, N.Y. TIMES, Nov. 16, 2001, at W7

(54) TRIPS, supra note 36, pt. I, art. 8.

(55) In an attempt to dampen the international outcries for revision of TRIPS, the U.S. Trade Representative, Robert Zoellick, announced prior to the start of the Fourth Ministerial Conference his support for a compromise which would provide least-developed nations an additional ten years to reach compliance with TRIPS and a five-year moratorium on WTO challenges against sub-Saharan African nations violating TRIPS as part of their battle against AIDS. Itano, supra note 33, at 1. This move was denounced by health advocates for the poor nations as a purely temporary approach.

During the course of the five-day conference, it was reported in the international press that the United States appeared to be ready to make concessions in the language surrounding TRIPS as well as on the topic of antidumping, but remained firm on its positions in textile and agricultural imports. On November 12th, CNN.com reported that Brazil and India were leading the developing countries’ battle for the right to make or import generic drugs: “They are looking for a waiver–on public health grounds–of rules that guarantee 20 year patents on medicines.” CNN.com, Drugs Battle at WTO, Nov. 12, 2001, at http:// www. cnn. com/ 2001 /WORLD/ meast/ 11/ 12 /wto.drugs/ index.html. According to the United Press International wire report of November 12th, “The deal [on the wording of the Doha Declaration] was reached when the 15-nation European Nation decided to join the developing countries and agree the TRIPS agreement ‘shall not prevent members from taking measures to protect public health.'” Martin Walker, WTO Near Deal on Drug Access for Poor, UNITED PRESS INT’L, Nov. 12, 2001, at 1. That same wire report noted, however, that “the breakthrough on drugs is not quite final. U.S. delegates are still pushing their own compromise, which would allow the worlds poorest countries an exemption of 10 year’s, and the rest of the developing world five years, from the constraints of patent rules, enabling them to treat victims of HIV and AIDS.” Id.

(56) See Declaration on the TRIPS Agreement and Public Health, supra note 29.

(57) Id.

(58) TRIPS, supra note 36, pt. II, [section] 5, art. 27(2).

(59) TRIPS, supra note 36, pt. II, [section] 5, art. 27 (3)(a).

(60) See Harrelson, supra note 35, at 180.

(61) TRIPS, supra note 36, pt. II, [section] 5, art. 31.

(62) Ford, supra note 47, at 945. Interestingly, the Paris Convention in Article 5.A.2 allows compulsory licensing: “Each country of the Union shall have the right to take legislative measures providing for the grant of compulsory licenses to prevent the abuses which might result from the exercise of the exclusive rights conferred by the patent, for example, failure to work.” See Paris Convention for the Protection of Industrial Property, supra note 47. However, limits are set. Article 5, sec. A(4) states: “A compulsory license may not be applied for on the ground of failure to work or insufficient working before the expiration of a period of four years from the date of filing of the patent application or three years from the date of filing of the grant of the patent, whichever period expires last

(63) Robert Sherwood, Intellectual Property ,Systems and Investment Stimulation: The Ratings of Systems in Eighteen Developing Countries, 37 IDEA 261, 276-77 (1997).

(64) TRIPS, supra note 36, pt. II, [section] 5, art. 31.

(65) TRIPS, supra note 36, pt. II, [section] 5, art. 31(b).

(66) TRIPS, supra note 36, pt. II, [section] 5, art. 31(b).

(67) TRIPS, supra note 36, pt. II, [section] 5, art. 31(c).

(68) TRIPS, supra note 36, pt. II, [section] 5, art. 31(g).

(69) TRIPS, supra note 36, pt. II, [section] 5, art. 31(h).

(70) TRIPS, supra note 36, pt. II, [section] 5, art. 31(f).

(71) For a more detailed discussion, see infra Parts II(B) and (C).

(72) Declaration on the TRIPS Agreement and Public Health, Para. 5.b, supra note 29.

(73) Id.

(74) Geoff Winestock & Helene Cooper, WTO Nears Broad Generic-Drug Accord, WALL ST. J., Nov. 13, 2001, at A17.

(75) Australia, Canada, Japan, Switzerland, and the United States. See Members Discuss Drafts for Ministerial Declaration, supra note 50.

(76) Id.

(77) Doha WTO Ministerial 2001: Summary of 11 Nov. 2001, Chitin to join on 11 December, Chinese Taipei’s Membership also Approved, at http://www.wto.org/english/thewto_e/minist_e/min01_e/ min01_11nov_e.htm (last visited Sept. 14, 2003) (on file with authors).

(78) Declaration on the TRIPS Agreement and Public Health, Para. 6, supra note 29.

(79) Id. In 2003, the General Council granted Members temporary waivers from the requirements of Article 31(f) of TRIPS whereby drugs produced under compulsory license are to be used primarily for the domestic market. The waiver allows Members to export drugs produced under compulsory license to least-developed nations and certain other nations until such time as TRIPS is amended to finalize the issue. The General Council instructed the TRIPS Council to complete an amendment in 2004. Decision of the General Counsel of 30 August 2003, Implementation of Paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public Health, at http://www.wto.org/english/tratop_e/trips_e/implem_para6_e.htm.

(80) Claude Barfield & Mark Groombridge, Parallel Trade in the Pharmaceutical Industry: Implications for Innovation Consumer Welfare, and Health Policy, 10 FORDHAM IN INTELL. PROP. MEDIA & ENT. L.J. 185, 185 (1999).

(81) Id. at 224. As PhRMA states: “Prices for pharmaceuticals vary widely from country to country for many reasons, including differences in living standards, income, willingness to pay, medical practice, product volume, exchange rates, the level of competitive medical service, product prices, patent terms and expiration dates, the length of time and cost of drug marketing approval, and government-imposed reimbursement and price controls.” Pharmaceutical Industry Profile, supra note 7, at 79.

(82) Barfietd & Groombridge, supra note 80, at 190-91.

(83) TRIPS, supra note 36, pt. I, art. 6. In permitting parallel importing, members still may not discriminate based on the nationality of the patent holder. Technical Note, supra note 45.

(84) Technical Note, supra note 45. See Part I(G) infra for a detailed discussion of the WTO’s mandatory dispute resolution process.

(85) Harrelson, supra note 35, at 193.

(86) Id.

(87) Id. at 193, n.195.

