A Patent Point of View

 James Love, in espousing the shortsighted view that weak patent protection enables a country to provide relatively cheap pharmaceuticals, misses a major point about intellectual property protection: Countries that condone pharmaceutical patent piracy discourage the development of a home-grown pharmaceutical industry. In the long run, this hurts the country's economy.

 Lax intellectual property protection can also endanger public health, as the production of a substandard, spurious and counterfeit drugs can flourish in such an environment.

 And, of course, this in addition to the harm, done to U.S. and other research-based pharmaceutical companies. Pirate companies in Argentina and Brazil alone, by copying drugs without compensating the inventor, rob the U.S. drug companies of $1 billion a year in lost export revenues. This is money that might have been invested in research and development of new life-saving medicines that could benefit patients all over the world.

Gerald J. Mossinghoff
Pharmaceutical Research and Manufacturers of America



Mr. Mossinghoff's letter says that countries that do not protect patents on drugs will likely discourage the development of a home-grown pharmaceutical industry. This is clearly not true, if you consider the non- R& D sector of thepharmaceutical market. Argentina boosts a large domestic industry precisely because it allows domestic firms to produce and sell drugs that are protected under patents in the U.S. and elsewhere. If Argentina introduces 20 year patent protection without compulsory licensing, it will see a significant decrease in the sales from its domestic pharmaceutical industry.

 Very few if any developing countries can reasonably expect to develop an important R& D pharmaceutical sector, not matter what changes are made in domestic patent laws. Even in developed counties, the evidence is that R& D is principally driven by public investments in R& D, which make private sector investments far more likely. In Argentina and elsewhere, we have encouraged governments to increase public spending on drug development R& D.

This allows governments to focus research on health problems of particular interest in those countries, to build the research capacity of domestic academic institutions, and to benefit domestically owned companies, as is often done in the United States, by the National Institutes of Health (NIH), which clearly favors firms with significant U.S. investment and employment over "foreign" companies.

 Mr. Mossinghoff has described the domestic pharmaceutical companies in Argentina and Brazil as "pirates," which are robbing U.S. drug companies of $1 billion in export revenues. Mr. Mossinghoff doesn't mention that changes in patent laws will be accompanied by other changes in the terms of trade between the U.S., Argentina and Brazil, which will likely hurt other U.S. businesses. More important, however, from my point of view, is his contention that pharmaceutical prices should be solely viewed in the context of export earnings and trade agreements. I was in Brazil in August, and I had the opportunity to experience first hand the hardships faced by a population that earns very low wages. The minimum wage for Brazilian workers in Sao Paulo was $65 a month. The U.S. embassy told me that drug prices in Brazil were about one fifth the price in the U.S. If Brazil takes actions that raise drug prices, it will cause millions of Brazilians, including children, to forgo needed medical attention. I do not believe that the U.S. government should force the Brazilian government to raise drug prices as its highest bilateral trade priority.

 Our advice in Brazil was similar to the advice given in Argentina. We urged the government to impose an R& D royalty on drug sales, and to use that money to fund R& D on problems that were particularly important to the citizens of Brazil. We believe this would greatly benefit the world, particularly given the rich biological resources in Brazil. However, while I was making this argument, the Brazilian representatives of PhRMA were telling the government that the cost of development of a new drug was $359 million, and that each investment was a 5,000 to one risk. Since this is an expected development cost of $1.8 trillion per drug, the government was momentarily persuaded that it was just too expensive for Brazil. Of course, the absurdity of the PhRMA assertions on drug development costs were soon appreciated, but clearly PhRMA was actively discouraging the government from funding pharmaceutical R& D. Of course, in the United States, PhRMA is extremely supportive of the large NIH R& D budget, which is used to underwrite the cost of R& D for many of the most important new drugs that enter the world market.


Wrong Impression

 An article titled "Monkeying With the Milk," in the June issue of Multinational Monitor was a well-researched and generally accurate account of the debate over recombinant bovine growth hormone (rbGH). But, in quoting the Consumers Union's Michael Hansen, your report unduly emphasized a narrow technical issue and left an erroneous impression of why CU opposes the use of rbGH.

 Dr. Hansen did indeed note that the hormone insulin-like growth factor 1 (IGF-1), which is found at elevated levels in milk from cows treated with rbGH, has been shown to promote the growth of tumor cells in laboratory experiments. However, he made that point in the context of explaining some of the unanswered questions about possible long-term public health impacts of rbGH use. Exposure to IGF-1 is one of several issues on which CU believes more and better scientific data are needed. But by emphasizing this point, your report implied that CU currently believes the use of rbGH increases consumers' cancer risk. That is not the case.

 CU has spoken out against the use of rbGH for several years, and we will continue to do so. Our posture is based on a broad analysis of the benefits, costs and risks to consumers of the use of this hormone, not primarily on the narrower and largely theoretical possibility of increased cancer risk.

 Whatever its perceived benefits to the drug companies who sell it and the dairy farmers who choose to use it, rbGH offers no clear benefits to consumers. The drug's purpose is to boost milk production, when the United States already suffers from a surplus of milk. Economic analyses indicate that the retail prices of milk and milk products do not go down in response to an increased oversupply. But the federal government is committed to buy up surplus milk, and the cost to taxpayers of that dairy- industry support program could increase by hundreds of millions of dollars in the next few years because of rbGH use.

 CU, like the FDA, believes that use of rbGH will increase the risk of udder infections in treated cows, which in turn is likely to result in increased antibiotic use, and may produce a slight decline in the average quality of milk from rbGH-treated herds.

 Given these likely impacts of rbGH use, and the lack of any tangible benefit to consumers to offset concern about unresolved questions of long-term health impacts, we are not surprised that surveys show a large majority of the public would prefer not to buy milk from rbGH-treated cows. CU believes consumers have the right to make that choice, and the fate of rbGH should be decided by market forces. For those reasons, we will continue to press for appropriate labeling of milk and dairy products from rbGH-treated cows.

Rhoda Karpatkin,
President, and
Edward Groth III, PhD,
Director, Technical Policy and Public Service
Consumers Union