Dr. Kumariah Balasubramaniam graduated in medicine from the University of Sri Lanka and continued post-graduate studies at the University of Manchester, U.K., obtaining a degree in Clinical Pharmacology and a Ph.D. in Pharmacology. In Sri Lanka, he taught pharmacology at the National University. He joined the United Nations Conference on Trade and Development in September 1978 as a senior pharmaceutical advisor. In April 1983, he joined the Caribbean Community Secretariat. In November 1986, Dr. Balasubramaniam accepted his present assignment as the pharmaceutical advisor to the International Organization of Consumers Unions in Penang, Malaysia. He is also one of the international coordinators for Health Action International.
Multinational Monitor: What are some examples of harmful dumping of pharmaceuticals on the Third World?
Kumariah Balasubramaniam: In a civilized world, "dumping" has become a very dirty word like "slavery" and "colonization." Classical "dumping" does not take place anymore. It has taken a new form - double standards in marketing practices.
Dr. Andrew Herxheimer, a clinical pharmacologist, describes the double standards by saying, "Multinational pharmaceutical companies usually take the view that if it is legal to sell a drug in a particular country, then it is proper to sell it there, preferably in large quantities. In their country of origin many potentially hazardous drugs may be promoted only for a restricted range of uses, and with certain mandatory warnings. If an importing country has no such requirements, the company can omit the warnings and can promote many more uses, no doubt sincerely believing that the local regulatory authority must surely know what is right for the country, and that it is not for the company to usurp its function."
Hoechst's Baralgan and Organon's Durabolin are examples of harmful drugs which are promoted in the Third World. Hoechst withdrew Baralgan in its home country, West Germany, in 1987 because of the drug's potential toxicity. However, Hoescht markets it in several Third World countries. In India, Baralgan is the ninth top selling brand-name drug. The sale of Barlagan, which is made by Indians and marketed in India cannot be termed "dumping!"
The indications for Organon's Durabolin in the British National Formulary are osteoporosis in post-menopausal women and aplastic anaemia. In Pakistan, however, Durabolin is indicated for loss of weight, poor weight gain and malnutrition in children. Malnutrition and poor weight gain are due to poverty. What is needed is food and not Durabolin, which may produce precocious puberty.
There are also drugs which are marketed in the Third World for irrational, but not necessarily harmful, uses. Cyproheptadine is an antihistamine used in the treatment of allergies and migraines. Merck, Sharpe & Dohme markets Cyproheptadine as Periactin in the United Kingdom for allergies and migraines. In Pakistan, the company markets Periactin as an appetite stimulant. According to the British National Formulary, it is not recommended as an appetite stimulant. Weight gain is mentioned as a possible side-effect.
Sandoz markets another antihistamine, pizotifen, as Sanomigran in the United Kingdom for the prevention of migraines. In Pakistan, it markets pizotifen as Mosgor and lists the indications as lack of appetite and marked lack of weight gain of a mental or nervous origin.
Another example of deceptive marketing is Merck's promotion of Encephabol as a brain tonic for babies in Pakistan and Sri Lanka. The indications for this drug include: disorders of speech development, behavior disturbance, low drive, poor concentration, difficulties in learning at normal intelligence and specific developmental disorders such as dyslexia and dyscalculia. As far as I am aware, this drug is not marketed in advanced industrialized countries for any of these indications.
MM: What are some means of combating inappropriate marketing of pharmaceuticals?
Balasubramaniam: An enormous amount of work is being done by the Medical Lobby for Appropriate Marketing (MaLAM), an organization based in Adelaide, Australia. Since the mid-1980s, the Secretary of MaLAM has sent out monthly letters addressed to drug company executives about their marketing of certain drugs.
MaLAM is concerned about inappropriate indications, unjustified claims of efficacy, inadequate warning of adverse effects and unnecessary expense. Priority is given to misleading advertising in Africa, Asia and Latin America, where the practice is more common, more extreme and more dangerous.
The letters compare advertising claims with the scientific literature. They are checked by an international editorial board before distribution to MaLAM subscribers in over 30 countries. If subscribers agree that the questions in the letter should be asked, they sign the letter and post it to the company under scrutiny.
Every month during the past eight years, MaLAM has written to multinational drug companies to demand that they either justify their marketing practices or improve them. Many companies respond. Some have changed their advertising. But evidence indicates that misleading marketing practices continue.
MM: Can you describe the history and purpose of essential drugs programs, and discuss the success or failure countries have had in implementing these programs?
Balasubramaniam: The World Health Organization (WHO) started the Essential Drugs Programme (EDP) in 1981 with the aim of strengthening the national capabilities of developing countries in the field of selection and proper use of essential drugs to meet the real needs of people in those countries. Another aim of the program is to promote and facilitate local production and quality control, where feasible, of such drugs.
