Anthrax, TRIPS and Doha

By C. Rammanohar Reddy

If proof was needed that the patents issue affects people in the developed countries as much as in the poor countries, then it is provided by the row over the German company Bayer's patent on ciproflaxacin, the drug used to treat anthrax.

The anthrax scare has prompted a number of countries to stockpile this drug for possible treatment. While ciproflaxacin is not the only drug that can be used - penicillin and doxycycline are other medications - it is the preferred drug in the U.S. Bayer's patent on the drug (scheduled to run until 2003) has raised questions about its ability to meet demand and the cost.

The German company has said it is tripling production but that has not convinced every country. Last week, Canada decided to ``break the patent'' and licensed Apotex, the largest pharma producer in the country, to supply one million tablets at a price which was 50 per cent of Bayer's price, a decision which has not pleased the patent holder.

The U.S., however, continues to insist that it is both illegal and unnecessary to buy the drug from generic manufacturers even as it seeks to build up a stockpile to treat 12 million citizens for 60 days and that it will depend on Bayer to make the necessary supplies.

Yet, at least one U.S. Senator has raised the possibility of buying the drug from Indian manufacturers who have been able to develop generic versions of the drug under the provisions of the 1972 Indian Patents Act.

The difference in costs is enormous. In the U.S., Cipro, the brand name of the drug, sells wholesale at $4.67 per 500 mg and the U.S. Government's purchase rate is $1.83 a tablet. Compare that with Indian retail prices, which in Chennai, are Ranbaxy (Rs 85.34 for 10), Cipla (Rs 98.90) and Dr. Reddy's Lab (Rs 49.50). These are as low as 2 to 5 per cent of the U.S. prices.

But it is not a disregard for costs that has persuaded the U.S. to have faith in Bayer's ability to supply adequate quantities. The fact is that if the U.S. issues a compulsory licence for manufacture or import of ciproflaxacin from alternative sources, it will undermine that position that it has taken at the World Trade Organisation on the agreement on Trade-Related Intellectual Property Rights (TRIPS).

The ciproflaxacin episode has popped up at a particularly awkward time for the U.S. because the country has been questioning the need for a liberal interpretation of the TRIPS agreement. This is what many developing countries want issued in the form of a ministerial declaration on ``TRIPS and Public Health'' at the WTO's conference in Doha next month.

At stake is not a renegotiation of TRIPS but the contents of a political declaration that will affirm the right of countries to liberally interpret the agreement to issue compulsory licences to third parties for production of patented medicines at a low cost; arrange for parallel imports from competing suppliers; allow developing countries to go beyond 2004 and 2005 to conform to the TRIPS agreement and more such assertions that would give governments the right to take necessary measures to address public health concerns, irrespective of the provisions of TRIPS.

The momentum for such a declaration came from the global agitation earlier this year about patented anti-retroviral therapy for HIV/AIDS patients costing $10,000 if sourced from the U.S. and European manufacturers, while Indian companies such as Cipla were willing to offer the same medication for as little as $350. The focus was sub-Saharan Africa but the issue affected all developing countries. With the ``Africa group'' successful in its demand for a special discussion on TRIPS, trade officials in Geneva have been discussing what could emerge from Doha on a more general level and not just about drugs for HIV/AIDS.

Unfortunately, the WTO membership is split down the middle on the ministerial declaration. The developing countries insist on such a declaration. but the U.S. and Switzerland (home to the world's biggest pharma companies) oppose any special statement or political reading of TRIPS and claim that the provisions of the agreement give enough flexibility for government to meet emergencies. The EU is taking a middle position and is willing to go some way towards meeting the developing country concerns, though of late member-states such as the U.K. and Germany - again home of major drug companies - are questioning the need for any clarificatiory reading of TRIPS.

The discussions on the agenda for the next round of WTO negotiations have occupied the headlines, but the discussions on TRIPS and public health are no less important. As the anthrax scare shows, this is an important issue all over the world.

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