Information now surfacing in that country shows that workplace safety protections may be another expense the company has been willing to cut in order to increase profits. Seagate has responded to an official Thai investigation into the deaths of workers at its disk drive factory outside Bangkok by denying responsibility for worker health concerns, firing workers who held a one-day strike and attacking the credibility of the government doctor assigned to investigate the case. In a letter by Seagate's Far East Safety, Environmental and Health Manager Pertpal Singh, Seagate claims that "No violations or problems have been noted concerning lead exposures."
The Seagate controversy began in 1991, when hundreds of workers in a Seagate plant in Samut Prakan, Thailand, just outside Bangkok, started reporting illnesses, including respiratory ailments, eyestrain and unusual fatigue. The workers believed the illnesses were caused by working conditions, particularly lead emissions in the manufacturing process, as well as poor ventilation and cramped quarters.
The situation came to a head when five Seagate workers, ranging in age from 23 to 28, died of unknown causes. After the deaths, the Thai government was forced to investigate, sending an occupational health doctor to the factory to review the case of the workers who died and to examine medical conditions of other workers at the factory. The doctor assigned to the case was Dr. Orapun Methadilokkul, a highly respected doctor from the National Institute of Occupational and Environmental Medicine in Bangkok. Dr. Orapun discovered that as many as 700 workers per shift were ill. She determined, however, that although lead levels were very high, lead was probably not the direct cause of the deaths of the five workers.
From her initial investigations, Dr. Orapun believed some of the deaths and illnesses were likely caused by "solvent-induced poisoning." She asserted that three of the deaths were "definitely cerebral hemorrhages caused by solvents." Orapun identified TP-35 as a particularly hazardous cleaning solvent.
Seventy percent of workers tested showed signs of "positive phenol exposure," believed to be caused by the use of solvents in hand-cleaning operations. TP-35 is a benzene derivative produced by DuPont that is also known as Freon TP-35. According to Material Safety Data Sheets, the standard forms used in the United States for identifying hazardous materials, "breathing high concentrations of these products ... may lead to narcosis, cardiac irregularities, unconsciousness or death." It is therefore recommended that TP-35 be used "only in well ventilated areas." However, Lee Kuhre, an environmental and health safety specialist with Seagate, describes TP-35 as a "completely benign" substance that is "in no way related to workplace illnesses." He believes that "the deaths had nothing to do with the Seagate workplace." Rather, they were caused by "breast cancer," "intra-cerebral hemorrage," "a brain hemmorage due to brain tissue bleeding," "heart rheumatic," and "infection after delivery."
Dr. Orapun also found that 26 percent of the workers had blood lead levels four to five times higher than the already high levels of the general public in Bangkok. Chronic lead exposure was present throughout the factory. A significant reduction in blood platelet levels, which allow blood clotting to take place, was also found for workers in the plant.
As illnesses persisted, Seagate employees demanded action from management, asking for safer working conditions, higher pay and medical examinations for lead contamination and eyestrain. When Seagate denied responsibility for illnesses, the workers staged a one-day strike in April 1991 for better working conditions and an increase in pay. According to Electronic Buyers News, the strike was "the largest to hit an electronics company located in Thailand."
Although Seagate announced that "operations of its disk-drive assembly plant were not affected" by the strike, management responded by firing seven workers believed to be strike leaders. When worker protests continued, Seagate fired 80 more workers. Finally, Seagate fired over 750 workers, sending a clear message to those demanding improved working conditions and higher pay.
Seagate management viewed the strike as nothing more than an employee power play. Ronald Verdoorn, Seagate's senior vice-president for global production, says that the strike was "completely politically motivated," and that the company "had a labor issue that created the health issues."
But the workers at Seagate have a wide variety of substantive complaints. Seagate workers earn an average of $4.60 per day. Alan Shugart, the president of Seagate Technology, had a salary of over $775,000 in 1992, more than $2,900 per day (or more in one day than the Thai workers will make in two years). The Seagate workers have no union. Strikes are rare, and under Thai labor laws, which are designed to be particularly advantageous for multinational corporations, companies are essentially free to fire and re-hire workers at will.
