Long, Strange TRIPS: The Grubby History of How Vaccines Became Intellectual Property
Even within the walls of the World Trade
Organization, the Trade-Related Aspects of Intellectual Property Rights agreement, or TRIPS, is a paradox and a freak: a temple to monopoly inside the
church of free trade.The
Biden administration’s announcement on May 5 that it supports an emergency
waiver of intellectual property rules by the WTO has been
rightly heralded as a major event. Even if the White House statement was vague
on the details, the news jolted to life a seven-month stalemate inside the WTO over
how to overcome a supply crisis that has seen only three-tenths of 1 percent
of vaccines go to low-income countries. The European Parliament may push the needle further in
June when it votes on a resolution calling on European capitals to join
Washington on the side of more than 100 countries that support lifting intellectual property restrictions
from products used to treat and contain Covid-19.One thing that hasn’t
changed is the tone of ridiculous solemnity around the intellectual property regime in question. Listening to the most stalwart
defenders of TRIPS, it’s possible to confuse the proposed waiver with a particle
accelerator of unfathomable and experimental power. To hear the trade
associations and their political allies tell it, meddling with TRIPS
jeopardizes your job, your safety, and the global economy, as much as or more than
SARS-CoV-2, as well as any hope of future innovation and progress. In announcing the
White House decision, U.S. Trade Representative Katherine Tai gravely described the waiver as an “extraordinary
measure.”In
truth, there is nothing extraordinary about suspending TRIPS to address what
the WTO’s director-general calls “the moral and economic issue of our time.”
There can’t be, because there is nothing extraordinary about TRIPS itself. Its
backstory is almost impossibly shallow and grubby; its founding documents younger
than Justin Bieber. TRIPS is not the expression of a universal post–Cold War
consensus, in the way the U.N. Declaration on Human Rights gave voice to human
aspirations after World War II. It was born as a brute and profoundly
undemocratic expression of concentrated corporate power—the work of “less than
50 individuals,” according to a U.S. trade official present at the creation.
One of that official’s reluctant Indian counterparts, Prabhat Patnaik, has described
the TRIPS affair as “a parody of the wildest conspiracy theory.”The negotiations that led
to the creation of TRIPS were less held over a table than conducted on a rack.
It was the only way to enforce the
peculiar and nearly universally rejected concept of medical monopoly, an
American innovation that cut hard against centuries of moral, economic, and
legal tradition, including those of the wider West.In 1951, Jawaharlal Nehru, the first
president of the newly independent India, decided to build a penicillin
factory. None of the big commercial producers, however, liked the idea of
transferring the needed technology and know-how to a large developing country
like India. They instead offered to export the antibiotic in bulk, then bottle it in
Indian factories for local distribution and sale. Only Merck agreed to build an
actual factory. Knowing it was the only company to make this offer, it attached
onerous long-term royalty demands and placed limits on Indian control of the
technology.Nehru was leaning toward accepting Merck’s
offer when a delegation from the young World Health Organization arrived in New
Delhi. The officials presented Nehru with another option: UNICEF and the WHO
would provide grants to cover the full cost of building a penicillin factory, as
well as United Nations technicians to oversee tech transfer and train native
staff. As part of the deal, the U.N. representatives offered to set up a research
center affiliated with the factory, with the goal of developing India’s scientific
and technical capacity to make other antibiotics and essential medicines.It can be difficult to imagine today, but for
much of the Cold War, U.S. foreign and trade policies didn’t track with the
interests of the U.S. pharmaceutical industry.The U.N. deal came with only two strings:
India must promise to keep the factory fully in the public sector and share
relevant research or discoveries with a network of similar projects the U.N.
