Andrew Laming (Bowman, Liberal Party) Share this | Hansard source

The Intellectual Property Laws Amendment Bill 2014 this afternoon gives me an opportunity to talk about the TRIPS agreement, which over the last decade has slowly come to fruition, after recognition late in the last century that the market failure that exists in developing economies made it almost impossible for us to have a realistic crack at the great killers of TB, malaria and AIDS-HIV in particular. We have seen in the last 10 years significant advances since the work first began. Much of it emanated from Harvard University. Jeffrey Sachs and Michael Kremer, an economist from the Harvard University School of Economics, brought this issue to public recognition. In this debate today, where we finally connect the TRIPS agreement after at least seven years of waiting since it was drafted, we recognise the work that occurred 10 years ago.

It was Kremer who published 'Pharmaceuticals and the developing world', which was a really important contribution in 2002. Some of the initial drafts of that document back in 1999 came to my attention as a young student looking for an area of important international health to work on.

At that time it was important to recognise that the market failure that really prevented major pharmaceutical corporations from taking cutting-edge drugs to the developing world was a problem for which we had no solution—and it was not that long ago. At the time, the concept was to turn to wealthy countries and ask them for a contribution to a fund proportional to their GDP, which would act as a pool mechanism so that as great drugs potentially came along for which pharmaceutical manufacturers knew there was no large financial market because the disease primarily existed in the developing world, a fund would effectively pull it through the stages to eventually see that drug being approved.

We had two types of diseases to consider. Firstly, we had conditions like HIV that were a significant problem and offered financial revenue in developed economies and, therefore, could be taken to the developing world. Secondly, we had the diseases that existed almost exclusively in the developing world. These are the ones that have huge amounts of morbidity. The diseases are known to us in wealthy countries but, of course, they afflict millions in the developing world. The list of those include:Chagas disease and dengue, hookworm, Japanese encephalitis, lymphatic filariasis, oncocytosis, schistosomiasis, and trachoma—with the exception that it exists in Australia. For those diseases, we know there are millions of people affected but that there is not really any revenue model to get the research happening because pharmaceutical manufacturers know that there is not really a great market there.

There is no market there for three reasons. First of all, these are relatively small economies with large populations and very, very low GDP per capita. There is no real market to purchase these pharmaceuticals and no way of distributing them. And, of course, the positive externalities of people seeking out treatments for preventing infectious diseases from spreading simply do not exist because people have given up seeking medical treatments in many cases.

That challenge, of course, was far less complex with HIV because, since at least 1984 when it was first known as HTLV, there has been a worldwide effort to find cures for HIV. We are now in a position where, while we cannot eradicate the virus, although we think we have come very close on occasion, we know that people will most commonly live and die with the disease rather than from it. So there have been remarkable breakthrough drugs and just getting them to the developing world has become a simpler process—and that is where TRIPS came in. We acknowledge that the drugs were being created, but we did not want to undermine the First World market by producing large amounts of this drug and delivering them to the Third World. First of all, that undermines any market there might be in those countries. Secondly, you have the risk that these drugs are purloined, taken across borders or actually sold in poor countries to the wealthy populations that live there. All of this would undermine the market proposition for these companies who might otherwise consider doing it.

As a result, TRIPS was, I think, ingenious, and really changed the way we were thinking. Back in 1999, Kremer's initial thoughts were about creating this fund that would make pharmaceutical companies say, 'Well, we have this molecule; it is going to costs hundreds of thousands or millions to develop. But at least we know there is a pot of money at the end.' That pot of money at the end of the rainbow just proved to be a little bit too tricky. In the end, we have fallen back to the more realistic goal of using the market to develop world-leading drugs and then going to the manufacturer and saying, 'You have a great drug that can work in the developing world. We will pay you to license generic manufacture of your drug at super low prices, and the wealthy countries will compensate you for your losses by selling that drug to the developing world to people who could never afford it.' That proved to be, I guess you could say, a more practical approach to the problem.

Globally, what we know is that in this effort to take technology to the poorest parts of the world, we have a different experience here in developed nations than we have right now in developing economies. Traditionally, the old way of doing it was to wait for income to increase. As income increased, health also improved. That is the correlation between more income and being able to purchase better health. That is what we saw in developed economies. This was really interesting work done by Rob Fogel, who found that the 50 per cent health improvement and the fall in death rates in the UK and the 70 per cent improvement in the US actually happened before 1911. That means it happened pre-drugs and pre-technology, effectively—certainly pre-antibiotics.

That was the developed experience. But in the developing world, it is really completely different. For example, Vietnam has a GDP per capita about 10th of that of the US at the start of last century, but their life expectancy is already 20 years longer. Something different is happening in the developed world now. Even in Africa, with a lot of the instability there, we saw that the GDP fell between 1972 and 1992 by over 10 per cent. But even in that time of falling GDP, we were seeing falls in infant mortality and improvements in longevity, which obviously was independent of either GDP or household earnings. So this is the new challenge then. We cannot afford to wait for the developing world to turn around. We cannot afford to wait for incomes to rise. We cannot take that standing-back approach to build capacity and wealth and hope that health will rise with it. We now have technology—a frontier which can move into even the most poor and dysfunctional communities and improve health. I guess that is the path that we have now taken.