The protesting Seagate workers were charged with breaking Thai labor laws. Verdoorn calls the workers' action a "wildcat, illegal work stoppage, instigated by a few individuals." The workers presented Seagate with a list of demands which Verdoorn characterizes as a demand of "we want better, better, better."
Having defeated workers' efforts to organize for better pay and health and safety improvements, Seagate turned its focus to Dr. Orapun. The company wrote letters to the Medical Council of Thailand in October 1991 requesting a review of Orapun's "medical ethics." Seagate claimed that Dr. Orapun was interested only in making money off the workers, who in fact were not sick at all. Seagate also argued that Orapun checked workers' blood lead levels much too often.
Dr. Orapun says Seagate's accusations are completely groundless, since "Seagate workers don't pay me or the hospital for their treatment anyway. The social security program pays." She notes that she was assigned to the case by the Thai government, and did not choose to investigate the worker deaths and illnesses at Seagate. Dr. Orapun says she has even received anonymous death threats for her investigation into the Seagate case.
When information on the Seagate case emerged in the Thai press, the Thai government itself began backtracking on the case. Seagate is the second largest foreign company in Thailand, and wields immense influence in the government. The director of the Thai Board of Investment, a very powerful government agency, told Dr. Orapun directly to keep quiet about the Seagate case, saying her investigation was "hurting the investment environment in Thailand."
In an attempt to end the controversy, it was reported in the Thai press, the Thai government "ordered the closure of the National Institute of Occupational and Environmental Medicine instead of speeding up the Seagate's [sic] investigation." Orapun was thus removed from the case. As Seagate notes, three separate Thai government agencies have since visited the plant and given the company a clean bill of health. However, the government still refuses to publicly release the final results of Dr. Orapun's investigation. And Seagate is attempting to have Dr. Orapun's medical license revoked, having recently submitted a third request to have her medical ethics reviewed.
Almost two years after the deaths of the five workers, Seagate has still not accepted any responsibility for the deaths or illnesses at its plant in Thailand. Verdoorn asserts that Seagate "has been completely exonerated of the allegations." Seagate continues to fight claims that there are workplace health problems in the factory, which would require the company to improve working conditions and pay workers' medical costs.
Dr. Orapun believes there are a number of easy steps Seagate could take to reduce worker exposures and illnesses, such as "isolat[ing] hazardous processes, and improv[ing] ventilation in areas with solvents." She also argues that Seagate and other multinational manufacturers should better "educate and train their workers in handling of dangerous substances, particularly heavy metals," and provide gloves and other simple protection. The Material Safety Data Sheet for TP-35 recommends that companies reduce crowding in the solvent areas, and install local exhaust systems.
Asked about these recommendations, Verdoorn's responds simply, "We have no workplace health issues in our factory."
- Dara O'Rourke
Capitalizing on the worldwide fascination with U.S. culture and mythology, U.S. tobacco companies are aggressively hawking their cigarettes in the economically fast-growing region as the embodiment of U.S. lifestyle.
"Winston. Spirit of the U.S.A.," blared television commercials in the Philippines during telecasts of the U.S. professional basketball championship series in June 1993. Winston was the primary sponsor of the televised games, shown twice a day in June. The advertisements pictured healthy, vibrant, young Americans at play on the beach or the ballfield - smoking Winstons.
In Indonesia, billboards picturing rugged white men read "Lucky Strikes. An American Original." In imitation of the theme, signboards on display throughout the country for a local cigarette called "Kansas" urge potential consumers to "Taste America, Taste Kansas."
In Malaysia, the tobacco companies use the same themes. In an attempt to undermine and circumvent government anti-smoking initiatives - which include a ban on television advertisements for cigarettes - the tobacco companies sponsor televised events and use other businesses as fronts to promote their deadly product. Marlboro sponsors the "Marlboro World of Sports." Camel runs a clothing line. The British company Rothmans promotes its Peter Stuyvesant brand with billboards that picture images of the Statue of Liberty, American football players and cheerleaders and use a slogan connecting the brand name Stuyvesant to the magic word "America." Salem runs a music store, Salem Power Station, and a travel company, Salem World, which jointly took out full page advertisements in Malaysian newspapers in the summer of 1993 to promote a contest which had a trip to London to see a concert by the rock group U2 as its grand prize. The Salem brand name was prominently displayed in the advertisement, linked with the image of the band.
