India, Brazil Duke It Out w/EU @ WTO on Generics

♠ Posted by Emmanuel in , at 2/05/2009 07:41:00 AM
And now for a more conventional North-South trade row. Major developing countries Brazil and India were justifiably upset over a shipment of generic drugs (Losartan for treating high blood pressure) made in India bound for Brazil being intercepted in the Netherlands during transit. The WTO's TRIPS agreement concerning intellectual property rights has long been a point of contention, especially with regard to medicines. Even very ardent globalization supporters such as Jagdish Bhagwati and Martin Wolf have faulted TRIPS for being inconsiderate of the medical needs of LDCs. This seizure has once again reignited the debate. From a Livemint report from a few days back:
A ship loaded with medicine from India drops anchor at a European port from where it will sail for Brazil. European officials seize the cargo and later send it back to India. They say the drug is a generic version that violates a patent protected in Europe. A generic drug is cheaper than the patented version.

The seizure has led to a full-blown war of words in three corners of the world—and put the spotlight back on contentious issues such as intellectual property (IP) laws, access to affordable medicines and the use of non-tariff barriers against exports from developing countries...

On 15 January, Mint had reported that a [Dr. Reddy's Labs] shipment of the generic version of losartan was seized in transit in the Netherlands. This shipment, on its way to Brazil, was held by the customs authority at Rotterdam, which said it infringed the patent of the original drug—Cozaar. Losartan is not patented in India or Brazil. The patent for Cozaar in the Netherlands is held by DuPont, while US-based pharma multinational Merck and Co. holds the marketing rights.
Say what you will about generic drugs from LDCs, but the drug companies and the developed countries which host them in the US and EU have another PR blunder on their hands here:
Developing countries accused the European Union (EU) at a meeting of the World Trade Organization (WTO) on Monday of seeking to use tough intellectual property laws to seize generic drugs, putting lives at risk in emerging nations, where the cheaper medicines are often destined. At the WTO meeting, Brazil and India criticized the EU over an Indian generic drug to treat high blood pressure that was seized late last year while transiting the Netherlands for Brazil.

Brazil’s WTO ambassador Roberto Azevedo told WTO’s General Council that the case reflected a trend by industrialized countries to try and circumvent global trade rules by pushing tough intellectual property standards in other bodies, such as the World Customs Organization and the World Health Organization.

The case touches on a sensitive issue between rich and poor countries—access to affordable medicine—and has been cited by developing countries as an example of rising protectionism in the economic crisis. “We have raised the issue here with the expectation that the EC (European Commission) will urgently review the relevant regulations and the actions of the national authorities based on such regulations, and bring them in conformity with the letter and spirit of the TRIPs (trade-related intellectual property rights) agreement and the rules-based WTO system,” India’s statement to the WTO council said.

EU ambassador Eckart Guth criticized the “highly emotional debate” and warned fellow WTO members against jumping to wrong conclusions or blowing the case out of proportion. [This is the correct LDC strategy, actually, and one I would employ--depict it as greedy Western pharmaceutical giants hurting the third world poor.]
The basic defense employed by the LDCs is, quite frankly, not as sturdy as they make it sound. To make a long story short, the main operating principle is, "we haven't reached an agreement on the shipment of generic drugs still under patent to LDCs, so lay off." See this ICTSD backgrounder to be clear on this point. In principle, LDCs have up to 2016 before coming into compliance with TRIPS stipulations on pharmaceutical products. In short, these shipments may be considered WTO-legal as the calendar tells me it's 2009. Aside from being underdogs in the court of world public opinion, developed countries using such heavy-handed tactics are also suspect on the WTO front. (Bryan Mercurio at the IELP demurs, however.)

In any event, a temporary solution is clear: why use Rotterdam or other EU ports as transshipment locations for generics in the first place?