Mr. Speaker, in recent days, The New York Times and some of our colleagues have publicly encouraged and endorsed the government of Brazil to seize American pharmaceutical patents, citing an urgent need to accommodate a public health crisis…
Mr. Speaker, in recent days, The New York Times and some of our colleagues have publicly encouraged and endorsed the government of Brazil to seize American pharmaceutical patents, citing an urgent need to accommodate a public health crisis in that country.
These arguments are false. American drug companies sell life-saving antiretroviral therapies at an almost 90 percent discount in Brazil; furthermore, Brazil's rate of HIV infection is almost the same as it is in the U.S.--well below 1 percent. Brazil appears to be manufacturing reasons to support its intent to develop a generic export capacity.
The WorId Trade Organization's 1994 Agreement on Trade Related Aspects of Intellectual Property (TRIPS), in conjunction with the 2001 Doha Declaration, enables countries to temporarily suspend patents when there is a dire need and when those patents are precluding access to life-saving medicines.
In Brazil's case, there are serious concerns that it is willfully manipulating WTO rules for commercial gain. Consider the remarks by Brazil's health minister just this week in Geneva: ``Brazil once again takes a new step forward in the struggle against AIDS . . . This stage may come to represent the first step for introducing a new phase in our local [antiretroviral] production. An additional target is to support our national manufacturing industry in this respect, as we are totally committed in maintaining high quality in the medicines available in the public health services.''
The wholesale theft of American technology for another country's commercial gain was never the intent of the Doha Declaration or TRIPS. The United States should consider any and all retaliatory measures if Brazil proceeds with such blatant theft. The theft of these pharmaceutical patents will cost Americans billions of dollars and take away investment that could otherwise be spent on the development of new drugs ranging from epidemics to the common cold.
Please include the following editorials ``Richman? Poorman? Beggarman? Thief? by James Pinkerton and Brazil Mulls Drug Patent Theft as an AIDS Antidote by Anastasia O'Grady.
[From the Tech Central Station, June 29, 2005]
Richman? Poorman? Beggarman? Thief?
(By James Pinkerton)
Will the real Brazil please stand up? Is Brazil a poor
country that needs more foreign aid from the United States--
even involuntary aid? Or is it an increasingly rich and
powerful country that can seize foreign markets for itself?
Indeed, is it so powerful that that it doesn't need to play
by the rules?
One source not to look to for answers is the Brazilian
government itself, as we shall see.
To an outside observer, it's apparent that the Brazilians
clearly want to have it all three ways: being needy when it
suits them, being export-y as they are able, being greedy
when they think they can get away with it--and if that last
stance hurts the U.S. economy, too bad. It's a little
complicated, and a little bewildering. And yet Uncle Sam's
answer to the ``Brazil Bewilderment'' will help determine
America's own wealth, and health, in the 21st Century.
Two recent items show the sharp divergence in perspectives
on Brazil. The New York Times' editorial page sees Brazil as
a destitute place. Which means, of course, that Brazil is a
wonderful place--for the Times to preach some politically
correct ``compassion.'' Using somebody else's money, of
course. In a June 23 editorial, the paper sided with Brazil
in its long-running argument with American owners of
Intellectual Property (IP); in this case, the fight is with
the biotech industry.
The Times noted that ``Brazil's free universal treatment
program, an indispensable weapon against the AIDS epidemic,
locks Brazil's government into buying lifelong daily
medicines for 170,000 people, and that number is rising.''
And so, the Times continued, ``Brazil has the right to make
sure it can continue to meet this burden by getting medicines
at the cheapest possible price.'' And the cheapest possible
price can be arrived at, quite often, through simple theft:
the violation of IP property rights.
In other words, the Times is so in love with government-run
``universal'' health care that it wants the U.S.--or, more
precisely, U.S. Pharma companies--to finance such health
care in other countries. It would be one thing if the
Times simply editorialized in favor of America subsidizing
the Brazilian social insurance system. That is, the
president and the Congress could simply vote to transfer a
few billion dollars a year to Brazil. But of course, no
elected officials would ever vote for such an overt
wealth-transfer, so the Times finds it expedient to
endorse a covert wealth-transfer, in the form of IP
ripoff.
And obviously the Times couldn't be expected to worry much
about anything so bourgeois as the rights of American
companies, and their shareholders and stakeholders. As the
Times sneeringly put it, ``Rightwing groups in the United
States and pharmaceutical manufacturers are calling this
theft, and several members of Congress have asked the United
States trade representative to apply trade sanctions.'' And
yet, the Times advised, ``The American trade representative
should make a public statement that the United States will
not retaliate against Brazil for exercising its right to save
lives.''
In the paper's pro-Brazil policy, we see how p.c.
solicitude for AIDS victims joins up with an all-purpose
entitlement mentality--to create a ruinous prescription for
American well-being, as well as a dire prospect for future
medical innovation in a property-rights-wrecking environment.
