Contradictory as it may seem, the big pharmaceutical companies give little priority to the human right to health, in spite of the fact that they play a strategic role in this context. Their main goal is profit, and as they work in an industry whose final clients are highly vulnerable people – those with illnesses – this gives them a much greater margin than in other industries to fix inflated prices.

However, small developing countries have little capacity for negotiation in the face of these companies, and if they are party to trade agreements, they often find themselves with their hands tied by measures such as the disproportionate extension of the duration of patents, or guarantees of profit levels that the companies can invoke in arbitration tribunals when they see their interests affected by public policies. This was the case of the lawsuit that the multinational tobacco company Phillip Morris pursued against Uruguay when this country adopted legislation to protect the health of smokers[1].

In this context, it was a heartening precedent to see that, this year, the Human Rights Council of the UNO adopted two significant resolutions to guarantee the human right to health. The first reaffirms that the access of all persons to affordable, secure, efficacious and good quality medicines is a condition for enjoying the right to health, considering that this could save millions of lives every year; and the second recognizes the need to strengthen the capacities of States in questions of public health.

These agreements, which moreover were adopted by consensus – something that is fairly unusual on issues such as this one – constitute a political backing for States – particularly those of developing countries – that seek to adopt policies to broaden the protection of their population. Thus the UN Council urges countries seeking to reduce the cost of medicines to have recourse to the flexibilities already available under the TRIPS agreement (on trade related aspects of intellectual property rights) of the WTO.

The South Centre, in a document of proposals presented to a High Level UN Panel on Access to Medicines[2], recommends that "An effective way to address policy incoherence between the right to health over trade and IP [intellectual property] rules is first and foremost, to assert the primacy of the right to health for all, over trade and intellectual property rules. The attainment of good health and well-being is an objective as well as a human right, whereas trade or intellectual property are means. Thus there should be primacy of health over trade or IP.”

Aggregated public procurement

One of the mechanisms that some countries are already implementing to tackle the economic power of the big pharmaceutical enterprises is that of public procurement. Central America, for example, already has a common mechanism via COMISCA[3], through which they collectively buy some 64 basic medicines, which gives them a greater capacity for negotiation vis-à-vis the producers. This mechanism is known as "aggregated procurement".

Ecuador has just undergone a similar process, with the initial purchase of 326 medicines via a reverse auction (where it is the sellers that bid and the lower price wins) to supply the whole public health system of the country during the next two years. As an initial step, last year they undertook a regional analysis of the prices of all the most essential medicines – those used for treating the main causes of death in the region; the study revealed that a single commercial enterprise would sell the same remedy in different countries with price variations of up to 300% or even 600%. Santiago Vázquez, General Director of the National Service of Public Contracting of Ecuador – SERCOP – commented to ALAI that this happens because, when the pharmaceutical companies see the opportunity to make more profit in the short term "they have done it without a second thought…”, adding that “what we have seen in South America and Latin America is a widespread strategy for controlling market power".

Moreover, the UN and the European Economic Commission have published reports that indicate that the big pharmaceuticals establish exorbitant prices utilizing a whole range of mechanisms, including patients, NGOs, the media, medical doctors, in order to orient purchase towards certain trademarks; the UN therefore recommends the establishment of mechanisms such as aggregated procurement processes, Vázquez pointed out.

When the companies were obliged to compete in price in order to sell in large quantities, they were still interested. More than 160 companies took part in the Ecuadorian auction, among them 27 Latin American companies of which 7 were awarded contracts. The purchase meant a saving for the country of 320 million dollars. The new factor in the Ecuadorian auction is that it was done in a totally electronic and automatic manner, and publicly, which made social monitoring possible[4]. "Anyone can see what medicines the state has purchased, their sanitary registration, and the final price," commented the government official.

Nevertheless the director of SERCOP complained that certain companies had gone out of their way to try to weaken the process, in particular criticizing the inclusion of generic medicines, as if they were of lower quality. The quality does not depend on a patent, he emphasized. Rather, the process of procurement has incorporated a mechanism of quality control of the drugs that, in addition to the sanitary registration as a basic requisite, involves a network of laboratories that receive random samples to analyze from inspection bodies, the results of which are publicized on the Web.

Similarly, he also noted as a key issue the role of the media in public procurement. SERCOP has issued a manual of good practices in public contracting, including a specific chapter for the media, that calls for a social pact. Vázquez indicated that Ecuador itself was seriously affected by a conflict of interest of a private television channel that carried out a campaign against the auction, for six weeks, with misleading information and lack of due balance in its coverage. "When the case was analyzed, we discovered a clear conflict of interest among the channel, the journalist and the pharmaceuticals, because her family has a direct relation with the sale of medicines to the State". When SERCOP requested the Superintendent of Communication to take action, they were accused of attacking the freedom of expression, a version that found an echo in international media. Because of this Vázquez insists that the media must make it clear whether or not they have conflicts of interest when covering news stories on public procurement.

Meanwhile, Ecuador has passed on the results of their study of drug prices in the region to Unasur and their Health Council (ISAGS), in the hopes of enabling a joint purchase of medicines across South America.

“The pharmaceutical companies, known as ‘big pharma’, have shared out the world market among themselves, indicating in which continents each will act”, commented Santiago Vázquez. “Both the big pharma and local drug companies at the Latin American level consider medicines as a business and not as a right. In the face of this, it is the duty of States to balance conditions so that medicines become a right rather than a business. In this vein, public procurement plays a fundamental role", he concluded.

02/09/2016

(Translated for ALAI by Jordan Bishop)

- Sally Burch is a journalist with ALAI.