The Guardian 2 November, 2005
Profit put first in bird flu battle
A number of countries in Asia and south-eastern Europe are experiencing outbreaks of avian
influenza (bird flu) affecting mainly poultry (chickens, ducks, geese and turkeys). The virus
responsible for the current outbreak is H5N1 — a type of influenza not normally associated with
human disease. But as the World Health Organisation and governments work to find solutions and
bring the problem under control, drug giants such as Roche and GlaxoSmithKline are determined
to make a profit killing.
In the United States, even some conservative Republicans have reacted against Roche's greedy
grab for profits. The company was put under pressure there to increase production the Tamiflu
antiviral drug and allow generic producers to increase the number of pills in circulation.
The senior Democratic Senator for New York, Charles Schumer, has accused Roche of "putting
profits ahead of world safety". After threats of the introduction of legislation to force Roche to
release its stranglehold on the patent the company relented slightly, announcing it would talk to
four generic drug manufacturers about increasing production. It has now licensed the four
companies to manufacture the drug.
So far 40 governments have placed orders with Roche for Tamiflu: any government ordering bulk
amounts will have to wait a year before the order is filled.
In Australia GlaxoSmithKline has the exclusive rights to the production of the antiviral drug
Relenza. The company says it "would have to look at the overall circumstances" before it would
allow generic copies.
Patent laws grant exclusive rights over the manufacture and exploitation of products to the patent
owner — a minimum 20 years in World Trade Organisation member countries and up to 25 years in
countries such as Australia, which allow patent term extensions.
Under conditions of monopoly supply, the patent holder determines the price and volume of
production. Prices are set in relation to market conditions rather than production costs or the price
at which the social benefit can best be optimised.
An article in the latest Medical Journal of Australia says that if there were no blocking
patents the Australian Government could begin to explore the option of generic production
immediately. "To secure certainty of supply the Government would have to find ways in which to
make it commercially attractive for a generic company to invest in production", says the
Journal.
"One way to assist a generic company to achieve economies of scale would be for the Australian
Government to offer a company export assistance to those countries in Australia's region that were
in need of a stockpile and that had little prospect of meeting that need. There would be much
strategic wisdom in Australia helping neighbouring countries in this way."
The Journal points out that "if the manufacturers cannot meet demand at cost-effective
prices" then there are "health, economic and ethical arguments for a 'government use' licence to be
issued and for generic capacity to be developed and deployed rapidly in Australia."
Buddhima Lokuge and Peter Drahos, from the Centre for Governance of Knowledge and
Development at the Australian National University, say Australia should do the
following:
Announce that it will investigate the issue of compulsory licence and local
manufacture;
Explore the possibility of exporting any generic surplus to neighbouring high-
risk countries like Indonesia;
Express public support for countries in the region taking the compulsory
licensing option and raise the issue of a coordinated approach to generic manufacture in the
region.