The AIDS Epidemic and TRIPS


The AIDS Epidemic and TRIPS

PRIOR TO THE adoption and entry into force of the TRIPS Agreement, a tragic epidemic was emerging in the early 1980s. HIV/AIDS became a global disease, severely affecting many developing countries. This chapter retraces how AIDS medicines were made available but not accessible for low-income people in these countries. Both developed and developing country governments were slow to realise the severity of the situation in developing countries and the need to act accordingly. Research-based pharmaceutical companies acted in their ‘business as usual’ way. International solidarity among non-governmental organisations (NGOs) and Indian generic drugs companies was formed around the issue of access to inexpensive medicines. In this process, patents and the behaviour of research-based multinational drug companies came to be viewed as the cause of the denial of access to medicines. Policies to produce medicines locally were also revived.


A Scientific Discovery of Human Immunodeficiency Virus (HIV)

Acquired immunodeficiency syndrome (AIDS)1 is caused by an RNA2 retrovirus (a virus that carries its genetic material in RNA rather than DNA).3 This retrovirus destroys organs of the human immune system such as CD4+ T cells4 and macrophages. HIV is an RNA virus and has an affinity for the CD4 molecule, which is on the surface of certain lymphocytes called CD4+ T cells. Macrophages also have CD4 molecules on their cell surfaces. HIV invades and fuses with CD4+ T cells and, using reverse transcriptase enzyme, transcribes its RNA into DNA. The viral DNA is then integrated into the genetic make-up of the host DNA and becomes a provirus. Via transcription, the provirus then forms a core of HIV RNA and other composite elements such as gag proteins, reverse transcriptase, integrase, protease, and other viral proteins. These are assembled into retroviral cores beneath the cell plasma membrane before they bud through the host CD4+ T cells. When they are released from CD4+ T cells, some of the core viral proteins are not mature and need to be cleaved by viral protease in order for a mature HIV particle to be formed and begin to infect another CD4+ T cell.

The discovery of the virus causing AIDS was achieved through scientific competition among groups of researchers at the National Cancer Institute (NCI, part of the National Institute of Health (NIH)) group led by RC Gallo, Harvard University, and the Pasteur Institute (France) group led by Luc Montagnier. In May 1983, these researchers published their respective articles, relating to the relationship between AIDS symptoms and the virus that they had isolated, in Science.5 According to Gallo, HTLV-III (human T-lymphotrophic virus Type III) was the pathogen of AIDS.6 For Montagnier, an isolated LAV (lymphadenopathy-associated virus) in a patient with generalised lymphadenopathy, was the AIDS pathogen.7 Following their publications, opinion was divided in the US and France as to whether these two retroviruses were the same.

An inquiry by the US Congress brought the argument to an end, and in May 1986 the virus was given the single name of HIV by an international nomenclature committee. Having experienced several disputes over scientific information such as this, the Pasteur Institute, which had been relatively unconcerned with intellectual property rights, also became sensitive to obtaining certain rights over its scientific discoveries. Since these could now be used in the diagnostics, prevention of infection and treatment of diseases or in further research on pharmacological agents, they began patenting their research results, as was the usual practice in the United States. The licence revenue of the Pasteur Institute allowed it to invest in further research. In 2004, roughly 40 per cent8 of basic research investment in the Institute’s biotechnology department came from licence fees from technologies that its researchers had developed.9 Virological research on HIV/AIDS has led the Pasteur Institute, the New York Blood Center, and the American Biotechnology Laboratory to obtain basic patents for HIV/AIDS diagnostics (eg equipment), not only in the US, Europe and Japan, but also in South Africa.

B Development of Antiretroviral Drugs

Discovering HIV to be the cause of AIDS and ascertaining the HIV life cycle were key to developing AIDS drugs. Following the isolation of HIV and the identification of its life cycle, the development of AIDS drugs was relatively smooth. Antiretroviral (ARV) drugs provide a mechanism for blocking one stage or another in the life cycle of HIV. ARVs help maintain the patient’s immune status by preventing reproduction and replication of HIV.

AZT (abbreviated from its chemical name, azidothymidine – generic name, zidovudine),10 the first ARV, was developed by Burroughs Wellcome, the US subsidiary of the Wellcome Foundation (UK). In the emergency phase of the AIDS epidemic in the early 1980s,11 the Clinical Data Examination Committee of the US Food and Drug Administration (FDA) suspended the placebo test, and granted authorisation to market AZT, based only on the test data of several hundred patients.12 One stage in the life cycle of HIV is the synthesis of DNA from viral RNA by reverse transcriptase. AZT inhibits the action of reverse transcriptase by supplying a base analogue (of nitrogen-infused thymidine), mimicking a DNA base, which stops elongation of the HIV DNA chain.

