Formula For Fairness: Patient Rights Before Patent Rights

Oxfam Briefing Paper on
1 Pfizer
Preventing the cure:

Corporate lobbying and fair access to
medicines
CUT THE COST

Oxfam Company Briefing Paper
Pfizer
Formula for Fairness:

patient rights before patent rights
Oxfams Company Briefing Papers
This is the second in a series of brieng Pharmaceutical companies operate in

papers analyzing the human development a marketplace in which Research and
impact of multinational corporations Development (R&D) priorities are de-linked
(MNCs). It is part of Oxfam Internationals from global health needs, and in which the
Trade Campaign. The series examines the poor are sidelined in corporate marketing
links between trade and poverty eradication strategies and sales proles. Recent cam-
and illustrates the challenges facing indus- paigns and media coverage of the issue of
try as a whole in contributing more system- access to medicines has led to growing pub-
atically to the reduction of poverty and suf- lic concern about the applicability of a
fering. It also identies the reputation risks global patent system to the needs of poor
posed to rms operating in a global econ- countries. Some progress has been made,
omy in which over 3 billion people have including a range of price cuts and the with-
extremely limited purchasing power a drawal by the pharmaceutical industry from
situation that makes it impossible for the the South Africa Court Case as well as the
market alone to respond adequately to withdrawal by the U.S. government from
the needs of the poor. the Brazil World Trade Organization
One of the dening features of globaliza- (WTO) dispute.
tion has been the introduction of new and However, these advances should not
more stringent international agreements distract from the need for a reform of the
to guarantee minimum trading standards. Trade-Related Aspects of Intellectual
A rules-based system to provide developing Property Rights (TRIPS) agreement and
countries with a chance to operate on a level increased commitment to other global
playing eld is needed but does not yet exist. health initiatives. There are many factors
On the contrary, there is evidence that the preventing access to medicines. This paper
rules agreed upon so far favor rich countries focuses on price and on the need for more
and the companies operating from research into diseases of the poor as being
within them. the most signicant parts of the puzzle that
This second paper in the series lie within the power of companies to influ-
(following Dare to Lead: Public Health and ence. It is one of the brieng papers pro-
Company Wealth, Oxfam brieng paper on duced by Oxfam International in its Cut the
GlaxoSmithKline) continues our scrutiny of Cost Campaign. The others include Patent
the link between trade rules and poor peo- Injustice: How World Trade Rules Threaten the
ples access to medicines. The unfolding Health of the Poor; a technical paper, Fatal
global health crisis and recent changes to Side Effects: Medicine Patents Under the
international rules combine to make this a Microscope; and Implausible Denial: Why the
priority development issue. The global bur- Drug Giants Arguments on Patents Dont Stack
den of ill health is borne disproportionately Up. There are also a number of country-
by developing countries. Any changes to specic brieng papers on South Africa,
trade rules that have an impact on health Brazil and Thailand. These papers are avail-
must diminish the problems these countries able at www.oxfam.org.uk/cutthecost.
already experience in delivering safe and
affordable medicines to the poor. Recent
changes, however, risk having the
opposite effect.
Contents
Executive Summary 4
Summary Recommendations 6
Section 1 8
Introduction & Overview
Section 2 10
MARK BUSHNELL
A New Pharmaceutical Giant
Section 3 13
From bad to worse
Pharmaceutical
the health divide and trips
companies operate in
a marketplace in which Section 4 20
Research and
The health divide
Development (R&D)
priorities are de-linked
Response of Pzer and the industry
from global health needs
Section 5 30
Power and Pressure
Pzers Lobbying
Section 6 38
Time for action
Section 7 42
Recommendations
4 Formula for Fairness

Executive Summary
Why Pfizer? A New Pharmaceutical Giant From Bad to Worse
The agreement on Trade- Pfizer is a huge, highly the Health Divide and TRIPS
Related Aspects of Intellectual profitable, and rapidly-growing Diseases that are under control
Property Rights (TRIPS) the company. Boosted by its merger in the developed world cause
new twenty-year patent regime in 2000 with Warner-Lambert, millions of premature deaths in
that the World Trade its sales last year were almost the developing world. The rea-
Organization (WTO) requires US$30 billion, pre-tax income sons are various, but limited
all member states to implement is expected to be over $13 billion access to life-saving drugs that
is likely to keep prices of vital in 2002, and its US$266 billion are widely available in rich coun-
new medicines higher than they market value is larger than, for tries is an important one.
otherwise would be and thereby example, the combined national Affordability is one of the factors
exacerbate the vast health dis- incomes of the eighteen biggest restricting access, and patent
parities between rich and poor economies in sub-Saharan protection is a key factor influ-
countries. Meanwhile, accusa- Africa. Its sales in the poor coun- encing the affordability of new
tions of insensitivity to the plight tries in which most of the worlds drugs. This analysis makes
of the worlds poor have increas- population lives are, like those of particularly alarming the marked
ingly put the pharmaceutical other leading pharmaceutical strengthening of patent protec-
industry on the defensive. companies, relatively small. tion in poor countries that will
Against this background, Pfizer However, Pfizer does have in result from implementation of
is a natural subject for our its infectious diseases business, the TRIPS agreement. TRIPS
second company briefing paper. in particular a range of prod- does allow for exceptions in
As the industrys largest com- ucts and an accumulated theory, but the safeguard provi-
pany, what it says and does is expertise that could be of enor- sions are proving very difficult to
highly influential both within the mous benefit if applied more operate in practice in the face of
industry and beyond. Yet, it has concertedly to the health prob- legal and other pressures from
consistently lobbied for stronger lems of the developing world. powerful companies and their
patent protection, including governments. Indeed, the U.S.
TRIPS, while denying in a meet- government has pressured a
ing with Oxfam the obvious number of countries into adopt-
negative implications for poor ing TRIPS-plus legislation.
peoples access to life-saving
drugs. Pfizer, like other leading
companies, has various
philanthropic programs, but in
Oxfams opinion these remain
inadequate in relation to the
scale of the crisis in the
developing world.

The Health Divide Power and Pressure Time for Action
Response of Pfizer Pfizers Lobbying Oxfam fully accepts that patents
and the Industry Pfizer has lobbied vigorously can be an important incentive for
Despite owning three important and successfully in support of R&D, but we believe the one-
drugs for infectious diseases its commercial interests; size-fits-all TRIPS system has
the antifungal Diflucan, the notwithstanding the public huge failings and must be
antibiotic Zithromax, and the health implications. Its chief reformed. Although the pharma-
antiretroviral Viracept Pfizer, executive is the chairman of the ceutical industry continues to
unlike a number of its competi- Pharmaceutical Research and fight hard in defense of lengthy
tors, has shown little flexibility on Manufacturers of America and globally uniform patent
pricing and patent enforcement (PhRMA), the most powerful protection, we believe that many
in poor countries. Where it has pharmaceutical industry lobby of the arguments it routinely
patents, it appears to adopt a in the U.S. It has close links with uses in support of its case are
broadly uniform pricing strategy, government, and its personnel flawed. Box 2 on pages 40-41
and its policy is not to issue occupy a number of important explains precisely why. We urge
licenses to generic manufactur- policy-shaping roles. It was a the individuals at the helms of
ers. The result is that its drugs driving force in putting intellec- the leading pharmaceutical
are often priced beyond the tual property on the trade companies to take much more
means of poor people and their agenda and therefore was seriously the responsibility
governments. Pfizers main instrumental in the eventual bestowed upon them by the fact
response to the health crisis in adoption of TRIPS. It has that they have it in their power
the developing world has been played a leading role in encour- to save many thousands of lives
to undertake limited donations aging the U.S. administration to at little or no cost to themselves
(for example, Zithromax for one use bilateral negotiations and or their companies. With good-
particular disease in a handful unilateral economic sanctions will on all sides, substantial
of countries). While Oxfam does including making suggestions progress is possible this year.
welcome initiatives of this kind as to who should be placed on
and there are now many similar the U.S. governments 301
programs being undertaken by Priority Watch List against
the leading pharmaceutical countries that it believes offer
companies, partly in response inadequate patent protection.
to public pressure in our opin-
ion they are, taken together, no
substitute for more systematic
policies aimed at making medi-
cines more widely available.

The report ends with the following
recommendations to the Pfizer
management team.
In the interests not just of the poor people of the developing

world, but also of the long-term health of the industry itself, Pfizer
should adopt a more constructive leadership role, both through
PhRMA and independently of PhRMA. We call on Pfizer to:
> recognize that the price of life-saving medicines in developing

countries is linked to patents and TRIPS.
> refrain from using its lobbying power to exert pressure for TRIPS-plus
regimes in all trade agreements including via USTRs Section 301
mechanism.
> acquiesce in modifications to TRIPS that achieve a greater balance

between public health needs and the interests of companies and abide
by the modified rules.
> abstain from enforcing patent rights in developing countries

where to do so yields little or no commercial advantage in the country
concerned and look favorably on requests for voluntary licenses where
there are urgent public health needs. Patents confer the right to
enforce exclusivity but do not impose the obligation to do so.
> where exclusivity is enforced, and as a quid pro quo for measures
to prevent low-price drugs from leaking into rich country markets and
the creation of the UN Global Health Fund, accept the establishment
of a competitive global tiered pricing mechanism.
> participate creatively in research programs aimed at poor-country

diseases by increasing its in-house proprietary research in response to
a global R&D fund; contributing to the proposed global research fund.

TRIPS is likely to keep
prices of vital new
medicines higher than
they otherwise would be
and thereby exacerbate
the vast health disparities
between rich and poor
countries
J. L. QUINTANO/OXFAM

