Análisis e Interpretación

In order to understand the motivation of companies such as Pfizer to aggressively pursue the strengthening of IPRs, it is worthwhile to briefly consider the value of IPRs to the major pharmaceutical industry ‐ what has come to be known as ‘Big Pharma’. Big Pharma is a loose descriptive term referring collectively, but not always specifically, to the biggest of the transnational pharmaceutical companies (Law, 2006). It is a term used by industry insiders, for instance, GlaxoSmithKline CEO, Jean‐Pierre Garnier (2008), and is common in medical journals (Ferner, 2005; Scherer, 2004). Though sometimes misconstrued as an exclusively US phenomenon, Angell (2004) noted that the biggest ten pharmaceutical companies in 2002 were: the US firms Pfizer, Merck, Johnson & Johnson, Bristol‐Myers Squibb, and Wyeth; the UK firms GlaxoSmithKline and Astra Zeneca; the Swiss firms Novartis and Roche; and the French firm Aventis. Angell (2004) also noted, however, that international companies were increasingly moving their research and development (R&D) operations to the US in order to capitalise on the “unparalleled research output of American universities and the NIH” (Angell, 2004, p. xxv). From 1988 to 2004, the size of the biggest pharmaceutical companies dramatically increased following 27 mergers and

92 acquisitions (Ornaghi, 2009). The major companies are represented in the US by the Pharmaceutical Research and Manufacturers Association of America (PhRMA), and internationally through the International Federation of Pharmaceutical Manufacturers and Associations (IFPMA).

At the turn of the millennium, Big Pharma stood at the head of one the most profitable industries in the world (Angell, 2004). In 2001, the Fortune 500 ranked the pharmaceutical industry as the leader of all industries in terms of profit as percentage of overall sales (18.5%) and profit as percentage of assets (16.3%) (Families USA, 2002). For comparison, the median profit on sales for all other industries was 3.3% (Angell, 2004), during a year that saw the worst overall financial performance then recorded in Fortune magazine’s 48‐year history14 _{(Families USA, 2002). In 2002, the top ten Fortune 500}

pharmaceutical companies’ combined profits were greater than the combined profits of all other 490 companies (US$35.9 billion and US$33.7 billion, respectively) (Angell, 2004; Harrington, 2003; Public Citizen, 2003). In addition, while the profits of pharmaceutical companies in the Fortune 500 have consistently risen over the years, those of the other industries combined have remained relatively static (Public Citizen, 2001).

For some commentators, such phenomenal profits of Big Pharma are directly related to the protection of their intellectual property (Angell, 2004; Drahos & Braithwaite, 2004). As Angell (2004) and Law (2006) pointed out, a large proportion of Big Pharma profits typically derived from one or two ‘blockbuster’ drugs. When the patent‐conferred monopoly protecting the profits on such drugs ran out, the drug would enter a competitive market where prices, and profits, tended to dramatically fall (Drahos & Braithwaite, 2004). In addition, in the early 2000s statistics arose indicating that despite increases in R&D spending, the ‘pipeline’ for new drug discovery was running dry (Cockburn, 2004). In this context, major pharmaceutical companies faced considerable motivation to expend effort lobbying for

14 _{With the exception of 1992, when changes to accounting rules affected recorded performance across all}

93 increased IPR protection, as evidenced in the above history of TRIPS.

As former editor of the New England Journal of Medicine, Marcia Angell (2004), documented, two sets of US legislation facilitating the extension of pharmaceutical IPR protection were successfully lobbied for by the industry in the 1980s: the Bayh‐Dole and Hatch‐Waxman Acts15_{. It was these changes,}

argued Angell (2004), that helped transform Big Pharma from a good business into a “stupendous one” (p. 3). As Angell (2004) and other critics have pointed out, such regulatory facilitation can be understood in part due to the pharmaceutical industry’s massive lobbying power ‐ spending more money lobbying in the US than any other industry (Ismael, 2005). According to US NGO, the Center for Public Integrity, the pharmaceutical and health products industry spent US$612 million on congressional lobbying from 1998 to 2005, using 3000 professional lobbyists to lobby on more than 1,400 congressional bills (Ismael, 2005). The second biggest lobbying industry over the same period was insurance, with US$543 million spent (Ismael, 2005). It is in this light that Angell (2004) concluded that despite the industry’s professed commitment to trade liberalisation, few industries are so dependent on taxpayer funds and government regulation to sustain their business model.

3.2.7 “Extra‐Institutional Pressures” and Breaking Counter‐Hegemonic Chains of Equivalence

To conclude this chapter’s first section, it is worth considering some of the pressures faced by countries to accede to the new global IPR regime embodied in the TRIPS Agreement. As the above discussion of the experience at WIPO suggests, many majority world countries opposed incorporating IPRs into the multilateral trading agenda (Matthews, 2002; Ryan, 1998). While the majority world in general was “by no means

15 _{Bayh‐Dole allowed universities and small businesses to patent discoveries emanating from taxpayer‐}

funded research through the National Institutes of Health (NIH), while Hatch‐Waxman allowed for the extension of monopoly rights on brand‐name drugs (Angell, 2004).