(88) The European Court of Justice has held that the initial sale of a patented pharmaceutical in the EU exhausts the patent holder rights. Shubha Ghosh, Pills, Patents, and Power

(89) Governments Share Interpretations on TRIPS, supra note 50.

(90) Declaration on the TRIPS Agreement and Public Health, Para. 5.d, supra note 29.

(91) TRIPS, supra note 36, pt. I, art. 3.

(92) TRIPS, supra note 36, pt. I, art. 4.

(93) National Economic Research Associates (NERA), Survey of Parallel Trade, 25 (May 1997), cited in Barfield, supra note 80, at 250.

(94) Telephone Interview with Mark E. Grayson, supra note 34.

(95) Bass, supra note 38, at 202. The developed countries complained that developing countries would take advantage of the generous phase-in provisions by increasing already active generics industries while not enacting any TRIPS-compliant patent legislation at all. Id. at 205-06.

(96) TRIPS, supra note 36, pt. VI, art. 65(1).

(97) TRIPS, supra note 36, pt. VI, art. 65(2)-(3).

(98) The TRIPS Council began the review process in 2001. Doha WTO Ministerial 2001: Briefing Notes, Negotiations, Implementation and TRIPS Council Work, supra note 51. In 2002, the TRIPS Council completed its initial review of certain developing nations’ implementing laws, including India and Brazil, mad initiated numerous additional reviews. At the end of 2002, over twenty reviews of developing nations’ implementing laws were still pending and the process is ongoing. 2003 WTO Annual Report 86, at http:// www. wto. org/ english/ res_e/ booksp_e/ anrep_e /anrep03_e.pdf.

(99) TRIPS, supra note 36, pt. VI, art. 66(1). The WTO recognizes as least-developed countries those forty-nine countries identified as such by the United Nations. The least-developed countries which are also WTO Members are: Angola, Bangladesh, Benin, Burkina Faso, Burundi, Central African Republic, Chad, Democratic Republic of the Congo, Djibouti, Gambia, Guinea, Guinea Bissau, Haiti, Lesotho, Madagascar, Malawi, Maldives, Mali, Mauritania, Mozambique, Myanmar, Niger, Rwanda, Senegal, Sierra Leone, Solomon Islands, Tanzania, Togo, Uganda, and Zambia. In addition, nine other least-developed countries are in the process of becoming WTO Members (Bhutan, Cambodia, Cape Verde, Laos, Nepal, Samoa, Sudan, Vanuatu, and Yemen) and two more are WTO Observers (Ethiopia and Sao Tome). See Doha WTO Ministerial 2001: Briefing Notes, Towards Free Market Access for Least-Developed Countries, at http:// www. wto. org/ englisb /thewto_e/ minist_e/min01_e/brief_e/brief03_e.htm (last visited Sept. 14, 2003) (on file with authors). After the January 1, 2006 deadline, such countries can request further extensions. TRIPS, supra note 36, pt. VI, art. 65(2).

(100) TRIPS, supra note 36, pt. VII, art. 70(8).

(101) TRIPS, supra note 36, pt. VI, art. 65(4). However, these countries must allow “mailbox” applications to be filed by current inventors so they can establish priority for patent protection when it is eventually granted. See TRIPS, supra note 36, pt. VII, art. 70(8) & art. 65.4.

(102) Technical Note, supra note 45.

(103) The Declaration states: “We also agree that the least-developed country Members will not be obliged, with respect to pharmaceutical products, to implement or apply Sections 5 and 7 of Part II of the TRIPS Agreement or to enforce rights provided for under these Sections until 1 January 2016, without prejudice to the right of least-developed country Members to seek other extensions of the transition periods as provided for in Article 66.1 of the TRIPS Agreement.” See Declaration on the TRIPS Agreement and Public Health, Para. 7, supra note 29.

(104) For a detailed article on the WTO’s dispute resolution system, see Michael Lorobina, WTO Dispute Settlement System: The Move from Pragmatism to Legalism, 8 J. LEGAL STUD. IN BUS. 77 (2001). The WTO’s Dispute Settlement Body is composed of one person from each member nation. If one member nation has a dispute with another member nation, the aggrieved member must first request a consultation with the other member through the WTO in order to attempt a negotiated resolution. If no resolution is obtained, the aggrieved nation can request a WTO panel to hear the matter. Such a panel will consist of three neutral members appointed by the parties or by the Secretariat of the WTO. The panel meets with the parties and then submits its decision. Bass, supra note 38, at 473-74. The parties may appeal through an Appellate Body, which is composed of seven members selected by the Dispute Settlement Body. Three members of the Appellate Body will hear the appeal and all seven will deliberate. Id. at 474.

(105) Bass, supra note 38, at 201-02. Prior to TRIPS, the United States utilized trade sanctions to encourage other countries to enact intellectual property laws similar to U.S. levels of protection. In the 1980s, in order to protect its increasingly important intellectual property industry, the United States started linking trade issues to intellectual property protection standards, through the use of trade sanctions and other measures. See Trachtman, supra note 41, at 7879

The United States has used Special 301 sanctions against countries including India, Brazil, South Africa, and Thailand. However, since the advent of TRIPS, the ability of the USTR to issue unilateral trade sanctions without first utilizing the WTO dispute resolution process has been called into question. After the adoption of TRIPS, the United States amended Special 301 to bring it more into compliance with the requirements of TRIPS. However, the United States continued to allow the USTR to “(1) to monitor the intellectual property protections of other TRIPS Member and Non-member countries in order to ensure compliance with TRIPS

(106) See, for example, the 1997 U.S. complaint against India, discussed in Part II(A) infra. In another matter, in 1992, the United States successfully pressured Thailand to amend its patent laws to prohibit parallel importing and limit compulsory licensing. See Rosemary Sweeney, Comment, The U.S. Push for Worldwide Patent Protection for Drugs Meets the AIDS Crisis in Thailand: A Devastating Collision, 9 PAC. RIM L. & POL’Y J. 445 (2000).

(107) Harrelson, supra note 35, at 183.

(108) Ford, supra note 47, at 949-50.

(109) The African Group, Bangladesh, Barbados, Bolivia, Brazil, Cuba, Dominican Republic, Ecuador, Haiti, Honduras, India, Indonesia, Jamaica, Pakistan, Paraguay, Philippines, Peru, Sri Lanka, Thailand, and Venezuela. See Members Discuss Drafts for Ministerial Declaration, supra note 50.