The AZT compound had been known for 20 years before AZT was marketed as an AIDS drug. In 1964, researchers at the Detroit Cancer Institute had synthesised the compound as an anti-cancer drug but without any preclinical data or statement relating to its therapeutic use.13 In 1980, an article by E de Clercq and others of the University of Leuven referred to AZT’s first medical indication as antiviral, antimetabolic and antineoplastic against normal viruses (ie not retroviruses), such as herpes simplex virus and vaccinia virus.14 In 1985, the in vitro activity of this compound against the HIV virus was reported by Mitsuya and other researchers at the National Cancer Institute (NCI including RC Gallo), Duke University and Burroughs Wellcome.15

Following AZT, several less toxic, more easily tolerated ARVs using ‘nucleoside reverse transcriptase inhibitors’ (NRTIs) were developed. Stavudine (2’, 3’-Didehydro-3’-deoxythymidine, or d4T) belongs to the same therapeutic class in terms of chemical structure and blocking mechanisms. It was developed by the Yale research team and licensed to Bristol Myers Squibb (BMS) which, after nearly 10 years of clinical studies, obtained US FDA marketing authorisation in 1994. This NRTI antiretroviral was sold as Zerit.

Both AZT and d4T lack -OH at a saccharide 3’-hydroxyl group, and these artificial nucleic acid bases compete with deoxythymidine (which is a natural nucleic acid base) in order to be incorporated into growing viral DNA chains. Hence, if AZT or d4T is incorporated into a DNA chain instead of deoxythymidine, the growth of that ‘chain’ through a 3’-hydroxyl group is halted and further elongation of viral DNA is inhibited.

Stavudine (d4T) improved the existing ARVs because it has a lower short-term toxicity than AZT. The discovery of AZT was a breakthrough, while d4T is considered a typical incremental improvement over AZT, seven years after AZT’s marketing in March 1987. Names and years of FDA approvals of the other NRTIs are as follow:16 didanosine (brand name Videx, approved in 1991), zalcitabine (brand name Hivid, approved in 1992 but currently discontinued by the manufacturer), lamivudine (brand name Epivir, approved in 1995), abacavir (brand name Ziagen, approved in 1998), emtricitabine (brand name Emtriva, approved in 2003), and nucleotide reverse transcriptase inhibitor (NtRTI) tenofovir (brand name Viread, approved in 2001).

Another type of ARV, referred to as a ‘non-nucleoside reverse transcriptase inhibitor’ (NNRTI) was also developed following NRTIs. The NNRTI type of ARV binds directly to reverse transcriptase and blocks its functioning by changing its structure. These include nevirapine (brand name Viramune), delavirdine (brand name Rescriptor) and efavirenz (brand name Sustiva or Stocrin).

Since 1995, other kinds of ARVs called ‘protease inhibitors’ (PIs) have been marketed. PIs prevent long precursor proteins from being cleaved by viral protease to produce the mature virus, the final stage of the HIV life cycle. Thus, these inhibitors lead to an increase in the ratio of immature viruses which are not infectious. The cell population infected by HIV and the amount of HIV in the body declines, so that the number of CD4+T cells increases and there is a gradual recovery of immune function. In the US, currently nine PIs are available. A newer NNRTI ARV, etravirine (brand name Intelence) was approved for marketing by the US FDA on 18 January 2008. Approval by regulators in other developed countries followed. Etravirine is considered to be appropriate only for treatment-experienced adults who have evidence of viral replication and HIV strains resistant to other ARVs.

Other new classes of ARVs include entry inhibitors such as enfuvirtide (brand name Fuzeon) and maraviroc (brand name Selzentry) and integrase inhibitors such as raltegravir (brand name Isentress).

C ‘Use’ Patents

Burroughs Wellcome applied for a patent for a new use for the AZT compound, based on the compound’s activity against HIV retroviruses, in March 1985,17 before the publication of the last article, and in September 1985.18This was because the AZT compound had already been known as having activity against ‘normal’ DNA viruses, and been developed as a cancer drug.

The US Patent and Trademark Office (USPTO) granted the first AZT patent on 9 February 1988.19 Its claim 1 is: ‘A method of treating a human having acquired immunodeficiency syndrome comprising the oral administration of an effective acquired immunodeficiency syndrome treatment amount of 3-azido-3-deoxythymidine to said human.’ According to section 101 of the US Patent Act, whoever invents or discovers any new and useful (a) process, (b) machine, (c) manufacture, or (d) composition of matter, or (e) any new and useful improvement thereof, may obtain a patent therefore.20 In other words, a new use of a known compound is patentable. A claim type, ‘a method of preventing or treating disease X by administering compound S to a human in need thereof in an amount effective for preventing or treating the disease X’ is therefore possible in the US.

