Is TRIPS preventing vulnerable countries from accessing basic drugs? The case of South Africa

Kat friend Shahid Nabi from Linkilaw has offered his thoughts on the affordability of drugs and the patent system, looking particularly at South Africa.

"When the Trade-Related Aspects of Intellectual Property Rights (TRIPS) was made a compulsory requirement to World Trade Organisation (WTO) membership in 1995, it showed how integral intellectual property was thought for economic development. Since then, there has been debate about how domestic and international IP policies can provide protection for businesses interests at a global level whilst still helping advance health development goals in developing countries. One major component of this debate has been the role of IP in connection with the availability of drugs.

Against this background, countries such as China, South Africa and Brazil have challenged certain IP laws, especially those that preclude access to essential drugs. For example, the cost of cancer-treating drugs in both South Africa and China are unaffordable for the majority of the population, amounting by one estimate to 286% of the monthly salary of the average Chinese cancer patient. More generally, governments and NGO’s have claimed that IP protection imposed by TRIPS serves to maximise multinational pharmaceutical companies profits rather than foster innovation.

Under the presidency of Nelson Mandela, the Medicines and Related Substances Control Amendment Act (1997) was put into place to allow parallel importation of off-patent drugs, allowing generic substitutions. This act enabled widespread access to HIV/AIDS drugs in the country, but it was unfortunately followed by years of multilateral pressure from the Pharmaceutical Industry Association of South Africa and certain developed countries to stop the production of these drugs. Two decades later, too many people are still not able to obtain the necessary medication at an affordable price.

On 25th of October of this year, a total of 36 patient and civil society groups marched to the South African Department of Trade to request a revision to the patent laws. This was done to commemorate fellow activist, Tobeka Daki, who died in an unsuccessful struggle against HER2 breast cancer, unable to access the necessary patented drug, costing R500,000, over $35,000. Claire Waterhouse, the Access Campaign Advocacy Adviser for Doctors Without Borders Southern Africa, claimed that “ [u]ntil the relevant Acts are amended, people will continue to suffer and die in South Africa because they can’t access affordable medicines.”

The Case Against TRIPS

Numerous developing nations have claimed that TRIPS allows wealthy nations to impose their agenda through the WTO, stifling domestic innovation and increasing the cost of medicines. Mark Duggan, Craig Garthwaite and Aparajita Goyayal (2014) have found that the creation of a “textbook patent system” (one in which foreign firms are granted monopoly rights while domestic firms are immediately pushed out of the market for the length of the patent term because of infringement) results in higher prices and a low number of pharmaceutical products being sold in the market.

The Case for TRIPS

A study from the Cancer Alliance reported the South African government registers patents that may well be rejected if the country adopted stronger patentability criteria, patent examination processes and opposition procedures. UN General Secretary Ban Ki-Moon called out developing countries for not taking into account TRIPS flexibilities, which can help reduce the price of cancer drugs. These flexibilities include compulsory licensing (the government’s authority to approve the production of patented products without the approval of the patent holders), and the right for national firms producing newly patented molecules to pay international businesses to continue their access to the national market. In terms of market monopoly, pharmaceutical companies have argued that while patent monopolies do restrict price competition, they also provide fixed welfare benefits by improving incentives for marketing, which is a form of non-price competition, offsetting the costs of monopoly pricing.

Is the WTO addressing the medical needs of developing countries?

Should individual countries seek, at least in part, their own way to ensure that domestic IP laws and policies improve health and pharmaceutical accessibility, or is the framework created by TRIPS adequate as it is? TRIPS works on the basis of a common global consensus that patent protection promotes the greater good of countries and stimulates interest in research. However, this system can be distorted, as is the case in South Africa, where patent laws mainly serve large pharmaceutical companies, who often buy the rights to drugs and raise prices, regardless of consequences to the public. The recent South African IP policy proposed by the Department of Trade extends beyond patent protection in accordance with international norms and strongly favours patent holders.

An example is that the policy enables companies to easily amend their patent criteria to comply with section 7.1.4 of the IP policy when a third party attacks their patent’s validity. This makes litigation with parties extremely hard as they can continue to amend their specifications to comply with South African patent law and thus maintain a monopoly over a product. Here, it is the local law that may well contribute to the lack of accessibility to necessary drugs. As such, at least in part, domestic structures and systems may also contribute to the issue of inadequate accessibility to drugs in the developing world."

Picture at lower left by Pöllö and is licensed under Creative Commons Attribution 3.0 Unported license