was establishing across the global south. Nehru accepted. The result was Hindustan
Antibiotics, the cornerstone of India’s emergent generics industry.It can be difficult to imagine today, but for
much of the Cold War, U.S. foreign and trade policies didn’t track with the
interests of the U.S. pharmaceutical industry. Truman’s State Department backed
the U.N. penicillin project in India over Merck, and generally supported an
internationalist agenda of building up native medicine capacity in the
decolonizing countries of Africa, Asia, and Latin America. Washington understood
that the drug industry’s attempts to protect its knowledge and markets abroad
not only lacked legal or moral bases but also threatened to undermine America’s
image and Cold War objectives by turning a potent form of soft power into a
symbol of capitalist greed and inhumanity.The day after Salk’s polio vaccine was
declared a success, Dwight Eisenhower offered to share all information and
know-how with every country that requested it, including the Soviet Union. A
month before John F. Kennedy’s assassination, he enraged the drug companies by issuing a memorandum that restricted private monopoly claims on government science—especially
federal research in “fields which directly concern the public health.” The
country’s interest, wrote Kennedy, is “served by sharing of benefits of
government-financed research and development with foreign countries to a degree
consistent with our international programs and with the objectives of U.S.
foreign policy.” Kennedy wanted to keep worldwide rights to public science
under public control so it could be shared and licensed broadly, rather than
claimed by a private actor hoarding and profiting from exclusive claims on intellectual property.Intellectual property is not like other
property. If you possess a cow, and someone steals it, you have lost your cow.
If you discover a process that makes cow’s milk safer to drink, the possession
of that knowledge by others does not reduce your store of it. In economic terms, knowledge is a “nonrivalrous” good. In Jefferson’s famous formulation, “He who receives an idea from me, receives instruction himself without lessening mine; as he who lights his taper at mine, receives light without darkening me.”Because of this, the
concept of intellectual property was resisted in Europe into the twentieth
century. As late as 1912, Holland rejected patents and maintained what it
called a “free trade in inventions.” This was consistent with the classical
liberal doctrine established by Adam Smith and John Stuart Mill, both of whom were
suspicious of patents. The nineteenth century’s most withering attacks on
intellectual property were found not in left-wing journals but in the pages of The
Economist, which advocated for the
abolishment of the English patent system. “Before [inventors] establish a right of property
in their inventions, they ought to give up all the knowledge and assistance
they have derived from the knowledge and inventions of others,” suggested the
magazine in 1850. “That is impossible, and the impossibility shows that their
minds and their inventions are, in fact, parts of the great mental whole of
society, and that they have no right of property in their inventions.”In accord with the prevailing view in Europe,
The Economist understood state-protected monopolies as vestiges of
competition-squelching royal privilege. The first patent system arose in
Elizabethan England not to “drive innovation” but to limit Crown-dispensed
monopolies. Hatred of these monopolies played a starring role in the American
Revolution, whose leaders were understandably unenthusiastic about patents.
Thomas Jefferson and Ben Franklin thought them impediments to progress and
mockeries of what they considered the incremental, cumulative nature of all “invention.” The phrase intellectual property was coined
in post-Revolutionary France to obscure the royal origins of monopoly and
deflect attention from the true subject of intellectual property claims, which
is not knowledge but markets. Since
markets do not fit easily into modern theories of rights and property, “those
who started using the word property in connection with inventions had a very
definite purpose in mind,” wrote the Austrian
economist Fritz Machlup:They wanted to substitute a word with a respectable connotation, “property,” for a word that had an unpleasant ring, “privilege.” [They] knew
that there was no hope of saving the institution of patent privileges except
under an acceptable theory … and in deliberate insincerity “construed the
artificial theory of the property rights of the inventor” as a part of the
rights of man.When medicines were added to this debate,
there was no debate at all. Only in the early to middle decades of the
twentieth century did the United States abandon an entrenched global taboo
against exclusive property claims on medicines. In Europe, this taboo lasted
another half-century. Switzerland, a pharmaceutical powerhouse, did not issue
drug patents until 1977. As with every country before the advent of the WTO in 1995, it had
little power to enforce these patents outside its own borders. Internationally,
