Pharmaceutical industries in emerging markets are shifting their focus away from poor to developed countries, which will affect access to cheap generic medicines. Poor states should tackle this development by capitalising on the international trade exemptions they still enjoy regarding medicines as “intellectual property”.
These comments come from a new report by the United Nations Conference on Trade and Development (UNCTAD), titled “Investment in Pharmaceutical Production in the Least Developed Countries”, or LDCs.
Michelle Childs, director of policy and advocacy for Médecins sans Frontièrs, agrees with UNCTAD’s call to extend LDCs’ exemption from intellectual property requirements (such as patents) beyond 2016. “LDCs should already be advocating to extend the exemption,” Childs told IPS.
But UNCTAD also notes that, while governments should encourage the creation of local generic pharmaceutical industries in poor countries to guarantee access to basic medicines, meeting all the conditions that could enable foreign investment could be so onerous as to render such a proposal practically unfeasible.
An LDC is a country that has a gross national income per capita of less than 905 dollars, lacking in basic economic capabilities and with very low indicators in human development factors such as nutrition, health and education and adult literacy.
Presently, 48 countries are considered as LDCs, of which most are in sub-Saharan Africa.
Despite the enormous increase and diversification of global pharmaceutical production during the past 20 years, most of the populations of LDCs “still lack access to much needed medicines”, according to the report’s lead author Kiyoshi Adachi, chief of UNCTAD’s intellectual property unit in the division on investment and enterprise.
Adachi recalls that some emerging developing countries, such as Brazil, India and China, have been able to develop a large generic medicines industry based on “their ability to reverse-engineer medicaments patented elsewhere”, thus becoming “important players in providing other developing countries with generic medicines”.
However, Adachi notes, these large generic pharmaceutical industries are now “becoming increasingly interested in selling their medicaments to developed country markets, and are beginning to partner with research and development-based transnational corporations in the sector”.
This shift may lead to a decrease in generic medicines on offer to LDCs.
LDCs can tackle these recent developments by capitalising on the exemptions they still enjoy of not having to offer intellectual property protection to pharmaceutical products patented in industrialised countries. These trends that could be alleviated by larger generic pharmaceutical manufacturers’ increased engagement in foreign direct investment in LDCs to produce medicines.
Their governments and international investment promotion agencies should “encourage investment in (local pharmaceutical production) in a manner that meets important public health objectives in a financially sustainable fashion”, Adachi suggests.
In terms of World Trade Organisation (WTO) treaties and the agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs), LDCs enjoy exemptions until Jan. 2016.
The exemptions may be prolonged beyond this date, if the WTO agrees on a further extension of the waiver granted to the LDCs.
However, the study also warns that LDCs lack many of the important prerequisites indispensable to attract foreign direct investment in the pharmaceutical sector. UNCTAD lists the industrial and health policy conditions LDCs would have to satisfy to launch feasible local pharmaceutical industries.
These prerequisites vary from human resources to basic infrastructure such as reliable power and clean water and efficient institutions such as a functioning national drug regulatory authority. It includes timely and cost-effective access to key inputs, especially active pharmaceutical ingredients.
The encouragement of foreign investment should go beyond mere industrial policy measures. Governments of LDCs would have to ensure “that the push to support the local production of pharmaceuticals through foreign direct investment and related technology transfer addresses real (local) public health needs”.
UNCTAD also promotes the idea that LDCs would have to guarantee the rule of law and that foreign investors should have the right to repatriate profits – despite the fact that such conditions translate into reduced controls on capital transfers and taxes, with resultant revenue losses.
“It is a joint venture between Uganda and India, with considerable technology transfer, and is operating successfully.” MSF is an international, independent, medical humanitarian organisation that delivers emergency aid to people affected by armed conflict, epidemics, healthcare exclusion and natural or human-made disasters.