The effect of these advertising strategies, says Karen Lewis, manager of tobacco policy resources at the Washington, D.C.-based Advocacy Institute's Smoking Control Advocacy Resource Center, "is an increase in tobacco use and enormous increases in cancer mortality." The use of images that evoke "America" is particularly insidious, she contends, since it preys on poor people's longing for the political freedom and economic advancement popularly associated with the United States. "People want to be as American as they can be, if they associate it with being able to buy shoes."
The U.S. tobacco companies defend these advertising practices. While many of their advertising strategies might seem objectionable in the United States and some - notably television advertisements - would be illegal, "it is patently unfair to compare marketing and advertising practices of a given foreign country with the United States," says Brenda Follmer, director of public relations at R.J. Reynolds Tobacco International, the maker of both Winston and Salem brands. "It is the sovereign right of each government to establish its own laws and regulations. The reverse of this would be a foreign country dictating to the United States how it should regulate various industries. The respective governments establish their own laws and regulations, and companies must comply with those laws."
Moreover, argues Folmer, "it is a well-documented fact that all of these markets historically have had high rates of smoking."
But while tobacco use has long been widespread in Southeast Asia, says Lewis, "smoking in most traditional societies has been confined to adult men." In an effort to expand the market, the U.S. companies target women and young people, the groups which have historically had low smoking rates. "The focus on sports and rock concerts is obviously geared to young people," she says, and images of "American, thin, economically liberated women" are designed to entice women to take up the habit.
The tobacco companies deny targeting young people, with Follmer claiming that Reynolds "follows an internal policy of marketing our products exclusively to adult smokers, even in those markets where there is no minimum age requirement for purchasing or consuming cigarettes."
The slick advertisements based on sports, rock music and other elements of U.S. culture are only one component of the comprehensive marketing strategy pursued by the U.S. tobacco companies. Other elements, according to Lewis, range from shop-level strategies to industry-wide plans. Tobacco companies will offer to redecorate the entire exterior of a store or restaurant in exchange for the prominent display of the company's product and logo, and they may also provide interior point-of-sale displays. And they will strike similar deals with national tobacco companies, entering into joint ventures in which the U.S. company upgrades the national company's plants in exchange for a share of the company.
Even if they do not enter into joint ventures with foreign tobacco companies, national tobacco monopolies and private local companies respond to market pressures and begin to act more like the multinationals, imitating the U.S. corporations' Madison Avenue techniques and aggressive promotional tactics. Taken as a whole, the U.S. tobacco company strategy works to completely transform the national tobacco industries, even in countries where U.S. companies do not command major shares of the national market.
There is little question that the U.S. tobacco companies' strategies pay dividends, as the results of the sudden introduction of U.S. cigarettes and tobacco company promotional techniques in the Korean market in 1988 make clear. In the year after the U.S. government forced Korea to lift import restrictions, the smoking rate among male teenagers rose by more than 50 percent, and among female teens by more than 300 percent, according to a U.S. General Accounting Office study.
Despite the eventual public health disaster the U.S. tobacco companies have virtually ensured for Southeast Asian countries in the decades to come, a much more frightening prospect looms on the horizon. These same companies are now working to knock down the trade barriers by which China limits foreign cigarette imports [see China's Tobacco Wars," Multinational Monitor, January/February 1992 ]. Replication in that vast market of the tobacco companies' "success" in Southeast Asian countries would be a public health nightmare with few historical parallels.
- Robert Weissman
Spearheading the sanctions campaign is the Coalition for Corporate Withdrawal from Burma, a diverse group of Burmese exiles, human rights activists, environmentalists, trade unionists, religious organizations and social investors. Members include the Associates to Develop Democratic Burma, the Sierra Club, the Oil Chemical and Atomic Workers union and the Interfaith Center on Corporate Responsibility. The coalition plans to file shareholder resolutions with companies maintaining business interests in Burma, asking each company either to issue a report revealing their activities in Burma or to cut off all business ties with the military regime. Companies targeted in the campaign include the oil companies Texaco, Unocal and Amoco, as well as PepsiCo., which owns a bottling plant in Burma. The coalition is not asking those with shares in these companies to sell their stock, but rather is urging them to vote their shares in favor of the resolutions in order to pressure the companies.
