TAC's Questions and Answers on Its Friends of the Court Status


Friends of the Court: Questions and Answers

Important victories in the fight for access to treatment have occurred in the last week. The Treatment Action Campaign (TAC) was admitted as a friend of the court (amicus curiae) on 6 March in the much publicised case between multinational pharmaceutical companies and the South African Government. In addition, the international day of action called by TAC for 5 March was a resounding success. Around the world people mobilised demanding that the drug companies withdraw their legal action. The media gave full coverage and the court case captured headlines in most major newspapers and news broadcasts. Around the world, people hold the multinational pharmaceutical industry responsible for a large share of the blame for millions of unnecessary deaths. As a result of this pressure, drug company, Merck, announced a substantial drop in the price of its two anti-retroviral medicines. Furthermore, the Pfizer donation to the South African government, with all the problems accompanying it, has finally come through. This was a direct result of activist pressure.

We have put together a glossary and a list of questions and answers regarding recent events.

Glossary

Trade Related Aspects of Intellectual Property Rights (TRIPS)
This is a World Trade Organisation (WTO) agreement to which South Africa is a signatory. It defines the minimum standards to which intellectual property law of the member countries of the WTO must conform.

Voluntary License
This is where a patent holding drug company gives a manufacturer a license to produce the generic version of the patented medicine. This hardly ever happens.

Compulsory License
This is an order by a court or an administrative body to one or more manufacturers to produce and distribute a generic version of a patented medicine. It is compulsory because it takes place without the permission of the patent holder.

Friend of the Court
TAC is a friend of the court in the case between the government and the pharmaceutical companies. This means TAC may submit evidence and argument before the court. Although TAC takes an independent position, in this case we support the legislation and the governmentís desire to make all medicines affordable.

Parallel Import This is when a patented medicine is bought from another country, usually at a lower price from the same producer. This is possible because drug companies sell their medicines at different prices in different countries. Note that a parallel import does not refer to buying a generic version of a medicine, but to a lower-priced patented medicine.

Patents Act
This is the South African law relating to patents. It was passed in 1978 and amended in 1997 to make it TRIPS compliant.

Question and Answers

  1. What is the name of the law being contested between the South African Government and the pharmaceutical companies?

    Medicines and Related Substances Control Amendment Act No 90 of 1997, or just the Medicines Act for short.

  2. What provisions for making medicines more affordable does the Medicines Act introduce?

    The act introduces three important provisions.

    • It makes provisions for parallel importation.
    • It establishes a pricing committee with the power to set prices of medicines.
    • It enforces generic substitution of off-patent medicines. This means that pharmacists must dispense cheaper, bio-equivalent, generic medicines that are not under patent, unless there are exceptional reasons for not doing so.

  3. Are these provisions important?

    Yes, they establish a legal framework to reduce medicine costs, not only during a crisis, but on a long-term basis.

    The generic substitution provision will curb a practice that enriches brand-name producers and dispensers, at the patient's expense. A common example that most people will identify with is Panado. Few people are aware that generic versions of paracetamol are sold for 25% (or less) of the price of Panado. The same applies to cotrimoxazole, an essential medicine for preventing and treating opportunistic infections in people with HIV. Most pharmacists sell patients the brand-name version of cotrimoxazole, called bactrim. However, there are cheaper, generic versions available such as Purbac.

  4. Does South African law allow for compulsory licenses?

    There are provisions for compulsory licenses in the Patents Act of 1978. The government should immediately request voluntary licenses from the patent holders of opportunistic infection and anti-retroviral medicines. This is the first step towards obtaining compulsory licenses.

  5. What is the advantage of TAC being allowed to be a "friend of the court"?

    The pharmaceutical companies have enormous resources. It is by no means a formality that the government will win. By joining the court case, TAC has presented argument against the drug companies that will show that drug company profiteering is a major obstacle to access. TAC brings to the court a perspective the government cannot, i.e. the testimony of ordinary South Africans regarding the cost of medicines, with particular emphasis on the HIV/AIDS epidemic. The government agreed to let TAC join because together there is a greater chance of beating the pharmaceutical companies. Furthermore, TAC's testimony has exposed the disgraceful practices of the pharmaceutical companies at a legal level. The drug companies are now on the defensive. It will be difficult for them to continue the court case without divulging information that they are usually reluctant to give out, i.e. their pricing data and practices.