Section 1
Introduction & Overview

Summary largest research and development (R&D)
The agreement on Trade-Related Aspects budget in the industry.
of Intellectual Property Rights (TRIPS) -- the > Pzer has a new chairman and chief
new twenty-year patent regime that the executive officer (CEO), who is also the new
World Trade Organization (WTO) requires chairman of PhRMA, the most powerful
all member states to implement is likely pharmaceutical industry lobby in the U.S.
to keep prices of vital new medicines > there is growing international concern
higher than they otherwise would be and about the health crisis in developing coun-
thereby exacerbate the vast health dispari- tries, and a risk that the crisis will be exacer-
ties between rich and poor countries. bated in the future by the TRIPS agreement
Meanwhile, accusations of insensitivity to within the WTO that Pzer was instrumen-
the plight of the worlds poor have increas- tal in bringing into existence. This concern,
ingly put the pharmaceutical industry on which United Nations Secretary-General Ko
the defensive. Against this background, Annan has described as a worldwide revolt
Pzer is a natural subject for our second of public opinion,3 was vividly illustrated by
company brieng paper. As the industrys the scale of international opposition that in
largest company, what it says and does is April 2001 forced thirty-nine leading drugs
highly influential both within the industry companies to withdraw their lawsuit against
and beyond. Yet it has consistently lobbied the South African governments Medicines
for stronger patent protection, including Act.
TRIPS, while denying in a meeting with > the large pharmaceutical companies
Oxfam1 the obvious negative implications are now on the defensive, and Pzers size
for poor peoples access to life-saving drugs. and visibility mean that even though it was
And although, like other leading compa- not involved in the South Africa case it will
nies, Pzer has various donations and phil- necessarily play a central role in the continu-
anthropic programs, in our opinion these ing debate on public health and trade rules.
remain inadequate in relation to the scale Close scrutiny of its decisions about access to
of the crisis in the developing world. its own products in poor countries and about
the allocation of its huge R&D budget is
Why Pfizer? inevitable. It will also be monitored for the
Oxfam published a detailed brieng extent to which it exercises socially enlight-
paper on the U.K. pharmaceutical giant ened leadership in influencing the rest of
GlaxoSmithKline in February 2001.2 This was the industry and the U.S. government.
the rst in a series of papers on the role of > Pzer has played an important role in
transnational corporations in the developing influencing U.S. government enforcement
world. We have chosen its U.S. counterpart, of intellectual property through the use of
Pzer, as the subject of our second company bilateral negotiations and unilateral eco-
brieng because: nomic sanctions, including the
> following its absorption of Warner- Special 301 provision.
Lambert, Pzer is the biggest pharmaceuti- > Pzer claims that patent rules have
cal company in the world. It9 sells seven of
Dare to Lead
nothing to do with access to affordable life-
the worlds top thirty drugs and has the saving medicines, yet the reality is that
although the international campaign for to date of pharmaceutical companies,
access to drugs in developing countries has including Pzer, to improve poor peoples
recently gained traction from the outcome access to life-saving medicines in developing
of the South Africa case and the U.S. govern- countries. Some companies do now acknowl-
ments decision to drop its complaint against edge that it is in their self-interest to act in a
Brazil at the WTO court the TRIPS agree- socially responsible manner. However, on the
ment still threatens to frustrate efforts to whole, the industrys price cuts and philan-
widen access by making cheap generic thropic responses have been ad hoc and
drugs available. piecemeal. Although valued by the individu-
> like most other pharmaceutical als who benet, this response still only
companies, Pzer has launched a number scratches the surface of what The Economist
of well-publicized philanthropic initiatives, has called the new war on drugs the
the most recent ones coming on the heels of struggle to speed the flow of pharmaceuti-
MARK BUSHNELL
intense international scrutiny and negative cals from rich to poor.4
publicity. But in Oxfams opinion, even Section 5 Public Pressure: Pzers
generous programs such as these are an Lobbying looks at the companys close
inadequate response to the health crisis links with government and its central role Pfizer has consistently
confronting poor countries. both in the conception of the TRIPS regime lobbied for stronger patent
and in the vigorous global enforcement of protection, including
TRIPS, while denying in a
Contents of Rest of Paper intellectual property rights through the
meeting with Oxfam1 the
This paper focuses specically on issues WTO mechanisms. Pzer has been extremely
obvious negative
pertaining to the developing world, and is successful in lobbying for enhanced patent implications for poor
not intended to be a comprehensive review protection, yet continues to push for more, peoples access to life-
of the operations of Pzer or the industry. despite the potentially negative impact saving drugs
Section 2 A New Pharmaceutical Giant on public health in poor countries.
gives a brief prole of Pzer. Section 6 Time for Action reviews
Section 3 From Bad to Worse The Health a systematic and structural alternative to
Divide and TRIPS rst describes the depth the trade rules that are currently failing the
of the divide between poor and rich coun- people of the developing world. TRIPS can
tries in the incidence of disease and prema- and should be reformed in ways that will
ture death and in levels of access to afford- both permit sufcient patent protection to
able life-saving medicines. It then outlines provide incentives for R&D and, at the same
the TRIPS regime, which greatly strengthens time, allow governments in poor countries
drug companies patent protection in devel- to meet urgent public health needs. These
oping countries. It shows that patents keep reforms should be combined with a large
prices high and that high prices are, in turn, injection of resources into health by the
a key factor limiting poor peoples access to international community. Cooperation in
life-saving medicines (especially newer, and such measures could do much to repair the
possibly more effective, patent-protected reputational damage inflicted on the indus-
drugs). The failure to access affordable medi- try by its slow and limited response to the
cines is, in turn, a key factor in the massive problem and could reduce the risk, from
disparity in the rates of disease and early the industrys perspective, of harmful legis-
death between rich and poor countries. lation to which unpopular industries are
While disease prevention, especially as always vulnerable.
to the HIV/AIDS pandemic, is obviously vital, Section 7 Recommendations lists steps
this paper focuses on patents and price as that Oxfam believes should be taken by gov-
the issues over which companies have the ernments, international institutions, and
greatest control. Pzer. This section offers proposals for Pzer
Section 4 The Health Divide: Response of to advance toward its stated desire to do
Pzer and the Industry" looks at the efforts more good for more people than any
other company on the planet.
Section 2
A New
Pharmaceutical Giant
Summary A New Industry Leader
Pzer is a huge, highly protable, and We are striving to be the company that does
rapidly growing company. Boosted by its more good for more people than any other com-
merger in 2000 with Warner-Lambert, its pany on the planet. Dr. Henry McKinnell, CEO
sales last year were almost US$30 billion, of Pzer, April 2001
MARK BUSHNELL
pre-tax income is expected to be over US$13 After its merger with Warner-Lambert
billion in 2002, and its US$266 billion mar- in June 2000, Pzer a U.S. company head-
ket value is larger than, for example, the quartered in New York City became the
Pfizers market value is combined national incomes of the eighteen worlds biggest pharmaceutical company by
larger than the combined biggest economies in sub-Saharan Africa. sales, ahead of GlaxoSmithKline (GSK),
national incomes of the Its sales in the poor countries in which Merck, AstraZeneca, and Aventis.5 Employing
eighteen biggest
most of the worlds population lives are, 12,000 researchers, it is the largest pharma-
economies in sub-
like those of other leading pharmaceutical ceutical R&D spender in the world. Its total
Saharan Africa
companies, relatively small. However, Pzer R&D budget for 2001 is around US $5 billion.6
does have in its infectious diseases busi- The Warner-Lambert merger was part of a
ness in particular a range of products and broader trend that consolidates corporate
an accumulated expertise that could be of power in fewer hands at unprecedented lev-
enormous potential benet if applied more els. Pzers pharmaceutical sales, including
concertedly to the health problems of the Warner-Lambert, were US$22.6 billion last
developing world. year, giving it a world market share of

around 7%.7 Sales including animal health year. Partly reflecting these targets the
products and consumer products (such as achievement of which will be the responsibil-
Sudafed and Zantac 75) were US$29.6 billion. ity of the new chairman and chief executive
Pzers global sales and marketing organiza- ofcer, Henry McKinnell Pzer enjoys a
tion employs more than 30,000 people. The signicantly higher price/earnings ratio than
company has employees in approximately 90 the industry average. Its stock market value is
countries. Pzers principal business units now US$266 billion.9 To put this into perspec-
are located in developed countries, mainly tive, Pzers market value is almost twice the
in the United States. Its products are sold in gross national product (GNP) of South Africa,
more than 150 countries around the world, the largest economy in sub-Saharan Africa,
with almost 70% of sales in the U.S. and and exceeds the combined GNPs of the eight-
Japan, and much of the rest in Europe. This een biggest economies in that region.10
typies the drug market concentration in Morgan Stanley Dean Witter had the fol-
rich countries. lowing to say about Pzer: Management is
Production costs accounted for only 17% on record as saying Pzer will grow at least
of sales in 2000. Hence, even after R&D of 25% over the next several years. We feel
US$4.4 billion in that year, and selling, infor- condent in the companys ability to
mational, and administrative expenditures achieve these targets.11
of US$11.4 billion (including US$3.4 billion
in advertising), Pzers income before taxes
and minority interests was US$8.9 billion,8
or 30% of sales. This result was helped by
post-merger cost savings of US$430 million
and nearly 4,000 layoffs. On the same basis,
net income grew by 25% to US$6.5 billion.
Helped by double-digit sales growth and
substantial further cost savings, the company
expects earnings growth of at least 25-27% in
2001 (growth in the rst quarter of the year
was 32%) and at least 20% in 2002, implying
pre-tax income of over US $13 billion next
JONATHAN RAINSFORD

Therapeutic Strengths particularly in the category of infectious dis-
Eight Pzer products had sales in 2000 ease. Pzers R&D pipeline includes around
of over US$1 billion, including three over 150 research programs in nineteen therapeu-
US$2 billion and two over US$3 billion. Its tic areas. Among the compounds in late-stage
cholesterol-reduction drug Lipitor (atorvas- R&D are two with signicant potential to
MARK BUSHNELL
tatin) with sales of over US$5 billion treat infectious diseases common to develop-
was the worlds second-top-selling ing countries. Vfend (voriconazole) is a broad-
pharmaceutical product. spectrum antifungal intended to comple-
Pfizer is uniquely Pzers sales breakdown by therapeutic ment Diflucan. Capravirine is an antiretrovi-
positioned to influence the area reflects the industrys disproportionate ral expected to be as effective as the triple
policies of governments focus on diseases in rich countries. Its two therapy combination of Viracept and GSKs
and international
biggest product categories are cardiovascular AZT and 3TC, used to combat HIV/AIDS.
organizations and to lead
disease and central nervous system disorders,
other companies by its
example
which are prevalent in developed nations A Uniquely Influential Role
such as the U.S. Its infectious disease cate- As a US company that leads the world
gory represents 16% of total human pharma- pharmaceutical industry, and whose chair-
ceutical sales. The top three products in this man and CEO is chairman of PhRMA, Pzer is
category are: uniquely positioned to influence the policies
> the worlds top-selling prescription of governments and international organiza-
antifungal Diflucan (fluconazole), the uses tions and to lead other companies by its
of which include treatment of life-threaten- example. In that sense, certainly, Pzers
ing opportunistic infections common in boast that itcan make more difference
HIV/AIDS, notably the brain infection to human life than any company has ever
cryptococcal meningitis. made before12 is true.
> the worlds top-selling protease inhibitor Pzer will increasingly become embroiled
for HIV/AIDS, Viracept (nelnavir), which is in the burgeoning debate about the social
sold by Pzer in North America and licensed responsibility of pharmaceutical companies
to Roche in exchange for a royalty elsewhere in the face of nearly 40,000 people a day
(apart from Asia, where Japan Tobacco has dying from treatable infectious diseases.
the rights). Indeed, the company is already involved in
> and the macrolide antibiotic Zithromax a number of controversies relating to afford-
(azithromycin), which is the most prescribed able access to its own patent-protected life-
branded oral antibiotic in the U.S. and treats, saving medicines (see section 4). As an indus-
among other things, most respiratory infec- try leader, Pzer bears a special obligation to
tions in adults and children. The once-daily shape socially enlightened policies that
dose for 3-5 days has been key to the prod- could improve the lives of poor people
ucts success. around the world, and to do more good
These product lines suggest that Pzer for more people than any other company
has considerable expertise that is of critical on the planet.
signicance for developing countries today,

Section 3
From bad to worse -

the health divide and trips
Summary alarming the marked strengthening of
Diseases that are under control in the patent protection in poor countries that
developed world cause millions of prema- will result from implementation of the
ture deaths in the developing world. The TRIPS agreement. TRIPS does allow for
reasons are various, but limited access to exceptions in theory, but the safeguard pro-
life-saving drugs that are widely available visions are proving very difcult to operate
in rich countries is an important one. in practice in the face of legal and other
Affordability is one of the factors restrict- pressures from powerful companies and
ing access, and patent protection is a key their governments. Indeed, the U.S. govern- patent protection is a key
factor influencing the affordability of new ment has pressured a number of countries factor influencing the
drugs. This analysis makes particularly into adopting TRIPS-plus legislation. affordability of new drugs
CATALINA ANECA

The Gulf Between Rich
Death and Disease The Gulf is even farther behind, with life expectancy
Between Rich and Poor at 49 for men and 52 for women.
The sheer scale of the global health divide Much of the explanation lies in the
is illustrated by two arresting comparisons:13 high death rates in developing countries
> The mortality rate among children from infectious diseases that have been effec-
under ve averages 75 per 1,000 worldwide, tively controlled in rich countries. Table 1
but ranges from just 6 in high-income coun- shows causes of death by region. In Africa,
tries to 151 in sub-Saharan Africa. infectious and parasitic diseases account for
> Worldwide, life expectancy at birth aver- 60% of deaths. In Europe, by contrast, they
ages 65 for men and 69 for women. But this account for just 5% of total deaths, while
conceals a huge disparity between high- over 70% are caused by cancer and cardiovas-
income countries, where it is 75 for men and cular disease (both of which are correlated
81 for women, and the low- and middle- with age and lifestyle factors, and together
income countries of South Asia, where it is account for fewer than 15% of deaths
62 and 63, respectively. Sub-Saharan Africa in Africa).
Table 1: Deaths by Cause in WHO Regions, Estimates for 1999 (%)

