Global Poverty: More Big Business is Not the Solution

By most accounts, UK Prime Minister Gordon Brown is genuinely passionate about reducing global poverty.

But he is not willing to challenge the structures of the global economy that generate poverty, or the corporations that build, benefit from and maintain those structures.

Nor, apparently, is he immune to gimmicky notions of corporate leadership to support development, or the lure of high-profile summits to shed light on new plans to do — very little.

Thus, earlier this week the UK was treated to the spectacle of the Business Call to Action summit, which Brown’s office co-sponsored with the UN Development Program. More than 80 CEOs of large companies gathered with Brown and other luminaries to discuss how they could help meet the Millennium Development Goals, which aspire to reduce global poverty by half by 2015. Roughly two dozen of these CEOs — from Anglo American, Bechtel, Citigroup, Coca-Cola, De Beers, Diageo, FedEx, Goldman Sachs, GE, Merck, Microsoft, SAB Miller, Wal-Mart and others — have signed the Business Call to Action, which states, “as leaders from the private sector, we declare our commitment to meet this development emergency.”

The premise of the event, as Gordon Brown said, was to advance “a new approach — moving beyond minimum standards, beyond philanthropy and beyond traditional corporate social responsibility — important though they are — to develop long-term business initiatives that mobilize the resources and talents that are the central strengths of global business.”

The mantra of the event was for corporations to “explore new business opportunities that use their core business expertise” and that also help spur development.

Taken at its face value, this was, um, not exactly inspiring. Says Peter Hardstaff of the UK-based World Development Movement, the CEOs “have all agreed — to do more business.”

But the problem goes way beyond the fact that business as usual — or even a little bit of new business initiative with a development-conscious orientation — is not going to do much to reduce global poverty. The real problem is that business as usual is a central part the problem.

“Instead of holding these companies to account for their actions,” says John Hilary, executive director of War on Want, a UK-based anti-poverty group. “Gordon Brown has allowed them to portray themselves as allies in the fight against poverty. The prime minister should be working to address the poverty and human rights problems caused by business, not giving the companies a free ride.”

War on Want focused attention on the harmful development impacts of many of the corporations signing the Business Call to Action. The group has campaigned against mining giant Anglo American. It has documented how Anglo American has benefited from human rights abuses associated with civil wars in Colombia and the Democratic Republic of Congo (DRC). Local mining communities in Ghana and Mali have seen little economic benefit from Anglo American’s operations (or the spike in the price of gold); instead, says War on Want, the company’s mines harm their environment, health and livelihoods.

Other corporate signatories to the Business Call to Action have directly hurt poor people through their “core business” more than can be offset by development-tinged ventures (even assuming such ventures succeed). Wal-Mart contracts with sweatshops. Bechtel tried to price-gouge and rip-off Bolivian consumers and the Bolivian state through control of the country’s privatized water system. Merck refuses to license life-saving medicines for cheap generic production.

Simultaneous with Brown’s business summit, Action Aid UK pointed to a major systemic abuse by multinational corporations that undermines development: They don’t pay their taxes. The group released a report looking at tax payments of 14 corporate signers of the Business Call to Action. It found that these companies combined are underpaying taxes by more than $6 billion a year, as compared to what they would pay if they paid at the statutory rate in the United States and UK. The group did not suggest any illegal activities by the companies — there are plenty enough legal tax avoidance strategies.

Money lost to developing countries through capital flight and tax avoidance is many times greater than aid flows into poor countries, says Jesse Griffith, the lead author of the Action Aid UK report.

Tax avoidance is a key issue because it strips money from national treasuries that would otherwise be available for social investment, and because it reflects structural problems that could and should be cured without any need for global philanthropy or aid.

But tax avoidance is only one of many ways that corporations exploit and perpetuate economic policies and institutional arrangements that contribute to poverty or inhibit authentic development.

The World Development Movement issued a 10-point challenge to corporations that claim an interest in promoting global development. It called on companies to stop using their political influence to promote policies that undermine development. It urged companies to: stop lobbying to open up developing country markets, and let developing countries “use the same trade policy tools industrialized countries used to get rich;” stop demanding rich country-style patent rules for the poor; support radical government action, starting in rich countries, to address climate change; support binding codes of conduct for multinationals, including respect for labor rights; end support for privatization and deregulation, including particularly financial deregulation; stop lobbying for and exploiting tax loopholes; and other measures.

This is not exactly an agenda that global business leaders are likely to take up soon.

On the other hand, it’s not exactly likely that global business leaders are going to lead the way to end global poverty.

Among other things, that’s going to take a global movement, led from the Global South, to implement the policies implicit in the World Development Movement call.

Big Pharma Digs In

The nations of the world are currently debating how to design new medical research and development (R&D) mechanisms to serve the twin goals of promoting innovation to meet the particular needs of developing countries and ensuring that important medicines are accessible to people in the developing world, regardless of their income.