(110) Doha WTO Ministerial 2001: Briefing Notes, Negotiations, Implementation and TRIPS Council Work, supra note 51.

(111) Declaration on the TRIPS Agreement and Public Health, supra note 29.

(112) Id. at Para. 4.

(113) Frances Williams, Declaration on Patent Rules Cheers Developing Nations: Access to Drags Stress on Public Health Rights of Poor Countries Hailed by Activists and Pharmaceutical Sector, THE FIN. TIMES (LONDON), Nov. 15, 2001, [section] Int’l Econ., at 11, available at LEXIS, News Library, The Financial Times (London). Some analysts contend the Doha Declaration could “apply to almost any medicine that a country needs, including those that treat diseases like asthma, diabetes, cancer and heart disease.” Louis Uchitelle, U.S. Companies Largely Back Trade Decisions, N.Y. TIMES, Nov. 15, 2001, at C3. James Love, director of Consumer Project on Technology, which works to increase access to drugs, stated, “This goes beyond AIDS, malaria and tuberculosis. Any health care item could be included. We want to use this in the United States, in Germany and in Switzerland.” Id. Other commentators agree that a broad interpretation “would give poor countries better access to cheap medicine for illnesses beyond AIDS, such as cancer, diabetes and even asthma.” Winestock & Cooper, supra note 74.

(114) While all participants in the Doha conference professed satisfaction with the end result, one liberal activist painted a more realistic picture. He noted that “[t]he resolution of the TRIPS and public health issue is being trumpeted as a victory for developing countries. This is exaggerated. While an attachment to the declaration does recognize that there is nothing in TRIPS that would prevent countries from taking measures to promote public health, there is no commitment to change the wording of the TRIPS agreement.” Walden Bello, The Meaning of Doha, BUSINESS WORLD, Nov. 20, 2001, at 1, available al LEXIS, News Library, Business World.

(115) With over four million people infected, India is the second most infected nation after South Africa. Expanding Global Access to HIV/AIDS Treatments: An Overview of the Issues, supra note 11, at 2.

(116) Scholars have stated several reasons tot India’s historically low level of patent protection for pharmaceuticals. First, India has an incredibly large population of approximately one billion people as of 2001. Census of India 2001, Provisional Population Totals: India, at http://www.censusindia.net/results/resultsmain.html. These individuals live in an area that is only 1,269,338 square miles, or about one-third the size of the United States. Second, in addition to the dense population, India is an extremely poor country. In 1993, approximately thirty-seven percent of the population lived in poverty. David Tomar, A Look into the WTO Pharmaceutical Patent Dispute Between the United States and India, 17 WIS. INT’L L.J. 579, 581 (1999). As a result of so many indigent citizens, the government of India has had to keep medical supplies and pharmaceuticals at affordable levels.

(117) Tomar, supra note 116, at 583.

(118) Park, supra note 4, at 140.

(119) Expanding Global Access to HIV/AIDS Treatments: An Overview of the Issues, supra note 11, at 2

(120) Stolberg, supra note 18, at A1.

(121) Id. In comparison, the U.S. price for Crixivan is $6,016 per year and for Sustiva is $4,730 per year. See Gardiner Harris, AIDS Gaffes in Africa Come Back to Haunt Drug Industry in U.S., WALL ST. J., Apr. 23, 2001, at A1

(122) Melody Petersen & Donald G. McNeil, Jr., Maker Yielding Patent in Africa for AIDS Drug, N.Y. TIMES, Mar. 15, 2001, at A1. The discounted price is fifteen cents per day for Zerit and eighty-five cents per day for Videx. Id. at A18. In comparison, Zerit sells in the U.S. for $3,432 a year and Videx for $2,729. However, Cipla offers a generic Zerit for only $40 a year and other companies sell the active ingredients for $23 a year. Petersen, supra note 19, at C10. Executive Vice President John L. McGoldrick at Bristol is quoted as saying, “We seek no profits on AIDS drugs in Africa, and we will not let our patents be an obstacle.” Id. at A18.

(123) Petersen & McNeil, supra note 122, at A1. Yale University, which also owns the patent to Zerit, agreed. Id.

(124) Abbott included a caveat. In order to qualify for the lower price, the buyer must apply to Axios International, a consulting firm hired by Abbott, to certify that the buyer can appropriately distribute the drugs and treat patients. See Petersen, supra note 11, at C9.

(125) Harris, supra note 121. The drug sells for $6,289 in the U.S. Cipla offers a generic version for only $275. Id.

(126) Id.

(127) Melody Petersen, Novortis Agrees to Lower Price of a Medicine Used in Africa, N.Y. TIMES, May 3, 2001, at CI.

(128) Acoording to WHO, malaria kills more than one million persons per year. According to the UN, three million die annually from AIDS. Id. at C12.

(129) Vivienne Walt, AIDS Drug War Heats Up, FORTUNE, June 25, 2001, at 48.

(130) Id.

(131) Telephone Interview with Mark E. Grayson, supra note 34.

(132) Kripalani & Engardio, supra note 31.

(133) Harris, supra note 121, at A1. In addition, The Consumer Project on Technology, a patient advocate group, said on March 27, 2001, that it formed a nonprofit company to ask the US government to allow it to manufacture a generic version of d4T, a Bristol-Myers AIDS drug sold as Zerit (and possibly some cancer and other drugs), under the 1980 Bayhe-Dole Act (35 U.S.C. [section] 203 (2000)) which allows the U.S. government to require a company selling drugs developed with U.S. funds to grant a license to a third party if the original seller is not making the drug available to the public on “reasonable terms.” Petersen, supra note 11, at C9. The CPT argues that the high price of the drugs charged by the patent holders is not reasonable. The government has never previously approved a grant of license under this provision of the Bayh-Dole Act. The government funded most of the cost of developing Zerit and has certain patent rights on the drug. Id.

(134) Kripalani & Engardio, supra note 31.

(135) Tomar, supra note 116, at 580. The USTR placed India on the “priority watch list” on May 1, 1996 and opened a formal investigation on July 8, 1996. Id. at 586. As required by TRIPS, the United States first requested a consultation with India, which occurred on July 29, 1996, but which failed to reach any resolution. Id. In March 1997, the USTR filed a formal complaint with the WTO. Id. at 580.