Cause of death World Africa Americas Eastern Europe SE Asia Western
Med Pacific
Infectious/Parasitic Diseases
Tuberculosis 3 3 1 3 1 5 3
HIV/AIDS 5 21 1 1 0 3 0
Diarrheal Diseases 4 7 1 7 0 7 1
Childhood Diseases 3 7 0 5 0 4 0
Malaria 2 9 0 1 0 0 0
Respiratory Infections 7 10 5 8 3 11 4
Tropical Diseases & Other 1 3 1 2 1 1 0
25 60 11 26 5 31 9
Other Causes
Malignant Neoplasms (cancer) 13 5 18 6 20 8 18
Cardiovascular Diseases 30 9 34 32 51 29 32
Injuries 9 7 10 10 8 9 11
Other 23 19 27 26 16 23 30
75 40 89 74 95 69 91
Source: Adapted from WHO World Health Report 2000, Annex 3
These totals may not add to 100% due to rounding
While scientic progress continues apace parasitic diseases in 1999, most were of poor
in the developed world the mapping of the people in developing countries, including 6.3
human genome, for example, offers scope for million in Africa and 4.4 million in
a quantum leap in targeted individualized Southeast Asia. More than half were of chil-
drug treatment the story elsewhere is very dren under ve. Six diseases pneumonia,
different. Of the estimated 40 million deaths diarrhea, HIV/AIDS, malaria, measles, and
(around 1,600 per hour) from infectious and tuberculosis (TB) account for most of these
deaths, killing mainly children and young
15 Formula for Fairness adults.
and Poor
Two relatively new factors will likely course for TB usually costs around US$20,
worsen this already bleak picture: but with multi-drug resistant TB, the cost
> AIDS epidemic. More than 95% of the can leap to US$2,000+.15
nearly 15,000 new HIV infections per day Much of the developing world is caught
occur in developing countries. Of the 36.1 in a vicious circle: poor health causes poverty
MARK BUSHNELL
million people estimated to be living with and poverty causes poor health. According to
HIV/AIDS at the end of 2000, 25.3 million an April 2000 WHO-sponsored report,
were in sub-Saharan Africa. In this region, malaria has slowed Africas economic
the infection rate among people 15 to 49 is growth by 1.3% per annum. Sub-Saharan
>
estimated at 8.8%, compared with well under Africas GDP would be up to 32% greater
1% in Western Europe and North America. Of if malaria had been eliminated 35 years ago. The World Bank estimates
the 21.8 million cumulative deaths so far This would represent up to $100 billion that per capita growth
from AIDS, more than 15 million have been added to sub-Saharan Africas current GDP rates in sub-Saharan
Africa, were reduced by
in sub-Saharan Africa, where in 1999 a mas- of $300 billion. This extra $100 billion would
0.7% p.a. between 1990
sive 9% of HIV-positive people died from AIDS be, by comparison, nearly ve times greater and 1997, due to the AIDS
or related diseases. If deaths had occurred at than all development aid provided to Africa epidemic.17
the much lower European or U.S. rates (1.3% [in 1999]16 Malaria-free countries average
and 2.4%, respectively), over 1.5 million fewer three times higher GDP per head than malar-
Africans would have died of AIDS in that year ious countries, even after allowing for differ-
alone.14 HIV/AIDS is also on the increase at ences in government policy, geographical
alarming rates in South Asia and Latin location, and other factors affecting eco-
America. More than 4 million have been nomic well-being. Similarly, the ravaging of
infected in India alone. Africa by HIV has ominous implications for
> Drug resistance. Chloroquine, previ- macroeconomic growth. The World Bank
ously the rst-line treatment for malaria, is estimates that per capita growth rates in
now ineffective in 80 of the 92 countries sub-Saharan Africa, were reduced by 0.7% p.a.
where malaria is a serious problem. In some between 1990 and 1997, due to the AIDS epi-
countries, up to half of meningitis and pneu- demic.17 Another World Bank study suggests
monia cases are now resistant to penicillin. that South Africas GDP will be 17% lower in
The emergence of drug-resistant strains of, 2010 than it would have been without the
among other things, TB, malaria, pneumo- effect of AIDS. A recent Harvard study sug-
nia, diarrhea, cholera, HIV, gonorrhea, and gests that these predictions even underesti-
other sexually transmitted infections is a mate the negative impact because they do
growing threat across the world. A key cul- not take feedback effects into account,
prit in developing countries is sub-optimal including falling worker productivity,
drug use, especially truncated courses of declining savings and investment, and
antibiotics, that result from poverty and rising business costs.18
high prices. The consequences of resistance The causes of the public health crisis
will be most severe in developing countries, in developing nations are complex. Poor
given that the emergence of resistance to nutrition, inadequate water and sanitation,
rst-line treatments means that much more armed conflict, and logistical difculties are
expensive second- and third-line treatments all important in explaining the health
become necessary for treatment to be effec- divide. However, access to effective drugs
tive. For example, a six-month treatment is also a fundamental factor.

At one level, the problem is that in some pared with US$3,724 in the U.S.21 Public
cases the necessary armory of drugs simply expenditure on pharmaceuticals is less than
does not yet exist. The commercial pull of US$10 per head in sixty-one countries.22
rich country markets has led to a paucity of In some cases, low government expendi-
research into affordable therapies, including ture on health reflects lack of political com-
vaccines, for the diseases affecting poor peo- mitment to public health and inappropriate
ple. Only 10% of global health research is prioritization of resources. Usually, however,
devoted to health problems in developing it simply reflects a lack of money. For exam-
countries, and only 2% is devoted to R&D ple, excluding South Africa, average GNP per
into AIDS, malaria, acute respiratory infec- head in the top twenty economies in sub-
tions, diarrheal diseases, and TB combined.19 Saharan Africa was US$322 in 1999.23 In such
There is, therefore, a compelling need for circumstances, even the best-intentioned
more R&D into these under-researched dis- governments can spend very little on health,
ease areas and particularly into treatments and as a direct result, millions of poor people
for resistant strains of the common killer die each year from diseases that, according
diseases. to the WHO, could in many cases be
Effective drugs do exist, however, for prevented at a cost of less than
many developing-country diseases, and yet $5 per life saved.24
more than one-third of the worlds popula- The gap between public provision
tion and more than half of the population and what is necessary is to some extent
of Africa - do not have regular access to even lled by private out-of-pocket expenditure.
basic medicines to treat these diseases.20 According to one source, 80% of people in
The mass exclusion from access to basic developing countries pay directly for some
life-saving medicines is inextricably linked or all of their own medicines.25 But this can
with the resources available in developing involve considerable hardship. Purchases of
countries. World Health Organization (WHO) pharmaceuticals are often at the expense of
statistics show that total per capita annual food and education, and nancial con-
health expenditure public plus private straints inevitably result in under-consump-
is less than US$100 in sixty-six countries and tion. The consequences are ineffective treat-
less than US$50 in thirty countries, comment and the growth of drug resistance.
$5 per life saved

CATALINA ANECA
The mass exclusion from

access to basic life-saving
medicines is inextricably
linked with the resources
available in developing
countries

The new requirement of at least
TRIPS Globalization of a trade negotiations that was signed in 1994

Rich-Country Patent System and that involved the formation of the WTO
The high cost of drugs, combined with the successor to the General Agreement
low incomes in developing countries, is on Tariffs and Trade in January 1995.
clearly a key factor in disparate access to life- TRIPS requires the domestic intellectual
MARK BUSHNELL
saving medicines and in disease and death property regimes of all 141 current WTO
rates between rich and poor countries. Drug member states (and any future new mem-
prices are influenced by a wide range of fac- bers) to include patent protection of at least
TRIPS requires the tors, including distribution costs, tariffs, twenty years from the date of ling on all
domestic intellectual exchange rates, and local economic circum- new technologies, including pharmaceuti-
property regimes of all stances. However, the extent to which there cals, which meet the standard criteria of nov-
141 current WTO member is competition in the pharmaceutical market elty, inventiveness, and industrial applicabil-
states to include patent plays a vital role in determining prices. ity. Industrialized countries had to comply
protection of at least
Prices tend toward the lowest achievable with this requirement by 1996. Although
twenty years from the date
when there are ve or more competing seventy developing countries had until 2000
of filing on all new
technologies, including
equivalent products on the market.26 Patent to comply, and the rest have until either 2005
pharmaceuticals protection limits the level of competition or 2006 (with possible extensions on a case-
for a specied period, allowing prices and by-case basis), they have been required mean-
prots to be higher during that time, as while to offer "market exclusivity" to new
a means of encouraging innovation. products effectively equivalent to patent
Until 1995, every country, in framing its protection pending implementation of
patent regime, was free to strike its own bal- TRIPS-compliant domestic legislation. In the
ance between encouraging innovation and event of alleged non-compliance, a complex
maximizing the availability of affordable and costly WTO dispute mechanism can be
medicines to its populace. Many developing triggered. The potential penalty for non-com-
countries chose to use this freedom to pliance with an adverse adjudication of the
exempt drugs from patenting or to grant Dispute Settlement Body is trade sanctions
only limited protection (e.g., a maximum against the recalcitrant country by the
of ve years, or patents on processes but complaining countries.
not products), thereby allowing low-price The new requirement of at least twenty
generic versions of new products to enter years of patent protection represents a sub-
the market within a few years of launch of stantial increase in many developing coun-
the original product. Indeed, many of todays tries. To meet concerns of developing coun-
rich countries did not grant patent protec- tries, the agreement is subject to certain
tion during earlier stages of their develop- public interest safeguards and exceptions.
ment, choosing to wait rst for the emer- Some observers do regard these safeguard
gence of local pharmaceutical industries provisions as adequate. Indeed, Pzer itself
before enforcing patents in their is among them. However, Oxfams view is
own markets. that these safeguards are piecemeal,
The new global intellectual property ambiguous, and difcult to administer,
regime enshrined in the WTOs Agreement especially because of the threat of legal
on Trade-Related Aspects of Intellectual challenge and use of the WTO dispute
Property Rights (TRIPS) is very different. procedures. For example:
Championed by the U.S. government and the > Article 8 of TRIPS holds that member
pharmaceutical industry, (led by Pzer see states may, in formulating or amending
section 5), the TRIPS agreement formed part their laws and regulations, adopt measures
of the nal Act of the Uruguay Round of to protect public health and to promote
20 years
of patent protection represents a substantial increase in many developing countries.
the public interest in sectors of vital withdrawn after worldwide campaigns and
importance. However, it seriously under- media criticism, although the Brazil-U.S. dis-
mines this by adding the requirement that pute has now moved back from the WTO
such measures must be consistent with court to a
the provisions of this Agreement. bilateral forum.
> Article 6 in effect allows parallel Indeed, in bilateral and regional trade
importing of patented products available agreements, and in other non-WTO fora, the
more cheaply elsewhere in the world. U.S. government heavily lobbied by PhRMA
However, the globalization of patent terms has pushed successfully for the introduc-
in the TRIPS agreement, which reduces pric- tion of TRIPS-plus levels of intellectual
ing pressure from generics, is likely to stem property protection (i.e., protection levels
signicant opportunities for savings from that exceed those contained in TRIPS).
parallel imports. Examples include Vietnam, Jordan, Brazil,
> Article 31 allows national legislation to Thailand, and, most recently, Egypt.
give governments the right, in specic cir- Although the U.S. does seem following an
cumstances, to grant a compulsory license Executive Order issued by President Clinton
to third parties to manufacture a generic ver- in May 2000 to have stopped exerting overt
sion of a product without the authorization pressure in the specic case of antiretrovirals
of the patent holder. However, the circum- in African countries,27 the practice continues
stances in which this may happen are lim- elsewhere. The Bush administration is push-
ited, the procedures are cumbersome, ing, for example, for the treaty governing the
undened adequate remuneration must proposed Free Trade Area of the Americas to
be paid to the patent holder, and experts include patent protection of more than 20
disagree on whether this article permits years and to incorporate even tighter
licenses to be granted to companies in restrictions on compulsory licensing
another country or whether manufacture than under TRIPS.
must be domestic (which would obviously
pose a problem for the many developing What Next? >
countries without a domestic generics Except for the limited cases where safe-
industry). A national emergency can guard provisions can successfully be utilized,
be invoked to accelerate the process, the new trade rules will delay the introduc-
but the term is not dened. tion of generics into the market. The
Under the strict interpretations pushed inevitable effect in many poor countries will
by the U.S. government and the industry, be higher prices for essential medicines dis-
both Articles 6 and 31 give wide scope for covered after 1995. Products affected include
dispute procedures. many anti-HIV drugs currently on the mar-
Pharmaceutical corporations, and some ket and any future improved drugs, from
industrialized country governments have Pzer or others, for HIV/AIDS, malaria, TB,
pressured developing countries not to use and all of the other preventable and/or treat-
versions of even these limited safeguards able diseases. Higher prices will restrict
for example, in the lawsuit mounted by the access to these important drugs and deepen
industry against the South African govern- the health divide between rich and
ment and in the complaint brought by the poor countries.
U.S. government against Brazil at the WTO
court (see section 5). Both actions were
Section 4
The Health Divide

Response of Pfizer
and the industry
Summary rights, which in the future will increasingly
Despite owning three important drugs for be determined by the TRIPS agreement.
infectious diseases the antifungal Meanwhile, there is a dearth of R&D into
Diflucan, the antibiotic Zithromax, and the new pharmaceuticals for diseases that are
antiretroviral Viracept Pzer, unlike a prevalent in developing countries.
number of its competitors, has shown little This section is divided into two parts. The
flexibility on pricing and patent enforce- rst looks at the three medicines in Pzers
ment in poor countries. Where it has portfolio that are particularly relevant to
patents, it appears to adopt a broadly uni- developing countries. The second part evalu-
form pricing strategy and its policy is not to ates some of the specic responses of Pzer
issue licenses to generic manufacturers. and the pharmaceutical industry in general
The result is that its drugs are often priced to the rich/poor health divide, focusing in
beyond the means of poor people and their particular on price cuts and philanthropic
governments. Pzers main response to the programs, including Pzers signicant
health crisis in the developing world has Diflucan and Zithromax initiatives.
been to undertake limited donations (for
example, Zithromax for one particular dis- Access to Pfizers Products
ease in a handful of countries). While As discussed in section 2, three products
Oxfam does welcome initiatives of this kind sold by Pzer are particularly relevant to dis-
and there are now many similar programs eases prevalent in developing countries: the
being undertaken by the leading pharma- antifungal Diflucan, the antiretroviral
ceutical companies, partly in response to Viracept, and the antibiotic Zithromax.
public pressure in our opinion they are,
taken together, no substitute for more sys- Diflucan (fluconazole)
tematic policies aimed at making medi- In 2000, global sales of Diflucan were just
cines more widely available. over US$1 billion (representing 4.5% of
Pzers total human pharmaceuticals sales).
Section 3 showed that disease and high Pzers approach to making this life-saving
death rates in developing countries are inex- drug commercially available for the treat-
tricably (although not exclusively) linked to ment of opportunistic infections associated
access to drugs, that access is intimately with HIV/AIDS has come under intense criti-
linked to prices, and that prices are in turn cism in a number of countries. In July 2000,
closely related to intellectual property Mdecins Sans Frontires/Doctors Without