But another Times newspaper has a far different take on
Brazil, a country which, after all, boasts the 9th-largest
economy in the world today. According to a June 22 article in
The Financial Times that ran the same day, under the
headline, ``Brazil is yielding farms that can feed the
world,'' Brazil is on its way to becoming ``a pivotal nation
in the future of world trade. Brazil is to agriculture
what India is to business offshoring and China to
manufacturing: a powerhouse whose size and efficiency few
competitors can match.''
As the FT details, Brazil now enjoys the largest
agricultural trade surplus in the world, and the country's
balance of trade is helped enormously by IP theft, which
often goes by the more polite name of ``compulsory
licensing.'' But by any name, it's still theft, and theft is
``zero sum.'' So if Brazil has more, the U.S. has less. From
Brazil's narrow point of view, it's easy to see the logic of
its current course. In the words of Ken Adelman, former
deputy U.S. representative to the United Nations, Brazil's
``earnest commitment to premeditated theft of American assets
should prompt the administration to stop considering Brazil a
good partner and its president a great friend until they
demonstrate a stronger commitment to the Rule of Law and free
trade.'' That was on May 9. On June 24, in an important Wall
Street Journal column entitled ``Brazil Mulls Drug Patent
Theft as an AIDS Antidote,'' Mary Anastasia O'Grady wrote,
``The possible compulsory licensing of AIDS drugs is only
part of Brazil's wider assault on intellectual property
rights. While China and India are promising to firm up
protections and sucking in capital investment, Brazil
seems bent on joining the likes of Cuba, Iran and
Venezuela.
Like IP itself, IP theft is a somewhat obscure topic, but
across the board, from movies to music to software to
pharmaceutical patents, such theft costs the United States
some 750,000 jobs and $200 billion a year annually. Which is
to say, it's a lotta money. Indeed, one might ask how The New
York Times would feel if, in some alternative universe, the
key to treating AIDS patients was discovered to be the
breaking of all the Times' copyrights and trademarks.
So which Brazil is it? Poverty-stricken victim? Hyper-
aggressive trader? Or rogue-nation with a national strategy
of IP-pirating? I posed that exact three-part question to
Roberto Abdenur, Brazil's ambassador to the U.S., at a June
24 meeting at the Council of the Americas Society in
Manhattan.
And here's what he said to me in response: ``It is
absolutely not true that Brazil would have a national
strategy [of IP theft]. Keeping a perfectly straight face, he
added, ``Of IP there is something like a revolution taking
place in Brazil; . . . we are taking very decisive actions on
piracy. Brazil is deeply committed to enforcing TRIPs [trade-
related intellectual property rights].''
Well, those were nice and reassuring words. But there was
one small problem: they weren't true. That very afternoon, on
June 24, came the news that Abdenur's bureaucratic buddies
back in Brasilia had announced that the country would impose
``compulsory licensing'' on Abbott laboratories'' anti-HIV
drug Kaletra if the company didn't surrender the license
first. Sorry, Mr. Ambassador, but your own government has
made you into a liar.
The irony is that for all Brazil's enthusiasm for IP-
mulcting, such a policy is not actually in the country's
overall long-term best interest. That was a useful
perspective supplied at the same June 24 Council of the
Americas discussion by Donna Hrinak, the former U.S.
ambassador to Brazil. She reminded the audience, which
included Abdenur, that for Brazil, ``the whole issue of IP
goes from AIDS treatment to the guy who is selling a pirated
CD to the grey market in computers.'' Which is to say,
Brazil's IP-lawlessness is endemic.
Then she added, ``I never understood Brazil's IP position.
It goes against its own interest.'' That is, Brazil would
ultimately gain more by working within the world IP system,
where rights are respected for the long-term benefit of all
property holders. Continuing, Hrinak added, ``Recife would be
like Bangalore if Brazil would look to its own interest, and
implement its own [IP] laws.'' Better to be supportive of a
thriving indigenous high-tech industry, she was saying, than
to merely be stealing technology from others.
From an American point of view, it's nice to know that some
U.S. diplomats see the importance of IP, for the well-being
of this country, and also for the well-being of the world
property-rights system--which will make all countries better
off if it's allowed to work. But so far, at least, there's
not much evidence that Brazil is looking to anybody's
ultimate well-being, not even its own. However, it does have
The New York Times in its corner. Maybe Brazilians can feast
on that.
[From the Wall Street Journal]
Brazil Mulls Drug Patent Theft as an AIDS Antidote
(By Mary Anastasia O'Grady)
When the Bush administration offered Brazil $40 million for
its anti-AIDS program earlier this year, Brasilia turned it
down on principle. The terms of the deal required the
government to condemn the sexual exploitation of women--
otherwise known as prostitution. Calling the U.S. demand
``theological, fundamentalist and Shiite,'' Brazil rejected
the offer.
Turning down a $40 million contribution seems like a luxury
that a developing country with an estimated HIV-infected
population of 600,000 couldn't afford. But as it happens,
Brazil has a back-up plan. It is moving to force foreign drug
makers to surrender their patents on anti-AIDS drugs at a
price dictated by Brasilia, a tiny fraction of the medicine's
value.