94 unanimous in their hostility towards the inclusion of intellectual property in the GATT Round” (Matthews, 2002, p. 17), the ‘Group of Ten’ countries, led by India and Brazil, consistently opposed the “GATT strategy” as the Uruguay Round commenced (Ryan, 1998, p. 559). Indeed, this opposition has been construed as the “main reason” that the Uruguay Round negotiations, begun in 1986, were largely stalled until 1989 (Matthews, 2002, p. 31). As Richards (2004) pointed out, there was little empirical evidence at the time supporting claims that a strengthened IPR regime would benefit the majority world’s interests, and, indeed, some compelling arguments to the contrary. Regardless, by 1995 the TRIPS Agreement was institutionalised within the WTO, with all WTO members necessarily complying with it. The “obvious question”, then, is why would the majority world “accede to an agreement whose evident cost‐benefits ratio is so high?” (Richards, 2004, p. 78).

The answer for Richards (2004), and several other commentators (Matthews, 2002; Ryan, 1998; Sell, 2003), is that majority world countries only consented to TRIPS in the face of multiple external pressures placed upon them during the Uruguay Round. In the 1980s, the US pharmaceutical industry joined an initiative, instigated by agricultural chemical companies in the 1970s, to lobby US government for support in pressuring foreign governments’ IPR laws (Sell & Prakash, 2004). Under the lobbying power of the ACTPN, PhRMA (then called the PMA16_{), and the International}

Intellectual Property Alliance (IIPA)17_{, among others, the initiative was}

successful in influencing important changes to US trade law (Sell & Prakash, 2004). In particular, in 1984 the Trade and Tariff Act was amended to include IPR violation criteria within its Section 301 and Generalised System of Preferences (GSP) provisions (Drahos & Braithwaite, 2002; Matthews, 2002; Santoro & Paine, 2003). This meant that not only were IPR issues institutionalised at the forefront of US trade policy (Matthews, 2002; Ryan, 1998; Sell, 1998), but also that the US could wield two new punitive

16 _{The Pharmaceutical Manufacturers Association ‐ not to be confused with the South African PMA, to be}

discussed later in this chapter.

17 _{A conglomerate of eight trade associations representing 1,500 copyright‐based companies (Sell &}

95 measures against perceived IPR ‘enemies’.

In the case of Section 301, this meant the USTR could proactively and without industry‐supplied evidence authorise penalties, such as trade sanctions, against foreign countries seen to be failing in their IPR requirements (Bhagwati & Patrick, 1990). Such moves were preceded by the inclusion of foreign countries on a 301 ‘watch list’ (Richards, 2004), dubbed by Palast (2000) as “a kind of Death Row for trading partners” (n.p.), and by Bhagwati (1990) as an example of the new‐found “aggressive unilateralism” of the US (p. 1). In the case of GSP, the penalty involved removing a bilateral trade privilege program designed by the UN in the 1960s to foster trade between minority and majority countries (Drahos & Braithwaite, 2002; Santoro & Paine, 2003).

According to Phillip Ellsworth (1993), a corporate leader in the pharmaceutical industry (Klug, 2008), the strategy leveraged upon countries opposing the US position during the Uruguay Round was threefold: multilateral, bilateral, and unilateral. In the first case, the multilateral GATT forum provided the venue. In the second and third, the IPR‐adjusted mechanisms of 301 and GSP provided the “weapons” (Richards, 2004, p. 125) through which to exert pressure. Such measures constitute what Shadlen (2004) referred to as “extra‐institutional pressures” (p. 80).

Using Laclau and Mouffe’s (1985) terminology, the ‘Group of Ten’ majority world countries can be regarded as a ‘chain of equivalence’, linked together in a common bond fostered around a shared antagonism to the agenda linking IPRs to trade platforms. The 301 and GSP mechanisms, therefore, can be regarded as hegemonic interventions intended to break the equivalential chain. According to Drahos and Braithwaite (2002), between 1985 and 1994 the USTR brought IPR‐related Section 301 actions against Brazil (1985, 1987 and 1993), Korea (1985), Argentina (1988), Thailand (1990 and 1991), India (1991), China (1991 and 1994) and Taiwan (1992). In only one case, however, was the threat of punitive trade measures realised ‐ that of Brazil,

96 where in 1988‐1989 the PMA‐initiated 301 action resulted in 100 percent tariffs levied upon US$39 million worth of Brazilian imports (Matthews, 2002; Santoro & Paine, 2003).

The mere threat of punitive trade sanctions, however, has been acknowledged as crucial “leverage” in international trade‐IPR negotiations (Santoro & Paine, 2003, p. 353). In particular, such threats were seen to achieve US‐favourable domestic IPR law changes in Thailand, the Philippines and Mexico, in spite of significant domestic criticism (Santoro & Paine, 2003), as well as achieving a US bilateral IPR deal with Korea in 1986 (Richards, 2004; Clemente, in Santoro & Paine, 2003). Similarly, removing GSP privileges was used to punish India in 1992, at an estimated cost to Indian exports of US$60 million (Henderson, 1997), and Argentina in 1997, with the withdrawal of US$260 million worth of Argentine exports (Sell, 2001). In the Argentine case, the USTR acknowledged it had enforced such sanctions based entirely on information supplied by PhRMA (Vicente, 1998). As Matthews (2002) argued, while the threat of bilateral trade sanctions weakened organised opposition to TRIPS (see also Blakeney, 1995), it also increased the prospect of completing TRIPS by keeping dissenting countries at the negotiating table. Thus, a “divide‐and‐conquer strategy” (Richards, 2004, p. 129; see also Ryan, 1998) was effectively mobilised to dissolve collective opposition to the ‘GATT strategy’.

3.3 HIV/AIDS, the ‘Access to Medicines’ Campaign, and the South