Borders (MSF) published a comparative price fluconazole at $.64 apiece, for example,
study of generic versions of fluconazole and Diflucan is sold in Kenya at $10.50 per unit.
Pzers branded product Diflucan. The This nding is consistent with other studies
ndings (see Table 2) illustrated wide price reporting up to a 90% price differential
differences.28 Although cross-country com- between brand name and generic drugs.29
parisons are complicated by the influence on Other analyses of drug pricing generally
prices of exchange rate fluctuations, tariffs, conrm that it is the presence of patent pro-
sales taxes, inflation, and margins charged tection that dictates the price of drugs, not
by distributors and retailers, generic equiva- local income and the ability to pay.30
lents are clearly substantially cheaper. While Patents are clearly the key to the
the Indian generics manufacturer Cipla sells affordability of drugs.
Table 2: Diflucan v. Fluconazole Price Comparisons

Manufacturer Country of Distribution Price per Unit (US$)
Biolab Thailand 0.29
Cipla India 0.64
Bussie Guatemala (negotiated price) 3.00
Pfizer Thailand 6.20
Vita Spain 6.29
Pfizer South Africa 8.25
Pfizer Kenya 10.50
Pfizers main response
Pfizer Spain 10.57 to the health crisis in the
Pfizer Guatemala (negotiated price) 11.84 developing world has
Pfizer USA 12.20 been to undertake limited
Pfizer Guatemala (not negotiated) 27.60 donations
CATALINA ANECA

MSFs conclusions from its Diflucan/flu- down price. Although fluconazole is not
conazole study included two particularly patent-protected in Thailand, Pzers version
signicant points. First, where Pzer has protected by a market exclusivity provision
patents, it sells the medicine at broadly simi- was the only one on the market until 1998,
lar prices, irrespective of the ability to pay in when three Thai companies began produc-
different national markets. Second, were tion of generics. Pzer then dropped its
developing countries able to access generic Diflucan price from US$7 per 200mg capsule
equivalents, they would be able to reduce the to US$3.60. Having regained market share,
price of uconazole signicantly. For exam- helped by intensied marketing, Pzer then
ple, if South Africa had been able to import raised its price back to US$6.20 per 200mg
uconazole from Biolab, a Thai generics capsule, compared with the much lower
manufacturer, the cost of one years mainte- generics prices (e.g., the Biolab price is
nance treatment would have fallen from US$0.29 for the same dosage).31 In Brazil,
US$2,970 to US$104 per patient. Pzers branded version of fluconazole is
Further investigations by Oxfam called Zoltec. In July 2000 it was selling at
have reached similar conclusions about a price almost double that of the cheapest
the important role of generics in bringing available generic (see Table 3).
Table 3: Prices of Fluconazole Brands in Brazil32

Brand Manufacturer Price per pill (R$)
Zoltec Pfizer 20.24
Flusan Eurofarma 14.39
Pronazol Diffucap-Chem 13.12
Lertus Zodiac 11.48
Zoltatin Biochimico 10.57
Fluconazol Sanval 10.49
Triazol Sanus 10.40
Although Pzer has subsequently has been not only to limit poor peoples
launched a fluconazole donations program access to Diflucan, but also, in countries
in South Africa and is now proposing to where the product is patent protected, to
extend this to a number of other countries deny access to generic equivalents until the
(see page 24), the case of fluconazole illus- patent expires.
trates well the general dilemmas for govern- Under TRIPS, generic producers will be
ments seeking an appropriate balance unable to compete with patented products
between the need for patent protection to for at least twenty years from the date of
encourage investment and innovation, and patent ling (or typically 10-15 years from
the desire to facilitate access to medicines for launch, assuming 5-10 years between patent
poor populations. The effect of Pzers policy ling and launch).33 Industry spokespeople
of high prices and strong patent protection tend to argue the need for a roughly uniform

Viracept (nelfinavir)
pricing policy in order to prevent the parallel stake in the sales of its patented drug,
importation of cheaper medicines from low- nelnavir, Pzer therefore benets from
price markets into higher-priced ones. The whatever patent-protected decisions Roche
industrys critics argue that if the net out- has the power to make on its prices.
come is to further limit poor peoples access Roche has offered to make the drug
to life-saving medicines, it is incumbent available at concessionary prices in a
upon the industry to exercise considerably number of developing countries under the
more exibility and social responsibility, and UNAIDS-led Accelerating Access Initiative
upon governments to assume a greater role. (see page 26). However, the price cuts offered
We look at these arguments in much more have not been publicized and are reportedly
detail in section 6. relatively small. Roche is meanwhile ghting
hard against pressure to lower nelnavirs
Viracept (nelfinavir) price in Brazil.
Viracept is the best-selling drug in the In 1996, Brazil introduced an AIDS
protease inhibitor class of antiretrovirals. program that aims to provide antiretrovirals
It works by disrupting the ability of HIV, the free of charge to HIV/AIDS patients. This
virus that causes AIDS, to replicate itself much-admired policy has been credited with
inside the human cell. Pzer describes it as halving the countrys AIDS mortality rate
one of the products that will drive the con- and an 80% fall in its hospitalization rate.34
tinuing success of the [newly-merged] com- The program currently uses twelve antiretro-
pany. It has great potential use in the viral drugs. Of these, ten have never been
treatment of HIV in poor countries. patented in Brazil (where patents on pharma-
The geographical distribution of Pzers ceuticals were not introduced until 1996)
many patent lings for nelnavir include and are therefore sourced cheaply through
South Africa and the member states of the local generic production or importation. The
African Regional Industrial Property two patented drugs are Mercks efavirenz
Organization (ARIPO), giving it patent protec- and Roches nelnavir. Because of their rela-
tion in these countries until 2014. In South tively high prices, they together accounted
Africa, 4.7 million people are estimated to be for over a third of the Brazilian governments
HIV-positive and ARIPO members include total AIDS drugs bill last year. Nelnavir
countries with some of the highest incidence alone accounted for 28% (or US$85 million).
of HIV/AIDS in the world: Tanzania (1.3 mil- Merck eventually agreed in March 2001 to
lion people), Mozambique (1.2 million), cut the price of efavirenz by around 60%, but
Kenya (2.1 million), and Uganda (1.5 million). Roche has thus far resisted government pres-
The UN categorizes nine of ARIPOs fteen sure for substantial price cuts. In mid-May of
member states as among the poorest the same year, the Brazilian government
countries in the world. warned Roche that it intended to issue a
Nelnavir is licensed to Roche in Europe compulsory license for local generic manu-
and other countries outside North America,
Japan, and Asia in exchange for a sales-based
royalty. Because Pzer maintains a nancial
facture of the drug if an adequate price cut
was not offered by July 2001. 35 >

Zithromax (azithromycin)
Zithromax (azithromycin) choma and not these other uses.37
Azithromycin is an important antibiotic Azithromycins potential to treat
well-known for its efcacy in treating tra- pneumonia and other killer diseases in
choma (one of the leading causes of prevent- developing countries is one reason that
able blindness in developing countries). In MSF recommended in 1999 that it be added
clinical and community trials in ve develop- to the WHOs Essential Drugs List. This list
ing countries, one dose of the medicine was is adapted for use by national health services
found to be as effective against trachoma as and used as the backbone of many govern-
the previously recommended six-week multi- ments medicines policies. Although
dose tetracycline regimen. The crucial differ- azithromycin has been proven extremely
ence is that the single oral dose of safe and highly effective, especially for chil-
azithromycin is much easier to use than dren, it is still not on the WHO list due to
the twice-daily and longer-term course cost considerations (affordability is one of
of tetracycline. the criteria for a drugs inclusion on the list).
Pzer donates Zithromax for use against For many developing countries, Zithromax
trachoma in a number of poor countries (see is priced out of reach both of the govern-
page 29). However, the medicines effective- ment and most individuals. A study of East
ness extends well beyond trachoma. It can Africa by MSF38 found the price to vary from
be used to treat a whole range of infections, US$2.70 per 250mg unit in Kenya to US$3.40
including pharyngitis, tonsillitis, and skin in Tanzania (i.e., roughly half the US$5.80
Life-saving medicines and ear infections, and it has become the price for double that dosage in Norway).
may be priced out of the most prescribed branded antibiotic in the The annual per capita health expenditure
reach of poor people, yet U.S. Azithromycin is also a powerful agent is just US$17 in Kenya, compared with
generic competition, against Streptococcus pneumonia and US$2,283 in Norway.39
which could bring down
Haemophilus influenzae. These pathogens are
the price substantially,
the prime causes of respiratory tract infec-
is not permitted in
countries that grant tions, and in particular pneumonia, which
patents during the period is the number one killer of children world-
of patent protection wide.36 Pzers donation program is for tra-
CATALINA ANECA

Company Initiatives Philanthropy and Self-interest
The Industrys Reaction to the The Wall Street Journal recently described the
Growing Public Pressure industry as reeling from an unprecedented
Pzers apparently roughly uniform wave of public scorn,40 and The Economist
international pricing policies for Diflucan asked, How did the industry get itself
and Zithromax are good specic examples into such a mess?41
of the general problem. Life-saving medi- As the public health crisis unfolds, both
cines may be priced out of the reach of poor the public and investors are questioning the
people, yet generic competition, which could performance of companies that fail to
bring down the price substantially, is not address these issues in developing country
permitted in countries that grant patents markets. The Internet is playing a huge role
(i.e., under TRIPS, eventually all WTO mem- in raising awareness of global health dispari-
bers) during the period of patent protection. ties and mobilizing pressure for change.
Criticism of the industry therefore con- Companies that are slow to react, or whose
tinues to mount amid concerns that TRIPS price cuts and philanthropic efforts appear
will exacerbate the health divide. inadequate in relation to need and to the
Pharmaceutical companies obviously resources available to them, risk poor public
cannot be expected to bear the entire burden relations, shareholder actions, and more
of health care in the developing world they importantly for them sustained damage to
are not charities, and drugs are in any case their share prices. This can happen in vari-
not the whole answer. However, the industry ous ways. Shifts in consumers purchasing
does have the resources including product patterns might be particularly relevant to
patents, low-cost production processes, and companies such as Pzer and GSK, with their
R&D expertise to make a much greater sizeable consumer health businesses. More
impact than it does, particularly because it subtly, a poor public image is likely to have
is consistently among the most protable of adverse effects on staff morale and recruit-
all industries. The low priority given to pub- ment. Probably most threateningly, lobbying
lic health considerations in the developing has its limits in the face of public opposition,
world by pharmaceutical companies has and the industry risks losing the invaluable
drawn increasingly vocal criticism. support of governments and legislators in
The Wall Street Journal recently described the industry as
reeling from an unprecedented

wave of public scorn
The Economist asked
How did the industry get

itself into such a mess?
Public-Private Partnerships
industrialized countries if public opinion > In May 2000, ve companies, including
continues to move against it. Pzers nelnavir licensee Roche, joined the
The objective of company boards is not UNAIDS-led Accelerating Access to HIV/AIDS
solely to maximize prot every year but to Care and Treatment Initiative (AAI) aimed at
maximize shareholder value. The growing HIV prevention and treatment in some devel-
risks described in the previous paragraph oping countries. This included the offer to
have meant that shareholder value and pro- sell to the governments of these countries,
poor policies have in recent years become subject to certain conditions, a range of anti-
more closely aligned. Responding to the HIV drugs at prices up to 90% lower than in
mounting public criticism of industry poli- industrialized countries. Pzer has not
cies, many companies have stepped up their joined AAI, saying that it prefers to remain
price cuts and philanthropic activities by independent so as to be more nimble
entering into non-commercial, well-publi- and dynamic.42
cized initiatives, usually in conjunction with > Three of these ve companies have
public bodies. These public-private partner- recently announced that they would go
ships (PPPs) generally involve at cost or free further than originally envisaged. Merck
drug donations or deep price cuts in specic and Bristol-Myers Squibb will cut prices
disease areas and countries. Recent moves in again (this time to levels at that they claim
the HIV/AIDS area include: they would make no prot). In its report,

Facing the Challenge, GSK extends price Price cuts and philanthropic programs
offers on additional HIV/AIDS and anti- and PPPs generally can if well-designed
malarial medicines to a wider range of coun- make an important contribution in particu-
tries and customer groups.43 In addition, it lar areas, but they are inadequate in isola-
commits to undertaking a pilot study to tion and cannot be regarded as alternatives
assess the impact of price reductions for to more systematic policies to promote
anti-infectives, deworming agents, and access to affordable medicines. They often
anti-diarrheals in poor countries. bear little relation to the scale of the prob-
> Bristol-Myers Squibb, makers of ddI lem and leave developing countries too
(Videx brand didanosine) and d4T (Zerit reliant on chance and the goodwill of compa-
brand stavudine), has promised $100 million nies. They are piecemeal, reversible, and fre-
to its Secure the Future program, which quently conditional. Thus, while Pzer has
involves setting up HIV prevention, treat- recently announced a new initiative to
ment, and research programs in a number extend its Diflucan donation program to The growing risks have
of African countries. more countries for an unlimited period, its meant that shareholder
In addition, Bristol-Myers Squibb, original program was limited to particular value and pro-poor
Boehringer Ingelheim, GSK, Merck & Co., patients in one country for a nite period, policies have in recent
years become more
Hoffman-LaRoche, and Abbott Laboratories, and even the expanded program is still piece-
closely aligned
among others, have launched other philan-
thropic initiatives.44
CATALINA ANECA