something like a Dutch-style free trade in medicines still reigned in the
1970s. But not for long.Feeling betrayed by their own government, the drug companies watched the
rise of the generics industry in India and elsewhere with alarm. With help from
the U.N., developing countries during the 1950s and ’60s began to invest in
developing native scientific and manufacturing capacity. The pacesetter remained
Nehru’s India, whose alternative drug economy was perceived by U.S. drug
companies as a threat, not just to its profits in developing countries but to the
very legitimacy of monopoly medicine, including inside the U.S., where
the real money was made. Between 1959 and 1962, an Arkansas Democrat named Estes Kefauver oversaw
an investigation into the
postwar pharmaceutical industry. The
high-profile hearings run by Kefauver, chair of the Senate subcommittee on
monopoly, focused on the core of the industry’s business model: patents,
cartelization, and monopoly pricing. The hearings pulled back the curtain on a
post-taboo drug industry that Americans and the rest of the world now saw
clearly for the first time: markups as high as 7,000 percent on patented drugs
whose creation involved natural processes discovered in publicly funded labs.Some of the most scandalous details to emerge from the hearings involved
the industry’s global practices. When Kefauver revealed that many of the
highest markups by Merck and Pfizer targeted the small middle class in India,
the Nehru government responded with further investments in the country’s
burgeoning generics industry. Of equal concern to the drug companies, New Delhi
began the process of drafting a new patent law to replace the British colonial regime
still on the books. The drug companies lobbied hard to stop a law they worried could
serve as a beacon across the global south.The
concept of intellectual property was resisted in Europe into the twentieth
century. As late as 1912, Holland rejected patents and maintained what it
called a “free trade in inventions.”“The Western corporations aligned with conservative sections of the
Indian government to bitterly oppose and obstruct the public drug sector and
patent reforms,” says Prabir Purkayastha, a veteran organizer of the Indian People’s
Health Movement. “Nehru’s vision represented an especially fearsome threat: A
developing country with its own scientific institutions, cutting-edge capacity,
no patent protection, and factory lines that could provide pharmaceuticals to
its own huge internal market and other developing countries.”India’s Patents Act of 1970 was not as radical as it might have been. Modeled
on the patent laws of Western Europe, it banned medicine product patents but
allowed space for exclusive claims on methods related to their manufacture.Merck CEO John Connor announced the law “a victory for global
communism.” But as he and his fellow executives feared, the patent law was only
the beginning. During the 1960s and ’70s, the Indian drug industry not only
presented a working model of self-sufficiency and south-south cooperation. It
also demonstrated the potential of north-south tech transfer, which was
increasingly seen by the global south not as charity it must beg and be
grateful for but something it deserved as a matter of basic global justice. It was in response to this increasing
politicization of technology that the U.S. drug industry took the lead in formulating
the plan that culminated, a quarter of a century later, in the founding of the
WTO.In 1964, the world’s 134 poorest countries formed a negotiating block
within the U.N. called the G77. In its politics and agenda, it overlapped with
the countries of the Non-Aligned Movement, formed three years earlier to pursue
an internationalist development agenda free from interference by either the
Western or Eastern sides of the Cold War. The purpose of the G77 was to
challenge the foundations of a world system dominated by its former colonial
masters. The rejection of knowledge monopolies and patents, in particular, was a
running theme in these efforts.In the wake of India’s Patents Act, G77 countries began to adopt similar
patent laws and development plans, weakening the power of foreign drug
companies to enforce their will (and price lists) around the world. In May 1974,
the group passed a declaration in the U.N. General Assembly calling for a “New International
Economic Order” defined by a more equal and democratically governed distribution of global financial,
natural, and “knowledge” resources related to human health. This vision
included a rejection of intellectual property as an illegitimate
tool of the strong against the weak, a neocolonial straw designed to continue
siphoning wealth from south to north.In the WHO, the G77 had the two-thirds majority
needed to set policy. Its push for north-south medical technology transfer
gained a powerful ally in 1973 with the appointment of Danish doctor Halfden
Mahler as WHO director general. Mahler had spent a decade directing India’s
tuberculosis program and supported the G77 agenda. At the 1977 WHO Health
Assembly in Alma-Ata, Kazakhstan, Mahler unveiled an agency program to help
