Developing countries should not be in a rush to initiate the complex process of reform of national legislation on intellectual property rights and provide for strong patent protection before the end of the transitional period in 2005 without studying the short- and long term implications of the reform.

In this context, it is relevant that in May 1999, after more than a year of debate, the World Health Assembly unanimously adopted resolution WHA 52.19 on the Revised Drug Strategy, calling upon member states to ensure that public health interests are paramount in pharmaceutical and health policies; and to explore and review their options under the relevant international agreements, including trade agreements, to safeguard access to essential drugs.

This resolution gives the World Health Organization (WHO) a new mandate to monitor the health implications of trade agreements and provide assistance to countries in implementing trade resolutions while protecting public health. Over the past six months high officials from the WHO, the World Bank and UNAIDS and several national governments have expressed support for the use of compulsory licensing of patents to address the global HIV/ AIDS crisis.

Compulsory licensing and parallel importing are, therefore, not issues for academic discussions; they are strategies that can and should be written into national legislations on intellectual property system of developing countries.

Having put compulsory licensing and parallel importing in their proper perspectives, it is relevant to critically examine the arguments put forward by the research- based multinational industry that the high prices for new and innovative drugs are necessary to recover the enormous capital investment on R& D which made introduction of the drugs possible, and also to put in capital to continue R & D for yet more new drugs.

As mentioned earlier, HIV/ AIDS is a relatively new infection and the specific drugs frequently needed by PLWA are new, protected by patents and enjoy a monopoly market. Prices are determined by manufacturers who fix very high prices. There is some evidence that the high prices have no relation to the cost of research and development that preceded the introduction of the drug. The best example is pentamidine, a very cheap drug developed to treat sleeping sickness in Africa. However, when it was found to be effective in the treatment of an HIV/ AIDS related infection – PCP (pneumocystitis carinii Pneumonia) the price of pentamidine increased 500 per cent. A recent survey of 20 African and South- East Asian countries conducted by UNAIDS found that pentamidine is available in only one of these countries.

Secondly, it has been shown that the industry has not carried out the original research and development for all the drugs they patent, market and enjoy monopoly pricing. The industry’s efforts for some drugs were the development of alternative copycat drugs to government- produced drugs (e. g. the protease inhibitors, new nucleoside analogues).

Every class of drug for HIV/ AIDS was discovered, tested and developed by government agencies. Among these drugs are ddI, AZT, d4t, Ritonavir and T- 20. The drug industry’s argument that the high prices have been fixed to recover the enormous cost of research and development is, therefore, not at all valid.

In conclusion, there is certainly a need for transparency. Consumers need to know the real costs of development and introduction of new drugs and the basis on which their prices are fixed.

Secondly consumers agree that effective patent protection is essential for innovation. But patent legislation should protect both the innovator and the consumer.

The present WTO international trade agreements provide a very sensible way of balancing the interests of the patent holders and public health through compulsory licensing and parallel importing – two strategies that will lower the cost of essential drugs for HIV/ AIDS.

This report draws substantially on material prepared and distributed by Consumer Project on Technology and postings on Treatment Access Forum, an electronic list serve discussion group.