Unlike a number of its competitors,
Pfizer has shown little
meal and an insufcient alternative to Pfizers Donation Programs

systematic policies that promote access. Unlike a number of its competitors, Pzer
Moreover, even deeply cut prices are often has shown little flexibility in its policies on
beyond the reach of poor countries and their patents or prices. For example, one way
governments (at the time of writing, only Pzer could facilitate broader access to its
seven countries have signed up to the life-saving medicines would be to issue vol-
Accelerating Access Initiative, and the num- untary licenses in poor countries, thereby
ber of patients expected to be treated is tiny enabling health ofcials to arrange for the
in comparison to the incidence of HIV). production or importation of affordable
Offers of hefty price cuts provide no guaran- generic equivalents, while protecting Pzers
tee that the best attainable prices are intellectual property position elsewhere.
achieved, as evidenced by the recent further Indeed, in December 2000, Cipla wrote to
price cuts by Merck and Bristol-Myers Squibb Pzers head of patents requesting just such
on their HIV drugs and by the offers by Cipla licenses for the production of a generic ver-
and other generics companies to undercut sion of fluconazole in return for royalty pay-
the prices offered under the Accelerating ments of up to 5% of sales. Pzer has yet to
Access Initiative.45 Even claims by patent respond to Cipla, but it has told Oxfam
Pfizer has shown little holders that products are being sold at cost that it is not its policy to issue such
flexibility in its policies on are debatable as much depends on how over- voluntary licenses.
patents or prices heads are allocated and therefore how cost Instead, the companys response to the
health divide has been to favor philanthropy
in the form of patient-assistance programs
for people in the U.S. who are uninsured
and cannot afford critical medicines, and
through limited donations programs in
developing countries.
Pzer initiated a fluconazole donations
program in South Africa in March 2000. The
program was criticized by international and
national-based groups such as South Africas
Treatment Action Campaign (TAC), ACT UP
Philadelphia and Paris, and MSF, for the fact
that it was limited to South Africa and ini-
tially intended to be limited to people suffer-
ing from cryptococcal meningitis, only one
of the two common opportunistic infections
associated with HIV/AIDS. In June 2000, ACT
UP and TAC demanded that the program be
CATALINA ANECA
extended to those suffering from systemic

thrushthe more common of the two infec-
tions. A short time later, this group was also
made eligible. Although welcomed by the
is dened.

flexibility in its policies on patents or prices.
South African government, this program has Pzers corporate philanthropy

been criticized by leading groups for being also extends beyond the fluconazole and
ad hoc and limited, for burdening the health azithromycin donations programs and this
system with signicant administrative costs, new center. The Pzer Foundation is an inde-
and for being a preemptive move to prevent pendent charitable foundation established
MARK BUSHNELL
generic competition from exercising a down- by Pzer in 1953. The foundations mission is
ward influence on prices. On June 6, 2001, to promote access to quality health care and
Pzer announced that it would extend the education, to nurture innovation and to sup-
offer of free Diflucan to HIV/AIDS patients port the community involvement of Pzer Companies are
in the fty least-developed countries where people. The companys other philanthropic increasingly being called
HIV/AIDS is most prevalent. The company activities focus on science and math educa- into account for the impact
argues that its philanthropic programs are tion, health promotion, and community of their core business
not the result of international campaigning development. Pzer has informed Oxfam practices on human
and media criticism.46 However, Oxfam that its Health Education Programs have development across
the globe
believes that this is open to interpretation reached 2.3 million people.48
in view of the chronology of events in the While Oxfam welcomes well-run dona-
history of the Diflucan program. Although tions programs, and Pzers programs are
it could be argued that Pzer would have certainly of value to their recipients, in
undertaken this initiative anyway, in Oxfams opinion Pzer is in a position to
Oxfams opinion it was made more likely undertake much more comprehensive
by the pressure on the industry to reduce efforts in improving access to essential
prices throughout 2001. medicines both through further expansion
Turning to azithromycin, the of its donations programs and even more
International Trachoma Initiative is a public- importantly through revision of its patent
private partnership formed in 1998. Working and pricing policies.
with international agencies and with govern- Pzer should take a more prominent
ment and non-governmental organizations leadership role in demonstrating sensitivity
to combat trachoma in developing countries, to the current global debate on corporate
Pzer now has programs in Morocco, social responsibility. Companies are increas-
Tanzania, Vietnam, Sudan, Ghana, and Mali. 47 ingly being called into account not prima-
The partnership, between the Edna rily for how generous their philanthropic
McConnell Clark Foundation and Pzer, donations are, but for the impact of their
treats the disease by focusing on simple sur- core business practices on human develop-
gery, the provision of antibiotics, face wash- ment across the globe. As has been shown in
ing and improved access to clean water, the section on fluconazole, Pzers policy of
better sanitation, and increased health high prices and aggressive enforcement of
education. its patents are key factors that limit access
A third large-scale project is the to life-saving medicines for poor people. To
announcement on June 11, 2001, that Pzer align its business more closely with the
will fund Africas rst major treatment and health needs of poor people, Pzer needs
training center for HIV/AIDS, based in the to exercise greater flexibility in its patent
Ugandan capital, Kampala. and pricing policies.

Section 5
Power and Pressure

Pfizers Lobbying
Summary U.S. election cycle, the company made the
Pzer has lobbied vigorously and success- second-highest monetary contribution,
fully in support of its commercial interests, donating US$2.3 million, 86% of which
notwithstanding the public health implica- went to the Republican Party.49
tions. Its chief executive is the chairman of Pzer conducts its lobbying through its
PhRMA, the most powerful pharmaceutical own staff as well as through external politi-
industry lobby in the U.S. It has close links cal lobbyists. It has regularly been one of the
with government and its personnel occupy top ve spenders on lobbying. In 1999 alone,
a number of important policy-shaping Pzer spent US$3.8 million and Warner-
roles. It was a driving force in putting intel- Lambert spent US$2.2 million on external
lectual property on the trade agenda and lobbyists in the U.S.50 A number of the lobby-
was instrumental in the eventual adoption ists employed by the company have held
of TRIPS. It has played a leading role in influential positions in previous
encouraging the U.S. administration to use administrations.
bilateral negotiations and unilateral eco- Pzers chairman and CEO, Henry
nomic sanctions including making sug- McKinnell, recently took over the chairman-
gestions as to who should be placed on the ship of PhRMA. He is also a member of the
U.S. Governments 301 Priority Watch List Board of Directors of the Business
against countries that it believes offer Roundtable (BRT) and vice-chairman of the
inadequate patent protection. BRTs Corporate Governance Task Force.51 The
CEO of Pzer U.K. is the vice-president of the
Influencing the Policy Makers Association of the British Pharmaceutical
Pzer has a long track record of actively lob- Industry (ABPI). Pzer is a member of a num-
bying both in the U.S. and globally to further ber of powerful U.S. industry lobbies. These
its commercial interests on such issues as include the Business Roundtable, the
domestic health care reform and interna- TransAtlantic Business Dialogue, the U.S.
tional patent protection. It is the most visible Chamber of Commerce, the International
advocate for the industry with the U.S. gov- Chamber of Commerce, and the Business
ernment, especially on intellectual property and Industry Advisory Committee (BIAC),
rights and TRIPS. Pzer has also made sub- as well as bilateral business councils such
stantial political donations. During the 2000 as the U.S.- Brazil Council. Senior managers

In 1999 alone, Pfizer spent US$3.8 million
and Warner-Lambert spent US$2.2 million
on external lobbyists in the U.S.
chair the European Union and intellectual (GATT), which began in September 1986,
property committees of the U.S. Council for gave Pzer the opportunity to lobby for
International Business (USCIB). its preferred global intellectual property
Pzer has also sat on a number of govern- regime. It was a driving force in putting
mental advisory committees over the years, intellectual property on the trade agenda
including the US Presidents Advisory and instrumental in the eventual adoption
Committee on Trade and Policy Negotiations of TRIPS. The commercial impact has clear-
(see below). In addition, it has recently been ly been fully assessed by the company. In
appointed to the Commission on Intellectual Oxfams opinion, it is equally obvious that
Property Rights established by the U.K. gov- the social or public health implications of
ernment to investigate how intellectual the agreement were not Pzers priority
property rules might develop in the future consideration.
to take into account the interests of develop- Pzer had been frustrated at the
ing countries and poor people. system administered by the UN-based World
Pzer Europe was part of the EuropaBio Intellectual Property Organization (WIPO).
industry lobby group that pushed through Expressing this, Pzers general counsel at
the controversial Directive on the Legal the time stated: As a UN organization, WIPO
Protection of Biotechnological Inventions, works by majority, and simply put, there
or the Life Patents Directive. This directive, were more of them than us. Our experience
passed in May 1998 by the European with WIPO was the last straw in our attempt
Parliament, allows companies to patent to operate by persuasion.54 In other words,
genes, cells, plants, animals, human body Pzer believed that the developing countries
parts, and genetically modied or cloned in WIPO opposed changing the current
human embryos.52 At the global level, the regime as set up under the existing treaties
company is also part of the International and WIPO, and that the U.S. alone could not
Bioindustry Forum, which protects the same bring about the change the company
interests at the UN policy-making level.53 wanted. As a response to this, Pzer suc-
ceeded in adding intellectual property pro-
Pfizer and the Origin of TRIPS tection onto the GATT agenda for the rst
The negotiations on the Uruguay Round of time. (See table 4 on the next page.)
the General Agreement on Tariffs and Trade

Table 4: Pfizer and Intellectual Property
Organizational Arena Pfizers Role
World Intellectual Property Organization (WIPO) 1979-1986
Initially, Pfizer hoped to bring tighter intellectual property standards to WIPO.
However, Pfizer subsequently expressed its frustration with the organization,
deeming WIPO inadequate to the task and stating that as part of the UN system,
WIPO identifies with the special interests of the very governments in the developing
world who abet the theft of intellectual property.a Further displaying this frustration,
Pfizers General Counsel at the time stated: As a UN organization, WIPO works by
majority, and simply put, there were more of them than us. Our experience with
WIPO was the last straw in our attempt to operate by persuasion.b
Sylvia Ostry, Governments and Corporations in a Shrinking World: Trade and Innovation Policies in the
a
United States, Europe, and Japan (New York: Council on Foreign Relations, 1990) , 24.
As quoted in this report, page 31.
b
General Agreement on Tariffs and Trade 1986-1994

(GATT)/Uruguay Rounds Having abandoned WIPO, Pfizer pushed the debate into the GATT arena by
way of its Chairman Edmund Pratts influential positions as the chairman of the
Presidents Advisory Committee for Trade Policy and Negotiation (ACTPN), a
key member of President Ronald Reagans Business Advisory Committee on
International Trade, and one of the chief architects of the Intellectual Property
Committee (IPC). In mounting this offensive, Pratt noted of industry, Our combined
strength enabled us to establish a global private sector government network that
laid the groundwork for what became TRIPs.a In addition, Pfizer hoped that this
move would result in greater security and compliance and believed that enforce-
ment mechanism[s] and dispute settlement could be instituted through the GATTb
a
Edmund T. Pratt, Jr., Pfizer Forum: Intellectual Property Rights and International Trade,
The Economist, May 27, 1995, p. 26.
Sylvia Ostry, Governments and Corporations in a Shrinking World: Trade and Innovation Policies in the
b
United States, Europe, and Japan (New York: Council on Foreign Relations, 1990) , 24.
World Trade Organization (WTO)/Trade Related 1995-Present

Intellectual Property (TRIPs) Before 1995, Pfizer successfully used the Uruguay forum to push for the adoption
of the TRIPs agreement in what became the WTO. Since then, Pfizer has attempted
to use the more stringent protocols and enforcement mechanisms set forth by
TRIPs and the WTOs requirement that all of its members adhere to the whole
package [of intellectual property rights] rather than being able to select specific
agreements for signature, to further strengthen international compliance and to
push for greater sanctions in the case of patent violations.a As Jacques Gorlin,
director of the Intellectual Property Committee, stated, there are penalties for
piracy in the WTO-TRIPs rules . . . [which are] significant enough for developing
countries
to take notice that they can no longer simply disregard international complaints.b
Pfizer continues to push for stronger patent protections, or Trips -plus.
As quoted in this report, page 33.
a
Jacques Gorlin, director of the Intellectual Property Committee and president of the Gorlin Group,
b
as quoted in the Pfizer Journal Global Edition, Vol. 1, Num. 2, 2000.

