How Big Pharma Squeezes Billions from Dirt-Poor Countries

Among the hundreds of thousands of secret US State Department cables recently released by WikiLeaks, the controversial whistleblower website, a cache reveals US diplomats defending the interests of big pharmaceutical companies, even at the risk of the hosting nation’s own public health priorities. The memos dutifully detail the many embassy meetings with local Big Pharma reps, during which US officials are presented with laundry lists of issues to raise with one or another local government ministry. Invariably the goal of the exercise is for pharma to pressure the US to pressure the host country to give favorable treatment to expensive brand name drugs, typically by preventing in-country manufacturing or marketing of far cheaper generic versions.

Separate cables show such industry profiteering tactics threatening to taint US diplomatic relations in emerging nations such as Hong Kong, the Dominican Republic, the Philippines, Turkey, Venezuela, Saudi Arabia, and India. Overall, a familiar picture emerges of a diplomatic corps if not held hostage by, at least a captive audience to, the financial interests of the biggest American pharma companies as they come into covert conflict with developing nations that quite naturally prioritize the health care of their people over the high margins that Big Pharma has come to expect. With several hundred drugs and vaccines in development to treat addiction, the scourge of hundreds of millions worldwide, the affordability and accessibility of these innovative (and, no doubt, expensive) medicines will become a pitched battle in global public health over the next decade. The outcome of the skirmishes sketched in the WikiLeaks cables will help decide whether profits or people prove victorious.

The cables by no means paint a uniform portrait of government lackeys doing industry's bidding. Many memos betray a between-the-lines irritation at pharma's monomaniacal self-interest. Still, there is a disturbing silence on the obvious moral or ethical objections to industry demands for high price, long patents, and other protections despite the cost in human lives. Only a single cable—from the outgoing US ambassador to Poland in 2009—lays bare the vast greed that drives these complex, highly technical negotiations.

The developing nations, contrary to what you might expect, in many ways hold the best cards in this political game. Emerging nations have the fastest-growing economies, the most upwardly mobile middle classes, and the biggest untapped markets in the world. And in their impressive pushback against Big Pharma, India has been the 800-pound gorilla over the past decade. A democracy with well-educated but relatively inexpensive brain power, the pharma industry views India not merely as a market but as a potential new hub of drug development and testing.

There is a disturbing silence on the obvious moral objections to industry demands for high prices, long patents, and other protections despite the cost in human lives. Only a single cable lays bare the vast greed that drives these complex, technical negotiations.

Aware of its advantage, India has played hardball, starting with its approval of local generic HIV drugs for its hundreds of thousands of citizens with the virus—a defiant challenge to Big Pharma, which had refused to discount its own brand-name AIDS drugs to affordable levels. (In the US, HIV treatment costs as much as $15,000 a year; the Indian generic knocked out knockoffs with a $350 price tag.) In addition, India’s supreme court has been fearless in shooting down foreign pharmas when they sue for patent infringement by Indian generic companies. When an emerging nation's entire legal and legislative apparatus unite to oppose industry interests, the company can either fold its hand or fold up its tent. When drug companies retaliated by boycotting India and refusing to sell new drugs there, they attracted universal opprobrium for denying sick people medicines.

Typically, the WikiLeaks memo from the US embassy in New Delhi detail a laundry list of complaints by the Organization of Pharmaceutical Producers of India, including a new price-control regime to keep drug costs more affordable and a wholesale rejection, over US objections, of so-called data exclusivity, allowing a generic firm to bring knockoffs to market as soon as a branded patent ends.

Drug prices are only one of the issues raised in the cables. Equally important to Big Pharma is obtaining patent protection in new markets. Patents, which confer market exclusivity on a product, are especially dear to drugmakers because truly innovative medicines are among the riskiest and most expensive investments around; a company spends, on average, $1 billion and 10 years to bring a new drug to market, and the rate of failure in late-stage development is more than 50%. Without a patent to allow the manufacturer a monopoly to sell the drug for a limited period of time, a competitor could copycat the molecule virtually overnight.

But what is a fair compromise between an innovator’s need to recoup profits from an invention and the public’s need to access medicine at an affordable price? In the US, with its political system owned and operated by corporations, the answer is, as much as the market will bear—one reason that our health-care is the most expensive and the least efficient in the developed world. But it turns out that most nations in the rest of the world are far less servile to Big Pharma than Uncle Sam.

In the Dominican Republic a group of Big Pharma reps met with a US counsel to request a speedup in the very slow rate at which the small nation's patent approval office was stamping drugmakers’ filings: out of 700 filed over the past decade, fewer than 10 had been processed! The diplomat penning the memo, which was all analysis and no action, commented wryly that the Dominican Republican was evidently waiting to see if the anti-corporate winds blowing across Latin America marked a lasting change in the political weather.

The politics of patent protection of pharmaceuticals tend to make for tedious reading, as do the details of the World Trade Organization's treaty called the Trade-Related aspects of Intellectual Property Rights (TRIPS) agreement, which gives private companies broad protections for their medicine monopolies, including a guarantee of 20-year patent protection before competitors can flood the market with generics. (A monopoly is, by definition, not a free market.) But, as longtime consumer activist James Love, who heads the Knowledge Ecology International organization, explained to The Fix, “All the things the US is doing is whatever benefits a handful of companies like Pfizer, Abbott, Merck, and so on. The US basically pushes for anything they want.” Whenever they score a major victory for these companies, they try to push it further. Love explained, “What does the US want? The US wants more.”

Although under the TRIPS agreement, pharmaceutical companies could register their drugs for 20-year patents in any nation via that country’s regulatory apparatus. But they don't want to risk the sly Dominican Republic–style delay. So they want more. They want automatic monopolies in every country. In practice, the easiest way to get these monopolies is by having the State Department pressure governments in the developing world to grant them long periods of data exclusivity. The data at issue consists of the mountain of information from the numerous clinical trials showing safety and efficacy to win approval from the FDA. By demanding data exclusivity, Big Pharma is essentially trying, Love explained, “to create an intellectual property right over the very knowledge that a drug is safe and effective—something that is completely independent of a patent.”