Specific features of a substance or new uses for a substance can be inventive and considered inventions (whether the invention is a product or process). This can take any descriptive form, including a specific use, formulation, or method of use. In the US, therapeutic methods used to be regarded as patentable without restriction. In 1996, the US Congress added restrictions on remedial action against infringements by medical practitioners’ ‘performance of a medical or surgical procedure on a body’.21 In the US today, therefore, medical or surgical, therapeutic and diagnostic methods performed on a human body can be patented, even though asking for injunctions or claiming damages against such acts is not possible.

Under the European Patent Convention (EPC), by contrast, claiming a method of treatment on a human or animal body is not allowed (see chapter 3), and this exclusion from patentability is permitted under Article 27.3(a) of the TRIPS Agreement, which states that: ‘Members may also exclude from patentability: (a) diagnostic, therapeutic and surgical methods for the treatment of humans or animals’.

Article 52(4) EPC 1973 stated that:

European patents shall not be granted in respect of “methods for treatment of the human or animal body by surgery or therapy and diagnostic methods practised on the human or animal body”. Methods for treatment of the human or animal body by surgery or therapy and diagnostic methods practised on the human or animal body shall not be regarded as inventions which are susceptible of industrial application within the meaning of paragraph 1. This provision shall not apply to products, in particular substances or compositions, for use in any of these methods.

It therefore became possible to claim ‘a (known) substance S for use as a medicament’, if the claim is written, ‘a pharmaceutical composition comprising compound S and pharmaceutically acceptable carrier’. In other words, a European patent may not be granted for the use of a substance or composition for the treatment of the human or animal body by therapy, but may be granted when directed to the use of a substance or composition for the manufacture of a medicament for a specified new and inventive therapeutic application. According to the Decision of the Enlarged Board of Appeal G5/83 in 1984, a first medical indication could obtain purpose-limited protection for a known substance.22 Pursuant to the EPC amendments which entered into force on 29 November 2000, Article 52(4) EPC 1973 was deleted but the same provision was placed under Article 53(c).23 In the amended text of Article 54(5) EPC 2000, it was made clear that claiming diagnostic or therapeutic use of products is allowable under the EPC.24

For second pharmaceutical use claims, the so-called ‘Swiss type’, ie ‘the use of compound S in the manufacture of a medicament for the treatment or prophylaxis of disease X’, can also be accepted. However, the mere use, ie the German ‘Verwendung’ type of ‘the use of compound S for treating the disease X’ is not allowable because it violates Article 52(4), EPC 1973, (G5/83). The ‘Swiss-type’ claims are acceptable only in the case of new uses of a medicament. They have not been allowed for other types of medical treatment, such as a new use of a known laser surgery system.25 Furthermore, a real pathological condition must be defined in the second medical use (T241/9526). In T1020/03,27 however, the decision of the Technical Board of Appeal of 29 October 2004, changed the previous decisions of the European Patent Office (EPO), in expanding the allowable type of the claims directed to the new dosage, or route, or interval of administration for the same active ingredient and for the same medical indication, while complying with the above provisions.

Thus, for AZT, for example, the European Patent (EP) 196,185, Claim 1 is formulated as follows: ‘A pharmaceutical formulation comprising as active ingredient, 3’-azido-3’-deoxythimidine and at least one pharmaceutically acceptable carrier therefor’. In patent EP 291,633, a separate application for EP 196,185, but claiming the same Convention priority, claim 12 is formulated as the ‘use of 3’-azido-3’-deoxythimidine in the manufacture of a medicament for the treatment or prophylaxis of a human retrovirus infection’.

In Japan, ‘use’ as a therapeutic method is not patentable because it is not considered as meeting the ‘industrial applicability’ requirement. However, ‘a pharmaceutical composition comprising compound A for treating the disease X’ is patentable and so the ‘second medical use’ is substantially patentable.28 Thus, the formula, ‘a pharmaceutical agent for preventing and/or treating disease X comprising compound A (of which a first indication is already known) as the active ingredient’ is allowable. The Japanese patent 1,721,193, for AZT, Claim 1 is formulated as ‘a pharmaceutical composition for treating or preventing the human retrovirus infections comprising 3’-azido-3’-deoxythimidine as the active ingredient and a pharmaceutically acceptable carrier’.

D Administration of AIDS Drugs

At present, no single antiretroviral (ARV) is sufficient to treat HIV infection and therefore a combination of ARVs is necessary. The appropriate combination is to be determined by specialist doctors based on the various factors of the diagnoses, such as CD4 counts, HIV viral load, side-effects, the state of opportunistic infections and drug resistance.29 In 1996, successful viral suppression with a combination of triple ARVs including a protease inhibitor (PI) was described by David Ho et al at the International AIDS Conference in Vancouver and the concept of highly active antiretroviral therapy (HAART) was introduced. This allowed for combining suitable ARVs, in order to suppress the viral load and avoid development of a resistant virus. Although the original HAART clinical trial was done using a combination of two nucleoside reverse transcriptase inhibitors (NRTIs) and one PI, a combination of ARVs such as two NRTIs or two NRTIs plus one PI, for example, became standard treatment.30 After numerous clinical trials, in general, currently HAART is comprised of combinations of two NRTIs plus one ritonavir-boosted PI (as described below; some are non-boosted) or two NRTIs plus one non-nucleoside reverse transcriptase inhibitor (NNRTI). The most recent guidelines of the Department of Health and Human Services (DHHS) also include two NRTIs plus an integrase inhibitor. Different sets of multiple ARVs came to be called the ‘AIDS cocktail’. Several years later, it became the standard of care to combine ARVs according to resistance of the particular virus.31