Pfizer and the Origin of TRIPS
Before the Uruguay Round, the raison Laubach, president of Pzer Inc., was on
dtre of GATT was to move toward the reduc- the Council on Competitiveness and on the
tion of trade barriers through the removal of board of the Pharmaceutical Manufacturers
tariffs and subsidies. With this round, the Association (the precursor to PhRMA)56. Pzer
concept of TRIPS and trade-related regimes also ensured that its views were put to some
emerged as a new component of the agree- of the major policy think tanks in the U.S.,
ment. Intellectual property rights became including the Heritage Foundation, the
governed by international trade rules, and American Enterprise Institute, the Hoover
governments were obliged to align their Institution, and the Brookings Institution.57
domestic legislation and policies accord- Together with IBM chairperson John Opel
ingly. Critically, the establishment of the (who chaired the Intellectual Property
WTO provided a more enforceable and Taskforce of the ACTPN), Mr. Pratt developed
tougher sanction mechanism for violations proposals to include intellectual property on
of those rules. Finally, the agreements nego- the agenda of the Uruguay Round, and these
tiated at the Uruguay Round were presented were circulated to the U.S. president, the U.S.
as a single undertaking i.e., countries had Trade Representative, and other trade
to accept the whole package rather than ofcials. Providing some solutions to U.S.
being able to select specic agreements fears of loss of competitiveness in the global
for signature. market, the proposals outlined a course of
Pzer was in a good position to lobby the action to advance the U.S. governments
U.S. administration on these issues. In 1979, desirefor gaining leverage. They suggested a
Edmund Pratt, then Pzers chairman, had long-term goal of incorporating intellectual
been appointed to the presidents Advisory property within the GATT framework and an
Committee on Trade and Policy Negotiations interim strategy of placing bilateral and uni-
(ACTPN). Two years later, he became chair of lateral pressure on countries lacking ade-
this committee and remained in this role quate intellectual property protection.58
until 1986. The advisory committee system These proposals were accepted by the U.S.
was established by the U.S. Congress in 1974 government. If, however, the long-term goal
to facilitate the provision of advice from the of their inclusion in GATT was to be
U.S. business sector in three areas: U.S. nego- achieved, other industrialized countries
tiating objectives and bargaining positions would have to be lobbied very hard. Neither
before entering into trade agreements; the the Europeans nor the Japanese were enthu-
operation of any trade agreement once siastic. Heeding the advice of the USTR, Pratt
entered into; and other matters arising in and Opel mobilized eleven other multina-
connection with the development, imple- tional companies59to form the Intellectual
mentation, and administration of U.S. trade Property Committee (IPC) in March 1986.
policy.55 Pratt subsequently became a special The aims of the IPC were to garner govern-
advisor to the United States Trade ment support for its objectives through part-
Representative (USTR) when he retired from nership with business associations in these
Pzer with the title of Chairman Emeritus. localities. The IPC successfully formed an
Other Pzer executives also held influential alliance with the European Union of
positions: Lou Clemente, Pzer's general Industrial and Employers Confederations
counsel, headed the Intellectual Property (UNICE) and the Keidanren, the Japanese
Committee of the USCIB, and Gerald industry coalition. Together, they released

their Basic Framework, a 100-page docu- with the establishment of the WTO. Mr.
ment60 that outlined the fundamental provi- Pratt has been quoted as saying: Our [the
sions of patent protection that was to industrys] combined strength enabled us to
become the basis of TRIPS. establish a global private sector government
Pzer took the lead in aggressively push- network that laid the groundwork for what
Pfizer has played a ing for TRIPS throughout the negotiations, became TRIPS.61
leading role in pressuring
threatening to oppose ratication of any Despite this success, the industry contin-
the U.S. administration to
Uruguay Round agreement by the U.S. ues to expand and deepen its quest for patent
use bilateral negotiations
and unilateral economic
Congress if it was not to its liking. Though protection. In his testimony to the U.S. House
sanctions against countries negotiations on TRIPS were tough, the agree- of Representatives Ways and Means
that it believes have weak ment came into force in 1995 with the other Committee in March 1996 as representative
patent protection agreements of the Uruguay Round, along of the IPC, Peter Richardson, senior assistant
general counsel for Pzer, voiced the indus-
trys objections to the transition periods pro-
vided to developing countries: long TRIPS
transition periods are forcing us to look out-
side the WTO for instruments to gain IP pro-
tection in the developing countries.62 This
contrasts with the recognition by a number
of international leaders that many develop-
ing countries faced serious implementation
problems in meeting the agreed TRIPS
transition timetable.
Richardson recommended that the U.S.
use a number of mechanisms to ensure that
TRIPS-compliant legislation was enacted
quickly. (This included pushing the
Singapore WTO Ministerial Meeting to agree
to an acceleration in the transition provi-
sions and using the regional free trade initia-
tives like the FTAA as vehicles for implemen-
tation of higher levels of patent protection).63
Lobbying has also been conducted at the
national level in various developing coun-
tries. In Brazil, for example, Pzer partici-
pated in the aggressive lobbying activities of
Interfarma, a coalition of multinational
pharmaceutical companies that was formed
for the express purpose of influencing the
early passage of the Industrial Property Law.
This law granted patent protection on phar-
maceuticals and took effect in 1997, eight
CATALINA ANECA
years earlier than required under TRIPS.

A number of countries have felt the heavy hand of
Section 301
Pfizer, Section 301 The 301 process depends upon surveil-
and TRIPS enforcement lance. U.S. companies provide the informa-
As a parallel strategy, Pzer has played a tion directly to the USTR or through their
leading role in pressuring the U.S. adminis- trade associations. PhRMA, for example, les
tration to use bilateral negotiations and uni- a report on an annual as well as special basis
lateral economic sanctions against countries to the USTR. PhRMA recommends how coun-
that it believes have weak patent protection. tries should be categorized and what action
It has signicantly influenced the develop- should be taken to punish those it thinks
ment and implementation of the have failed. In its dual capacity as a lead
Section 301 mechanism. PhRMA member, as well as on its own behalf,
In the early 1980s, Pzer worked Pzer has pressured U.S. ofcials to exercise
with the USTR and the Pharmaceutical its leverage through these mechanisms. The
Manufacturers Association to develop a posi- latest PhRMA recommendations to the USTR
tion paper that formed the basis of a presi- list thirty-seven countries to be targeted.
dential statement on the importance of intel- PhRMAs strategy is to highlight the alleged
lectual property to the U.S.64 This paper con- nancial losses to the U.S. pharmaceutical
tributed to change in the U.S. international industry from what they perceive to be inad-
trade law in 1984. New legislation, known as equate patent protection. In lobbying for
Section 301 of the Trade and Tariff Act, sanctions, PhRMA adopts a very narrow
allowed the U.S. government to take retalia- interpretation of TRIPS, which leaves no
tory action against countries failing to give space for developing countries to dene
adequate protection to intellectual property. their policies according to public health
Additionally, Section 501 of the act author- needs. The phraseology of the USTR's report
ized the president to evaluate the degree of on actions to be taken under Section 301
the intellectual property protection afforded is remarkably similar to PhRMA's
by a country when considering granting recommendations.
tariff preferences under the Generalized A number of countries have felt the heavy
System of Preferences. hand of Section 301 and other unilateral
In 1998, an Omnibus Trade and retaliatory measures from the U.S., including
Competitiveness Act strengthened the Thailand, South Africa, and Brazil. Brazil in
implementation of Section 301 by introduc-
ing the Special 301 provision. This required
particular appears to have come under
aggressive scrutiny (see box 1). >
the USTR to identify countries that denied
adequate intellectual property protection to
U.S. rms and, depending on the perceived
severity, to warn those countries to shape up,
to present them with a plan for progress, or
to apply trade sanctions.65

BOX 1:
on economic crimes empower the Ministry
Pfizer in Brazil of Justice to investigate abusive pricing by
Brazil, a middle-income country, is seen manufacturers. A Parliamentary
as a lucrative market for the pharmaceutical Commission of Inquiry was set up in early
industry. The Brazilian market, however, is 2000 to conduct investigations using these
greatly polarized with the majority of the legal instruments.
population too poor to purchase needed Pzer is one of the top ten pharmaceutical
medicines. Some 60 million Brazilians (about manufacturers in Brazil and has been pres-
one third of the population) live in poverty ent in the country for nearly fty years. Its
and account for just 16% of total drug con- most successful products in this market are
sumption. Drug prices remain high, reflect- Zithromax, Feldene, Zoltec, and Viagra. To
ing the purchasing power of a minority of the majority of Brazilians, its medicines are
the population. Prices have come under unaffordable. Indeed, it has been under
some scrutiny by the Brazilian government. investigation by the Ministry of Justice for
The Consumer Defense Code and legislation price increases of eight different drugs.66
Pfizer Sales in Brazil67

Selected Drugs
1999 1998
Drug Generic name Units Sold Value in US$ Units Sold Value in US$
Zithromax Azithromycin 609, 000 11,380,000 1,023,000 24,387,000
Zoltec Fluconazole 345,000 5,105,000 667,000 12,650,000
Viagra Sildenafil 1,162,000 29,806,000 603,000 19,576,000
Feldene Piroxicam 2,862,000 15,858,000 3,503,000 26,942,000
Pzer recognizes Brazil as a market of approval even if led later than one year
signicance. This is reflected in the interest from the original date of ling). Methods
it has taken in national developments that used by Interfarma to lobby those involved in
affect the pharmaceutical industry. In partic- the drafting process included expenses-paid
ular, Pzer has been involved in lobbying sur- overseas travel.68 Pzer also was, and still is, a
rounding the introduction of TRIPS-compli- member of ABIFARMA, which is the Brazilian
ant intellectual property laws in Brazil. equivalent of the U.S. PhRMA.
Pzer is an active member of Interfarma, These lobbying activities mirror a history
a coalition of multinational pharmaceutical of U.S. pressure upon Brazil on intellectual
companies, formed for the express purpose property. In 1987, PhRMA complained to the
of influencing the passage in Brazil of the USTR of Brazil's lack of process and patent
1996 Industrial Property Bill. This bill protection for pharmaceutical products as
included TRIPS plus clauses such as a ban an unreasonable practice that burdens or
on parallel importing, and the allowing of restricts U.S. commerce. The following year,
late patenting (which permits patent the Reagan administration imposed 100%

tariffs on US$39 million worth of Brazilian Conclusion
imports. These sanctions remained until the Pzer continues to lobby actively for yet
Brazilian government amended its patent higher levels of patent protection through-
laws in 1990.69 out the world despite civil society criticisms
Most recently, following PhRMA recom- about the impact of TRIPS on access to afford-
mendations, Brazil was targeted again by the able life-saving medicines. Its former chair-
U.S. administration through the initiation of person, Edmund Pratt, has said: Pzer will
a WTO dispute against Brazil claiming that continue to do all it can to carry the intellec-
the latter's legislation was not TRIPS-compli- tual property rights banner forward, helping
ant. In the heat of political and public pres- to write new chapters in this saga to protect
sure, however, the U.S. nally withdrew its products of the mind.70
challenge on June 25, 2001, stating that the To the majority of
differences would be resolved through the Brazilians, Pfizers
U.S.-Brazil bilateral consultative mechanism. medicines are
unaffordable
JENNY MATHEWS/OXFAM

