Inside Views
International Policy Network: Fake Scare About Fake Drugs
Published on 15 December 2009 @ 12:56 pm
Disclaimer: the views expressed in this column are solely those of the authors and are not associated with Intellectual Property Watch. IP-Watch expressly disclaims and refuses any responsibility or liability for the content, style or form of any posts made to this forum, which remain solely the responsibility of their authors.
Intellectual Property Watch
By Philip Stevens and Julian Harris
Recent customs seizures by some European Union members of Indian-made generic drugs en route to Latin America have caused uproar amongst development NGOs like Oxfam. They claim the EU is using the problem of counterfeit drugs as a pretext to protect the intellectual property of its pharmaceutical industry over the interests of patients in poor countries who need cheap copies.
These claims are not only wide of the mark but dangerous. The activists’ campaign has been so successful that the Indian government has threatened a formal dispute against the EU at the World Trade Organization, claiming such seizures violate the flexibilities written into its Trade-Related Aspects of Intellectual Property (TRIPS) agreement. Such a dispute could derail delicate free trade agreement negotiations between the EU and India, potentially costing the Indian economy US$17bn.1
This issue has been blown out of all proportion. In their publicity, Oxfam and Health Action International cite 19 inappropriate seizures by Germany and the Netherlands on patent grounds since late 2008. Most of these were subsequently released. But according to EU figures, there were 3,207 seizures in 2008, 93 percent of which were concerned not with patent infringement but with suspected trademark infringement – meaning counterfeits.
Patent-related seizures are therefore a tiny minority, and certainly not the Armageddon for African countries claimed by the activists.
Meanwhile, in the final months of 2008, EU customs seized 34 million fake pills, including 1.6m fake painkillers and 600,000 fake anti-malarials in one haul at Brussels airport alone.
There are very good reasons for seizing fakes that break a trademark. Trademarks tell consumers that what they are about to buy is the real thing. Companies go to a lot of trouble building up the reputation of their brand, which can only be achieved by manufacturing products of a consistently high quality.
When that brand is subverted by trademark infringement, patients cannot know the provenance or the quality of the drug. Such fakes often contain actively harmful substances such as anti-freeze or too little active ingredient. Both are deadly to sick people. For malaria and HIV, counterfeits can hasten drug resistance and disease mutation, making whole classes of therapy useless.
Fake drugs are a rapidly growing menace in low-income countries. We estimate in our study “Keeping It Real” that over 700,000 people avoidably die every year due to fake malaria and TB drugs. Many fakes originate from India: field research by NGO Africa Fighting Malaria in 2008 revealed 35 percent of drugs randomly bought in pharmacies in six African cities to be substandard, with many apparently manufactured in India. The reputation of Indian generics has sunk so low that Nigeria, Uganda and Libya have blacklisted certain companies.
In this context, EU customs authorities are performing a vital public service to developing countries by checking transiting consignments of Indian – and indeed Chinese – generic drugs for trademark infringements.
Such quality control is good for Indian pharmaceutical companies, too. The Indian pharmaceutical industry has long been known as the “medicine chest of Africa” and almost half its revenue now comes from supplying good quality generics to more lucrative markets in North America and Europe.
When unscrupulous counterfeiters exploit those trusted trademarks, it undermines the reputation of India’s entire pharmaceutical sector.
Even anti-intellectual property fundamentalists such as the EU’s Pirate Party agree that trademarks are vital for guaranteeing the quality of drugs. As MEP Christian Engström stated on his blog last week: “The primary function of trademarks is to act as consumer protection. The Pirate Party has no objections in principle to combating counterfeit goods or upholding the existing trademark laws.”
It is unclear why activists are seeking to turn a legitimate health issue into an international trade spat over patents. The most obvious explanation is that they are hoping to derail the forthcoming India-EU free-trade agreement, to which they are publicly hostile. For the Indian government, it presents a good opportunity to have intellectual property requirements removed from the deal, so that certain elements of its pharmaceutical industry can continue to infringe trademarks.