Burma is an ideal candidate for a campaign of economic disinvestment, as South Africa was in the 1980s, according to coalition campaigner Simon Billenness, of the socially responsible money management firm Franklin Research and Development Corp. "The repressive regime in Burma is propped up, at least in part, by multinational corporations, and people who can legitimately claim to speak for the Burmese people are calling for the sanctions."
In 1988, the Burmese military junta, called the State Law and Order Restoration Council (SLORC), renamed the country Myanmar and declared martial law. International suspension of aid money and deepening economic troubles led the regime to promise democratic elections in 1990. The elections, in which the National League for Democracy party of Daw Aung San Suu Kyi won 82 percent of the seats in government, have been disregarded by the SLORC, which has placed Aung San Suu Kyi under house arrest and initiated a campaign of violent repression against others in Burma seeking democratic reform. Aung San Suu Kyi has since won the Nobel Peace Prize, focusing world attention on the plight of her country.
Since August and September 1988, when the SLORC military opened fire on thousands of peaceful pro-democracy demonstrators, Burma's despotic rulers have tightened their grip on the country. The human rights group Freedom House now ranks the regime as among the 12 most repressive in the world. And, according to "Towards Democracy in Burma," a report by the Washington, DC-based non- governmental organization Institute for Asian Democracy:
Since 1988, facing severe economic woes, the SLORC has embarked on a fire sale of Burma's natural resources, and multinationals, particularly oil and timber companies, have eagerly lined up for their place at the trough.
It has been estimated that 70 to 90 percent of the profits from oil and gas development directly buoy the SLORC regime (see Oil in Burma: Fueling Oppression," Multinational Monitor, October 1992 ). Companies including Texaco, Unocal and Amoco prop up the SLORC by providing a much-needed source of foreign exchange. One oil project, in the Andaman Sea south of Rangoon, will involve the building of a pipeline that environmentalists believe will pass through a delicate ecosystem containing Burma's last remaining habitat for several endangered species.
According to "Towards Democracy in Burma," over 1.2 million acres of Burma's forests each year are sold off to multinational logging firms such as Wilmington, North Carolina-based Dean Hardwood, a rate that will wipe out Burma's forests within a decade. The denuding of all vegetation in some areas has caused flooding and the destruction of fisheries and plantations, which in turn has led to massive displacement of rural communities. Indigenous people that depend on forest resources for their livelihoods are facing cultural extinction.
A country that was once self-sufficient in food and abundant in resources, Burma is now listed by the United Nations as a "Least Developed Country."
While China has furnished the SLORC with much of its military hardware (to the tune of roughly $1 billion), U.S. and foreign multinationals have been crucial suppliers of the regime as well. Bell Helicopter, a subsidiary of Providence, Rhode Island-based Textron, Inc., has engaged in contracts with the SLORC for helicopters and parts, which have particular military value in the harsh landscape of Burma.
In a statement on Amoco's activities in Burma, Amoco president William G. Lowrie says that Amoco "avoids interfering with the internal affairs of its host country ... maintaining strict neutrality in Myanmar." Lowrie asserts that this is what has enabled Amoco to conduct business in countries such as Burma, as well as Argentina, despite "coups and military ousters of the ruling party." Jim Fair, director of media relations at Amoco, notes that Amoco has introduced many benefits to the Burmese, which include "expos[ing] people to Western practices."
International donors such as the World Bank, the Asian Development Bank, the United Nations Development Program and the Japanese government have advocated continued economic engagement with Burma, arguing loans, trade and investment are the best means to persuade the SLORC to voluntarily forego its repressive measures.