Section 6
Time for action

Summary should supplement these reforms by provid-
Oxfam fully accepts that patents can be an ing nancial resources to allow wider access
important incentive for R&D, but we believe to life-saving drugs and helping to determine
the one-size-ts-all TRIPS system has huge and fund an R&D agenda into diseases that
failings and must be reformed. Although disproportionately affect the poor. Such a
the pharmaceutical industry continues to systematic approach could eliminate the
ght hard in defense of lengthy and glob- current case-by-case battles over particular
ally uniform patent protection, we believe drugs in particular markets and lift develop-
that many of the arguments it routinely ing countries over-reliance on potentially
uses in support of its case are flawed. Box 2 reversible donations and price reductions
on pages 40-41 explains precisely why. We from the pharmaceutical industry.
urge the individuals at the helms of the Oxfam believes patents play an important
leading pharmaceutical companies to take role in rewarding innovation and encourag-
much more seriously the responsibility ing investment into R&D. However, we
bestowed upon them by the fact that they believe that the one-size-ts-all TRIPS sys-
have it in their power to save many thou- tem has huge failings. What is needed is a
sands of lives at little or no cost to them- patent regime that combines incentives for
selves or their companies. With goodwill R&D with improved access to affordable
on all sides, substantial progress is life-saving medicines.
possible this year. Substantial progress is possible, although
far from certain, this year. The WTOs
Fundamental Reforms are Needed Council for TRIPS is, under the Uruguay
Our specic recommendations to Pzer Round nal Act signed in 1994, due to con-
What is needed is a
in section 7 need to be set in the context of duct a review of the agreement. At the urg-
patent regime that
combines incentives for
reform of the regulatory and commercial ing of African countries, the Council for
R&D with improved environment within which the big pharma- TRIPS held a special health day on June 20,
access to affordable ceutical companies must operate. 2001, to discuss intellectual property and
life-saving medicines Governments and multilateral institutions access to drugs, and TRIPS seems certain
CATALINA ANECA

to be a key subject for discussion at the WTO ics or low-price patent-protected drugs
ministerial meeting in Qatar in November to high-price industrialized markets71 and
and in any future trade round. In addition, about prices in developing countries being
the issue of access to drugs is under urgent used as a benchmark in other countries.
consideration elsewhere, including in many > substantial government contributions
parts of the UN, among the G8 countries, to the UN fund (to be launched at the G8
and in the U.K. governments Commission Meeting in Genoa in July 2001) to help poor
on Intellectual Property Rights. countries to improve access to health serv-
ices, including medicines. This fund may act
Oxfam calls for these bodies to support as an additional incentive for R&D into neg-
modication and clarication of TRIPS lected areas by boosting the
to include: potential market.
> greater flexibility in the scope and > an additional dedicated global research
duration of patents in developing countries fund aimed in particular at new vaccines
to give greater weight to public health and treatments for HIV, malaria, TB, sleeping
considerations. sickness, etc., should supplement the above-
> easing restrictions on compulsory mentioned fund. Such a fund would be a far
licensing and simplifying the procedural more effective way of encouraging pro-poor
requirements. As a minimum, TRIPS should R&D than relying on patent protection,
be modied to conrm that overseas compa- which does nothing to address the issue
nies can be used as licensees; specify any of purchasing power.
royalty rate that must be paid; and permit Objections from Pfizer and the
Brazil-type local working requirements. Pharmaceuticals Industry
> an extension of the current transition The industry with very few exceptions
periods for TRIPS compliance. continues to aggressively defend the patent
protections it has achieved and continues to
Such changes would be a critical step in flex its lobbying muscle to extend these yet
the right direction, but would not be further, as exemplied by this quotation
enough. Access to patented medicines would from PhRMAs 2000/1 annual report:
still be restricted by high prices (however A PhRMA priority this year is to enhance,
short the period of patent protection). Even if possible, the Trade-Related Intellectual The industry continues to
generic prices are frequently too high to be Property Agreement (TRIPS) in the next aggressively defend the
affordable in poor countries. Furthermore, round of World Trade Organisation (WTO) patent protections it has
there would still be many diseases for which negotiations, but at a minimum to preserve achieved and continues to
flex its lobbying muscle to
effective drugs do not yet exist. Oxfam the current levels of protection provided
extend these yet further
refore also calls for: by TRIPS.
> systematic tiered pricing (or differen- For a detailed rebuttal of the arguments
tial pricing) of patent-protected drugs, with most commonly used by the industry against
prices based on transparent and objective proposals for reform of TRIPS, see
criteria that reflect health and development Implausible Denial, an Oxfam policy paper
needs and purchasing power in different published in April 2001.72 Box 2 on pages 40-
MARK BUSHNELL
countries. 41 summarizes the main industry argu-

> measures to address the legitimate con- ments and Oxfams response to them.
cerns of the industry about leakage of gener-

BOX 2: using low prices elsewhere as a benchmark,
is overstated and has in practice proved man-
Why the Drug Giants ageable (as the consistently high prices in the
U.S. market demonstrate). It would be per-
Arguments on Patents fectly possible to have a differentiated patent
Dont Stack Up regime and/or pricing policies tailored to the
differing health and economic circumstances
Argument 1: Patents are not a signicant of individual countries.
factor restricting access to medicines, as less
than 5% of the drugs on the WHO essential Argument 4: Strong patent protection will
drugs list are patent-protected. not damage public health in developing
Oxfams opinion: This argument entirely countries if it is accompanied by public-pri-
misses the point that affordability is an vate partnerships (PPPs) providing heavily
explicit criterion for a drugs inclusion on the discounted and/or donated drugs, and if the
WHO list in the first place, which is why most industry develops tiered pricing policies.
antiretrovirals (other than for mother-to-child Oxfams opinion: PPPs may be part of the
transmission) do not appear despite the solution, but are inadequate in isolation. They
global AIDS crisis. are ad hoc and reversible, frequently condi-
tional, and provide no guarantee that the
Argument 2: A global market requires a best attainable prices are achieved.
uniform patent system, and without strong
global patent protection the industry would Argument 5: It takes US$500 million
lack incentives for undertaking R&D into to bring a new drug to the market, and a
major diseases. twenty-year patent term is justied by the
Oxfams opinion: We fully accept that cost and risk associated with R&D into
patents can be an important incentive for new drugs.
R&D, but a one-size-fits-all patent system Oxfams opinion: The industry is not as
is unnecessary and undesirable. Only indus- risky and R&D not as costly as often
trialized countries have the capacity to claimed. The industrys figure of US$500 mil-
absorb the high prices (and therefore gener- lion per new drug is misleading and the
ate the substantial profits) that patents allow. significant contribution of public funding to
In developing countries, where purchasing the discovery process is often glossed over.
power is much more limited, applying strin- In addition, Oxfam questions whether a full
gent patent protection will not generate sub- twenty years of patent protection is neces-
stantially more revenues or relevant R&D, but sary, even in rich markets, especially given
will limit poor peoples access to medicines. the significant decline in average drug devel-
opment and registration times from which the
Argument 3: Differing patent periods or industry
substantial price cuts in poor countries has benefited in recent years. Because of
would result in rich countries pharmaceuti- discounting, R&D investment decisions
cal markets being flooded with cheap gener- depend disproportionately on projected rev-
ics or parallel imports, or with other down- enues in the early years after launch. Patents
ward pressures on prices, seriously under- are important, but it is not very important for
mining the industrys protability.71 patents to be long, and not at all important
Oxfams opinion: The risk of low-price for patents to be long everywhere.
generics or parallel imports of patented prod-
ucts leaking from developing to developed Argument 6: Without effective patent pro-
countries, or of consumers in rich countries tection there would be no R&D into Third
World diseases.
Oxfams opinion: Although there is chronic Its Time for Action
under-resourcing of R&D into such diseases, Although the details were specic to South
strong patent protection will not materially Africa, the outcome of the recent legal case
increase either the market potential in these in that country is likely to prove precedent-
disease areas or the incentive for R&D. There setting in the encouragement it gives other
are much more effective ways of ensuring the developing-country governments to make
necessary R&D such as the global research use of the TRIPS safeguards. Following that
fund proposed by Oxfam. Meanwhile, strong case, the pressure for progress in addressing
patent protection in rich countries is enough the health divide is immense. Unless the
incentive for R&D into diseases common to industry recognizes this, we believe that it
rich and poor countries. risks being overtaken by events, losing not
only more public support but also far more
Argument 7: Companies, like individuals, damagingly the support it still enjoys
have the right to protect their property from the governments of most
including intellectual property against industrialized countries.
theft, which is why they are seeking Our specic recommendations to Pzer
protection through the WTO. are listed in the next section. As a general
Oxfams opinion: Governments have to point, however, we urge the individuals at
balance competing rights. Attempts to defend the helms of the leading pharmaceutical
the right to health care by flexible patent companies to take much more seriously the
enforcement are under threat by pressures responsibility bestowed upon them by the
from companies even when such flexibility fact that they have it in their power to save
is apparently consistent with TRIPS. many thousands of lives at little or no cost
Companies should respect the spirit and to themselves or their companies. As a recent
letter of the legal limitations on their patent editorial in the respected medical journal
rights and should take a broad view when The Lancet put it:
deciding how vigorously to enforce their The time has come for the pharmaceuti-
patents. Where they fail to do so, and insist cal industry and the governments who repre-
on a rigid approach to patent enforcement at sent them in trade disputes to acknowledge
the expense of poor peoples health, they risk that the world is facing an extraordinary
public opprobrium and real and lasting challenge.73
damage to their share prices. And as a recent article in Foreign Affairs
argued:
Argument 8: Generics manufacturers The global economic order will not
make sub-standard products and are driven work for the United States, Europe, and
by their own prot motives. Japan unless it also works for India, Brazil,
Oxfams opinion: Large generics compa- and South Africa. A system that seems rigged
nies that export to developed nations have to aid the wealthiest and most competitive
to pass regular inspection by regulating countries will be undermined by the poorest
authorities, such as the Food and Drug and least competitive.74
Administration in the case of the U.S.
Generics companies do indeed usually seek
to make profits, but it is still the case that their
products are sold at cheaper prices than
branded products. From a development
perspective, this provides a significant health
benefit to poor people by improving access
to essential medicines.
Section 7
Recommendations
Summary
Our main recommendations are as follows. Pfizer should cease

lobbying for TRIPS-plus protection, acquiesce in the modifications to
TRIPS proposed below, adopt greater flexibility in the degree to which
it enforces its patent rights, adopt systematic and transparent tiered
pricing policies, and increase its commitment to R&D into Third World
diseases. Developed-country governments should agree to modify
TRIPS to ensure developing countries greater flexibility in addressing
their pressing health problems (notably by licensing generic
manufacturers to produce low-price versions of patent-protected
products). They should also fully support the UN Global Health Fund
and establish a dedicated global research fund. Developing countries
should resist pressures for TRIPS-plus legislation, make full use of the
TRIPS safeguards, and increase commitments to health expenditure.
Pfizers price cuts and philanthropy programs, though significant

for their beneficiaries, do not represent an adequate response for
the many other people in many countries who cannot afford the prices
that Pfizer charges. Oxfam accepts that the global health crisis is
complicated and cannot be resolved by reducing the price of
medicines alone. However, price is a critical factor in defining
who has access to medicines, and patents are a major
upward influence on price.
Recent campaigns and media coverage of the issue of access to

medicines has led to growing concern about the applicability of a
global patent system to the needs of poor countries. Some progress
has been made recently, including a range of targeted price cuts, the
abandonment by the pharmaceutical industry of the South Africa case,
and the U.S. governments removal of its complaint against Brazil from
the WTO dispute mechanism. However, these advances should not
distract attention from the need for reform of the TRIPS agreement
and increased commitments to other global health initiatives.
The recommendations below outline what key players can and should
do to address the problem of a global patent system that exacerbates
an existing crisis and further reduces access to medicines.

Recommendations to Pfizer
In the interests not just of the poor people of the developing
world, but also of the long-term health of the industry itself, Pfizer
should adopt a more constructive leadership role, both through
PhRMA and independently of PhRMA. We call on Pfizer to:
> recognize that the price of life-saving medicines in developing

countries is linked to patents and TRIPS.
> refrain from using its lobbying power to exert pressure for TRIPS-plus
regimes in all trade agreements including via USTRs Section 301
mechanism.
> acquiesce in modifications to TRIPS that achieve a greater balance

between public health needs and the interests of companies and abide
by the modified rules.
> abstain from enforcing patent rights in developing countries

where to do so yields little or no commercial advantage in the country
concerned and look favorably on requests for voluntary licenses where
there are urgent public health needs. Patents confer the right to
enforce exclusivity but do not impose the obligation to do so.
> where exclusivity is enforced, and as a quid pro quo for measures
to prevent low-price drugs from leaking into rich country markets and
the creation of the UN Global Health Fund, accept the establishment
of a competitive global tiered pricing mechanism.
> participate creatively in research programs aimed at poor-country

diseases by increasing its in-house proprietary research in response to a
global R&D fund; and contributing to the proposed global research fund.
Recommendations to Governments
and Multilateral Institutions
Oxfam believes that developed-country governments and
multilateral organizations should:
> agree to modify TRIPS to allow developing countries more flexibility in

the scope and duration of pharmaceuticals patents, easier compulsory
licensing, and longer transition periods for compliance.
> accompany the above proposal with rigorous measures to address

the legitimate concerns of the industry about leakage of generics or
low-price patent-protected drugs to high-price industrialized markets
and about prices in developing countries being used as a benchmark
in other countries.
> establish a moratorium on all dispute actions that hinder the access
of developing countries to life-saving medicines, particularly with
regard to their use of compulsory licences and parallel imports.
> support the UN Global Health Fund with contributions as below:

Annex 1: Proposed composition of the Health
fund based on approximate 2000 GNP figures
Source: OECD DAC website
Country Proportion of fund

based on approx
GNP 2000 (US$m)
US 4,0390 Belgium 970
Japan 20400 Sweden 930
Germany 7840 Austria 760
UK 6070 Norway 670
France 5400 Denmark 670
Italy 4430 Finland 510
Canada 2910 Greece 460
Spain 2320 Portugal 420
Netherlands 1600 Ireland 340
Australia 1560 New Zealand 170
Switzerland 1100 Luxembourg 80
Total 100000
> establish an additional global research fund aimed in particular at new

vaccines and treatments for HIV, malaria, TB, sleeping sickness, etc.
Recomendations to Developing Countries0