(136) See Report of the Panel, India–Patent Protection for Pharmaceutical and Agricultural Chemical Products, Sept. 5, 1997, WT/DS50/R, Doc. # 97-3496 (1997).

(137) See Notification of an Appeal, India–Patent Protection for Pharmaceutical and Agricultural Chemical Products, Oct. 16, 1997, WT/DS50/6, Doc.# 97-4569 (1997).

(138) See Report of the Appellate Body, India–Patent Protection for Pharmaceutical and Agricultural Chemical Products, Dec. 19, 1997, WT/DS50/AB/R, Doc. # 97-5539 (1997).

(139) See Action by the Dispute Settlement Body, India–Patent Protection for Pharmaceutical and Agricultural Chemical Products, Jan. 27, 1998, WT/DS50/9, Doc. # 98-0280 (1998).

(140) Tomar, supra note 116, at 588-90. The amended law is known as the Patents (Amendment) Act of 1999. See Status Report by India, Addendum, India–Patent Protection for Pharmaceutical and Agricultural Chemical Products, Apr. 15, 1999, WT/DS50/10/Add.4WT/DS79/6, Doc.# 991633 (1999).

(141) On February 21, 2000, the pharmaceutical industry requested that the USTR place India on the “priority watch list” again for its “refusal to adopt adequate and effective patent protection for pharmaceutical products and … denial of equitable market access to US firms.” Press Release, PhRMA, PhRMA Calls for Vigilance on Intellectual Property Protection

(142) PhRMA, Enforcing the TRIPS Agreement is Critically Important to U.S. Industries, supra note 39. The Patent (Amendment) Act of 2002 was finally adopted by the Indian Parliament in May 2002. The new law does grant twenty-year patent terms. Patent Cooperation Treaty: International Patent Filing Resource, Salient Features of the Indian Patents (Amendment) Act 2002 and Patent Rules 2003, at http://www.pctfiling.com/article_show-asp?article_ID=134. By 2005, India intends to complete additional amendments to its patent laws to specifically address protection for pharmaceutical products. PhRMA, 2003 PhRMA Special 301 Submission: India, at http://www.phrma.org/international/resources/03.03.2003.341.cfm.

(143) PhRMA, Enforcing the TRIPS Agreement is Critically Important to U.S. Industries, supra note 39. Section 84(2) and 93(2) permit the holder of a voluntary license to request and obtain a compulsory license. TRIPS Article 31(a) allows a compulsory license only if the third party requested and failed to get a voluntary license. Sections 95(1)(i) and 93(5) contain provisions that arguably allow the Indian Government to set the price of the compulsory license without adequately reflecting the economic value of the authorization (i.e., the economic value of the license itself) as required by TRIPS Article 31. For example, Section 95(1)(i) says the price may be set at a price that is “reasonable considering the nature of the invention, the expenditure made by the patent owner in developing the invention and the cost of obtaining the patent and ‘other relevant factors.’ Id. None of these factors considers the economic value of the authorization, the license itself:

(144) Id.

(145) TRIPS, supra note 36, pt. 2, sec. 5, art. 27. For a more thorough discussion of other issues of concern to the U.S. pharmaceutical industry regarding the new law, see PhRMA, Enforcing the TRIPS Agreement is Critically Important to U.S. Industries, supra note 39. For example, the article mentions a provision in Section 102 that authorized the government to transfer a patent exclusively to the government if the government concludes “it is necessary that an invention which is the subject of … a patent should be acquired from the patentee.” This arguably violates Articles 2 and 31 of TRIPS. Id.

(146) Telephone Interview with Mark E. Grayson, supra note 34. This statement reflects the Pact that a pharmaceutical may be patented in one year, but not be approved for marketing to humans until ten to twelve years later.

(147) Rich & Petersen, supra note 26, at C6.

(148) Melody Petersen & Larry Rohter, Maker Agrees to Cut Price of 2 AIDS Drugs in Brazil, N.Y. TIMEs, Mar. 31, 2001, at A4.

(149) Jennifer Rich, Brazil Welcomes Global Move on Drug Patents, N.Y. TIMES, Nov. 16, 2001, at W1.

(150) Park, supra note 4, at 130.

(151) Expanding Global A coeds to HIV/AIDS Treatments: An Overview of the Issues, supra note 11, at 2.

(152) Doctors Group Helps Spread AIDS Strategy, N.Y. TIMES, Sept. 13, 2001, at B2. Government experts estimate that in five years, there will be 900,000 Brazilians who are HIV positive. Miriam Jordan, Merck Vows AIDS Help for Brazilians, WALL ST. J., Mar. 29, 2001, at A10.

(153) Petersen & Rohter, supra note 148, at A4.

(l54) Jordan, supra note 152, at A10.

(155) Petersen & Rohter, supra note 148. The prices offered to Brazil are higher than those offered earlier in the year to African countries. In May 2000, when Merck and various other pharmaceutical companies lowered drug prices at the request of UNAIDS, Merck offered discounts to all countries in sub-Saharan Africa, and to other poor countries having one percent of adults infected. Merck did not extend its offer to Brazil because it has a higher per capita income than many other countries and a less than one percent infection rate. Id.

(156) Petersen & Rohtel, supra note 148.

(157) Rich & Petersen, supra note 26, at C6.

(158) Id.

(159) Id.

(160) Id.

(161) Melody Petersen & Jennifer Rich, Roche Asks for Meeting with Brazil Health Minister, N.Y. TIMES, Aug. 24, 2001, at C2.

(162) Rich, supra note 24, at B1.

(163) Id.

(164) Rich & Petersen, supra note 26, at C6. Prior to 1994, Brazil did not offer any international patent protection for pharmaceuticals. Park, supra note 4, at 139. On May 15, 1997, in order to meet its obligations under TRIPS, Brazil adopted new patent laws, in the form of the Industrial Property Law. The new patent law provides that foreign manufacturers will lose their patents if they do not either manufacture the drug in Brazil or license a local company to do so within three years after obtaining the patent. Crossette, supra note 27, at A4

The United States has a long history of Special 301 actions against Brazil. For example, in 1987, the United States issued Special 301 trade sanctions against Brazil because of Brazil’s failure at that time to provide patent protection for pharmaceuticals. The trade sanctions involved a 100% tariff on certain imports from Brazil into the United States. Bass, supra note 38, at 206-07. In 1993, the USTR listed Brazil on its “priority foreign country list.” Chang, supra note 105, at 209-10. As a result of Brazil’s moving to adopt new patent laws, in 1996, the USTR moved Brazil to the “watch list.” Id.