Either way, it would be tragic and perverse if a trade agreement was stifled by false allegations of stifling Indian exports. Emerging economies and developing nations need the benefits of free trade in genuine products – not counterfeits.
Philip Stevens and Julian Harris are analysts at International Policy Network, a London-based think-tank.
- Economic Impact of a Potential Free Trade Agreement (FTA) Between the European Union and India, Cepii – Cirem, Yvan Decreux and Cristina Mitaritonna, 2007, (p.17), available here [pdf] [^]
Categories: Inside Views, English, European Policy, Patent Policy, Public Health, WTO/TRIPS
15 December 2009 at 2:27 pm
WHAT A PITY AND SHAME THAT EUROPE CHAMPION OF HUMAN RIGHTS IS DEFENDING SEIZURE OF GENERIC MEDICINE IN TRANSIT.IF A DRUG IS FAKE THE COMPANY FACES CONSEQUENCE WHEREVER IN THE WORLD IT IS SOLD.THE EC-CUSTOMS CANNOT ACT AS UNIVERSAL POLICEMAN OF WORLD AND PROMOTE THEIR COMPANIES MARKET IN THE GUISE TRADEMARK VIOLATION ETC PARTICULARLY WHEN THE GOODS ARE NOT MEANT FOR ITS CITIZENS.LET EC–CITIZENS EAT EXPENSIVE MEDICINES ,WHY FORCE IT ON OTHERS THROUGH SUCH MEANS.DEVELOPING COUNTRIES CANNOT AFFORD TO BUY COSTLY MEDICINES AND SO GENERIC MEDICINES IS A NEED AND REALITY.RIGHT TO LIFE GUARANTEED IN CONSTITUTION OF MANY COUNTRIES INCLUDES RIGHT TO GOOD HEALTH WITH CHEAP MEDICINES AND SO GENERIC MEDICINES ARE NECESSARY.IT IS IMPORTANT AND NECESSARY FOR INDIA AND OTHER DEVELOPING COUNTRIES TO FILE COMPLAINT IN WTO FOR CONSULTATION AND PANEL LATER TO PUT AN END TO UNIVERSAL POLICING BY EC-CUSTOMS AND PROMOTE GOOD HEALTH WITH CHEAP MEDICINES.FURTHER IN NOKIAS CASE UK CUSTOMS DID NOT INTERVENE IN COUNTERFEIT GOODS AS IT WAS MEANT FOR TRANSIT AND UK COURTS DID NOT INTERVENE.WHY DOUBLE STANDARDS AMONG EC–COUNTRIES.
15 December 2009 at 2:55 pm
Funny the IPN does not issue a statement about Vioxx – a brand name quality drug that passed regulatory approval but with doctored data. If they were really concerned about both access and the patent system they would say something about this.
Also their argument is purile as the EC directive that allows seizures has no controls to ensure that rights holders do not abuse the system. It takes special idiots to craft such legislation – that can be abused and has been abused. Let us forget these libertarians essential junking of due process rights – or perhaps not.
These so called expert writers at a think tank do not even discuss the legal rights under GATT that may be violated nor that there is no universally accepted definition of counterfeit (do they want us to forget that IPRs are essentially territorial?). Yet wax lyricall as if the definition exists.
This is definitely not an article of the rational standard that we expect from IPW.
15 December 2009 at 7:30 pm
I’d really like to see IP-Watch invite Oxfam (or other NGOs active in this issue) for a follow-up article.
I’m not a specialist in this matter, but I’m not sure how much I can trust counterfeits data from EU (a major ACTA proponent) or even from IPN, a libertarian “corporate-funded campaigning group” (in the words of George Monbiot — http://www.guardian.co.uk/commentisfree/2006/sep/27/post437); a group that has previously called global warming a “myth”, while being funded by Exxon (http://www.theyworkforyou.com/debates/?id=2005-02-08a.1353.1#g1355.1).
15 December 2009 at 11:40 pm
A few comments on this article:
“Such a dispute could derail delicate free trade agreement negotiations between the EU and India, potentially costing the Indian economy US$17bn.”
