Politics & Policy

The Wto’s Drug Problem

Do WTO deals mean anything?

The World Trade Organization isn’t exactly the sort of body whose inner-workings stir front-page coverage on the New York Times. Visit the WTO website and you can glance at the cutting-edge developments: The fast-tracking of Armenia’s application for membership and the release of a 400-page report on the European Union’s actions on implementing a new recommendation on “anti-dumping duties on imports of cotton-type bed linen from India into conformity with the Anti-Dumping Agreement.”

But don’t be deceived. The events of this round of negotiations — set to resume later this month in Geneva — may have serious consequences for American healthcare.

At issue are the WTO rules on intellectual-property rights. About a decade ago, the United States and other member countries agreed to a standard for respecting each others’ intellectual property. The agreement covers everything from your son’s favorite video game to the medication your father takes for arthritis.

But developing countries have long complained that the agreement is overly restrictive. In particular, they feel that patent rights for brand-name pharmaceuticals make fighting public-health problems expensive and thus unaffordable.

In 2001, WTO representatives met in Doha, Qatar, to find a solution. In a rare display of international goodwill, delegates agreed to allow some WTO members to override patents on expensive Western drugs but only for public-health emergencies, such as HIV/AIDS, malaria, tuberculosis, and other epidemics. Thus, developing countries would have the ability to make generic (read: cheap) versions of brand-name pharmaceuticals. Recognizing the complexity of the situation, the Doha delegates also agreed to hash out the details at focused negotiations in Switzerland in late 2002.

At the time, this agreement seemed like the perfect compromise. For companies that invest billions of dollars in drug development, there is the promise of global protection for their discoveries. For poor countries, the agreement offers the means to better fight epidemics like AIDS.

But then a funny thing happened on the way to Geneva. Suddenly, much of the Doha agreement was back on the table. As one U.S. trade negotiator quipped, “There seems to be a fair amount of give and take: People give something and then they take it back.” Indeed, the list of contentious points covers much of everything, clearly undermining the spirit of Doha. Some, for example, fought to expand the definition of poor countries to include not only developing world, but many (relatively) well-off nations.

The most-alarming point of contention, though, has to do with the definition of a public-health emergency. At Doha, the agreement began by listing three epidemics — HIV/AIDS, tuberculosis, malaria. At Geneva, there has been lobbying to change that. One of the proposals would allow countries to define for themselves a public-health emergency without any limitations. A compromise proposed by the conference chair — supported by 143 of the WTO’s 144 members — would do nothing to limit this.

It may, of course, sound academic. An epidemic, after all, seems fairly straightforward. Earlier this week, the New York Times editorialized that if, say, Angola is worried about a problem, it’s their business, not ours. “The WTO should not be in the business of tying nations’ hands.” But the risk is that some countries will use self-definition to their own advantage. Nations could declare not only an HIV emergency but also an Erectile Dysfunction crisis. Patents for scores of drugs, thus, would be rendered meaningless. The high-cost of drug development would be harder to recoup, diminishing the incentive for further investment in research and development. Carl Bildt, the former Swedish prime minister, argues such compromise would end up “deterring investment and stifling innovation.”

Incidentally, the Erectile Dysfunction example isn’t rhetorical hyperbole. Just this August, Egypt declared a public-health emergency in Erectile Dysfunction and broke the patent on Viagra. The U.S. government has made it clear that part of its Middle East policy is to win over the so-called Arab street; it makes for poor trade policy, however, to attempt to win over the Arab bedroom. Erectile Dysfunction is not a public-health emergency.

But that’s exactly the problem with the sort of “compromise” measures supported by most nations. As James Love of the anti-patent Consumer Technology Project suggests, such language could mean that: “any healthcare item could be included. We want to use this in the United States, in Germany and in Switzerland.” These countries, incidentally, are host to the much of the drug development in the world. In other words, it’s not just about poor countries; it’s about intellectual property rights in every country.

Now on break, the Geneva negotiations are set to resume later this month. Given the widespread consensus among developed and developing nations, there will be mounting pressure on U.S. representatives to compromise. They should remember, however, one basic principle: A deal’s a deal. Don’t undo the spirit of Doha, build on it.

— David Gratzer, a Canadian medical doctor, is a fellow at the Manhattan Institute senior fellow.


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