Brazil's lower house passed legislation abridging AIDS drug
patent rights earlier this month. The bill specifically names
drugs produced by Abbott Laboratories. Gilead Science and
Merck. It is not clear whether the Senate will pass the law
or Brazilian President Luiz Inacio ``Lula'' da Silva will
uphold it or exercise his veto. But steamrolling the rights
of patent holders is something that Brazil has been
threatening since 2001.
The possible compulsory licensing of AIDS drugs is only
part of Brazil's wider assault on intellectual property
rights. While China and India are promising to firm up
protections and sucking in capital investment, Brazil seems
bent on joining the likes of Cuba, Iran and Venezuela in
cutting its own throat by destroying those rights.
The effort pits the short-run benefits of grabbing at
little cost today's best medicines--claiming ``humanitarian''
motives--against the long-run damage to research and
development that weakened property rights are sure to
inflict. Such policy positions could devastate Brazil's
stated hopes of attracting a thriving biotech industry.
Brazil posits that the WTO's Trade-Related Aspects of
Intellectual Property Rights (TRIPS) allows it to go after
patents in a public health ``crisis.''
Yet more than half the drugs Brazil distributes through its
anti-HIV/AIDS program can be copied legally. As to cutting-
edge medicines that still have patent protection, Brazil
receives sharp discounts from pharmaceutical companies, which
try to recoup their research and development costs in
wealthier countries like the U.S. To be sure, Brazil is not
as rich as the U.S., but it's not among the poorest either,
as evidenced by its space program and thriving aircraft
industry.
One example of drug company generosity is the deal Merck
has given Brazil on its anti-retroviral drug Stocrin.
According to Grey Warner, senior vice president for Latin
America Human Health at the company, ``Stocrin is sold to
Brazil at the lowest price in the world outside of the least
developed countries, such as sub-Saharan Africa, where we
supply the product at no profit. In practical terms, this
equates to a price that is about 90% lower than in the U.S.,
Canada and Western Europe.'' That seems like rather generous
treatment of a large country well advanced toward
industrialization.
Meanwhile, at the strategically critical World Intellectual
Property Organization (WIPO) in Geneva, Brazil is leading the
charge to weaken intellectual property rights within the
World Trade Organization. This week, a second session on ``a
development agenda'' for the WIPO was underway. This meeting
is a follow-up to the April WIPO session in which the ``Group
of Friends of Development,'' led by Brazil, spelled out its
objection to intellectual property rights as traditionally
defined. The 14 countries in this euphemistically titled
alliance include such paragons of sound economic development
policy as Iran, Cuba, Argentina, Bolivia, Ecuador, Peru,
Venezuela and Sierra Leone.
In its April document the group stated that it wants to
examine the implications of intellectual property rights
protection, ``rather than seek to approach this highly
controversial issue as if it were governed by absolute
truths, loosely under the one dimensional perspective of the
private rights holders, ignoring the broader public
interest.''
That's clearly code language for socializing property
rights, a view that has dominated Brazilian thought over most
of the 20th century and produced the current squalor that so
many Brazilians live in. Few people want to invest in a
country where legalized theft is government policy.
Another egregious attempt to destroy intellectual property
rights is the effort by a group of developing nations--again
led by Brazil--to include a bizarre amendment to the 1992
United Nations Convention on Biodiversity, which has been
ratified by 188 countries, ostensibly to protect nations'
biological resources. The change would give nations the
ability to sue for patent rights to a successful biotechnical
innovation if they could prove that a plant molecule, animal
molecule or some ``traditional knowledge'' originating in
their country was used in the development of the product.
According to Timothy Wolfe and Ben Zycher, who studied the
law for the Pacific Research Institute, this would be
``analytically equivalent to a long-run tax on
biotechnological and pharmaceutical research and development
investment.'' Their PRI study estimates the effects of such a
tax on 27 countries including Brazil, Mexico, Peru and
Colombia. By the year 2025, the law ``would reduce the
biotechnological and pharmaceutical research and development
capital stock by about $144 billion (in year 2004 dollars),
or almost 27 percent, for the 27 nations,'' Messrs. Wolfe and
Zycher write. ``This implies a loss of 150-200 new drugs.''
As Mr. Zycher points out this is similar to price controls,
which have of course wreaked havoc in economies wherever they
have been applied. ``You can erode property rights in the
short term without much effect, but the long-run effects are
far more serious,'' he said.
Brazil's actions, ostensibly designed to help people with a
terrible disease, will retard economic development and
handicap all efforts to improve human health standards.
Ailing AIDS patients will need new pharmaceutical
developments as the virus mutates and becomes resistant to
today's wonder
drugs. But what company will volunteer to produce drugs that
politicians demand free of charge? Job-seeking Brazilians who
would benefit from foreign investment in biotech will have to
move to India. Brazil will sink ever lower into
underdevelopment. Maybe soon it will legitimately qualify for
the same charity as poverty-stricken sub-Saharan Africa.