poor countries reduce their drug spending by building up their domestic drug
industries. The conference was capped with the adoption of an ambitious plan,
known as the “Declaration of Alma-Ata,” to provide “health for all” by the year 2000. The declaration, like
the WHO’s essential medicines program, committed the agency to the affirmation
of “health as a human right based on equity and social justice.” “The G77 was claiming the right to the kind of institutional capacity
that would make it self-sufficient in a pandemic,” says David Legge, an
Australian co-founder of the International People’s Health Movement, a global
activist and academic network. “The calls for a New International Economic Order
were about scaling the model of the U.N. penicillin projects.” The potential of the Alma-Ata conference, however, would remain
unfulfilled, thanks in part to the obsessive revenge drive of the man named CEO of Pfizer in 1972, the year India’s Patents Act entered into
force. As secretary of the Army in the Kennedy administration, Edmund T. Pratt
Jr. brought a strategic view to the U.S.-Soviet military standoff. As CEO of
Pfizer, he took a similar approach to the rise of a south-based generics
industry and growing assertiveness by the G77. These developments threatened Pfizer’s
ambitious plans for dominating global markets for drugs and agricultural
products, especially in Asia. In the wake of the Alma-Ata conference, Pratt gathered a group of drug industry executives to discuss a plan. Pfizer was the natural candidate to lead an industry counterattack
against the G77. Its bulldog patent lawyers were legendary for launching kamikaze
infringement suits around the world. In 1961, the company sued the British
government after the National Health Service purchased an Italian generic version of a
Pfizer-patented antibiotic, tetracycline. Throughout Europe, where medicine
patents were still widely banned, the suit served as a sobering introduction to
the modern “postethical” U.S. drug industry. Editorials reminded readers that Pfizer
owed its power to wartime contracts to produce penicillin, which had been discovered
and developed at Oxford and left in the public domain. Pfizer lost the 1961 suit,
then lost again when it sued the NHS over another alleged infringement four
years later.Pratt’s first idea was to try and shift the conversation from the G77’s
own turf. At the time, the only forum designed to handle the legal issues
around intellectual property was the U.N.’s World Intellectual Property
Organization, or WIPO, the agency that oversaw the 1883 Paris Convention for the
Protection of Industrial Property. The 1883 Treaty only required countries to
grant foreign companies the same rights they granted their own within national
borders, but it was the closest thing to a binding agreement on intellectual
property. When the G77 rebuffed the drug industry proposal, Pratt turned to a
strategy the historian Graham Dutfield calls “forum-management.” If the U.N. was too democratic, a less democratic arena would have to be
found. Pratt and his group settled on an unlikely target: the next round of
negotiations for the General Agreement on Tariffs and Trade, scheduled
to begin in Uruguay in 1986. Beginning in 1947, the decadal talks established the
legal framework for postwar global trade. GATT amendments were sweeping, legally
binding, all-or-nothing deals, with a format that favored the richest
countries. Pratt’s strategy was to insert intellectual property inside GATT,
then discipline the uppity south without mercy. “The experience with WIPO was
the last straw in our attempt to operate by persuasion,” Pfizer’s general
counsel Lou Clemente would later tell the Australian researchers Peter Drahos
and John Braithwaite, authors of the definitive account of the episode, Information Feudalism.In the late 1970s, there was no precedent for intellectual property as a
subject of global trade. When the company Levi Strauss lobbied to pass an
anti-counterfeiting code during the Tokyo round of GATT in the early 1970s, it
was quickly shot down. If Washington couldn’t protect the country’s iconic blue
jeans, how could anyone expect to enforce patents on lifesaving medicines, a
concept barely recognized by America’s closest allies? Pratt found his opening in another detail
from the Tokyo Round. The negotiations in Japan had introduced a novel trade concept:
“linkage.” By arguing that an issue was a “link” to legitimate trading issues such as tariffs and quotas, negotiators could get it on the agenda. This was the
strategy used to pass amendments related to customs procedures and invisible
export subsidies. The drug company CEOs just needed to convince the U.S. trade representative to “link” intellectual property to the global trading system in advance
of Uruguay. This is why the TRIPS acronym—“Trade-Related Aspects of
Intellectual Property Rights”—sounds so forced and clumsy. It was born in a
shoehorn. Even if it worked, the group would still face
a much more daunting hurdle. GATT was premised on advancing free trade, and patent monopolies are embodiments of restraints on trade—state protectionism in its purest form. How was that going to work?Fortunately for the drug industry, it wasn’t