Formulations began to be manufactured which combined two or three ARVs, simplifying patient intake. For example, GlaxoSmithKline (GSK) marketed Combivir, which is a combination of lamivudine (3TC, brand name Epivir) and zidovudine (AZT, brand name Retrovir), as well as Trizivir, a combination of AZT, 3TC and abacavir (brand name Ziagen). Abbott sells its combination of two PIs (lopinavir and ritonavir), under the brand name Kaletra. Ritonavir (brand name Norvir) is hard to tolerate because of its side-effects when used in doses high enough to work as a single PI. Ritonavir serves better as a booster for other PIs, making them increase their concentrations and last longer in the blood because it inhibits an enzyme in the liver that metabolises other PIs.32

Kaletra was initially used as a second-line ARV in patients with treatment failure. In 2005, a tablet formulation was marketed which does not require refrigeration, an improvement over the capsule. In 2006, Gilead received authorisation from the US FDA to manufacture and sell Truvada, which is a combination of tenofovir (brand name Viread) and emtricitabine (brand name Emtriva). In July 2007, the US FDA and in December the European Medicinal Agency (EMEA) authorised the selling of Atripla, a once-daily pill consisting of tenofovir, emtricitabine and efavirenz (brand name Sustiva or Stocrin). It was developed as a result of cooperation between Gilead and Bristol Myers Squibb (BMS) and offered another option in initial regimens which are relatively easy to administer. In the US, six combination formulas of ARVs are available. Those formulas were developed to significantly decrease pill burden and to increase patients’ adherence to HAART regimens. In current pharmaceutical developments, there are several possibilities for HAART regimens. These are as follows: (1) treatments that combines two NRTIs and one NNRTI to avoid PI side-effects, such as abnormal fat distribution and metabolic abnormalities; (2) the use of PIs such as ritonavir-boosted PIs or nevirapine manufactured by Boehringer Ingelheim (brand name Viramune) to avoid side- effects on the central nervous system caused by efavirenz; or, (3) the use of NRTI-sparing regimens to avoid long-term side-effects due to NRTIs.

E New Modes of Blocking HIV

HIV mutates frequently and its RNA is integrated into host white blood cells, called T-cells, and some T-cells infected with HIV become latent. For this reason, a permanent cure is difficult to achieve and constant research to develop new drugs with new modes of blocking HIV is necessary.

New AIDS drugs are developed with the aim of blocking the process of fusion to or entry into the cell. One entry inhibitor, manufactured by Roche, is enfuvirtide (brand name Fuzeon), an injectable fusion inhibitor, which binds the subunit of viral glycoprotein (gp) 41 and prevents the virus attaching to the cell.

Chemokine receptor type 5 (CCR5), a protein on the surface of immune cells like T cells and macrophages, acts as a chemokine attractant to guide the migration of cells.33 Around the year 2000, US researchers discovered that CCR5s functions as a viral co-receptor, guiding HIV to its target cells.34 A compound that blocks the functioning of CCR5, therefore, could be an effective ARV drug. It would prevent the virus from entering uninfected cells by blocking the predominant route of entry, instead of fighting HIV inside white blood cells. There were several competing entry inhibitors that block the interaction between CCR5 and HIV in clinical trials, including PRO140 (Progenics), vicriviroc (Schering Plough), aplaviroc (GW-873140) (GSK) and maraviroc (Pfizer). Some were terminated, however, due to safety concerns over liver toxicity and increased risk of cancers. Another difficulty was that HIV could use another co-receptor CXCR4 to enter the cells. On 6 August 2007, seven years after the identification of CCR5’s function as a major HIV co-receptor, the US FDA granted accelerated approval to maraviroc (brand name Selzentry), making it the first approved agent in this drug class. Earlier, on 1 July 2003, US patent 6,586,430 was granted for the invention of new chemical compounds with particular use as CCR5 modulators, preferably antagonistic, of the activities of chemokine CCR5 receptors.

AIDS drugs which act on viral integrase (integrase inhibitors or strand transfer inhibitors) are also being developed. Integrase inhibitors block the process of DNA strand transfer from the viral genome to the host genome. Raltegravir, manufactured by Merck (brand name Isentress) which was approved by the US FDA on 12 October 2007, is one such medicine.