Samuel Preston estimated, even in the 70s, that income growth was probably only accounting for between 10 and 25 per cent of the improvement in health. Dean Jamison, as recently as 2001, was even more precise. He attributed, I think, over 70 per cent of the decline in infant mortality rates between 1962 and 87 to technology alone—21 per cent to better education and, really, only about five per cent of that improvement due to growth in income. So the general belief now is that we cannot wait for improvements in capacity. We have to give ownership of these solutions to countries themselves, because they know what works. But in the end there are very elaborate partnerships supported by TRIPS, which include your bilateral and multilateral agreements. You have the faith organisations, NGOs, the private sector brought in and then, of course, agreements with government. It is a very complex partnership that underpins it.

This, of course, is at the heart of the Global Fund. The Global Fund is there to specifically focus on those three big killers—AIDS, tuberculosis and malaria. They have just taken a very simple approach—a large pot of money, listening to the countries of origin and where the work is being done, and giving them full control over it by having a process that does not advance unless every one of those parties that I have just listed is involved. Getting government and civil society working together is not new. We have NGOs all over the world—often poorly coordinated but doing their best in resource-sparse environments. What has changed in the last 10 years is a general reaching out to the private sector, realising that you just have to have the engine room of intellectual property making a difference in the developing world, and there was a time, as recently as 2000, when we really had not woken up to that. That has been a very, very significant shift.

The Bill and Melinda Gates Foundation has also made an extraordinary mark just in the last 20 years. I can remember when the foundation first visited the World Bank. It was in 2000. Even at that time, the World Bank was more focused on reducing corruption in its dealings with developing economies than it was with elaborate private sector partnerships. So when the Bill and Melinda Gates Foundation came along with an utterly different approach, I can remember the impact that it had in Washington. Basically, the foundation turned up and asked: 'What are the diseases for which there is a cure but which is not available in those countries?' There was a big long list. There was a very simple piece of arithmetic done. The foundation simply asked, 'How many people are affected? How much does the drug cost? How much does it cost to deliver?' They multiplied those together and wrote a cheque. This was an extraordinary change in the way aid was delivered. The foundation simply said, 'Our goal is not to have as many diseases with as many people afflicted at the end of our work. We want to start eradicating disease full stop.'

This new look at how aid can be delivered is not about how much you have to give but about pausing to work out how much it would cost to get to the goal. You agree on the goal and then you work backwards. You work backwards from that and ask, 'Is this a realistic goal that we can achieve within a lifetime, within a decade or within a year?' This is about looking at it from the other side and saying, 'We will not stop until this is achieved.' It will be utterly futile unless we take that approach which looks at the destination rather than simply the positive feelings of being part of a journey.

The TRIPS agreement took a long time to connect up here. I have to note that in six years of a Labor government this process could have been accelerated but it was not. These things are way too urgent to wait. This was something that was drafted and generally agreed to in 2007 and here we are finally dealing with it today in 2014. That is a source of concern. They are an opposition that feel very comfortable taking the high moral ground on foreign aid, but with all of their domestic disputes and troubles they found it almost impossible to take really meaningful steps in government. There were 100 countries affected by diseases for which cures were not available who had to wait for the duration of that six years of Labor government until there was a coalition government to finally get this moving.

I do not want to become too partisan in these comments, but there is a sense that Labor is easily distracted by other matters and often forgets that there are simpler, red-tape-free ways of getting things done. Again, agreements between New Zealand and Australia are way more complex than we thought when we first embarked, but this effort to get a combined Australia-New Zealand therapeutic goods administration is well worth pursuing. Although we possibly underestimated its complexity, having a single trans-Tasman agreement within IP is certainly an excellent idea.

My focus today was primarily on TRIPS because I think that is the headline story from this legislation. We now have a way of directly incentivising the generic production of breakthrough drugs for the developing world. I really wanted to point out in my speech today that 10 or 15 years ago that was not even contemplated; we were heading in the other direction. But now in economies such as in sub-Saharan Africa, where 38 countries spend less on health in total than the single state of Connecticut in the US, we can start to make a difference for populations there even when their own governments do not share the same passion for diverting and maintaining investment in health. There is not a high enough recognition that health underpins economic outcomes in those countries. Until we have the capability and sophistication within those governments to have that focus on health and human development, in the meantime we will have these very fertile partnerships between the world's biggest pharmaceutical manufacturers, the world's biggest technological developers, those who are coming up with the bright ideas that are the subject of IP, particularly here in Australia, civil society and government. I look forward to those partnerships developing further.

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