This approach has been strongly criticized by environmentalists, human rights advocates and a mission of 10 Nobel Peace Prize Laureates that includes the Dalai Lama, Ross Daniels of Amnesty International and Archbishop Desmond Tutu. In February 1993, the mission traveled to Thailand in an effort to free Aung San Suu Kyi and support efforts to restore democracy to Burma. Refused entry into Burma, they spoke with refugees along the Thai-Burmese border about the torture and repression of the Burmese people at the hands of the SLORC.
The mission joined in Aung San Suu Kyi's call for an economic embargo against the SLORC. Archbishop Tutu analogized the SLORC's dependence on foreign investors with that of the South African apartheid regime, and stated that reform in South Africa only began when the impact of serious economic sanctions was felt there. Another one of the laureates, Betty Williams, asserts that the situation in Burma is "all of our concern," and for companies to claim political neutrality is a "dreadful cop-out."
At least one company, Levi Strauss & Co., has divested from Burma, stating that "under current circumstances, it is not possible to do business in [Burma] without directly supporting the military government and its pervasive violations of human rights." It is the hope of those pushing for democracy in Burma and an end to the brutal the SLORC regime that more companies will follow.
- Aaron Freeman
"Fifty-five rural guards came with guns. They bulldozed our farms, our crops, our trees to erase all that we had worked for. They came into our houses and dragged us outside - men, women, even little children. Then they burned everything that remained. Stone didn't warn us they were coming because what they did is illegal. This is what foreign companies do."
That is how Elias Villalobos Parjeles, a peasant farmer who squatted two years ago on an abandoned plot of Costa Rican land now leased to the Stone Container Corp., describes the scene he witnessed as the National Guard forcibly evicted him and other squatter families, allegedly at the direction of Stone, a Chicago-based pulp and paper company. The conflict between the farmers and Stone here in the heart of the Osa Peninsula, located on the southern cone of Costa Rica, just off the shores of Golfo Dulce at Punta Estrella, stems from Stone's plans to build Central America's largest chip mill in this rainforest jewel.
The planned chip mill and port facility near Mogos could annually export up to 1.4 million tons of wood chips cut from Stone's extensive gmelina plantations. Ston Forestal, a subsidiary of its Chicago- based parent Stone Container, has planted over 25,000 acres of the non-native, fast-growing gmelina with plans to expand the monoculture plantations to 60,000 acres.
Gmelina, which Stone calls a "miracle tree," can grow up to 12 to 18 inches per month and resprout from the stump three times over its life cycle. Stone intends to plant 27 million gmelina trees and begin harvesting at 6-year intervals in 1995, over an 18-year period.
The company's expansion has provoked a fiery opposition from international rainforest groups and an alliance of non-governmental organizations and local officials in Costa Rica. They say the Stone project will displace local farmers and pose serious environmental threats - all for temporary and limited economic gain. Stone has declined to respond to these claims, and Max Koberg Van Patten, Ston Forestal's general manager, refused repeated requests by Multinational Monitor for an interview.
In the Tico Times, Juan Jose Jiminez, a technician for BOSCOSA, a sustainable development organization that has projects in the Osa, says that using land currently cultivated with rice, beans and other staples for Stone's plantation is a bad trade. "Stone is using the best soils that could be used for agriculture, it is a waste," he says, noting as well that the jobs Stone provides at its chip mill will only be temporary, disappearing when Stone abandons its plantations.
At present, Stone's plantations employ 700 to 1,100 workers, with another 1,000 jobs promised once the mill begins production. Gerald Freeman, Stone's chief financial officer, says so far the company has invested $15 million in its Costa Rica operations. The company operates in a "Free Zone," paying no property, income or export taxes, and can take advantage of duty-free imports on equipment.
Activists are concerned that Stone's "economic development" plan could harm Costa Rica's internationally renowned parks and reserves, which serve as an attraction to tourists, the country's largest source of foreign income in 1992.
The Rainforest Action Network, a San Francisco-based environmental group, contends the absence of environmental studies of the effects of Stone's gmelina plantations on native biodiversity, chemical use, depletion of soils and occupation of prime agricultural land is an outrage, given the delicate and flourishing ecosystem in which the plantation would be located. Osa Peninsula, home to Corcovado National Park, contains one of the last expanses of intact rainforests found in Central America; viable populations of jaguars, tapirs and spider monkeys make their home here. Because of its unique biological diversity, sparse development and cultural heritage, the Osa has been nominated for protection as a United Nations World Heritage Site and Biological Reserve.
