Fight Poverty, Not Patents

By CARL BILDT
January 6, 2003
Op-ed in Wall Street Journal

Time is running short for the World Trade Organization to fulfill the pledge made last November at Doha to find a way to guarantee poor countries access to medicines through the effective use of compulsory licensing of patents. Talks on this urgent issue stalled in December, and that is bad for everyone, but the burden of delay falls most heavily on developing countries afflicted with HIV/AIDS and other epidemics.

As they resume this month, WTO members should not be deluded. No "quick fix" allowing broader compulsory licensing will turn the tide in the global fight against HIV/AIDS. Poverty, far more than patents, stifles progress against this epidemic. And until wealthy countries practice what they preach about free trade and open their markets to the developing world, poor nations will be denied the opportunity to lift themselves out of a vicious cycle of poverty and bad health.

Last year's landmark Doha Declaration on the "Trips" (Trade-Related Intellectual Property Rights) Agreement and Public Health reaffirmed the importance of intellectual property as necessary incentive for pharmaceutical investment and innovation. It also reaffirmed the right of countries to issue compulsory licenses to improve access to life saving drugs for HIV/AIDS and other epidemics when facing a national emergency.

But the world's poorest countries cannot always make effective use of this legal safety valve. This is because the Trips Agreement does not explicitly provide for the compulsory licensing process to be used for the export of medicines, but only for their domestic production. This presents a potential problem because most poor nations lack any such domestic capacity. At Doha, member states recognized this problem and agreed to develop a solution by the end of 2002. This they have failed, but now hope to be able to do by February.

There is a need here for a long-term solution and, unusually, there is a simple answer to the question of how to provide one: a "waiver" mechanism to allow poor countries the flexibility they need in a major health crisis. This approach would allow countries to begin taking full advantage of the system this year -- a tangible down payment on promises made in Doha.

A waiver would provide the basis for a transparent, sustainable and legally certain mechanism. Critics of this approach argue that granting waivers on a case-by-case basis would impose unnecessary procedural restraints on the process. But this existing and often used procedure contained in the WTO Agreement would allow the grant of waivers on an expedited basis to poor countries meeting certain pre-existing criteria.

Some nations have introduced more radical proposals, such as amendments or new interpretations to the Trips Agreement. But these proposals would take many months, if not years, to implement and could end up deterring investment and stifling innovation. A waiver system strikes a balance and minimizes the kind of overreaching that seems to have doomed the negotiations last year.

There is clearly an urgent need to expand access to life saving drugs in the world's poorest nations. A waiver mechanism would facilitate the grant of compulsory licenses for export and offer poor countries the flexibility they might need to achieve this goal. But negotiators in Geneva must remember that expanding access to existing medicines is not a sustainable option. As much as 99% of essential drugs are already in the public domain in Africa. Innovation is an equally critical part of the equation.

The challenge we face today is not only to get existing therapies to patients but also to encourage a steady stream of new medicines. The fact is that development of new and better medicines will depend upon whether the international community maintains the stability of an intellectual property system that rewards the development of these medicines. Private sector risk taking and investment generated those innovative medicines that today save countless millions of lives around the world. And investment will be the key to developing a new generation of innovative AIDS treatments that work against increasingly resistant strains of the virus, or, even better, a vaccine.

Moreover, patents and other "tools" of the intellectual property system stimulate technology transfer, investment and economic growth. And, even more important in the long term, we should not forget that they spur and reward local creativity and innovation.

The software industry in India, for example, achieved world-class status after improvements were made to its copyright regime. And Brazil and China have experienced vast increases in pharmaceutical sector investment following improvements to patent laws. Over time, there is no reason whatsoever why Africa should be different.

The European Union and United States cling to massive subsidies and high tariffs on textile and agriculture products, among others, stripping developing countries of their competitive advantage and preventing them from competing effectively in the global marketplace. Oxfam estimates that if Africa could get only 1% additional share of world trade, that would inject $70 billion into African economies. If only 10% of that were to go to health, Africa would have the means to confront its health crisis.

Rich countries also need to contribute more to the U.N. Global Fund to Fight AIDS, tuberculosis, and malaria. Over the longer term, more trade will enable Africans to confront their health crises. But they also urgently need more direct assistance. U.N. Secretary General Kofi Annan has called for $7 billion to $10 billion annually for the Global Fund. Rich countries have so far only contributed a fraction of this amount.

WTO members must redouble their efforts in the next weeks and come up with a practical and effective solution aimed at affording poor nations greater access to the medicines they desperately need. The "waiver" approach is the only mechanism that will achieve this goal without stifling innovation. There will be no quick fix to the human catastrophe that is the HIV/AIDS epidemic.

A long-term solution will require the U.S. and the EU to liberalize their markets and help developing countries onto a path of sustainable economic growth. It remains truly shameful that we subsidize every cow in the EU with €2.5 every day -- which is more than three-quarters of the population of sub-Saharan Africa have to try to live on. Fighting poverty will also require freeing markets.

Mr. Bildt is the former prime minister of Sweden.