Prescription panic: How the anthrax scare challenged drug patents.

• Author: Godwin, Mike

BEFORE SEPTEMBER 11, U.S. policy toward pharmaceutical patents was clear: The interests of the patent holder came first. However, the anthrax scare that surfaced in October has managed to shake that policy to its roots. By the time the shaking was done and the original scare had subsided, Bayer Corporation, the Pittsburgh-based American subsidiary of the German pharmaceutical giant Bayer AG, had managed to hold onto its patent monopoly over the manufacture and sale of the powerful antibiotic ciprofloxacin, now familiar to Americans by its brand name, Cipro.

How that happened provides a lesson in how both public health issues and certain types of intellectual property rights have been affected by the terrorist attacks on the World Trade Center and the Pentagon, as well as by the mail-based anthrax attacks. Perhaps more important, in a world in which threats of bioterror are only likely to increase, the tug of war between Bayer and the government over Cipro hints at how even governments that nominally give patent protection a high priority are likely to compromise their principles in the face of a perceived public health threat--at least when that threat faces their own citizens.

Increasingly over the last two decades, American pharmaceutical policy has favored the interests of the patent holder. The U.S. has labored to discourage foreign governments from breaking pharmaceutical patents and buying unauthorized generics from India or China--two nations widely recognized as the major exporters of unauthorized generic drugs. When necessary, the U.S. has used trade barriers and various other types of political pressure to keep non-compliant governments in line.

"For 20 years, it's been the policy of the U.S. government to tighten the screws on foreign governments over intellectual property rights, particularly with medicine," says James Love, director of the Consumer Project on Technology, a Washington, D.C.-based public interest group critical of the pharmaceutical industry.

This approach is reflected in Article 31 of the WorldTrade Organization's Trade Related Agreement on Intellectual Property Rights (TRIPS). That agreement requires governments to honor patents. If a government needs or wants to exploit a patented invention, it must ask the patent holder for authorization and offer "reasonable compensation" for the privilege.

Love, whose group promotes global access to "essential" medicines, says the hard-line American policy "started in the Reagan era," when the push toward globalized trade began. To critics like Love this policy seems harsh, but its logic is clear: Without a worldwide framework in which each nation honors and enforces other nations' patent rights, it's possible for nations not bound by patent agreements to flood the world market with cheap generic drugs. Drug companies wouldn't be able to price their products high enough to guarantee a return on their research investment.

Furthermore, the argument goes, if you undermine the patent incentive system, you won't get the new drugs that are needed to address new health crises. "You wouldn't have Cipro if there wasn't a patent," says Mark Grayson, senior director of public affairs for the Pharmaceutical Research and Manufacturers of America (PhRMA), the drug industry's association in Washington. (See "Goddamn the Pusher Man," April 2001.)

Historically, PhRMA'S view has been more or less shared by the U.S. government. So in the late 1990s, when Brazil faced a problem in providing government-subsidized access to affordable AIDS drugs and the Brazilian government authorized the domestic production of generic knock-offs of American drugs, U.S. Trade Representative Robert Zoellick announced that "the U.S. won't hesitate in using its total strength and international laws to modify the situation."

Although the U.S. approves of anti-AIDS generic-drug programs in impoverished countries such as Senegal and Uganda, it stops short of approving compulsory licensing or patent-breaking in so-called Middle Income Countries...