Some of the pharmaceutical companies producing Covid-19 vaccinations would be forgiven for being unenthusiastic about South Africa’s whining about vaccine availability.
The whole sorry vaccine saga has shown us up against poorer, less sophisticated countries, which have been way ahead in purchasing vaccines or the rights to them.
South Africa has the reputation of being at the forefront globally of interfering with the property rights of the pharmaceutical industry ever since the African National Congress (ANC) came into power.
Some of the public, health professionals, the pharmaceutical industry, civil society, government and political actors in South Africa have been engaged for some time in battles around patent law, on the one hand, and access to medicine, on the other.
It hasn’t been pretty, as the government and health non-governmental organisations (NGOs) have waged a ‘moral’ battle against the industry, presenting it as rapacious, profiteering and uncaringly capitalist.
The patenting of medicines is covered by the Patents Act, 1978 (Act). Under its terms, patents are granted by the Companies and Intellectual Property Commission (previously the Patents Office) and remain in force for 20 years from the date an application is lodged.
The patent recognition system is designed to promote innovation by giving inventors who are granted patent rights a 20-year period to make and sell their products, without competitors being allowed to copy them. Once a patent has expired, competitors are entitled to use the innovation, making its benefits more broadly available.
In the health sector, most patent applications are made by foreign pharmaceutical companies or their South African subsidiaries.
In 1998, the Pharmaceutical Manufacturers Association and 39 international pharmaceutical companies brought an application to court to halt the implementation of part of the Medicines and Related Substances Control Amendment Act, 1965. The 1997 amendment was intended to ‘ensure the supply of more affordable medicines’ through providing for parallel importation, generic substitution and setting up a pricing committee and related measures.
This amendment would have seen the diminution of the companies’ patent rights.
In the early 2000s, the AIDS Law Project, the Treatment Action Campaign (now Section27) and others criticised the patent system for keeping the prices of anti-retroviral drugs (ARVs) higher than they would be if more generic competition was permitted at an earlier stage.
They also urged that the Act be amended to take full advantage of the flexibilities included in the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), which was adopted in 1994 by the World Trade Organisation and reinforced by the Doha Declaration.
TRIPS is binding on all WTO member states, including South Africa. It lays down minimum standards for the regulation of patents.
TRIPS also authorises member states to “provide limited exceptions to the exclusive rights conferred by a patent”, provided these do not “unreasonably conflict” with normal patent exploitation or “unreasonably prejudice the legitimate interests” of the patent holder. However, in interpreting these exceptions, or “flexibilities” as they are known, “the legitimate interests of third parties” must also be taken into account.
Many developing countries criticised TRIPS, saying these rules bar them from gaining early access to patented medicines at more affordable prices.
In 2001 this pressure led to the adoption of the Doha Declaration (Doha) which was endorsed by a conference of ministers from WTO member states. Doha stresses the importance of “implementing and interpreting the TRIPS Agreement in a way that supports public health – by promoting both access to existing medicines and the creation of new medicines”. Member states are authorised to use the TRIPS flexibilities in taking measures to “protect public health” as defined in this way.
At the beginning of 2000, former president Thabo Mbeki said that he believed HIV was not the exclusive cause of Aids. His health minister at the time was Manto Tshabalala-Msimang. No ANC member of parliament opposed this bizarre, unscientific view. Accordingly, an estimated 330,000 people died prematurely because of Mbeki’s ‘belief’.
On Aids Day, 1 December 2000, Pfizer US and the government signed an agreement for the free provision of anti-fungal medication Diflucan, worth $50 million. The drug is used against crypto-coccal meningitis and oesophageal candidiasis, infections resulting from Aids. The deal came about after pressure from Aids campaigners.
However, six months before agreement was reached the government and NGOs criticised the offer: “It looked at first to be a wonderful present,” says Patricia Lambert, legal counsel to Tshabalala-Msimang. “But we are learning here that highly publicized drug donations aren’t always like birthday presents, not at all.”
Lambert said that although South Africa “greatly appreciates” the donation and is intensely negotiating terms of the gift, the government may decide to reject Pfizer’s offer. The reason? Pfizer was “only” promising to provide the costly medicine for two years. Pfizer was also placing conditions on who could use the drug, where patients must be treated, how they are diagnosed, how the drug would be distributed and how its use would be monitored.
OutRight Action International described the offer: “US-based pharmaceutical giant Pfizer has promised free HIV drugs to South Africa, but under conditions so limiting as to make a mockery of the “donation.” IGLHRC joins South African activists in urging immediate protests against Pfizer. ….express outrage at [Pfizer’s] denial of the essential human right to health. Demand that they offer long-term and life-saving solutions, not short-term and self-interested “charity.”
