Letter to USTR Zoellick regarding WTO Patent discussions

November 10, 2001

Robert B. Zoellick
United States Trade Representative

Dear Ambassador Zoellick,

I am writing to urge the US government to withdraw its opposition to language in the WTO Ministerial declaration that addresses important public health problems, and support substantive efforts to deal with trade relates aspects of public health. In her November 9, 2001 statement on the WTO negotiations, WHO Director General Gro Harlem Brundland said "access to health care is a human right and we all have an obligation to see this right progressively realized," noting further that "many millions of people still cannot get the medicines and vaccines they need at an affordable price." These problems will certainly become more acute as the WTO rules are more fully implemented.

Despite confusion created by public relations efforts by US and European export industries, it is increasingly clear that the WTO TRIPS accord presents barriers to medicines for many poor countries. It is also clear that the public in the US and Europe do not support government trade policies that make medicines unaffordable in developing countries.

Unfortunately, in the current negotiations the US government has engaged in a number of strategic maneuvers designed to prevent the developing countries from obtaining interpretations that would address existing problems with the implementation of the TRIPS agreement. The US has been in some cases proposing language that would appear to benefit the poor, but which would actually narrow protections for consumer interests, and in other cases, asking African countries to take short term extensions of compliance periods as a substitute for more permanent and sustainable solutions. Given the power of the US government and the situation in many developing countries, you may well succeed, but only to our shame -- undoubtedly contributing to the growing list of grievances against the US which harm other foreign policy objectives and lower our standing in the world community.

It is objectionable that the US delegation is seeking to discredit the positions advanced by the Brazil and Indian delegations on the grounds that these countries are pursuing commercial rather than public health objectives, positions that were advanced in today's New York Times, for example. As you know, India is today the most important global source of low cost generics, and policies that enable India to supply low cost generic drugs globally clearly benefit the poor. We recognize that rules that allow India to be a major global supplier of generic drugs, including those produced for sale in countries that issue compulsory licenses, runs contrary to US export company interests. But without the ability of poor countries to obtain cheap alternative sources of drugs, the poor will suffer, and the rules that will determine if this can be done are at the core of this week's WTO discussions. Also, the US needs to acknowledge the role that Brazil has played in leading the way in terms of its commitment to funding HIV treatment, and which also created a global market for generic HIV drugs, benefiting not only Brazil, but also leading to huge reductions in the prices of HIV drugs in Africa and other poor countries.


In some cases the problems with the present TRIPS accord are manageable within the current framework of the agreement, if one can obtain clarifications and pro-public health interpretations of important sections of the agreement, and also if developing countries manage to enact and implement laws that take advantage of the much discussed "TRIPS flexibility," something which has yet to happen. Here too it is noteworthy that the US government has mounted a series of attacks on the WHO programs for technical assistance on patent law changes, raising basic questions about the good faith of US government officials who claim the existing agreement has sufficient flexibility. It is hardly creditable to bash the WHO for its efforts to help the poor countries write fast track compulsory licensing laws, and pressure countries in bilateral discussions, and then tell reporters at the WTO meeting that we support the right of poor countries to write such laws.


Not only is the US government objecting to the most effective and plain language that makes it clear that members can protect the public health, but it is refusing to address directly the most obvious flaw in the agreement -- the harmful consequences of Article 31.f of the TRIPS accord, which if strictly interpreted, would make compulsory licensing an empty benefit for most developing countries, although not for the US and many European countries, which have both the industrial capacity and the domestic market to make compulsory licensing feasible. This is a result that is morally repugnant, and needs to be fixed.

The problems of Article 31.f have been discussed for some time, having been raised in numerous US and EU discussions with the Trans-Atlantic Consumer Dialogue, and having been raised by coalitions of public health groups even before the 1999 Seattle Ministerial meeting, and in countless meetings with US and European trade negotiators. Nonetheless we always find the US government prepared to block concrete progress on this issue, in this case putting the matter off yet again for future discussion, while pressing ahead for immediate action on the trade priorities of other US export industries. All the US government has to do to fix this problem is support language that Article 30 of the TRIPS could be used to permit exports of medicines where the legitimate interests of the patent owner are protected in the export market, the approach taken by HR 3235, a bill pending in the US Congress, or by interpreting the existing TRIPS agreement so that an importing country can grant a compulsory license to a firm in a foreign market.

Here it is worth noting that the HR 3235 presents very clearly the ethical and practical issues that the WTO has to deal with, in a Northern context. HR 3235 gives the Secretary of Health and Human Services (HHS) the authority to permit the non-voluntary use of a patent to export medicines in a public health emergency, for example, if a highly contagious disease puts the lives of Americans at risk, and there is inadequate access to medicine in another country due to patent barriers, or in cases where for humanitarian reasons the US wanted to rush medicines to aid in a foreign public health emergency, including an act of terrorism or biological warfare. It is unthinkable that we would fail to act in cases where our actions could help, and for this reason alone your office should address the problems of Article 31.f.

