US PhRMA Bares its Fangs – South Africa Patent Law Reform and Access to Medicine at Risk Yet Again

By Professor Brook K. Baker

Senior Policy Analyst, Health GAP

January 17, 2014

PhRMA (Pharmaceutical Researchers and Manufacturers of America) is putting $350,000 on the table to stop proposed patent law reform in South Africa and instead to lobby for even more monopoly protections for medicines.  Why would a pharmaceutical association from the US be so interested in an African country that comprises only a tiny fraction of global pharmaceutical sales?  Why, after having faced universal public scorn for having sued the Nelson Mandela government 1998-2001 to stop earlier, completely lawful access-to-medicines reforms, would the industry once again risk humiliating publicity and an all-but-certain defeat?  More particularly, when every reform that South Africa is proposing is completely lawful under international intellectual property law, most particularly the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), why would PhRMA choose to a clandestine, public-relations and think-tank strategy not only to derail the propose reform, but advocate for even stronger monopoly protections?

The answer is simple – dirty lucre and precedent.

The current South African patent regime is a PhRMA dream.  Although South Africa has legislation mandating patent examination, an examination system has never been established.  This means that virtually every drug company patent filed in South Africa, so long as the applicant can fill out the form and pay the filing fee, will be and is granted.  No one – I mean no one – double checks whether a patent application has any merit whatsoever.  No one checks if alleged innovation is in fact new or well known under existing industry practice.  No one checks if the patent application impermissively makes numerous claims or duplicates claims made previously.  Pfizer could get a patent on a peanut butter and jelly sandwich tomorrow if it wanted to.

PhRMA also likes the South African patent regime because it doesn’t allow anyone to come in and oppose a patent application even if it has not merit.  PhRMA likes the SA patent regime because it’s so cumbersome to get a compulsory license that no such license has ever been issued.  Ditto with respect to parallel importation (buying a brand drug more cheaply in another country and importing it when excessive prices are imposed domestically.

What PhRMA doesn’t like about the proposed SA reform that SA Draft IP Policy recommends:  (1) tightening up patenting standards, (2) examining patent applications vigorously, (3) allowing other parties to oppose patent applications, (4) limiting patent terms to 20 years only, no extensions, (5) disallowing monopolies based on data/registration exclusivity and patent/registration linkage, and (6) adopting easier to use parallel importation and compulsory license mechanisms.  Each and every one of these provisions is lawful; each and every one is acknowledged by international bodies including WIPO, the WTO, UNDP, UNAIDS, WHO and others; each and every one is a wise exercise of public authority that – in accordance with the Doha Declaration on TRIPS and Public Health – prioritizes public health and access to medicine for all.

Instead of these commonsense, lawful, and indeed modest reforms, the united pharmaceutical industry wants to push for “stronger” and more “comprehensive” IP protections – IP that produces stronger, longer, and broader monopolies, monopolies that exclude competition and allow unfettered monopoly profits.Certainly PhRMA is interested in extra monopoly profits to be made in South Africa, but it is interested in monopoly profits in Africa more broadly and in so-called pharmemerging economies where the bulk of its future profit growth will come from.  In other words, PhRMA and the consulting firm it is hiring, Public Affairs Engagement, are worried about South Africa as a precedent:

If the principles in the draft [IP Policy] are adopted, not only will South Africa become less hospitable to the Life Sciences sector, it may also provide the model for other developing nations, inside and outside Africa, including such important aspiring economies such as India and Brazil.

South Africa is now ground zero for the debate on the value of strong IP protection.  If the battle is lost here, the effects will resonate.  … A robust public affairs program is necessary to create the environment for a sensible IP policy to be adopted by the Cabinet and implemented through legislative processes. … Without a vigorous campaign, opponents of strong IP will prevail – not just in South Africa but eventually in much of the rest of the developing world.

Strong patent rights are the goose that lays the golden eggs for Big Pharma worldwide. For PhRMA, the movement for pro-health reform – the fox in the goose house – must be crushed.  The precedent must be defeat, not victory.However, PhRMA does not intend to argue its case on the merits.  It plans a disinformation and closed-door lobbying campaign full of lies and innuendos.  First and foremost, it plans to argue that IP reform will retard domestic and foreign investment and that stronger IP will open the doors to investment, growth and development.  However, if easy patents were good for South Africa, it should be awash in investment now, since it is virtually impossible not to get any patent you want in South Africa today.  Indeed, all available evidence shows that stronger IP has not positive correlation with increased investments in South Africa or any other African or lower-income country.  But, it isn’t evidence or logic that PhRMA wants to sell – it’s fear.

Second, PhRMA plans to sell fear of competition, most notably from Nigeria, Africa’s other economic powerhouse.  Somehow, according to the planned obfuscation game, Nigeria will leap ahead of South Africa if South Africa simply adopts internationally acknowledged IP standards, including fully lawful flexibilities allowing countries to bypass patents to respond to public health needs and to overcome monopoly abuses.  It doesn’t matter that Nigeria has poor infrastructure, under-developed human capacity, and the lack of a technological base – all it needs is for South Africa to adopt IP reform and its economic transformation will be complete.

Third, PhRMA wants to argue that “South Africa’s health problems are the result, not of lack of drug access, but of poor health infrastructure, improper management, and, ultimately, poverty.”  Here, PhRMA’s not lying per se, but it is guilty of implicature – the half truth that tells a lie.  Perhaps PhRMA can explain why excessive drug prices miraculously improve health systems and management.  Better yet, maybe it can explain how exorbitant prices cure poverty!

But PhRMA’s shill, the PAE, makes clear that “we do NOT want a debate over individual drug prices to become the focal point of the campaign.”  Well, one can certain understand that – just because high prices are the most fundamental feature of the IP regime, why would PhRMA want anyone to talk about that?

Although PhRMA plans to ally with local proxies like the Innovative Pharmaceutical Industry Association of South Africa, SA business groups, and compliant academics, the campaign will be run from Washington. Operating under a euphemism like “Forward South Africa” and ostensibly led by a “respected former government official, business leaders, or academic,” the publicity and intense lobbying campaign would be actually be run by US-based PAE, which promises that “any and all research, op-eds, blog posts, and other material” will be reviewed and commented upon by PhRMA.  PAE promises to consult with PhRMA every step of the way.

Big Pharma was shamed in front of the whole world over its 1998-2001 lawsuit against South Africa that used a phalanx of lawyers to try to defeat TRIPS-compliant parallel importation and generic substitution.  Tail between its legs, the 39 drug companies and pharmaceutical association that sued Mandela finally withdrew their case following a deluge of negative press in March of 2001.  PhRMA, on behalf of that same industry, is now bearing its fangs again, but will use misleading studies, op-eds, and threatening lobby visits to delay and even reverse pro-health reform.  Fortunately, the global press and treatment activists are lifting the curtain and shining a spotlight.  But it will take concerted effort to win this pro-health campaign against a US-dominated industry that over and over again cries crocodile tears about poor peoples’ health while gouging their governments for every last penny of monopoly profit.

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