  6. But surely by joining the case, TAC has caused a 6 week delay in its outcome?

    The postponement is an indulgence that the judge has allowed the drug companies. TAC warned of its intentions to join the case on 26 January. The drug companies have had since 16 February to respond to TAC's arguments. Arguing that TACís entry into the case delays the outcome of the case and, therefore, access to medicine, is akin to the logic of stating that the drug companies should have been presented with easier arguments to counter, so that the case could terminate quicker.

    Here is a summary of the advantages of TAC joining the case:

    • the chances of the drug companies losing the case have substantially increased
    • affordability of treatment within the context of HIV/AIDS is now part of the court case and cannot be ignored by the pharmaceutical companies or government
    • the chances that the judgement of the case will set an important legal precedent for poor countries in health care crises have substantially increased
    • the public mobilisation and negative publicity for the pharmaceutical companies generated by TAC calling for an international day of action and joining the case could not have been achieved otherwise.
    • generic manufacturer, CIPLA, used the court case, including TAC's testimony therein, to support their application for compulsory licenses two days after the court case began; another Indian generic manuafacturer, Hetra supported by Aspen Pharmacare (South Africaís largest generic manufacturer) has offered the lowest price for generic anti-retrovirals;
    • multinational pharmaceutical company, Merck, substantially dropped the prices of their anti-retroviral medicines a few days after the trial in order to relieve themselves of some of the pressure.

  7. Will the pharmaceutical companies lose the court case?

    The pharmaceutical companies have enormous resources. They can hire the best lawyers and spend huge amounts of money slowing down the judicial process. There is no guarantee that the court case will be won by the state.

  8. TAC has previously had an adversarial relationship with the SA government. Has this now changed?

    TAC is an independent social movement. We oppose the government when necessary and we support it when necessary. Our objective is the provision of affordable and good quality medicines for people with HIV/AIDS. Many of the government's policies, actions and inaction towards tackling the HIV/AIDS epidemic have been disgraceful. We have -- and will continue -- to criticise the government for this. However, the Medicines Act is an important law that will establish a legal framework for bringing down the prices of medicines. TAC, therefore, will support the government in trying to get it enacted.

  9. Are the courts an appropriate place to conduct the fight for affordable treatment?

    Yes. Under the Apartheid government, the courts, aided by racist legislation, frustrated justice. Even then, we used the courts to expose inequality, torture and systemic violence. The new constitution, however, has made the courts a place where justice and equal rights can be enforced. This is not automatic but the current legal system is infinitely more advantageous to poor people. The fight for affordable treatment has to be conducted both through mass mobilisation and in the court rooms.

  10. What is TRIPS and what is the South African government's obligation to TRIPS?

    The WTO TRIPS agreement sets a minimum standard that laws within member countries must follow. South African law is considered TRIPS-plus. This means that it gives stronger protection to intellectual property rights than TRIPS demands. The pharmaceutical companies are claiming that the Medicines Act is not TRIPS compliant. TAC, the South African, Dutch and German governments, the WHO, the ICFTU, the AFLCIO and many others firmly believe that it is. A law can be disallowed if it is found that it is not compliant with South Africa's international treaty agreements or the Constitution.

    TRIPS is a notoriously complicated, ambiguous legal document. It is a poorly drafted compromise of various interests, but mainly those of big business. There is clearly a need, especially by developing countries, to push for TRIPS and the WTO to be reformed. Currently it is too favourable to big business at the expense of consumers and start-up businesses, particularly in poor countries. However, we believe that the needs for people with HIV/AIDS can probably be met within the current agreement, albeit not without enormous legal costs and wrangling.

  11. Does the government need to declare the HIV/AIDS epidemic a state of emergency?

    See TAC's statement on this.

  12. Will the Medicines Act hurt South African business?

    No. The HIV/AIDS epidemic threatens South Africa's social and economic fabric. South African Business, for ethical reasons, but also because it is in their interests should support the Medicines Act. Furthermore, the strengthening of the local generic pharmaceutical industry would also benefit the economy. Nevertheless, big business has been shamefully silent. South Africa's biggest institutions, holding companies, mining houses and life insurance firms, as well as medical aids, have a duty to openly support the government and to condemn the Pharmaceutical Manufacturers Association. SACOB are usually quick to criticise government when they perceive the slightest threat to their members. Their silence on this critical issue is unacceptable. In contrast, the unions, Cosatu, Nactu and Fedusa, have made a firm commitment to supporting the government in the court case.

