COVID-19 Throws Harsh Spotlight on The Human Cost of Misguided International Trade & IP Policies Srividhya Ragavan May 18, 2020

COVID-19 Throws Harsh Spotlight on The Human Cost of Misguided International Trade & IP Policies

The current global struggle with the Coronavirus pandemic has highlighted dangerous shortcomings of our healthcare systems and the importance of putting access and affordability of medication at the top of the to-do list for reforming it.  While many, including the former Director of WIPO, Francis Gurry, have suggested that it is “far too early” to address access to medicines and other IP policy issues raised by COVID-19, we cannot afford to wait.  Because one thing that the present crisis has underscored are harmful myths about the relationship between trade, prosperity and access to medicines.  Unless we acknowledge these myths and remove them from the calculus, any solutions to the present challenges posed by the current deadly global pandemic will not only continue those errors, they will prove ineffective, and ultimately deadly, in the future.

The present international trade system has been based on several faulty, and potentially disastrous foundational, misunderstandings about the role of trade and prosperity. One longstanding truism of the rapidly disintegrating global trading system has been that harmonized regulation was the best way to “flatten the playing field” and spread the benefits of economic prosperity throughout the global economy. This is most clearly illustrated through the WTO trading system established in the 1990s, including TRIPS, the premiere multilateral IP treaty even today.  That trading system undeniably placed trade protections over public health by requiring patent protection for pharmaceuticals with, at the time-limited focus on the flexibilities that were later emphasized in response to the HIV-AIDS pandemic of the 1990s.

With hundreds of thousands of individuals infected with COVID-19, with a death toll in the past few months that was previously unimaginable, we forget that the choice of trade policy over public health has been a constant of U.S. policy.  In the middle of the 2016 Presidential campaign in the United States, the breaking news was the potential withdrawal by the U.S. of its pledge of $450 million intended to support a proposed peace plan, Paz Colombia. The withdrawal related to a declaration made by the Colombian Minister of Health to issue a compulsory license to lower the price of imatinib, a leukemia drug, marketed as Glivec.  The Swiss Pharmaceutical company, Novartis AG, the owner of the patent over Glivec, had priced 400 milligram of the drug at 129,000 Colombian pesos (approximately $43). The total per year cost of 400 mg Glivec in Colombia, amounting to $15,000 per patient per year, which represented nearly twice the average annual income of Colombians.

The Colombian story is disturbingly similar to what had happened in India when soranafib tosylate, marketed as Nexavar, whose patent, owned by the German pharmaceutical company Bayer AG, was the subject of a compulsory license because of its inaccessibility on the Indian market due to its high price.  Nexavar was priced at approximately $5000 (Rs.2,80,428) for a month’s treatment. The cost of a month’s treatment regimen of Nexavar was nearly five times more than the median annual income in India. That is, individuals in India earning $5000 per year would consider themselves fairly well-employed. Thus, Bayer’s Nexavar, like Novartis’ Glivec was not a story of the poor being unable to afford medication.  Like countless others, it was a story of creating poor out of the rich!

The current rejection by the U.S. of the WTO global trading system has not improved access to medicines for its citizens. To the contrary, the trade wars that replaced the MFN system of the WTO have put at risk access to the very ingredients we need to create and use tests for COVID-19. The  World Health Organization (WHO) is scrambling to find a way to make medications accessible as the only way to open trade and assure access around the globe to the medicines required to combat COVID-19.  Regardless of what treatments are eventually discovered, their impact will become meaningful only with proper access.  That requires both a functioning chain of supply, and reasonable prices so that life-saving treatments are effectively and actually available to save patients’ lives.

With its leveling effect of killing humans in virtually every country, across ages, races, religious and socio-economic strata, COVID-19 has exposed the most problematic, and underexplored, truth of our present global trading system.  It isn’t poverty that makes access to medicines so problematic.  It is our trade policy itself.  As the examples above demonstrate, although the holders of the patents at issue were non-US companies, the U.S. joined others in using their trading power, in essence, to lobby to maintain high global prices for pharmaceuticals.  It is little wonder that efforts at regulating drug prices in the U.S. continue to fail.

Since TRIPS, the West perpetuates the important role of private companies as “innovators of magic pills that can cure diseases,” and has used trade policy, including diverse Free Trade Agreements, such as the USMCA, to expand patent protection.  While one of the authors of this piece thinks that patent protection for innovative pharmaceuticals is not necessarily inappropriate, we both agree that the abuses that have arisen from this trade-enhanced global patent system, including drug companies’ aggressive patent aggregation and pricing strategies, have denied even the middle class in developed countries access to life-saving drugs because of non-transparent drug pricing practices.  Yet third world generic drug companies have been portrayed as pariahs when the need for such companies was created by drug companies’ refusal to provide medicines at reasonably affordable prices even in the United States.

Generic drug companies serve an important role in the distribution chain.  They help maintain balance in global public health by providing accessible alternatives to often exorbitantly-priced branded pharmaceuticals. Even President Trump desperately pleaded with India to remove its export controls on hydroxychloroquine so that the U.S. could purchase this generic drug.

COVID-19 has exposed the need for a reality check when it comes to pharmaceuticals and trade policy.  As it ravages countries, the story of human suffering becomes a story of policy lacunae in the international trade and intellectual property (IP) regimes. Despite the life-saving possibilities posed by medical innovations protected under patent laws, and the flexibilities that TRIPS allows in connection with these laws specifically to support public health initiatives, the international trade regime, as applied, still fails to effectively account for existing local differences that prevent access to life-saving medication.

Questionable policy prescriptions, especially in the area of patents for pharmaceuticals, that promote stronger and broader patent protection, without necessary controls over patent abuse or recognition of the necessary flexibilities required to meet local realities continue to detrimentally affect large numbers of the global population in both developed and developing countries by depriving patients access to life-saving medication   The disturbing factor is the regularity with which this drama repeated itself around the world. The current pandemic has merely brought this problem to the forefront by the large numbers of the global population, that have already died and will continue to die if we do not act to change this policy now.

COVID-19 casts into the harsh glare of reality the devastation of the global economy and national productivity when public health is ignored or placed in service to other exigencies, such as trade. As we struggle with solutions to combat this latest global health challenge, we cannot ignore the fact that the international rhetoric that the story of access to medicines is one of poverty.  It ain’t poverty. It is trade policy.  Until we put access back into the trade policy balance in a viable and effective manner, including critical consideration of local realities, access to life saving medicines will only become an exponentially more deadly problem.

And, it is time for the WHO and the WTO  to work together to ensure that whatever trade agenda developed in response to COVDI-19 does not serve as a barrier to adequate access to medicines for all the people who need them.