In a letter to Costa Rican President Rafael Angel Calderon Fournier, Oscar Fallas Baldi, who leads the Asociacion Ecologista Costarricense, AECO, said that unique aquatic systems in the Golfo Dulce - coral reefs, mangroves, estuaries and breeding grounds for bottle-nosed dolphins, turtles and whales - would be "violently impacted" by Stone's chip mill and port facilities. Because the Golfo Dulce is a deep tropical basin with poor water circulation, it is particularly vulnerable to long-term damage from oil spills, chemical run-off and other industrial pollution.
The multiple concerns about the effects of Stone's plans has led to the creation of a broad coalition opposed to the corporation's Osa project. Costa Rican ecologists, local politicians and residents of the Osa Peninsula, including cattle ranchers, farmers, workers and indigenous peoples, have formed The Puerto Jiminez Committee for the Defense of Our Natural Resources to stop Stone's expansion.
In late May 1993, opponents sailed the Golfo Dulce in a flotilla under the banner "Stop the Chip Mill in Punta Estrella," in an effort to draw international attention to their plight. The protesters released to the media a list of violations of forestry laws, government subsidies, unacceptable ecological impacts from the expansion and local repression linked to Ston Forestal.
Nelson Godines, the head of a local Costa Rican agricultural center and member of the Puerto Jiminez Committee, says, "We here see Stone as a big monster that squeezes us more and more and does not bring anything to the area but problems and destruction."
- Darrell Geist (Mr. Geist writes for Cold Mountain, Cold Rivers, a grassroots media group based in Missoula, Montana.)
The U.S. plan would result in both higher health care costs and a drop in consumption as Argentinians either pay the higher prices or do without needed medicines, says Pablo Challu, executive director of CILFA, a consortium of Argentinian drug makers.
Argentina's current drug patent law, in effect since 1864, provides patent protection for manufacturing processes used to make specific products, but not for the products themselves. The U.S. Pharmaceutical Manufacturers Association and the U.S. government want Argentina to expand the law to include product protection as well.
Argentina's existing patent laws have helped fuel the development of a vibrant sector of the Argentinian economy engaged in the making of pharmaceutical drugs, as well as leading to prescription costs far below what U.S. citizens pay for identical drugs, Challu says.
"Why not tell the truth that what they are after is a substantial increase in the flow of resources away from this country?" says Challu, Argentina's foreign trade minister during the late 1980s.
Challu, an economist by training, estimates that the price increases for drugs under the U.S.- favored patent exclusivity system would exceed 273 percent in Argentina. Consumption of drugs would decline by 45.4 percent as many people do without medicines because of higher costs.
"If the national labs disappear, it will be possible for the foreign labs to charge the same prices in Argentina that they charge in the United States," Challu contends.
Challu also says he objects to the U.S. government's heavy handed tactics to secure this change in Argentina's patent law, which has been in place since 1864.
"If the monopolistic patent advocated by American institutions and the American embassy in Argentina were really the best thing for this country," he asks, "why are they threatening us with trade sanctions if we make a sovereign decision to choose another path?"
The U.S. government and U.S. drug makers support product patent restrictions to protect the inventions and make it worthwhile for an inventing firm to develop new drugs.
"What is the purpose of going into that kind of research, spending tens of millions of dollars on inventions, when you have to license it to someone else?" asks Harvey Bale Jr., senior vice-president of the Pharmaceutical Manufacturers Association.
Tighter patent restrictions would spur greater inventiveness in Argentina as well, he says. The Challu proposal would do the opposite, discouraging new research both by Argentine drug companies and by foreign drug companies operating in Argentina.
"This [proposal] is a gimmick to [enable] some of the Argentine companies who would otherwise be doing their own research to continue to be able to feed off from and bleed the innovators," Bale says.
Bale notes that this is not simply an issue relating to pharmaceuticals. The Clinton administration's efforts to secure better intellectual property protections in world markets would also help protect computer software innovations, as well as preserve an author's rights to books and articles, he says.