  13. What has been the US government's stance on the court case?

    The US government until recently supported the pharmaceutical industry. South Africa was placed on the US 301 Trade Watch List. Trade sanctions were threatened and AID was suspended. As a result of activist pressure, the US government backed down. Nevertheless it is critical for activists to put more pressure on the US government and to demand that the pharmaceutical companies withdraw their court action. The same applies to European governments. The German and Dutch governments are to be commended for openly supporting the South African government in the court case.

  14. What has been the stance of the World Health Organisation (WHO)?

    Shortly after the court case began the WHO issued a statement of support for the South African government. The next day they retracted their support. If the WHO is truly committed to improving health-care they should not be taking a neutral stand on this issue. TAC calls on the WHO to openly support the South African government in the court case.

  15. Do other poor countries stand to benefit from the court case?

    Yes. The court case has highlighted the disparate situation between treatment access in rich countries and poor countries. The international day of action highlighted the need for countries like Brazil, India, South Africa, Philippines and Thailand to form a strategic alliance with the power to reform TRIPS and other international legal agreements that are heavily weighted in favour of the United States and Western Europe. Furthermore, the development of a strong generic pharmaceutical industry throughout these countries will increase the chances of providing affordable treatment to other poor countries.

  16. Is TAC against patents?

    TAC does not stand against patents. We are against the abuse of patents. When millions of lives are threatened because pharmaceutical companies charge exorbitant prices on their medicines, then patents are being abused. Clearly there is a need for patent law, in particular TRIPS, to be reformed.

  17. What other barriers are their to access to treatment?

    The pharmaceutical industries often accuse activists of ignoring other barriers to treatment. There are many, including poverty, lack of government will -- throughout the third-world, with a few notable exceptions -- to tackle the epidemic, lack of government finance throughout the third-world, poor health-care infrastructure in many parts of South Africa and throughout Africa, social stigma and ignorance associated with the disease, poor adherence by patients to drug regimens (throughout the world, in rich countries as well as poor) and lack of skilled medical personnel. However, the central barrier is affordability of medicines and testing procedures. TAC and its allies have been and remain firmly committed to combating all of these problems.

  18. The drug companies argue that strong intellectual property incentives are needed to maintain investment in new research. What is TAC's response to this?

    It is true that the cost of researching and developing new drugs is very high. However, the following points should be considered:

    • Most research into new essential medicines, particularly anti-retrovirals, occurs in the public sector. Pharmaceutical companies usually invest money in the final stages of research and development (R&D), when a new drug looks promising. Often they simply buy patents from public institutions or other companies (e.g. d4T and fluconazole, but also many others).
    • Africa accounts for approximately 1.3% of global pharmaceutical sales. Issuing compulsory licenses will not significantly affect brand-name pharmaceutical company profits.
    • When compulsory licenses are issued, they are supposed to be accompanied with compensation for the patent-holder, usually a royalty payment on the sales of the generic product.
    • The industry is not as risky as the pharmaceutical companies pretend it is. The pharmaceutical industry is one of the most profitable industries in the world by almost any measure. According to a recent study by Oxfam, pharmaceutical company profit to capital ratios average 15%, while the average in industry as a whole is less than 8%.
    • Brand-name pharmaceutical companies spend more money on marketing than on research and development.
    • There is very little pharmaceutical industry R&D into essential medicines that predominantly affect the third-world.
    • Patent protection throughout the world has become stronger in recent years. For example, South Africa has increased the length of the patent term from 16 to 20 years in order to be TRIPS compliant. Brazil did not patent pharmaceutical products until recently. India will introduce patents on pharmaceuticals products into law before 2005. The pharmaceutical companies have never had it so good.

    Generic production of essential HIV/AIDS medicines is the only way to ensure a sustainable supply of affordable medicines in South Africa and many other developing countries. TAC will campaign for a research and development tax of 1% on all generics sold in South Africa.

  19. What can people do to help?

    You can ask the company or institution you work for to issue a statement of support for the Medicines Act. Join an organisation campaigning for affordable access to health-care in your area. Join TAC and make donations to our organisation.


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