A successful conclusion to ongoing negotiations at the World Health Organization (WHO) — scheduled to conclude at the end of this week — could yield dramatic public health benefits in the years and decades ahead. Long-ignored research needs of poor countries might be addressed. Important new products might become affordable for all patients, not just those who live in rich countries or happen to be wealthy. New collaborative systems of conducting R&D might yield scientific breakthroughs for emerging public health threats that might otherwise be delayed, or never occur.

Big Pharma is watching the WHO talks with trepidation. The brand-name pharmaceutical companies are open to new government resources being invested to find treatments for diseases endemic to developing countries — this represents a new business opportunity, after all. But they fear losing their pricing prerogatives, including to charge exorbitant rich country prices in middle-income countries. The companies are also very concerned that new R&D mechanisms may displace the global patent-monopoly system around which they have built their business models — and which enable them to earn enormous profits.

In an effort to direct the WHO negotiations away from bolder measures that would advance public health objectives but might threaten its parochial interests, the industry is deploying the diverse set of instruments in its policy-influencing toolbox.

Predictably, Big Pharma is heavily influencing the positions of rich country governments in the WHO talks. Recent reports indicate disappointing intransigence from the United States, the European Union and Japan — a shift from earlier negotiating rounds.

Industry finagling managed to get the Biotechnology Industry Organization, the U.S. biotech trade association, designated as “experts” for the WHO negotiations — a designation that gives BIO representatives seats in the WHO negotiating room.

The global pharmaceutical industry confederation — the International Federation of Pharmaceutical Manufacturers and Associations (IFPMA) — has filled the corridors outside the talks with lobbyists. IFPMA has 59 persons officially registered to participate in the meeting.

More insidiously, the industry’s funded patient group and think tank allies have waged a propaganda campaign to discredit the WHO initiative — without revealing their financial entanglements with the industry.

An entity called Patients and Patents has circulated a “Patient Declaration on Medical Innovation and Access.” This declaration insists on the importance of patient group involvement in WHO negotiations before “recommending changes to international patent protection (IPP).”

Patients and Patents is governed by a seven-member advisory board. Six of the seven members of the advisory board are linked to the brand-name pharmaceutical industry, either directly as an individual or through their primary organization, and the seventh member has at least a weak tie to the industry.

One member of the governing advisory board, for example, is Durhane Wong-Rieger. Wong-Rieger is chair of the Consumer Advocare Network, which is funded by Canada’s pharmaceutical industry trade association Rx&D. Wong-Reiger is also president of the Canadian Organization for Rare Disorders, which is funded by Actelion Pharmaceuticals, Amicus Therapeutics, Apo Pharma, BioMarin Pharmaceutical, BIOTECanada, Debiovision, Genzyme Canada, Hoffmann-LaRoche (Roche), Merck Frosst Canada, Neurochem, Novartis, Orfagen, Ortho Biotech, Pfizer, Rare Disease Therapeutics, Shire Human Genetics Therapies, Sigma-Tau Pharmaceuticals and YM Biosciences.

A high proportion of the signers of the Patient Declaration are also connected to the brand-name pharmaceutical industry. A review by Essential Action (an organization I direct) found 61 of 110 of the signers of the Declaration have industry ties.

A global network of industry-affiliated — and frequently industry-funded — libertarian think tanks have placed misleading op-eds in news outlets around the globe, denouncing the WHO negotiations. The authors do not disclose their industry ties.

Tim Wilson, for example, placed op-eds in the Business Standard (India) and in the Times of India, arguing that the WHO talks would undermine innovation and hurt people in developing countries. These articles identified him as affiliated with the Institute of Public Affairs in Melbourne, Australia. They did not note that at least half of Institute of Public Affairs’ board of directors is comprised of individuals with financial ties to the pharmaceutical industry.

Other op-eds by industry-allied think tanks and academics have appeared in recent days in Malawi, Rwanda and Colombia. These followed a series of op-eds by industry-connected nonprofits and academics in the United States over the previous month. The U.S. op-eds focused on Thailand’s issuance of compulsory licenses — government authorizations of generic competition for products that remain on patent — to make cancer, heart disease and HIV/AIDS drugs available to poor people in Thailand.

Big Pharma’s effort to curtail or contain the WHO negotiations on medicine innovation and access is a comprehensive one. The industry is not at all shy about exercising its political power, and it is doing so. But Pharma execs also know that the industry suffers from enormous public relations problems that undermine its influence. Industry-funded or -connected organizations that trot out to propagate Big Pharma’s myths and deceptions can be far more effective in muddying policy debates.

As the WHO talks began this week, Dr. Christophe Fournier, president of the International Council of Médecins Sans Frontières/Doctors Without Borders, said, “This week is not just about countries signing checks. It’s about changing the rules of medical innovation — coming up with new proposals that ensure the drugs we need are developed and are made affordable. But with so many vested interests involved, will governments be bold enough to take that step?”

Thanks to Big Pharma’s multi-faceted pressure campaign, that remains an open question.