The Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS), originally signed in 1994, gave developing countries until 2005 to bring their IP laws in line with the new legislation. With respect to drugs, Indian, Brazilian, and Thai pharmaceutical firms could no longer copy drugs that American and European firms had created. Before 2005, however, these generic drug firms pursued a strategy of finding cheaper ways to produce anti-retroviral drugs (ARVs), and selling them to purchasers for a fraction of the price. A first-line treatment of drugs combining Stavudine, Lamivudine and Nevirapine decreased from $10,439 per person per year in 2000, to $99 in 2007. This burst open the oligopolistic market in the pharmaceutical sector, which due to the high barriers of entry had only seven firms producing all the ARVs supplied until 2000. This also forced originator firms to embark on discounting programs for developing countries, albeit to protect their brand images. This price drop was a significant factor in extending coverage in sub-Saharan Africa by 800% in the two years to 2005, as reported by the WHO. However, toxicity, severe adverse effects and resistance to first-line treatments require a switch to a second-line regimen. This second line, covered by the post-2005 TRIPS regime, means firms cannot copy the drug, and countries in need are prevented from importing generics. Second-line medicines are four times more expensive than first line, and in countries that come under the Organisation Africaine de la Propriete Intellectuelle – altogether, 16 francophone countries – 10% of patients need to change treatment every year. Thus drug expenditure will increase by 250% just to maintain current access programmes. Without rapid price reduction for second line drugs, health programmes will have to choose between treating new or current patients. It is no surprise that patent-holding pharmaceutical companies are seen as saboteurs in the battle against HIV/AIDS.
Go to the original piece on Think Africa Press for more detailed discussion of the issues.
Also, see this British Medical Journal’s editorial on how India is currently negotiating away its production of generic drugs. According to the editorial, “In exchange for market access in other areas of the economy, the EU wants India, a country with very low per capita incomes, to embrace tough new rules on ownership and enforcement of intellectual property for medical inventions.”