The War Over Drugs in Central America and Washington

By Michelle Chen Aug 27, 2009

One of the first signs that Obama’s healthcare reform efforts were headed southward was the backdoor deal the White House struck with the pharmaceutical industry earlier this summer. Big Pharma’s promise to help “save” Americans $80 billion under the reformed healthcare system sounds generous, but more likely reflects how much companies felt like giving in exchange for maintaining their stranglehold on the market. And now we learn that drug manufacturers are exporting this lust for profits to our ‘trading partners’ abroad. While poor Americans are crippled by high drug costs, folks in Guatemala don’t get a public option, a town hall, or even a vote. Thanks to U.S. trade policies, they just get a bill for brand-name drugs that could cost as much as 850 percent more than a local generic version. According to a study on the Central American Free Trade Agreement and Guatemala’s prescription drug market, intellectual property regulations have drastically limited access to critical drugs like insulin and HIV/AIDS treatments. Center for Policy Analysis on Trade and Health (CPATH) analyzed Guatemala’s pharmaceuticals market under CAFTA and found that drug companies have capitalized heavily on “data exclusivity” and patent rules that restrict the availability of generic medicines. Authors Ellen Shaffer and Joseph Brenner warn:

Particularly alarming is that the rules not only keep affordable new generics from entering the market; they also function retroactively to remove existing medicines from the shelves. While patents already allow brand name drug manufacturers like Novartis and Merck to suppress competition from generic drug makers in the U.S. and abroad, data exclusivity is an additional bonus for this multi-billion dollar industry. Securing data exclusivity is a simple process for these companies, but it places insurmountable bureaucratic burdens on generics manufacturers.

So the magic of free markets is forcing Guatemalans to purchase a limited selection of drugs with fancy labels at exorbitant prices, or simply to go without their medications. Governments may try to challenge these policies, but according to CPATH, trade agreements often trump domestic cost-cutting measures, such as establishing preferred drug lists. And the multibillion-dollar drug industry can litigate internationally against local policies that could open the door to generic competitors. All of which makes the term “free trade” seem like a bit of a misnomer. While fair-trade activists have campaigned around the devastating effects of intellectual property rules on farmers in poor countries, the impact of trade agreements on access to medicine shows that the Global South faces a corporate assault not just on their food systems, but their healthcare systems as well. CPATH reports that the Obama administration has shown no sign of reversing the Bush administration’s penchant for corporate-friendly free trade agreements. So let’s turn back to the current healthcare debate: The crisis in Guatemala is another testament to the human consequences of the drug industry’s dominance in Washington. One of their key demands, after all, is restrictions on imports of lower-cost medicines into the United States. Healthcare disparities in America are also deepened by the unaffordability of prescription drugs. According to one study of Medicare beneficiaries, Black and Latino seniors were less likely than whites to stick with their treatment regimens due to cost concerns. (Note that these patients are covered by the country’s supposedly most solid government-run health program.) According to a 2003 paper by the Center for Studying Health System Change, “working-age African Americans and Latinos are considerably more likely than whites not to fill all of their prescriptions because of cost concerns." Drug-access disparities were also tied to a lack of insurance and dependence on public programs like Medicaid. In the healthcare crises at home and abroad, the international reach of the pharmaceuticals industry is creating a global medical underclass. Small world, eh? Image: Guatemala health clinic (David Zimmerly)