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It
has been suspected, or even known, for some time now that multinational
drug companies not only make very high profits through charging monopoly
prices on various drugs, but also use national and international patent
regimes to further strengthen such monopoly. However, even the fiercest
critics of the TRIPS agreement may not have anticipated the extent of
such practice even in the case of life-saving drugs, as has been revealed
in the recent controversy over the sale of AIDS drugs in Africa.
The controversy involves a Mumbai-based
Indian drug company, Cipla Limited and the multinational drug giant
Glaxo Wellcome plc. Cipla has become one of the world's major producers
of generic AIDS medicines, based on the company's ability to produce
drugs through reverse engineering. This in turn is possible because
the Indian patent laws still recognise only process patents in the pharmaceutical
sector.
Late last year, Glaxo attempted
to block access to cheaper versions of its top-selling AIDS medicine
which were being distributed in Sub-Saharan Africa by Cipla. In early
2000, Healthcare Ltd., a pharmaceutical distributor in Accra, Ghana,
purchased a small consignment of Duovir, Cipla's version of Glaxo's
anti-AIDS drug Combivir. Cipla was providing these at a small fraction
of the cost charged by Glaxo. Soon afterward, Glaxo sent letters to
Cipla and Healthcare charging that "importation of Duovir into
Ghana by Cipla or its affiliates represents an infringement of our company's
exclusive patent rights" and threatening legal action if they were
continued. As a result, Cipla stopped selling Duovir in Ghana. Healthcare,
the Ghana distributor, said boxes of Duovir remain unopened in its offices
and that no patients have received any of the drug, in a country with
one of the most severe problems of AIDS incidence.
Currently, the cocktail of three
drugs that are used to treat AIDS patients is provided by the major
MNC drug companies to developed country users at a price of around $10,000
a year. This an amount which is obviously outside the reach of most
African citizens. Yet it is estimated that of the total of 36 million
people in the world currently infected with AIDS, as many as 25 million
are in Sub-Saharan Africa. Cipla, which manufactures generic versions
of these drugs, has offered them for sale to several South African countries
at just above $ 300 a year. Cipla has been cutting prices of these drugs
continuously over the past year, citing in-house technological advances
as the cause.
It is noteworthy that over the
past year, five major drug makers - Glaxo, Bristol-Myers Squibb Co.,
Merck & Co., Boehringer Ingelheim GmbH of Germany and Roche Holding
Ltd. of Switzerland - have agreed to substantially slash prices of their
AIDS drugs in Africa, even though they are still much above the price
of the generic substitutes. It is known that this offer to discount
prices is largely because of the fear that African nations will begin
buying generic copies of their drugs produced by Cipla in India and
by other companies in Thailand and Brazil.
In a recent twist, Cipla has
offered to pay a royalty of 5 per cent of sales to the five drug companies,
a move which has met with tepid response. Instead, the MNCs have argued
that all this condones the violation of the companies' patents and the
TRIPS agreement, and have asked western governments to put more pressure
on India, Brazil and other countries to speedily adjust their patent
laws so as to conform to TRIPS and prevent such production of cheaper
generic drugs, in other words to regain their monopoly and ability to
charge higher prices.
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