Section (c) of HR 3235

''(c) EXPORT OF HEALTH CARE PRODUCTS IN PUBLIC HEALTH EMERGENCIES.-The Secretary may authorize the use of a patent, without authorization of the patent holder or any licensees of the patent holder, to export medicines or other health care products that are needed to address global public health emergencies, when the legitimate rights of the patent holder are protected in the export market.

What is deeply disturbing is that your office has mindlessly opposed fixes to Article 31.f in order to help our export industries by crippling the usefulness of compulsory licenses in many developing country markets, in the post 2006 world where major generic producers such as India will be required to issue 20 year patents on medicines.

It is useful to note that the US and many other northern countries have used antitrust proceedings to address these issues, which is another case of the agreement having one impact in the US and Europe, and another in a developing country that does not have the bureaucratic resources to benefit from some areas of TRIPS "flexibility." Antitrust enforcement is an expensive and complex undertaking, and remains largely a developed country tool for issuing compulsory licenses. It is also important to note that the US government itself issues compulsory licensees to foreign patents. See for example the September 26, 2001 Federal Register notice regarding United States v. 3D Systems Corporation and DTM Corporation, where the US Department of Justice required zero royalty compulsory licenses of Mexican and Canadian software patents.


The most cynical approach by the USTR has been to offer short-term extensions of TRIPS compliance to African countries, hoping they will make a separate deal with the US, splitting the developing country delegations.

The problems with the US proposals are many. The least developed countries already have the right to ask for extensions of TRIPS compliance, and the US proposal probably has the effect of limiting the term of such extensions, since they can be open ended now under Article 66 of the TRIPS. Of course many African countries do not even qualify as LDCs, including countries like Kenya, Botswana, Ivory Coast, Ghana, Nigeria or Zimbabwe, which are hardly rich countries by US or European standards.

But also, developing countries face very difficult non-WTO pressures, including for example annual AGOA certification on IPR issues, threats to withhold GSP benefits, and numerous bilateral and regional trade negotiations where the US aggressively advances TRIPS plus positions. Unless the US government has some binding way to ensure that it will not separately pursue high IPR standards in these other proceedings, LDCs and African countries will not benefit from even these putative extensions. It is of course relevant that H.R. 3005, a bill to give the USTR fast track negotiating authority, requires the USTR to seek accelerated compliance with TRIPS, as well as to oppose price controls on medicines. Also, note that right now some 37 countries in Africa already issue patents on antiretroviral drugs, five years before required to do so by the TRIPS, so the notion that the formal extension will be meaningful needs to be balanced with the reality that US bilateral trade pressures make this a difficult if not impossible situation for LDCs and African countries. For these and other reasons, we support measures that actually modify the understanding of what constitutes compliance under the TRIPS -- a more realistic benefit to developing countries than a phony extensions that will be taken away in bilateral negotiations.

More important, however, the interests of LCDs and indeed every county in Africa will be linked to the rules faced by India, Brazil and other developing countries that are excluded from the benefits of the US proposal, for two reasons. First, LDCs and African countries need to import medicines or at least active ingredients from countries that have the best capacity to manufacture them -- such as China, Korea, India, Brazil, etc. Second, the LCD and African markets are so small that they lack the necessary economies of scale to make generic manufacturing efficient for many drugs. As has been pointed out on several occasions, it was the decision by Brazil to purchase generic HIV drugs which created a sufficient market to make today's low cost generics ARV drugs possible, ultimately benefiting African countries and making HIV treatment a feasible goal after years of high prices by US and European drug companies. This is the empirical reality that you must deal with, and take responsibility for as millions perish and suffer form AIDS and other illnesses.

It is also appalling that the US government has sought to limit the benefits of the TRIPS flexibility to only the most serious health care problems, such as AIDS. Countless persons in poor countries will need access to medicines for asthma and other common illnesses, and why on earth should our trade policy make this difficult? Do we really hate the poor that much? It is this appropriate from a country so rich, that has benefited so much from global trade?

For these reasons, we ask that the US government reexamine its opposition to the developing country proposals, and embrace more moral and realistic trade objectives.


Finally, to the extent that the US is truly concerned about R&D, rather than export company profits, we urge the US delegation to propose a new round of trade on R&D, addressing such issues as the lack of investment in R&D on drugs for neglected diseases, or the need to have broader sharing of the burdens of funding basic research, now largely paid for by US taxpayers through the NIH. This would recast the trade debate in a positive way, emphasizing also the important contributions by US taxpayers to fund global R&D, and gain the support and respect of the public health community. Indeed, it should be obvious that the entire framework of the WTO trade agreements has been focused too much on the narrow interests of our export industries, while failing to even imagine the types of trade agreements what would have been designed if the object was to advance public health goals. As our trade policy emerges from the legacy of close ties and revolving doors between lobby groups such as PhRMA and the USTR, it will be necessary to turn trade policy into something that reflects real public interest objectives. You need to lead the way, rather than continue to act as a government funded and empowered surrogate lobbyist for a handful of large export companies.


James Love
Consumer Project on Technology

Cc: Joe Papovich

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