alone in fretting over the rest of the world’s rejection of intellectual
property.* The
south’s competing vision—shared by some developed countries—posed a threat to powerful
interests driving the emergent high-tech information economy. A number of
industries—entertainment, software, biotech, agriculture, semiconductors—began
to see the world through pharmaceutical industry eyes. In Washington lobbying
calls and Manhattan club lunches, leaders of industry began speaking of the
need to establish a protective regime around U.S. technologies, from
medicine to software. In 1981, Pratt and IBM executive John Opel were appointed co-chairs of
the Reagan administration’s Advisory Committee for Trade Policy and
Negotiation. Created by Congress in 1974, the outside advisory group collected
blue-chip senior executives to advise the U.S. trade representative on policy
and strategy. Upon taking the reins, Pratt and Opel established an intellectual
property task force and stacked it with experienced people from patent-based
manufacturing associations, especially drugs and chemicals. In the five-year
run-up to Uruguay, this task force served as a war room for a two-track policy
aimed at toughening up Washington’s allies, while softening and dividing the
expected opposition.A number of
industries—entertainment, software, biotech, agriculture, semiconductors—began
to see the world through pharmaceutical industry eyes.After locking down administration and industry support, Pratt’s group took
its project public. It was helped by growing anxiety over U.S. economic decline,
and deftly worked the propaganda knobs and dials of the public mood accordingly.
Pratt saw the post-Vietnam, post–oil shock slowdown as a chance to reboot what
industry insiders called “the drug story.” With the economy suffering a
quadruple whammy—ballooning trade deficits, skyrocketing foreign debt,
manufacturing flight, and stiffening competition from Europe and Japan—the
companies rebranded the patent as a beleaguered symbol of American ingenuity
and “competitiveness.” Nations that refused to recognize the authority of the
U.S. Patent Office were rogue nations, pirate
states, whose intellectual larceny threatened both factory jobs in Detroit and
rising high-tech industries in Silicon Valley. This was the button pushed by Barry
MacTaggart, chairman of Pfizer International, in an op-ed that appeared in The New York Times on July 9, 1982, under
the title, “Stealing From the Mind.” The piece unveiled the argument that industry and the U.S.
negotiating team would pound home for the next four years until the start of
talks in Uruguay. MacTaggart informed readers that a “tense worldwide struggle
for technological supremacy” was underway. The inventions of America’s high-technology research-based industries, wrote MacTaggart, “have been ‘legally’
taken in country after country by governments’ violation of intellectual-property
rights, especially patents.” He exhorted all freedom-loving nations to get in
line behind the “proper enforcement and honorable treatment” of intellectual
property, singling out “computers, pharmaceuticals [and] telecommunications” as
areas of knowledge being “stolen by the denial of patent rights.” Inside the U.N., he warned, the G77 was
“trying to grab high-technology inventions for underdeveloped countries”—an
attack on “the principle underlying the international economic system.” The fact that there was no such principle did not stop the Pfizer-led
group from devising the outlines of a regime to enforce it. It was adopted by the
Reagan administration as its own, and the world was put on notice that intellectual
property was on the menu in Uruguay. The G77 nations, many reeling under the
impacts of a debt crisis, announced they had no intention of going along. Two
of the loudest rejections came from India and Brazil, the twin capitals of the
south-based generic drug industry.For the next four years, the U.S. took a number of anti-TRIPS states
behind closed doors. The purpose of these meetings was coercion to sign on to
TRIPS. The primary tool involved was a piece of U.S. trade law known as Section
301, established by the 1974 Trade Act. Section 301 created a mechanism for
sanctioning U.S. trade partners for policies deemed discriminatory or
burdensome. In 1984, the act was amended to make lax patent and copyright
enforcement a tripwire for Section 301 investigation and retaliation, a process
known as Special 301. The poorest countries had the most to lose in such retaliations, since
many had only recently been granted duty-free access to the U.S. market under a
program established in 1976 called the Generalized System of Preferences.Washington’s punishment-reward approach to
softening up the anti-TRIPS alliance made halting progress. In 1985, the U.S. rattled
the anti-TRIPS coalition by brandishing the threat of Special 301 action
against South Korea and Brazil. Clayton Yeutter, the U.S. trade representative at the time, informed both countries that Special 301 was the
“H-bomb of trade policy.” (His successor would praise it as a “crowbar.”)