Also in May 2000, in response to appeals from governments and public health officials, five other major pharmaceutical companies offered to slash the prices of their AIDS drugs for countries that could provide proof that the medicines would be used properly.
“There is a feeling among some here that the drug companies are acting a bit like Big Brother” said Prof. Malegapuru Makgoba, director of the Medical Research Council, the government’s medical science funding arm and current health ombudsman. “We want greater access to your drugs, but why must you dictate how we use them?”
In 2002 the TAC and other NGOs filed a complaint with the Competition Commission (Commission) against GlaxoSmithKline (Glaxo) and Boehringer-Ingelheim (Boehringer) on the grounds of unlawfully excessive prices for ARVs as prohibited by the Competition Act 89 of 1998.
The Commissioner, Menzi Simelane, decided that the companies had abused their dominance and indulged in excessive pricing, refusing a competitor access to an essential facility (the patented formulas for their ARVs) and an exclusionary act.
Although Glaxo and Boehringer contested these findings, rather than proceed to the Competition Tribunal, they settled the matter. The terms included the companies issuing licences to others to produce the drugs.
As Dr. Anthea Jeffery points out, the underlying aim was to use Simelane’s rulings to make findings of anti-competitive conduct against patent holders in extraordinarily wide-ranging circumstances.
Simelane’s interpretation of the ‘essential facilities’ doctrine contradicted relevant rulings in Europe that an overly broad approach negates patent rights and undermines innovation.
Glaxo and Boehringer had already taken account of the ‘legitimate interests of third parties’ (as TRIPS requires) by reducing their ARV prices and licensing a local generics manufacturer. Despite this, Simelane’s rulings ‘unreasonably conflicted’ with their patent rights and ‘unreasonably prejudiced’ the companies’ legitimate concerns.
Seven licenses were to be issued to generic manufacturers, which would cover “the manufacture in and importation into South Africa of the ARVs … and permit the export of any ARVs manufactured in South Africa to all sub-Saharan African countries.”
In September 2013, the Department of Trade and Industry (DTI) published the Draft National Policy on Intellectual Property. Jeffery described the draft proposal as “often vague and difficult to understand”. It had to be read with an article published in 2012 by the United Nations Development Programme (UNDP), with significant input from the AIDS Law Project.
The consequences were that it would be harder to obtain patent rights, which could deter local innovation and further reduce South Africa’s competitiveness”. As Jeffery says the proposals were to include:
- Bypassing patent rights via compulsory licensing in wide-ranging circumstances;
- Limiting the remedies available to patent holders;
- Replacing the present patents court with a new patents tribunal; and
- Allowing the State to use or take patent rights for little or no compensation.
- Making new patents harder to obtain;
- Expanding ‘compulsory licensing’ to bypass patent protections (‘Compulsory licences’ give firms the right to exploit patented products without the consent of the patent holder.)
- Allowing the exporting of products made under compulsory licence;
Many of the changes are inconsistent with binding international agreements.
In late 2013/early 2014 the Innovative Pharmaceutical Association of SA (IPASA) produced a plan to counter the DTI’s policy. At this point the health ministry and the NGO sector went on the attack.
In January 2014 the minister of health, Dr. Aaron Motsoaledi, launched an outrageous campaign of vilification against the international pharmaceutical companies active in South Africa. He accused them of “conspiring against the state, the people of South Africa and the populations of developing countries by planning what amounts to mass murder.”
“I am not using strong words; I am using appropriate words. This is genocide,” Motsoaledi told the Mail & Guardian…., in response to a plan he described as a conspiracy of “satanic magnitude” – a plan he called on all South Africans to fight “to the last drop of their blood”. He accused IPASA of “genocide” after seeing its campaign plans. “This document can sentence many South Africans to death.”
The government and the supportive NGOs received a lot of media coverage of their outrage; the industry virtually nothing.
There is currently no legislation which has deprived pharmaceutical companies of their rights. TRIPS and the Doha Agreement act as a break on government’s intentions.
The populist view is that the big pharmaceutical companies owe the world their patents as of right to save lives.
The realistic view is that if South Africa continues to lead the world in the usurpation of intellectual property, our desirability as an investment destination will diminish further than it already has.
The government and its allies forget that South Africa is a tiny portion of most pharmaceutical companies’ revenue. If South Africa remains too combative the industry will simply withdraw their products.
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