Oxfam calls on developing countries to:
> resist pressures and inducements from industrialized countries

to adopt TRIPS-plus levels of intellectual property protection.
> increase commitments to essential social services, and, specifically, to

increase health expenditure targets agreed upon at the African
Summit on HIV/AIDS and related infections, held in April 2001.
> consolidate a concerted position on TRIPS reform to allow for more

flexibility in the scope and duration of pharmaceutical patents, easier
compulsory licensing procedures and parallel import uses, and longer
transition periods for compliance to be directed at the G8 Meeting in
Genoa in July 2001 and beyond.
> incorporate the full extent of TRIPS safeguards into their

national legislation.
> make full use of compulsory licensing and parallel importing in their
national medicines policies.
Bibliography
1 16 29
Pfizer meeting with Oxfam, New York Quotation is from WHO, April 25, Scherer, Frederick M., Industrial
City, June 4, 2001. 2000, press release Economic costs of Market Structure and Economic
2
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17 30
Public Health and Company Wealth, R. Bonnel, HIV/AIDS: Does it increase For example, see Schut, Frederick T.
February 2001 (available at or decrease growth in Africa? ACT and Van Bergejik, Peter A.G.,
www.oxfam.org.uk/cutthecost). Africa/World Bank, 2000. International Price Discrimination:
3
Address to the African summit on 18
As reported in Erica Barks-Ruggles, The Pharmaceutical Industry, World
HIV/AIDS, tuberculosis, and other Brookings Policy Brief: Meeting the Development 14 (9): p. 1141-1150, 1986.
31
infectious diseases, Abuja, Challenge of HIV/AIDS. April 2001. MSF, HIV/AIDS Medicines Pricing
April 26, 2001. 19
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4 32
The Economist, 2001 Review. Removing Obstacles to Healthy Instituto Brasileiro de Defesa do
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GlaxoSmithKline, financial Development. Consumidor e, Silver, L., Marques,
presentation by J-P Garnier, 20
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February 19, 2001. 21
Internacional de Precos de
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6
Medicamentos Essenciais da RENAME
Statistics for Pfizer in this section Table 8, 1997 data.
2000. Report, University of Brasilia,
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WHO, WHO Medicine Strategy 2000-2003, December 2000.
2000, accessible at www.pfizer.com. Geneva, 2000. 33
7
Between the early-1990s and late-
IMS Health reports audited 23
World Development Report 2000/2001, 1990s, the average US clinical
worldwide pharmaceuticals sales at pp. 274-5. development time for new drugs fell
US$317b in 2000, and estimates total 24
WHO, Report on Infectious Diseases 2000. by 22% to an average of around 60
sales including certain OTC
25
WHO, Financing Health in Developing months (for priority drugs ie,
products at US$354 billion
Countries. those considered by the Food & Drug
(www.ims-global.com).
26
Administration to offer high
8
Excluding merger-related costs and WHO Secretariat. Background therapeutic value average
other one-off items. Pfizer, January paper for the WHO-WTO Secretariat development times fell further, to
24, 2001, press release, Fourth Workshop, More Equitable Pricing 54.1 months in 1998-9). In addition,
Quarter Earnings Release, for Essential Drugs, April 2001. regulatory approval times halved
www.pfizer.com . 27
Executive Order 13155 issued by between 1993 and 1998, to just 10
9
Based on a share price of US$42.21 President Clinton in May 2000 months. Hence the average period for
on June 26, 2001 and 6.31 billion prohibits the U.S. government from clinical development plus approval
shares in issue. seeking the revision of any was less than 6 years at the end of the
10 intellectual property law in sub- decade, compared with closer to 10
World Bank World Development Report
Saharan Africa that pertains to years at the beginning. (Source: Tufts
2000/2001, pp. 274-5.
HIV/AIDS treatments as long as it is University Center for the Study of
11
www.msdwadvice.com/market/ TRIPS-compliant. President Bushs Drug Development, September 2000
profiles/profiles.asp. Report from administration has indicated that it and October 2000 Impact Reports,
March 2, 2001. has no plans to rescind this order. available at www.tufts.edu/med/csdd)
12
Pfizer, Midyear Report 2000. 28
MSF, Price Differences of 34
On Brazils AIDS program, see
13
Statistics are for 1998 and are taken Fluconazole: Consequences and www.aids.gov.br/politica/index.htm.
from World Development Report Conclusions. Access to Essential 35
O Estado de Sao Paulo, May 16, 2001.
2000/2001, p. 277. Medicines campaign study, July 2000. 36
14 Note: Pzer takes issue with MSFs WHO, Report on Infectious Diseases:
UNAIDS, Report on the Global HIV/AIDS Removing Obstacles to Healthy
Epidemic, June 2000 and December methodology. Comment from Pzer
to Oxfam, June 21, 2001. Development.
2000. 37
15
www.pfizer.com.
WHO, Report on Infectious Diseases 2000, 38
Overcoming Microbial Resistance. Pascale Boulet, Patent Protections of
Medicines in Kenya and Uganda,
MSF, April 2000.

39
WHO, World Health Report 2000. Brazil: What Went Right? The Global March 13, 1996.
40
Adverse Reaction: AIDS Gaffes in Challenge of Access to Treatment and 63
Ibid.
Africa Come Back to Haunt Drug the Issue of Compulsory Licensing. 64
Santoro, p. 9.
Industry at Home, Wall Street Journal, Paper presented at the Tenth
65
National Meeting of People Living The three categories are Priority
April 23, 2001.
with HIV and AIDS, Rio de Janeiro, Foreign Countries, Priority Watch List
41
The Economist, April 21, 2001, p. 83. countries, and Watch List countries.
Brazil, November 3, 2000.
42
Meeting between Pfizer and Oxfam, 45 66
Ministerio da Justica, Secretaria de
Oxfam internal unpublished
New York City, June 4, 2001. Defensa Economica. The drugs are:
interview.
43
Facing the Challenge can be found 46 Citalor (atorvastatin), a cholesterol-
Pfizer communication to Oxfam,
at www.gsk.com. lowering drug; Diabinese
June 21, 2001.
44
For example: Bristol-Myers Squibb (chlorporpamide), a drug used for
47
Ibid. the treatment of diabetes; Feldene
has promised to reduce the prices of
48
ddI and d4T to about $500 per year in Ibid. (piroxicam), an anti-inflammatory
Senegal as part of AAI. Boehringer- 49
www.opensecrets.org , Center for drug; Norvasc (amlodipine), a
Ingelheim will offer Viramune brand Responsive Politics. cardiovascular drug; Terramicina
nevirapine free for a five-year period 50
(oxitetraciclina), an antibiotic; Tralen
Ibid.
to developing countries for (thioconcazol), an antifungal for
51
www.pfizer.org. gynecological use; Viagra (sildenafil),
prevention of mother-to-child HIV
transmission. Glaxo Wellcome, the
52
Belen Balanya, Anne Doherty, Olivier a treatment for impotence;
first big company to announce a Hoedeman, Adam Maanit, and Eric Vibramicina (doxycicline), an
specific price reduction for HIV drugs Wesselius, Europe Inc. antibiotic used widely in treating
in poor countries, has offered to (Pluto Press, 2000). sexually transmitted diseases; and
reduce the cost of Combivir (AZT and 53
www.foei.org/LINK/LINK93/ Zoltec (fluconazol), an anti-fungal
3TC) from about $16 per day in rich biotechlobby.html. agent used widely both in gynecology
countries to $2 per day in selected 54
and in treating infections associated
Quoted in M. Santoro, Pzer: with AIDS.
poor countries. Merck & Co. has Protecting Intellectual Property in 67
provided $3 million to the Harvard a Global Marketplace, Harvard IMS Health. Mercado Farmacutico
AIDS Institute for its Enhancing Care Business School, 1992, p.7 Brasileiro. Sao Paulo, January 2000
Initiative (ECI) in Brazil and Senegal. (hereinafter referred to as Santoro). and December 1998.
Merck has also given $1 million to 55
68
Interviews by Professor Lynn Silver,
upgrade the library of the University www.ustr.gov/outreach/advise.html.
56
University of Brasilia, of Aldo Rebelo,
of Cape Town Medical School. Merck op cit. Santoro. Federal Deputy, Brazilian Congress;
& Co. has announced a five-year, $50 57
P. Drahos and J. Braithwaite, Sissi Santos Pereira, Staff Advisor,
million gift to the Republic of Information Feudalism, Brazilian Senate; and Cicero Gontijo,
Botswana, in conjunction with the (forthcoming 2002). Professor of law, Getulio Vargas
Bill and Melinda Gates Foundation, 58
P. Drahos, Global Property Rights in Foundation May 2001.
which is also giving $50 million. Information: The Story of TRIPS at the 69
J. Lanjouw and I. Cockburn, New
Merck has also signalled its intention GATT, Prometheus, vol. 13, p. 7-8, 1995. Pills for Poor People? Empirical
to provide price cuts on indinavir 59
The membership of the IPC was: Evidence After GATT, World
and/or efavirenz (Crixivan and
Pfizer, IBM, Merck, General Electric, Development, vol. 29, 2001, p. 268.
Stocrin) to Senegal. This is the first
time Merck has explicitly abandoned Du Pont, Warner Communications, 70
Speech to the U.S. Council for
its one world, one price stance. Hewlett-Packard, Bristol-Myers, FMC International Business, Conference
The Swiss giant Roche, makers of Corporation, General Motors, on Intellectual Property, March 1995.
HIVID brand zalcitabine (ddC) and Johnson & Johnson, Monsanto, 71
This is not to imply that Oxfam
Invirase and Fortovase brands and Rockwell International. endorses current pricing policy in
60
saquinavir, and marketers of Viracept Intellectual Property Committee, the U.S.
brand nelfinavir to most of the world, Basic Framework of GATT Provisions 72
Implausible Denial Why the Drug
has also promised price cuts under on Intellectual Property, Keidanren Giants Arguments on Patents Dont
the UNAIDS program. Abbott and UNICE, June 1988. Stack Up, April 2001 (available at
Laboratories developed an 61
Edmund T. Pratt Jr., Pfizer Forum: www.oxfam.org.uk/cutthecost).
agreement with Tanzania in late June Intellectual Property Rights and 73
2000 and is providing initial grants The Lancet, vol. 357, p 243,
International Trade, The Economist, January 27, 2001.
in Mbeya, an especially poor region in May 27, 1995, p. 26. 74
southwest Tanzania where AIDS is 62
David E. Sanger, A Grand Trade
FDCH Congressional Testimony, Bargain, Foreign Affairs,
rampant. Source: Mark Harrington,
January/February 2001.
The Series

pharmaceutical companies are
measured not by their contribution
to public health, but against
financial returns
Pharmaceutical companies face a

major reputation risk if they do not do
more to promote access to life-saving
drugs in the developing world
First published by Oxfam GB in July 2001.

Published by Oxfam GB under ISBN 978-1-84814-131-5 in October 2010.
Oxfam GB is a member of Oxfam International.

Registered charity no. 202918 0183 BC: 104442

Formula For Fairness: Patient Rights Before Patent Rights

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Oxfam Briefing Paper on

Preventing the cure:

CUT THE COST

Formula for Fairness:

This is the second in a series of brieng Pharmaceutical companies operate in

A New Pharmaceutical Giant

4 Formula for Fairness

5 Formula for Fairness

6 Formula for Fairness

In the interests not just of the poor people of the developing

> recognize that the price of life-saving medicines in developing

> acquiesce in modifications to TRIPS that achieve a greater balance

> abstain from enforcing patent rights in developing countries

> participate creatively in research programs aimed at poor-country

7 Formula for Fairness

8 Formula for Fairness

Introduction & Overview

11 Formula for Fairness

12 Formula for Fairness

13 Formula for Fairness

From bad to worse -

14 Formula for Fairness

Table 1: Deaths by Cause in WHO Regions, Estimates for 1999 (%)

16 Formula for Fairness

$5 per life saved

17 Formula for Fairness

The mass exclusion from

18 Formula for Fairness

TRIPS Globalization of a trade negotiations that was signed in 1994

The Health Divide

21 Formula for Fairness

Table 2: Diflucan v. Fluconazole Price Comparisons

22 Formula for Fairness

Table 3: Prices of Fluconazole Brands in Brazil32

23 Formula for Fairness

24 Formula for Fairness

25 Formula for Fairness

The Wall Street Journal recently described the industry as

reeling from an unprecedented

How did the industry get

27 Formula for Fairness

28 Formula for Fairness

meal and an insufcient alternative to Pfizers Donation Programs

extended to those suffering from systemic

29 Formula for Fairness

South African government, this program has Pzers corporate philanthropy

30 Formula for Fairness

Power and Pressure

31 Formula for Fairness

32 Formula for Fairness

General Agreement on Tariffs and Trade 1986-1994

World Trade Organization (WTO)/Trade Related 1995-Present

as quoted in the Pfizer Journal Global Edition, Vol. 1, Num. 2, 2000.

33 Formula for Fairness

34 Formula for Fairness

years earlier than required under TRIPS.

35 Formula for Fairness

36 Formula for Fairness