WHO defined essential drugs as those that "are of utmost importance and are basic, indispensable and necessary for the health needs of the people." In short, essential drugs programs are a means by which countries with limited resources can make essential drugs of good quality available at affordable prices to all their people. EDP was set up to enable WHO to assist developing countries in setting up their own national essential drugs programs.
A progress report by the Director-General of WHO to the World Health Assembly in May 1992 reviewed the world drug situation. The progress report, "Implementation of WHO's Revised Drug Strategy: Action Programme on Essential Drugs" stated, among other things, "Approximately half the world's population still lacks regular access to the most needed essential drugs. Moreover, it is estimated that perhaps over 60 percent of the developing world does not have regular access - and socioeconomic deterioration in the developing world over the past decade has made progress difficult. This disturbing estimate for the developing world reflects a drug situation where poorly coordinated policies and strategies, inefficient procurement, uneven distribution, inadequate assurance of quality, unaffordable prices and improper drug utilization are often more the norm than the exception."
"It has become increasingly clear that the current level of cooperation is not sufficient to counter the socioeconomic decline in developing countries. The Director- General emphasizes that Member States will need to increase their efforts significantly to make the most of the present political will and momentum in the development of national drug policies and in the implementation of national essential drugs programmes."
It would, therefore, appear that little success has been achieved since EDP was launched 10 years ago.
MM: What is the basis of the pharmaceutical industry's opposition to essential drugs programs?
Balasubramaniam: The industry's fear of the EDP concerns growth of the generic market, possible breakdown of the patent system and interference with the marketing of drugs. Perhaps the greatest fear is the possibility that developed countries may consider adopting EDP. The United Kingdom, for example, introduced a limited list in 1985.
When the WHO published its first list of essential drugs in 1977, the multinational pharmaceutical industry strongly opposed it. The International Federation of Pharmaceutical Manufacturers Associations (IFPMA) critiqued the WHO list of essential drugs, and stated that the underlying argument for developing an essential drugs list is faulty in both its medical and economic reasoning. The IFPMA claimed that adoption of the report's recommendations would result in sub-standard rather than improved medical care.
Subsequently the industry changed its position. A very interesting industry response was IFPMA's 1982 offer to the WHO to supply needed drugs to the poorest countries at very low prices. The WHO rejected this offer because the set-up would not have afforded price transparency.
At present, the industry is willing to support WHO's EDP but strongly insists that the program apply only to the public sector in developing countries. It is well known, however, that in almost all developing countries, the private sector controls a major share of the pharmaceutical market. Any EDP which concentrates only on the public sector and leaves the private sector to be controlled by the drug industry will never achieve the objective of EDP, namely to enable a country with limited resources to make available essential drugs of good quality and affordable prices to all its people.
MM: Why do you think the United States is working so hard to impose U.S.- style patent laws on the Third World?
Balasubramaniam: It is only the pharmaceutical industry that has been trying to force the entire world to adopt U.S.-style patent laws. No other industry has entered the debate. The Pharmaceutical Manufacturers Association (PMA) of the United States appealed successfully to the U.S. government to take retaliatory trade measures against Third World countries which did not change existing national legislation that provided no protection to pharmaceutical products. The PMA has insisted on these countries offering strong patent protections to pharmaceutical products. The General Agreement on Tariffs and Trade (GATT) negotiations are still at a deadlock but the PMA has already been successful in getting several Third World countries including Brazil, Chile, Indonesia, Korea, Mexico, Thailand and Venezuela to change their patent laws. The industry argument is that strong patent protection is essential for R& D and new drug development. I do not agree with this.
The period from the mid-1940s to the mid-1970s saw the creation of several innovative new drugs based on high-technology R& D. This was a period of weak patent protection. Industrialized countries which are the homes of several well-established multinational drug firms did not provide for protection of pharmaceutical patents in their national legislation. These countries included France, Italy, Japan, Switzerland and West Germany. Italy, France and Switzerland introduced patent protection for pharmaceuticals as late as the 1970s.
The argument put forward by these countries at the time was that their pharmaceutical industries could not develop to an internationally competitive level if patent protection was granted to pharmaceuticals. This argument was accepted by the world community.
However, when Third World countries voice the same argument now, they are accused of "pirating." The counter charge by Third World countries that the multinational drug industry has "pirated" several billions worth of intellectual property in the form of plant-based traditional remedies from Africa, Asia and Latin America, has yet to be answered. And that "pirating" continues.
It is important to reiterate that the Paris Convention, an international agreement adopted in 1883 and revised six times and still in force, clearly states that non-protection of pharmaceutical patents is perfectly acceptable.
The other argument that patent protection is needed to provide conditions necessary to more drugs being available to the Third World cannot be accepted. The industry's research is funded by the profits on drug sales, and the level of research spending is calculated when companies fix their prices. In other words, the price of every medicine includes a company-imposed research tax. The most generous estimate - this is the WHO's calculation - of the amount of the total research budget devoted to specific disease conditions in the Third World is 4 percent. If Third World countries are purchasing about 20 percent of drugs produced by the multinational drug industry, they are in effect contributing 20 percent of the R& D budget and getting back only 4 percent. The Third World is therefore subsidizing R& D for the First World.