(165) TRIPS, supra note 36, pt. 2, sec. 5, art. 27.

(166) PhRMA stated: “The Brazilian patent law punishes US manufacturers by restricting patents held by US companies that import their products into Brazil. Eliminating import discrimination in patent regimes was a major objective of TRIPS. The retention of this objectionable provision mars an otherwise good system for protecting innovation in Brazil which has resulted in hundreds of millions of dollars in new pharmaceutical investment since the passage of the 1996 patent law.” Press Release, PhRMA, PhRMA Applauds USTR Action Against Argentina and Brazil (May 1, 2000), at http://www.phrma.org/mediaroom/ press/releases///01.05.2000.16.cfm (last visited Sept. 14, 2003) (on file with authors).

(167) Crossette, supra note 27.

(168) Communication from the Permanent Mission of the United States and the Permanent Mission of Brazil to the Chairman of the Dispute Settlement Body, Notification of Mutually Agreed Solution, July 5, 2001, at http://docsonline.wto.org/GEN_viewerwindow.asp?D:/DDF-DOCUMENTS/T/IP/D/23A1.D (… 1/7/2002 (last visited Jan. 7. 2002) (on file with authors).

(169) Press Release, PhRMA, PhRMA Supports USTR on Brazil (June 25, 2001), at http:// www.phrma.org/mediaroom/press/releases/25.06.2001.238.cfm (last visited Sept. 14, 2003) (on file with authors). PhRMA stated, “intellectual property protection is essential to the research and development of new medicines and vaccines. We therefore further welcome USTR’s continued commitment to TRIPS enforcement, including through the use of the WTO dispute settlement process where necessary.” Id.

(170) Paul Davis, of Act Up Philadelphia, stated “It will serve as an important precedent for other nations desperate for ways to make treatment more affordable to their populations against the strong patent protections and pricing policies of companies in rich nations. It will also remove barriers to access in many poor countries by illustrating that a country can withstand this kind of pressure.” Crossette, supra note 27.

(171) Doctors Group Helps Spread AIDS Strategy, supra note 152, at B2.

(172) Id.

(173) Id.

(174) Rich, supra note 149, at W1.

(175) Park, supra note 4, at 127.

(176) Kramer, supra note 35, at 565.

(177) Saito, supra note 37, at 1187.

(178) Rachel Swarns, South Africa’s AIDS Vortex Engulfs a Rural Community, N.Y. TIMES, Nov. 25, 2001, at A16. In October 2001, President Mbeki “suggested that whites, and unwitting black allies, were deliberately overplaying the AIDS epidemic to undermine a black continent on the rise and to perpetuate stereotypes of Africans as ‘promiscuous carriers of germs.'” Id. Earlier in 2001, he challenged statistics from his own medical and government institutions, stating that they were incorrect in listing AIDS as the number one cause of death in South Africa, and asked them to amend their budgets as a result. To support his position, he cited six-year-old WHO statistics that listed AIDS as then only the twelfth highest cause of death. Id. at A16.

(179) [section] 15C of the Medicines and Related Substances Control Act of 1965 (as amended 1997), JSRSA 1997, vol. 3, at 1-63

(180) Originally, the South African Patents Act of 1978 granted full patent protection to drugs and prohibited parallel imports. David Snyder, Comment, South Africa’s Medicines and Related Substances Control Amendment Act: A Spoonful of Sugar or a Bitter Pill to Swallow?, 18 DicK. J. INT’L. L. 175, 182 (1999).

(181) Id. at 182 (quoting Section 15C(a) of the Medicines Act).

(182) Id. at 183.

(183) Other critics have argued this provision is meant to refer only to the resale of a particular item of medicine after it has been sold initially by the patent holder. Id. at 184.

(184) Kramer, supra note 35, at 553, 565-66.

(185) Judy Rein, International Governance Through Trade Agreements: Patent Protection for Essential Medicines, 21 J. INT’L L. BUS. 379, 400 (2001). (quoting from Section 15C(b) of the Medicines Act).

(186) TRIPS, supra note 36, pt. II, sec. 5, art. 27.

(187) Rein, supra note 185, at 401. To emphasize its position, the United States also placed sanctions on certain South African goods, and in 1998 and early 1999, placed South Africa on the Special 301 “watch list.” Kramer, supra note 35, at 565-66. In addition, Congress suspended foreign aid to South Africa. Saito, supra note 37, at 1189. In 1998, the USTR identified the Medicines Act as the United States’ “largest patent rights concern.” Snyder, supra note 180, at 176.

(188) Bass, supra note 38, at 212-13

(189) Frederick Abbott, Discontinuities in the Intellectual Property Regime: The TRIPS–Legality of Measures Taken to Address Public Health Crises: A Synopsis, 7 WIDENER L. SYMP. J. 71, 82 (2001).

(190) Press Release, PhRMA, PhRMA Applauds United States-South Africa Joint Understanding on Intellectual Property (Sept. 22, 1999), at http://www.phrma.org/mediaroom/press/releases/ 22.09.1999.29.cfm (last visited Aug. 8, 2001) (on file with authors). PhRMA President Alan Holmer stated, “Strong intellectual property protection is critical for the discovery and development of new medicines, and new medicines are critical to public health around the world.” Id.

(191) Press Release, PhRMA, Drug Companies Suspend Action Against South African Law (Sept. 9, 1999), at http://www. phrma .org/ mediaroom/ press/ releases/ 09.09.1999.47.cfm (last visited on Sept. 14, 2003) (on file with authors). The pharmaceutical industry interpreted this statement to mean the law would be amended to delete entirely the provisions for parallel importing and compulsory licensing, which the pharmaceutical industry considered to be “inconsistent with South Africa’s international obligations.” Id. As a result of South Africa’s statements, in December 1999, the United States removed South Africa from the Special 301 “watch list,” much to the displeasure of the pharmaceutical industry. PhRMA stated: “While PhRMA was gratified by the Government of South Africa’s recent statements that it will respect its TRIPS obligations, we believe that the U.S. Trade Representative has acted prematurely. The revisions of South Africa’s Medicines Act of 1997 have not yet been implemented by the Parliament.” Press Release, PhRMA, PhRMA Applauds U.S. Government Recognition of Intellectual Property Protection as a Critical Element of Improving Health (Dec. 3, 1999), at http:// www .phrma. org/ mediavoom/ press/ releases /03.12.1999.22.cfm (last visited Sept. 14, 2003) (on file with authors).