F Further Challenges

As ARV therapies advanced between 1995 and 1998, AIDS-related mortality decreased dramatically and conditions improved for HIV patients in developed countries.35 However, it is very easy for HIV to mutate, so strains of the virus that are resistant to therapeutic agents can easily emerge. In 1996, it was estimated that HIV replicates approximately 10 billion virions (viral particles) per day. HIV reverse transcriptase is not perfect and may, on average, make one spontaneous error (mutation) each time a viral genome is replicated. HIV does not have a mutation repair capability during replication, so many HIV mutations (heterogeneous or variant strains) coexist. If a patient continues to have a high level of HIV, mutant viruses accumulate within the body, and if treatment is given after mutant viruses emerge, drug resistant strains constitute a majority of the HIV viral population.

Drug-resistance refers to a condition in which a normally effective dose of a drug no longer inhibits the growth of a virus or bacterium. When a virus becomes resistant to drugs, the effective level of drugs necessary to inhibit growth changes, and drug-resistant strains emerge. If the amount of ARV drugs in the blood is insufficient, resistant viruses (viruses against which the medication is ineffective) emerge and replicate to a greater degree than susceptible viruses (viruses against which medications are effective).36 One of the most significant difficulties faced in using antiretroviral treatment (ART) to treat HIV is the ease with which drug-resistant strains of HIV can emerge.37 Thus, for AIDS treatments, it is necessary that: (1) the treatment continues with the correct dosage and through the correct method; (2) at least two of the combined drugs are effective and the virus does not become resistant to them; and, (3) the combination of ARVs maintains the HIV viral load at a level below the limit of detection. As the toxicity and side-effects of AIDS drugs are significant and the rate of mutation of the virus is high, no definitive link has been established between the quality of specific ARVs and drug resistance.38 Drug resistance cannot be taken lightly, as drug-resistant strains of HIV are transmitted globally. Thus, the difficulties in producing second-line ARVs to ameliorate treatment failure with the initial regimens, lead to global consequences, including economic ones. Clinical studies are always in progress and the International AIDS Society–USA (IAS–USA) Drug Resistance Mutations Group regularly reviews new data on HIV drug resistance and updates and publishes a list of mutations associated with antiretroviral drug resistance.39 A recent study undertaken by Hirsch et al includes drug resistance examinations of those new drugs using a new mechanism, such as maraviroc. The results of this study are included in the 2008 Recommendations of an International AIDS Society–USA Panel.40

Currently, in the US, there are 23 ARVs available (seven NRTIs, four NNRTIs, nine PIs, two entry inhibitors, and one integrase inhibitor). Of these, two new PIs, tipranavir, manufacture by Boehringer Ingelheim (brand name Aptivas) and darunavir, manufactured by Tibotec (brand name Prezista), were developed to treat viruses resistant to available PIs and one NNRTI, etravirine manufactured by Tibotec (brand name Intelence), was developed for viruses resistant to available NNRTIs. As mentioned previously, raltegravir, enfuvirtide and maraviroc were developed to work during various steps of the viral life cycle so that they could still be effective if the previous treatment failed. For example, as long as the virus uses the CCR5 receptor alone, maraviroc can be administered. Recently, darunavir and raltegravir have been approved even for treatment-naïve patients by the FDA. Maraviroc was also supported as an initial treatment ARV, given accelerated approval, and subsequently approved on 20 November 2009. These new ARVs could be very difficult to obtain in resource-limited countries.

The 2010 revised WHO Guidelines41 address primarily the problems of developing (ie, resource-limited) countries. They recommend that national programmes should develop policies for third-line therapy that take into account the conditions for funding, sustainability and the provision of equitable access to HAART (conditional recommendation, low quality of evidence)42. The WHO Guidelines differ from the Guidelines of the Department of Health and Human Services (DHHS)43 and of the International AIDS Society-USA (IAS-USA) in several respects. One of these differences is that the WHO Guidelines recommend darunavir as a third-line HAART medicine when first- or second-line ARV treatment has failed. The WHO Guidelines include raltegravir (integrase inhibitor) and etravirine (a new type of NNRTI)44 among a third-line therapy. The DHHS Guidelines consider darunavir and raltegravir as first-line therapy ARVs (see chapter 11).

Recently, there seems to have been a general decrease in the marketing rate of new AIDS drugs, which has prompted institutions such as the National Institutes of Health (NIH), the largest funder of HIV/AIDS drug development in the world, to adopt incentive policies. In 1997, there were 125 AIDS drugs at a developmental stage, but by 2001–02 this number was said to have dropped to approximately 80. GSK, Roche and others did not enter the new AIDS drug market, and many biotech companies licensed out their inventions. For example, GSK halted clinical trials of its CCR5 anti-HIV drugs because of issues such as side-effects on the liver and increased risk of malignancies. New players, like Panacos, Schering Plough and Pfizer have entered the field.45

There have been no new Big Pharma entrants. This could lead to clinical trials problems if and when a third generation of HIV/AIDS drugs is needed. The burden of future uncertainties seems to have prevented a significant increase in efforts against HIV/AIDS, compared with other illnesses such as diabetes and cardiovascular diseases.46

However, the portfolio of available AIDS drugs is not so unhealthy as that of drugs in development. Table 8.1 shows a comparison of HIV/AIDS drugs in the pipeline in 2009 with drugs for other diseases.

