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By Danna Farhang

Tensions are brewing as a recently enacted agreement on intellectual property rights brings local manufacturers who want to produce generic versions of new drugs affordable for the local market into direct conflict with the claims of multinational pharmaceutical companies and lobbyists.

The Trade Related Aspects of Intellectual Property Rights (TRIPS) agreement came into full effect in Egypt on January 1, 2005 at the end of a five-year transitional period that was used to allow the nation to bring legislation and practice in line with international Intellectual Property norms. The agreement, created by the World Trade Organization (WTO), offers a wide range of protection to patents and, in this case, patented medications designed by major pharmaceutical companies; signatory governments have a legal obligation to enforce the agreement.

However, five years might not have been enough: American drug giants are already complaining that Egypt is infringing on their rights.

The Pharmaceutical Research and Manufacturers of America (PhRMA), a lobby group representing the interests of major US drug developers, recently sent a letter to former US Trade Representative Robert Zoellick (now deputy secretary of state to Condoleezza Rice), demanding he take action in response to an announcement by Egyptian Minister of Health and Population Mohammed Awad Tagedin that the government was granting domestic market approval to several hundred generic versions of patented drugs.

The expected number of medications slated to be reproduced ranges from 500 to 850, although only 41 drugs have been approved so far this year. The total cannot be confirmed because the ministry is not required to unveil the list of medications prior to their release.

PhRMA claims the decision is in contravention of Egypt’s responsibilities under the TRIPS agreement and is demanding the government apply a ‘data exclusivity’ ruling on any and all medications produced generically in the country. Under this restriction, local pharmaceutical manufacturers would not be able to use test data, which brand-name companies must supply by law, to create their own cheaper generic versions.

TRIPS reads: “when [required] as a condition of approving the marketing of pharmaceutical products.. which utilize new chemical entities, the submission of undisclosed test or other data, the origination of which involves a considerable effort, shall protect such data against unfair commercial use.”

“By establishing this ‘data-exclusivity’ principle, the government would [also] require generic drug companies to submit clinical data of their drugs’ efficacy,” says Aya ElHilaly, a health and human rights program officer at the Egyptian Initiative for Personal Rights (EIPR). In doing these tests, El-Hilaly warns “this may make drugs unavailable for five to ten years,” and may cause the cost of drugs to become so high that they would be inaccessible to the average Egyptian.

Data exclusivity was originally intended to provide pharmaceutical companies that lacked a comprehensive drug patent extended protection of their innovations for a period of five to 20 years in order to compensate for the research and development invested in the drug. For the most part, though, data exclusivity has been most useful for major and profitable discoveries in the pharmaceutical industry.

Presently, generic drug manufacturers are not required to test their drugs for effectiveness in the same rigorous manner as their brand-name counterparts because the main components of the drugs have already been proven to work. What this means is that generic drugs do not have to undergo clinical trials on humans and animals, which tend to come at a significant cost.

EIPR claims that PhRMA is trying to halt the development of a free trade agreement (FTA) between the US and Egypt as a penalty for Tagedin’s announcement. The NGO fears that because Egypt is so eager to have an FTA with the US, the government is predisposed to bow to demands made by the pharmaceutical industry.

This is not the case, says Bristol-Myers Squibb representative Ahmed El-Tonsy.

“When it comes to our interests, it is in our favor to have a free-trade agreement,” he says. “What was raised by PhRMA was not akin to a carrot and a stick. It was merely raising the issue that the Egyptian government was not addressing its’ responsibilities. And PhRMA is not in a place to cancel an FTA.”

El-Tonsy says the situation with PhRMA began when the major pharmaceutical players noticed that local companies were manufacturing their patented drugs. He claims Bristol-Myers Squibb, like others, tried to address the situation locally through legal warnings. When this didn’t work, it was taken a step further to the Ministry of Health, where he claims the company was told that the drugs being manufactured locally were not the same as the international brands. It was then brought to the attention of the PhRMA lobby group in the United States.

In response, the Ministry of Health and EIPR both have claimed that local manufacturers’ activities do not violate any part of the TRIPS agreement. In a statement released last month, EIPR says “the TRIPS agreement does not include any ‘exclusive’ rights to the test-data originator [the pharmaceutical company] for any given period and gives countries the freedom to determine how to protect this data only from ‘unfair commercial use,’ without defining such use.”

Even if international arbitration results in some restrictions, experts have said that the situation must be dealt with on a case-by-case basis because the Ministry of Health has not yet released the list of drugs that it plans to permit on the market and so the situation cannot be approached with a broad stroke.

Monel Abdel-Baki, an economist and expert on the TRIPS agreement at the American University in Cairo, claims that much of the tension between international Big Pharma and local drug makers stems from the main ingredients of drugs being imported and subsidized by the government, leading to an unfair advantage for local pharmaceutical producers.

Furthermore, “you have a sort of formula [for the creation of the medication] and in many cases it would not be similar [to the patented drug], it might actually have some substantial differences from its international counterpart,” she says.

If the data exclusivity clauses are enacted, there could be major effects on local producers. “Egypt is not a major producer as it used to be, but it has the know-how and it would be unfair to deprive Egypt of this,” says Abdel-Baki. She also believes that it may have a long-term impact on Egypt’s exports and a trickle-down effect on other industries.

“Egypt now exports mainly to Arab nations as well as many East African nations and this amounts to about $300 million,” she says. However, these additional rules, if included through pressure from US pharmaceutical giants, “might affect the decline in Egyptian exports and might affect the balance of trade and the balance of exports in Egypt.”

Applying ‘data exclusivity,’ EIPR claims, may also have the impact of drastic price increases for local consumers.

“Sales in developing countries for these companies are very minor. Even if they are losing, the loss is very small,” El-Hilaly says. “In this case, the government should take the stance that people have the right to accessible and affordable medicine, versus the need for profit of these pharmaceutical industries.”

However, El-Tonsy argues that they must protect their interests as well. “Egypt is one of the most attractive markets in the Middle East if we [can’t] work in our region, then we would have left by now.”  bt