(192) Ford, supra note 47, at 956. Thus, the pharmaceutical industry lost the support of its main ally, the United States government. In May 2000, due again to international pressure and despite the protests of the United States pharmaceutical industry, President Clinton issued an Executive Order providing that the United States government would not “challenge those sub-Saharan African governments that grant compulsory licenses under pharmaceutical patents on HIV/AIDS drugs or permit parallel imports of these drugs from other countries where they are available at lower prices.” Janice Mueller, No “Dilettante Affair”: Retkinking the Experimental Use Exception to Patent Infringement for Biomedical Research Tools, 76 WASH. L. REV. 1, 53-54 (2001)

(193) Rachel Swarns, Drug Makers Drop South Africa Suit Over AIDS Medicines, N.Y. TIMES, Apr. 20, 2001, at A1.

(194) Id.

(196) Park, supra note 4, at 148.

(197) Swarns, supra note 193.

(198) Id.

(199) Id.

(200) Telephone Interview with Mark E. Grayson, supra note 34.

(201) Andrew Pollack, Clash Over Patents, N.Y. TIMES, Apr. 20, 2001, at A6. Note that Nigeria in August 2001 announced plans to use cheap generic drugs to treat its population starting in September 2001. See Jesse Pesta, Tests of Drugs in Nigeria, India May Well Shape The Destiny of Millions, WALL ST. J., Aug. 2, 2001, at A10.

(202) Gardiner Harris & Rachel Zimmerman, Drug Makers Say WTO Setback Will Not Have Significant Impact, WALL ST. J., Nov. 25, 2001, at http://interactive.wsj.com/fr/emailthis /retrieve.cgi?Id=SB10057786858. More than ninety-five percent of the medicines that WHO has determined to he “essential” for the treatment of diseases like malaria and tuberculosis are no longer covered by patent. Pharmaceutical Industry Profile, supra note 7, at 106.

(203) See generally Amir Ataran, & Lee Gillespie-White, Do Patents for Antiretroviral Drugs Constrain Access to AIDS Treatment in Africa?, 286 JAMA 1886 (2001). Based on this study, of the fifteen antiretroviral drugs patented by the large pharmaceuticals, the median number patented in the African countries is only three. The author surmises that the potential commercial gain in these countries is so pore, the large pharmaceutical companies have not deemed this market worth the expense of filing and enforcing patent rights. Id. at 1890.

(204) Walt, supra note 129, at 48.

(205) Dugger, supra note 53, at W7.

(206) Snyder, supra note 180, at 176.

(207) Pharmaceutical Industry Profile, supra note 7, at 106.

(208) Expanding Global Access to HIV/AIDS Treatments: An Overview of the Issues, supra note 11, at 2.

(209) PhRMA, Danger Ahead: Drug-Resistant Stratus Shows There Are No Simple Solutions, at http:// world.phrma.org/challenges.drug.resistance.html (2000-2001) (last visited on Feb. 18, 2002) (on file with authors).

(210) PhRMA, Health Care in the Developing World, at http://world.phrma.org/healthcare. devel.world.html (2000-2001).

(211) Rachel Swarns, AIDS Obslacles Overwhelm a Small South African Town, N.Y. TIMES, Mar. 29, 2001, at A1.

(212) Swarns, supra note 178, at A16.

(213) Swarns, supra note 211, at A8.

(214) Id. Another difficulty is that inexpensive drugs are often resold in Africa at a significant profit. Mirryena Deeb, of the Pharmaceutical Manufacturing Association of South Africa, has stated that in South Africa, the “public hospitals were sacrificing up to fifty percent of the drugs to theft. Not only are drugs being stolen and resold in the private sector, but so are ‘beds, catering equipment, medical equipment, and computers,’ all of which drive up the cost of medical services.” Snyder, supra note 180, at 190. Because of theft and corruption, the World Bank estimates that tot every $100 spent by African governments on prescription drugs, only $12 worth of such medicine ever reaches the patients. PhRMA, Health Care in the Developing World, supra note 210.

(215) For example, during the 1980s and 1990s, contaminated medicines killed approximately 500 people in Argentina, Bangladesh, Nigeria, Haiti, and India, and in 1998 in Gurgaon, India, “33 children died of kidney failure caused by a locally made cough syrup that was contaminated with a toxic solvent, diethylene glycol.” Denise Grady, Generic Medicine for AIDS Raises New Set of Concerns, N.Y. TIMES, Apr. 24, 2001, at D2.

(216) Snyder, supra note 180, at 192.

(217) Pharmaceutical Industry Profile, supra note 7, at 102.

(218) Barbara Crossette, Poor African Countries Lack Ways to Monitor Use of New AIDS Drugs, Experts Warn, N.Y. TIMES, Apr. 1, 2001, [section] 1, at 10.

(219) Telephone Interview with Mark E. Grayson, supra note 34.

(220) Snyder, supra note 180, at 191-92.

(221) Park, supra note 4, at 143-14.

(222) For example, with malaria, a cheap and effective treatment known as chloroquine was developed. The drug was very easy to administer, and in the 1960s and 1970s, malaria was greatly reduced in the less developed nations. However, noncompliance by patients (i.e., not finishing the full course of the chloroquine treatment) has led to drug resistant strains, and malaria is now once again one of the top three causes of death globally. Stephanie Flanders, In the Shadow of AIDS, a World off Other Problems, N.Y. TIMES, June 24, 2001, [section] 4, at 3. Likewise, tuberculosis is becoming drug resistant, in part because patients are receiving treatment at facilities that do not have the capability to monitor proper usage of the medicines. Id.

(223) Gordon W. Perkins, M.D., director of the Bill & Melinda Gates Foundation, has compared the concern over compliance with the taking of antiretrovirals to the current resistance of many diseases to antibiotics. He has voiced the concern that “if large numbers of patients do not take the drugs consistently and correctly, then there is a clear risk of a resistant strain of HIV developing. Just like antibiotics.” Crossette, supra note 218.

(224) David Fidler, Neither Science Nor Shamans: Globalization of Markets and Health in the Developing World, 7 IND. J. GLOBAL LEGAL STUD. 191, 212 (1999).