Table 8.1: Drugs in development, HIV/AIDS compared with other diseases


Drugs in Development*




109 (of which approximately 20 are vaccines)

Heart Disease/Stroke


Infectious Diseases


Mental Illness


Neurological Disorders



*Either in clinical trials or under FDA review.
Some medicines are listed in more than one category.

Source: ‘Drugs in Development’ (, Chain Drug Review, Dec 17, 2008 (


A Access to ARVs in Developing Countries

Thus, various ARVs have been marketed since 1987 offering different ways to administration, depending on patients’ infection situations. At the inception of ARV marketing, approximate market sizes were known only for the US and Europe. The price for ARVs in the US is extremely high, currently $10,000 to $15,000 per patient per year. This is because these ARVs are new and still patent protected; their market volume is relatively small; and some patients have relatively high incomes and insurance.

Around 1990, the overall pharmaceutical market in developing countries comprised less than 13 per cent of the world market.47 Of the total, Africa’s share was 1.1 per cent, and South Africa’s was approximately 1 per cent.48 Since that time, the emerging pharmaceutical markets such as China, Russia, Brazil, Turkey, the Republic of Korea, Mexico and India have expanded considerably and will continue to do so in the future.49 Today, the overall drug market of developing countries is estimated to be approximately 19 per cent of the world market. However, the overall South African pharmaceutical market has shrunk, and currently makes up only 0.35 per cent of the world market.

Although South Africa is a developing country, it has a high income class, a clinical trial system and a drug manufacturing infrastructure. When the wealthy class in a poor country forms the ‘market’ for a drug, it is difficult for a company to determine what its patent and drug pricing strategy should be in that country. Research-based pharmaceutical companies at this time are pursuing a traditional pricing policy often called ‘cherry picking’, targeting the wealthy class exclusively, by setting drug prices at the same levels as in developed countries.

The problem of purchasing power gaps in a country is usually resolved through policies taken by the government of that country, or international procurement systems through international and national organisations, but drug companies could also practise what is usually called differential pricing50 which could be efficient for the companies themselves. However, concerning the initial pricing of AIDS drugs, the originator companies apparently followed traditional ‘global’ pricing policies for ARVs and paid little attention to patient access and affordability problems.

Higher than competitive prices (on the concept of ‘competitive price’ see Chapter 1) for patented drugs are often justified by the patent-holders’ need to recover the cost of R&D, including clinical studies to ensure the safety and efficacy of the medicines, which is said generally to be two-thirds of the entire cost of the drug R&D, starting from basic science (see chapters 3 and 12). Innovative medicines could also lead to savings in healthcare costs, making new treatments possible and probably providing alternatives to non-drug inputs such as invasive operations,51 or reducing the necessary recovery time. However, the strategy of tailoring patents and prices to the upper class has had a disastrous consequence in the AIDS pandemic situation. The fact that ARV drug prices were affordable only for sufficiently insured patients in developed countries and the wealthy classes in developing countries was bound to open political discussions among those who cared, ie, patients and civil society groups. Markets where there were no patents on ARVs soon began to get supplies from less expensive Indian producers.

High prices, together with the underdeveloped state of health care systems in many developing countries and general lack of financial resources have made it difficult for most patients to get access even to old, unpatented drugs. Annual per capita public expenditures for pharmaceuticals are low in most developing countries, and the high potential in this vast public sector market is yet to be realised. According to a 1986 World Bank report,52 annual per-person outlays for pharmaceuticals were of the order of US$0.56 in low-income economies, US$1.40 in lower middle-income economies and US$5.60 in upper middle income economies. For nine countries for which data was readily available, the Bank found that the private sector’s share in national pharmaceuticals expenditures was at least one half (in Zimbabwe for examples), more commonly two-thirds, and in select countries more than 90 per cent (Pakistan and Thailand).53 More recent figures from the WHO suggest similarly that out-of-pocket payments for pharmaceuticals in developing countries are extremely high.54 The average percentage of expenditure on drugs, as a percentage of total health expenditure, is relatively low and stable in developed countries (7–20 per cent in 2006).55 In developing countries, however, it is 24–66 per cent on average.56 It remains unclear whether this is due to inadequate healthcare services and infrastructure, or whether the services in these countries are inexpensive.