U.S. Trade Representative Mickey Kantor this spring included Argentina on its "Priority Watch List" for insufficient laws on intellectual property. The designation represents a warning to Argentina that it needs to modify its trade laws to satisfy the United States or face trade sanctions in the future.
But Argentina's existing patent laws have advantages, particularly for drug prices. Price comparisons of the same drug, form, strength and quantity in the United States and Argentina reveal the much lower prices found in the South American nation, even where the same corporation is marketing the same drug in both places.
Such comparisons demonstrate both the excessive profits the firms can extract in the United States, a nation with broad patent protections, and suggest what Argentineans would have to pay if that South American government succumbs to U.S. pressure.
Consider, for example, the case of Zantac, a popular anti-ulcer medication. A Zantac prescription that costs $91.98 in the United States costs $18.17 in Argentina. Both are made by Glaxo Pharmaceuticals. The difference is that in Argentina Glaxo must compete with 12 Argentinian national laboratories making the drug and charging an average of $12.75 for the dosage.
The story is similar for Feldene, produced by Pfizer Inc. A dosage that sells for $37.88 in Argentina sells for $228.44 in the United States, six times more. The average price charged by 27 national laboratories in Argentina for the same drug, form, strength and quantity is $15.85, well under even the Pfizer price in Argentina.
A recent study by Challu showed the Zantac and Feldene examples to be typical. Of 38 drugs studied by Challu, only two were cheaper in the United States than in Argentina, 10 were more than 500 percent more expensive in the United States than Argentina, and four of them were more than 1,000 percent higher in the United States. The drugs with these four highest mark-ups were: Ativan, sold by Wyeth-Ayerst Laboratories and used to treat anxiety and depression; G.D. Searle's Flagyl, used for various infections; Smith Kline Beecham's Tagamet, an anti-ulcer treatment and Pfizer's Feldene.
A United Nations report earlier this year on intellectual property rights estimated that national pharmaceutical firms account for 55 percent of the total sales in the domestic Argentinian market, a performance the report said was "rather exceptional in the developing world."
If Argentina is forced to adopt product patents for drugs, the nation may end up repeating the experience of Italy, where tighter patent laws led to huge increases in sales by non-Italian drug companies. That led to a dramatic decline in Italy's trade balance on pharmaceuticals and medicines. In 1978, the year Italy reestablished product patent protection for phamaceuticals, the country had a trade surplus of $40.6 million in medicines and pharmaceuticals. By 1989, that surplus had given way to a deficit of $826.8 million, the UN report said.
During the first seven years after the change in the law, foreign firms' sales in Italy increased by 200 percent. The foreign companies' gain was the domestic corporations' loss; many smaller laboratories in Italy were closed as a result of the changes in the law, while many others were swallowed by foreign firms, according to the report.
In an attempt to save Argentina's pharmaceutical sector from the fat that befell Italy, Challu has proposed a middle course of patent law reform that would require payments of modest royalties to a company which invented a drug while allowing competitors to produce the drug by another process.
Challu estimates that his approach would keep drug prices 38 percent below what they would be if Argentina adopted the U.S. proposal while increasing the quantity of pharmaceuticals domestically produced and sold by more than 207 percent. Stephen Schondelmeyer, director of the Pharmaceutical Research Institute of Management and Economics at the University of Minnesota's College of Pharmacy, says that Challu's royalty plan is better for consumers than Canada's recently abandoned compulsory licensing plan, which allowed for at most two producers of a drug. Challu's plan, in contrast, would allow for as many producers as wish to pay royalties.
Schondelmeyer says having larger number of producers competing to sell drugs may lower prices by 50 to 80 percent from monopoly levels, compared to about 20 percent price reductions when there are only two producers.
But Challu's study, coupled with the U.N. report, demonstrate the difficulties people in the developing world have obtaining affordable medicines when the U.S. government and U.S. industry urge tight patent restrictions.
By requiring the licensing of the technology under royalty terms which are fixed by the government, rather than providing exclusive marketing rights, Argentina is trying to preserve a competitive and low-cost pharmaceuticals industry.
- Steve Farnsworth
Taxpayer Assets Project.