(225) John Karon et al., HIV in the United States at the Turn of the Century: An Epidemic in Transition, 91 AM. J. OF Pyre HEALTH 1060, 1064-65 (2001).

(226) PhRMA, Challenges: Social and Political Issues, at http://world.phrma.org/challenges.social. pol.html (2000-2001).

(227) Crossette, supra note 218, [section] 1, at 10.

(228) Bob Herbert, A Missing AIDS Lifeline, N.Y. TIMES, June 28, 2001, at A27.

(229) Ida Susser, & Zena Stein, Culture, Sexuality, and Women’s Agency in the Prevention of HIV/AIDS in Southern Africa, 90 AM. J. OF PUB. HEALTH 1042-1044 (2000).

(230) PhRMA, Challenges: Social and Political Issues, supra note 226.

(231) PhRMA, The Pharmaceutical Industry Primer, supra note 20

(232) Robert Peru, Research Cost for New Drugs Said to Soar, N.Y. TIMES, Dec. 1, 2001, at C1.

(233) Id. at C1, C14. Critics have attacked this study, since the data came from ten drug companies, and the center is financially supported by drug companies, and also because the study is alleged to ignore the fact that a great deal of research costs are subsidized by the United States government. Id. at C14.

(234) O’Reilly, supra note 20, at 58, 61.

(235) PhRMA, The Pharmaceutical Industry Primer, supra note 20. A generic manufacturer in the United States is not required to prove the safety or effectiveness of the drug clinically, only that it is the bioequivalent to the patented version. Once that is established, the generic version can be marketed immediately upon patent expiration. See Pharmaceutical Industry Profile, supra note 7, at VIII. This change is a result of the adoption of the Drug Price Competition and Patent Term Restoration Act of 1984 (also known as the Hatch-Waxman Act or the “Bolar Amendment”), 35 U.S.G. [section] 271 (e)(l) (1984), which made it easier to introduce generics. Prior to the Bolar Amendment, “the generic company was required to wait until the expiration of the first patent held by the creator of the drug, and then duplicate all of the research.” See Kramer, supra note 35, at 562. This duplication of research included data to support safety and effectiveness. Thus, a generic manufacturer had to prove that the drug was safe and effective independently. Alfred Engelberg, Special Patent Provisions for Pharmaceuticals: Have They Outlived Their Usefulness?, 39 IDEA 389, 396-97 (1999). After the Bolar Amendment, the generic industry was allowed to use the safety and effectiveness data developed by the patent holder, and only had to show bioequivalency. The rationale for the Bolar Amendment was estimations of billions of dollars in cost savings to the United States from earlier availability and use of generics. Kramer, supra note 35, at 563. The Bolar Amendment states it: “shall not be an act of infringement to make, use, offer to sell within the United States or import into the United States a patented invention … solely for uses reasonably related to the development and submission of information under a federal law which regulates the manufacture, use, or sale of drugs …” Kramer, supra note 35, at 563 n.56.

(236) Singham, supra note 63, at 373.

(237) Pharmaceutical Industry Profile, supra note 7, at V.

(238) Id. at VIII.

(239) Id. at 80.

(240) Id. at VI.

(241) PhRMA, The Pharmaceutical Industry, supra note 20.

(242) Press Release, PhRMA, WTO Doha Declaration Reaffirms Value of Intellectual Property Protection (Nov. 14, 2001), at http://www.phrma.org/mediaroom/press/releases/14.11. 2001.310.cfm (last visited Sept. 14, 2003) (on file with authors).

(243) Singham, supra note 63, at 374.

(244) Id. at 369.

(245) O’Reilly, supra note 20, at 61.

(246) Singham, supra note 63, at 369.

(247) Curti, supra note 39, at 473.

(248) Id. at 378.

(249) Pharmaceutical Industry Profile, supra note 7, at 105.

(250) Id. at 100.

(251) Singham, supra note 63, at 374. On the other hand, strong patent protection leads to greater investment. After Mexico adopted a strong patent law in 1991, U.S. research and development in pharmaceuticals more than doubled in that country, and after Italy adopted strong patent law in 1978, investment in its local pharmaceutical research and development more than quadrupled in ten years. Pharmaceutical Industry Profile, supra note 7, at 105. Alter enacting legislation in the 1970s that allowed broad compulsory licensing, Canada suffered great loss in investment in pharmaceutical research and development. In 1987 and 1993, Canada reinstated full patent protection and instituted compulsory licensing provisions that contained the TRIPS limitations. The research-based pharmaceutical industry began to invest in Canada again. Such pharmaceutical research spending increased by over 700 percent from 1987 to 1997, and new research and development investment was over $4.6 billion. Pharmaceutical Industry Profile, supra note 7, at 104-05. An estimated 3,500 new jobs were created also. See also Keith Maskus, Intellectual Property Challenges for Developing Countries: An Economic Perspective, 2001 U. ILL. L. REV. 457 (2001), which concludes that strengthening intellectual property rights should increase economic growth over time. Nevertheless, he does note that such growth is offset by the increased costs of developing a legal system and administrative infrastructure to grant and enforce such rights. Id. at 466-67.

(252) Pharmaceutical Industry Profile, supra note 7, at 87.

(253) Declaration on the TRIPS Agreement and Public Health, supra note 29.

(254) “[The Doha Declaration] is a sterile, hypothetical, theological discussion which has nothing to do with why people are actually dying of AIDS today,” noted Thomas Hombelles, director of international government relations at Merck. Geoff Dyer. Activists Point to Flaws in Declaration on Drug Patents, THE FIN. TIMES (LONDON), Nov. 16, 2001, Int’l Econ. & the Ares., at 13, available at LEXIS, News Library, The Financial Times (London). Alan F. Holmer, President of the PhRMA, summarized the position of his industry after the Doha Declaration:

With this reaffirmation of the TRIPS agreement, we hope member

countries will now focus on and address the real barriers to access

to medicines in developing countries: poverty, ton few trained

doctors and adequately equipped facilities, high tariffs on

medicines in many developing countries, the need for more developed

country support, political will in developing and developed

countries alike.

Press Release, PhRMA, WTO Doha Declaration Reaffirms Value of Intellectual Property Protection, supra note 242.

(255) Declaration on the TRIPS Agreement and Public Health, supra note 29.