B Compulsory Licences and Local Production

i International Solidarity for Affordability of AIDS Drugs

Among the civil society groups which organised campaigns for access to medication, there are organisations such as Médicins sans Fronti res (MSF) that are devoted to extending medical and nursing care to developing countries in a state of emergency.57 There are also organisations working towards development and social justice, such as Oxfam, Consumer International and Third World Network. In the US, CPTech (today named Knowledge Ecology International), part of a consumer organisation founded by Ralph Nader, began a critical information campaign on intellectual property issues. CPTech cooperated closely with WF Haddad58 who is known in particular for his international efforts to promote generic drugs. Together with the Indian National Working Group on Patents, which was made up of members of the Indian government and civil society groups, CPTech also led an international movement questioning the public health role of the TRIPS Agreement in favouring US multinationals. MSF and Health Action International (HAI) later joined this movement and together they developed the ‘Access to Medicines Campaign.’ This international movement received wide public support, including that of the WHO and other UN organisations such as the United Nations Development Programme (UNDP) and the World Bank.

The following constitutional challenge in South Africa by 39 research-based pharmaceutical companies was a trigger. It led to the subsequent movement in various parts of the world, ultimately leading the way to the Doha Declaration on Public Health and the TRIPS Agreement.59

In February 1998, 39 Members of the Pharmaceutical Manufacturers’ Association of South Africa (PMA) filed a lawsuit arguing that the amendment in December 1997 made to the Medicines and Related Substances Control Amendment Act 101 of 1965 (Medicines Act)60 infringed the Constitution of South Africa.61 By the amendment, section 15C entitled ‘measures to ensure supply of more affordable medicines in certain circumstances so as to protect the health of the public’ was inserted in the Medicines Act.62 The main argument by PMA companies was that section 15C was unconstitutional because it gave broad discretionary power to the Minister of Health without specifying under what conditions (for what diseases, for example) this power could be exercised, and without giving right holders the opportunity of prior consultation (as Article 31(b) of the TRIPS Agreement provides).63

That these pharmaceutical companies responded with a lawsuit on such a grave issue without even proposing alternative solutions to the urgent public epidemic problem shocked the conscience of the international community.64 Thousands of protestors marched on the Pretoria High Court in support for the South African Government. MSF alone obtained 250,000 signatures from all over the world. Civil society groups, not only from South Africa, such as Treatment Action Campaign, but from the entire world protested against the PMA companies. In their campaigns, they quoted President Nelson Mandela, who said that: ‘the pharmaceuticals are exploiting the situation that exists in countries like South Africa – in the developing world – because they charge exorbitant prices which are beyond the capacity of the ordinary HIV/AIDS person. That is completely wrong and must be condemned’.65

Paralleling this lawsuit, in 1996, the United States Trade Representative (USTR) placed South Africa on its ‘watch list’ of countries, and initiated negotiations to bring it into line with Article 31 of the TRIPS Agreement. During the Uruguay Round, the US insisted that disputes relating to the TRIPS Agreement be resolved through the WTO dispute settlement procedures. The case of the South African Medicines Act, for them, was a test case on how TRIPS could be used. This approach also was criticised heavily by civil society groups. Following the meeting between the next South African President Mbeki and US Vice-President Gore in September 1999, South Africa was removed from this list. In May 2001, President Clinton recommended that the USTR take tolerant measures towards the statutory amendments made by the South African government.

The first ARVs were major innovations (new use of a known compound originally for therapeutic use for cancer) and priced accordingly for rich, industrialised markets. But even in the US in the 1980s, their prices were too high for a large number of uninsured and under-insured patients. In the series of international events that followed in South Africa and Thailand that attracted world attention, the original concern was not so much the practice of patent protection but the affordability of AIDS drugs and the allegation of a decisive link between IPR and denial of access.

As we will see below, for the vast majority of medicines recognised as essential medicines by the WHO, patent problems were not relevant, since very few such medicines remain under patent. The chronic problem in developing countries has been that medicines needed are not available for various reasons (such as the mismatch between prescription and available medicines).66 The fact that even generics are unaffordable in many of the least developed countries where there is no product patent protection indicates that problems of access extend well beyond the issue of patent protection.

It is not in the least developed countries but rather in those developing countries with wealthy classes that research-based pharmaceutical companies tend to file for patents, and it is in these countries with their technical capacity for copying and their ability to undertake R&D, that conflicts over IPRs occur. It is also in the emerging economies that there is continuing extreme poverty in large segments of their populations, together with wealthy classes. In these developing countries with relatively developed technological skills, the idea of domestic production is often supported for the moral and political reason of assuring self-reliance. It is also widely believed in these countries that domestic production would reduce drug prices. Since the 1970s, many countries with certain technological skills have attempted to nurture their own domestic pharmaceutical industries (see chapter 9). Intellectual property rights in this situation can be seen as the sole obstacle to the local production of medicines. Regulations concerning scientific and clinical research (biological and genetic resources), as well as requirements concerning safety, efficacy and quality of medicines, are often unclear in these countries, and also become sources of political conflict. As the discussions on the affordability of medicines in these countries have intensified, the idea of dynamic welfare through innovation has received less attention than arguments that patents only hinder access to medicines.