The industry also claims that strong patent protection is essential for foreign investment. But there is no empirical evidence of this. In the United States, for example, the national Industrial Conference Board undertook a survey of 107 U.S. companies which had very significant foreign investments to determine barriers to foreign investment. A series of obstacles were identified, but in the 382 pages of the Board's report neither patent protection nor the lack of it was ever mentioned as affecting the decisions on foreign investment.
This is an old study. But as far as I am aware, no subsequent studies have shown evidence to refute its findings. Furthermore, it is well known that multinational drug firms invested heavily in Brazil and Italy at a time when both these countries had no patent protection.
MM: What impact would the imposition of U.S.-style patent laws have on public health in Third World countries?
Balasubramaniam: U.S.-style patent laws will deprive Third World people of innovative drugs at cheaper prices. AZT is a drug used to treat AIDS patients. This drug, developed by Burroughs Wellcome, has been at the center of controversy in the United States over the issue of patents and the drug's very high price.
Indian patent law, which protects pharmaceutical patents but not processes, has enabled Indian scientists to develop an alternate process for the production of AZT. The Indian Institute of Chemical Technology (IICT), which developed the process, has licensed it free of cost to three Indian drug firms. According to the director of IICT, the Indian-made AZT will cost a quarter or less of the current Burroughs Wellcome price. Indian companies are exploring foreign markets in Africa and other countries where Burroughs Wellcome has no patent for its AZT.
U.S.-style patent law and the price charged by Burroughs Wellcome mean that AIDS victims in the Third World will be deprived of AZT. Indian scientists have made a breakthrough enabling thousands of AIDS sufferers access to it. I do not consider this "pirating."
The Third World pharmaceutical industry will certainly be adversely affected [by the adoption of U.S.-style patent laws]. Several of the smaller firms will close down. The bigger ones may consider mergers with a view to capturing the generic market. Prices of drugs will escalate and a vast majority of Third World people will not be able to afford even a few basic essential drugs.
MM: What are the effects of the debt and structural adjustment policies on the health of people in Third World countries?
Balasubramaniam: The indebted countries are caught in a vice. To maintain their fragile economies, to import basic essential needs such as food, fuel and pharmaceuticals, they need loans. And loans are available only under conditions of structural adjustment laid out by the World Bank and International Monetary Fund (IMF).
The structural adjustment policies usually demanded by these two institutions which have an adverse impact on health and pharmaceuticals include: currency devaluation - so that prices of imported goods such as pharmaceuticals go up; cuts in government spending - meaning that health subsidies are reduced or taken away altogether; removal of trade and exchange controls - resulting in the limited foreign exchange available being used up by the rich for importing luxury items and the disappearance of low-priced essential generic drugs from the market; and privatization of public sector enterprises, including health care.
The per capita GNP of the bottom 20 percent of the people in Nepal, for example, is U.S.$25. If health subsidies are cut and prices of essential food grains go up by even a few cents, these people have to go without health care and food.
Structural adjustments have destroyed the health of poor and underprivileged people. The group most affected is made up of infants and young children. In 1982, UNICEF reported that more than 40,000 young children died every day from malnutrition and infection. In 1992, according to UNICEF, 250,000 of the world's young children are dying every week, and millions more are living in malnutrition and almost permanent ill- health. Infants and young children continue to die in equal numbers in 1992 as in 1982. And several millions continue to survive in utter misery in 1992, as they did in 1982. Structural adjustments policies have denied these children resources that should have gone into guaranteeing their welfare.
MM: What are some elements that make up a rational health care plan for Third World countries, and what barriers exist to the implementation of this type of plan?
Balasubramaniam: The health care policies for all Third World countries should be based on the concept of primary health care (PHC) which was outlined at the International Conference in Alma Ata in September 1978. The World Community unanimously accepted that PHC was the key to "Health for All" in the year 2000.
Unfortunately, no country has adopted a national health policy based on PHC. In the early 1980s, PHC was abandoned in favor of disease-specific technology packages. These "vertical interventions" were very expensive both in terms of technology and implementing costs. Several countries have been unable to maintain these programs which were initiated by international agencies.
We now seem to have come full circle. The 89th session of the WHO Executive Board in January 1992 reiterated that PHC is the key to achieving "Health for All" and advised Third World countries to formulate and implement national health policies based on PHC.
Lack of political will by governments and opposition from the medical establishment are the two chief factors which have prevented Third World countries from implementing a rational health policy based on PHC. In December 1990, the Government of Bangladesh introduced a national health policy based on PHC. The Bangladesh Medical Association vehemently opposed the new policy; medical doctors went on strike. Some months later a new government came to power. The new health policy was withdrawn.
Statement on Patents and Pharmaceuticals