(256) According to the United Nations, an effective response to AIDS must address three areas: reducing the number of new infections, expanding access to care and treatment, and cushioning the social and economic impact. U. N. Special Session On HIV/AIDS, Fact Sheet, Global Crisis-Global Action, HIV/AIDS–A Governance Challenge, June 25-27, 2001, at 9. This clearly cannot be addressed by drug access alone, which is only one of the UN’s three areas of concern. Indeed, “global funding must support large-scale and comprehensive national strategic plans that cover the gamut of interventions needed to control the epidemic … [including] support of donors, the United Nations, multilateral lending institutions and international civil society organizations.” Id. at 10.

(257) Press Release, UNAIDS, UN Efforts Broaden Availability of antiretrovirals, (Dec. 13, 2001), at http://www.lists.essential.org/pipermail/ip-health/2002-January/002573.html (last visited Sept. 14, 2003) (on file with authors). In addition, the pharmaceutical industry has undertaken a great deal of philanthropic activity in the developing world beyond the many price discounts discussed earlier in this paper. The pharmaceutical industry in partnerships with UN agencies, government and other private entities, invested almost $2 billion from 1998 to 2001 in efforts to provide access to medicines to developing countries. PhRMA Press Release, WTD Doha Declaration Reaffirms Value of Intellectual Property Protection, supra note 242. For detailed information on the numerous public health initiatives of the various drug companies who are members in PhRMA, see PhRMA, Global Partnerships, Humanitarian Programs of the Pharmaceutical Industry in Developing Nations, at http://www.phrma.org. For example, for the next five years, Boehringer-Ingelheim will donate nevirpine, a drug used for the prevention of mother-child transmissions of AIDS. Pfizer established the Academic Alliance for AIDS Care and Prevention in Africa, a foundation whose members are African and Western infectious disease specialists who are building a large AIDS clinic in Africa specifically for the training of health care workers in AIDS treatment. Abbott Laboratories and Abbott Laboratories Fund created “Step Forward … for the world’s children,” a fund offering aid to AIDS orphans worldwide. Pharmaceutical Industry Profile, supra note 7, at 76-77. Furthermore, Merck has been supplying Mectizan, a drug for river blindness, tot free in African and Latin American countries for over a decade. Merck initially tried to find an organization to purchase the drug, but agencies such as WHO and the US Agency for International Development and others did not want to buy the medicine. Merck decided to donate the medicine, and it is currently the only Merck drug manufactured exclusively for donation. An estimated twenty-five million patients receive the drug each year. Distribution costs alone have been about $20M per year. See James Weber, et al., Merck Global Health Initiatives (A), HARV. Bus. REV. 9-301-088, Jan. 26, 2001, which contains a complete discussion of Merck’s donation program for Mectizan.

(258) H. David Danta, Global Issues on the Agenda at the World Health Assembly, JAMA July 4, 2001, vol. 286, no. 1, at 29, available at http://jama.ama-assn.org/cgi/reprint/286/1/29.pdf (last visited Sept. 14, 2003) (on file with authors).

(259) Jennifer Steinhauer, U.N. Redefines AIDS as Issue of Rights and Peril to Poor, N.Y. TIMES, June 28, 2001, at A1. Many public and private sector initiatives to address the AIDS issue already exist, though more are needed. For example, in August 2000, then President Clinton signed a bill establishing a global trust fund of over $300 million to support AIDS initiatives such as prevention and health care to countries most impacted with the disease. The Bill & Melinda Gates Foundation has contributed over $450 million to various AIDS initiatives. The “U.N. Foundation” started by Ted Turner has established a method on its Web site for private persons to contribute to its AIDS fund. The Coca-Cola Company has offered the company’s African resources (trucks, warehouses, marketing expertise) to UNAIDS to assist in the campaign against AIDS. Don Melvin, Health Expert: World Gaining Edge in Fight Against AIDS, ATLANTA J. CONST., Aug. 19, 2001, at A8. The UN Foundation web site can be found at http:// www.unfoundation.org. Loveline, the world’s largest HIV prevention effort specifically targeted at teenagers, is funded by the Henry J. Kaiser Family Foundation, the Bill and Melinda Gates Foundation and the South African government. Herbert, supra note 228, at A27.

In what may be a role model for private and public sector cooperation to address the overall needs of the AIDS crisis, Merck, the Bill & Melinda Gates Foundation and the Republic of Botswana established in July of 2000 the Botswana Comprehensive HIV/AIDS Partnership, an initiative whose goals are to improve overall HIV/A1DS treatment and care in Botswana. James Weber et al., Merck Global Health Initiatives (B): Botswana, HARV. BUS. REV. 9-301-089, Jan. 26, 2001, at 1. The Centers for Disease Control and Boehringer-Ingelheim have also joined the partnership. Id. at 9. The foundation works with other national governments, the Harvard AIDS Institute, the Joint United Nations Programme on HIV/AIDS (UNAIDS) and other local and national organizations. Merck instituted this program out of a conviction that the private sector corporations have to be part of the global AIDS solution. Merck and the Gates Foundation will each contribute $50 million over five years to the partnership. Id. at 8. The strategy of this private/government sector partnership is not to focus on the drug price issue alone, but to address the holistic issues of AIDS in Botswana. Thus, the initiative addresses HIV counseling and testing, prevention education, treatment of opportunistic infections and cancers, health care worker training, as well as antiretroviral therapy. With respect to antiretroviral therapy, the program focuses not just on access and price, but on adherence to dosage plans, drug resistance and side effect monitoring, drug regulation and distribution systems, and training. Id. at Exhibit 4. See also Bass, supra note 38, at 220-21, for a discussion of additional initiatives.

(260) Singham, supra note 63, at 415.

(261) As a PhRMA spokesperson stated, “Why should only the pharmaceutical industry provide health care to the developing world? Lots of industries could get involved in this. Intellectual property is the best way for countries to eventually come out of poverty, and that includes not just our U.S. intellectual property, but everyone’s.” (emphasis added) Telephone Interview with Mark E. Grayson, supra note 34.

Peggy B. Sherman * and Ellwood F. Oakley, III **

* Professor Sherman is an Assistant Professor of Legal Studies at Georgia State University. She received her J.D. from Vanderbilt University School of Law.

** Professor Oakley is an Associate Professor of Legal Studies at Georgia State University. He received his J.D. from Georgetown University Law Center.