C Important Roles Played by Indian Generic Producers

The originator companies in the early 1990s, by ignoring patient access and affordability problems, opened the political field to civil society groups and Indian generic producers, who soon found commercial markets in non-patented countries.

The chairman and managing director of the Indian generic company Cipla, YK Hamied, took the lead in providing inexpensive drugs to African countries67 and helped establish the credibility of the civil society movements and solidarity between the civil society groups and Indian producers. At that time, there was no protection for product patents in India, so Cipla was able to begin producing ARVs which had been patented in the US, Europe, and South Africa. He exported combination ARVs, attracting world-wide attention, including media news reports on the BBC and in the New York Times.68 Cipla and MSF claimed that patents were preventing AIDS drugs from being sold at affordable prices to those who needed them, and therefore requested that the South African Government issue compulsory licences for all patents on AIDS drugs. Cipla increased its production capacity by exporting ARVs to Africa and subsequently established its reputation by passing quality tests conducted by the US FDA and international organisations such as the WHO.

On 10 March 2001, the New York Times published an article about the remarkable changes that had taken place for AIDS patients in Africa.69 According to this article, these occurred because Cipla had asked the South African Government for permission to sell inexpensive knock-off versions of eight of the 15 ARVs that, in varying combinations, are used in the AIDS cocktails for $600 per year per patient – a small fraction of the $10,000 to $15,000 that Americans pay. The pharmaceutical giant Merck offered the ARV sales at cost ($600 per patient per year for the protease inhibitor Crixivan, and $500 per patient per year for another antiretroviral, Sustiva, marketed overseas as Stocrin).

In this humanitarian campaign, a confluence of views emerged among civil society groups, the Indian generics community and academics in the US who criticised the Bayh-Dole Act (chapter 3 p 97) and patenting or licence policies of the NIH. Discussions in the US on the ‘public’ nature of medicinal patents were adapted to conditions in developing countries and came to contain powerful arguments against multinational companies’ pharmaceutical patents and the TRIPS Agreement in these countries.

Chairman Hamied of Cipla argued that ‘large pharmaceutical companies’ did not really own the patents.70 He gave the example of Brystol Myers Squibb (BMS), which manufactures stavudine. Hamied said:

the original inventor is Yale University, and the patent is held by the US government. BMS pays the US government for Yale University royalties. AZT is not a Glaxo product, but was developed by the National Institute of Health. I am simply asking these companies to give me a licence, in the same way they have one from the US government.

Health policy-oriented civil society groups protested against the patent and licence policies of the NIH and from 2000 to 2001 demonstrated against the high price of BMS’s stavudine (d4T). These groups also demanded intervention by the Federal Trade Commission (FTC), alleging patent abuse by drug companies. MSF, HAI and CPTech Health Gap complained that the high price of paclitaxel (Taxol)71 and fluconazole (Diflucan)72 violated section 5 of the FTC Act.

Later, in 2006, CPTech complained that Gilead (a US bioventure company) licensed tenofovir and emtrisitavine patents in India, despite the fact that there were no patents established in India. CPTech complained to the FTC that Gilead was partitioning world markets through their global patent strategy.73 Gilead licenses several Indian manufacturers to produce and sell tenofovir.74

D International Organisations

Not only research-based pharmaceutical companies, but international organisations and governments of developed countries as well were slow to respond to the urgent pharmaceutical needs arising from the HIV/AIDS pandemic.

The WHO is one of the specialised agencies of the UN and was established on 7 April 1948. The WHO was originally created to respond to problems relating to epidemic outbreaks in different regions, but its expectations are high, as the Preamble of the WHO Constitution states, inter alia, that ‘health is a state of complete physical, mental and social well-being, and not merely the absence of disease of infirmity’. Its objective as stated in Article 1 is: ‘the attainment by all peoples of the highest possible level of health’. Article 2 of the Constitution delineates the WHO’s broad range of activities, such as: ‘(a) to act as the directing and co-ordinating authority on international health work; . . . and (u) to develop, establish and promote international standards with respect to food, biological, pharmaceutical and similar products’. Therefore, the task of the WHO is not only to combat diseases, especially key infectious diseases, but also to promote the health of people in a broad sense.

In 1977, the WHO Health Assembly adopted Resolution WHA 28.66 which laid the foundation for the WHO Essential Medicines policy. Since then the WHO has been investigating social and economic requirements for treatments75 and has developed a list of approximately 300 essential drugs, known as the List of Essential Medicines, which is revised roughly once every two to three years. Each WHO member country can adopt its own list, modelled on the WHO’s list.

In combating the AIDS epidemic, however, the UN itself, rather than the WHO, took the initiative76