Between 1984 and the conclusion of the Uruguay Round in 1994, the U.S. invoked
Special 301 in a dozen confrontations with G77 leaders, including one with
India and three with Brazil, resulting in tariffs and reduced access to the
U.S. market. And yet, a core bloc of 10 countries, led by
India and Brazil, fought on. When the Uruguay Round commenced in the coastal
resort city of Punta del Este, in September 1986, TRIPS remained a battleground.
The Group of Ten were still holding the line in 1989 when two events, perhaps
not unrelated, finally broke the India-Brazil axis and ended the last line of
resistance to the globalization of Western medical monopolies. The collapse of communism in Eastern Europe in 1989, and the imminent
dissolution of the Soviet Union it foretold, altered the global political
order. The U.S. entered a historically unique period of dominance, and Moscow
vanished as a source of material and ideological support for countries in the
anti-TRIPS opposition. (Soviet science and tech transfer had helped lay the
foundation for generic drug industries across the global south.) With the crumbling of the Berlin Wall, the industry agenda, championed
by the U.S. trade representative, was liberated from the last remnants of Cold
War restraint. Within the GATT process, nations were hauled into side rooms and
bullied by what the anti-TRIPS negotiators called “Black Room” consultations,
according to interviews conducted by Drahos and Braithwaite. That year is when the
U.S. trade representative began applying Special 301 with full force, opening
investigations into five of the 10 “hard-liners” opposing TRIPS. India and
Brazil, the leaders of the group, got the worst of it. Brazil broke first, after
the U.S. imposed crippling tariffs on its imports. India held out a little
longer, but by 1990 had also broken. Under the terms of TRIPS, the country had
10 years to dismantle and revise the 1970 Patents Act. When the news hit
India, street protests against the government of Rajiv Gandhi broke out across the
country.With the countries in line, it was left to the newly arrived Clinton
administration to oversee the final details. Clinton was a strange figure for the
role. He had campaigned against the “unconscionable” greed of health and drug
industries that he had described as pursuing “profits at the expense of our
children.” He identified the high price of drugs as “one example of why the
health care system doesn’t work.” None of those concerns remained when he
toasted the globalization of drug patents that the vast majority of countries
still considered unconscionable and unlawful.Clinton seemed genuinely happy at the
ceremony in the Moroccan city of Marrakesh on April 15, 1994, when 124 states
signed the Final Act of the Uruguay Round, bringing the WTO into existence. According to the text of the treaty, the WTO
heralded “a new era of global economic cooperation,
reflecting the widespread desire to operate in a fairer and more open
multilateral trading system for the benefit and welfare of their peoples.” In return for enforcing Western patents on medicines and other
technologies, G77 nations were promised access to northern rich
markets, and a conditional “freedom from fear” of finding themselves on the wrong end
of a 301 Special.At the time of the signing ceremony, this
trade-off was widely reported as fair and consensual. It was neither, but the
consensual part seemed to stick. A dozen years later, as sophisticated a critic
of TRIPS as Joseph Stiglitz would write, “as they signed TRIPS, the trade
ministers were so pleased they had finally reached an agreement that they didn’t
notice they were signing a death warrant for thousands of people in the poorest
countries in the world.” Except they did know. It’s the reason they
fought as long and as fiercely as they did. It’s why Group of Ten negotiators
called each other in tears when Brazil cracked, and why so many WTO ministerial
meetings have been shrouded in tear gas. A lot of people understood perfectly
well in 1994 that TRIPS was a mass death sentence. Now everybody else does, too.*But it was the largest industry to do so. In 1980, half of the world’s 20
biggest drug multinationals were headquartered in the U.S. In response
to industry opposition to the WHO Essential Medicines program, Ronald Reagan
cut U.S. support for the agency in 1985.
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