Your source indicates that the $17 billion figure is for all areas, not only those related to intellectual property. In which case, any disagreement between the parties could potentially derail negotiations and cost the Indian economy $17 billion. If the IP provisions of the deal as it stands are a sine qua non for the EU, who is really responsible for derailing it?
“Most of these were subsequently released. But according to EU figures, there were 3,207 seizures in 2008, 93 percent of which were concerned not with patent infringement but with suspected trademark infringement – meaning counterfeits.”
I did not know this, and you deserve credit for pointing it out. On the other hand, that should read “suspected counterfeits.” Furthermore, if the intent is to delay and raise the cost of shipments of generics, it matters little whether the mechanism is allegations of patent infringement or allegations of trademark infringement. From what I understand, many activists and NGOs are upset that the mere allegation of IP infringement is enough to halt a shipment.
“There are very good reasons for seizing fakes that break a trademark. Trademarks tell consumers that what they are about to buy is the real thing… When that brand is subverted by trademark infringement, patients cannot know the provenance or the quality of the drug. Such fakes often contain actively harmful substances such as anti-freeze or too little active ingredient.”
It is important to draw a clear distinction between trademark infringement and substandard or low quality drugs. Words such as “fake” and “counterfeit” do not distinguish between drugs that may be high quality, but technically infringe trademarks, and those drugs that both infringe trademarks and are of substandard quality.
“For the Indian government, it presents a good opportunity to have intellectual property requirements removed from the deal, so that certain elements of its pharmaceutical industry can continue to infringe trademarks.”
I am not familiar with the details of the EU-India FTA, but in general trademark infringement should already be adequately covered under TRIPS. I also doubt the Indian government and generics industry are more interested in loosening trademark law than patent law.
16 December 2009 at 4:15 pm
The IPN got it wrong on the motives of the activists. The reality is much less sophisticated. The NGOs concerned need visibility and recognition. A spat over patents has all the ingredients for successful communication: the white knight NGO fighting villain customs administrations from wealthy EC member States perfidiously supporting ugly, greedy Big Pharma to prevent the noble Indian generic industry from saving poor sick people from developing countries. Another reality is that the people who run the campaigns need a job, seek recognition, etc.
The reality is also much more cynical. Communication for self-interest on a few patent-based border measures (most of which did not lead to seizure) pre-empts the health and indeed the life of millions who are threatened by counterfeit, fake, substandard, spurious, bogus (cross out the terms you don’t like) drugs.
But, maybe, I have become too cynical.
16 December 2009 at 4:53 pm
To Miguel Said Vieira: Intellectual Property Watch welcomes Oxfam or another NGO to contribute a follow-up to this article if they wish. Thank you for the suggestion. William New, Editor
21 December 2009 at 3:36 am
Your arguments are biased and fail to pass the rationality test. Nobody has been in favour of letting the trademark counterfeit and substandard drugs to reach the patients. The concern in the context of seizures in EU was that “legitimate generic drugs” are being targeted. The drugs for which no patent rights exists in India or in the importing country is a “legitimate drug” for use in these countries and it is not counterfeit. Finally, the counterfeit statistics released by the EU and US needs to be verified for its methodology. The study of the European Parliament (Dordi C 2008, Impact of Counterfeiting on International Trade: Comments on Anti-Counterfeiting trade Agreement, Policy Department External Policies, Directorate General External Policies of the Union, European Parliament) has questioned the methodology of arriving at these statistics.
24 December 2009 at 3:33 am
The authors have failed to understand the difference between fake drugs and generic drugs.India is never for promoting fake drugs. Confiscating or blocking temporarily legitimate drugs in transit just because they are not produced by particular companies smacks of highhandedness and defeats the objective of TRIPS which is to promote global trade. A point which the authors have again failed to appreciate is that companies in the SME sector cannot afford the cost of delay (cost both in arguing the case and cost on demurrages) and had to abandon the consignments. The action by the authorities thus becomes even an anti competitive measure. It is also an anti public health measure and needs to be condemned in no uncertain terms.