MSD and others must be held accountable for PharmaGate plot

500 activists from the Treatment Action Campaign (TAC) picketed yesterday at the offices of the pharmaceutical company Merck, Sharp and Dohme (MSD) over their involvement in the controversial PharmaGate plot. The plot aimed to undermine and substantially delay South Africa’s long awaited IP policy – a policy that outlines several critical reforms to South Africa’s existing patent legislation. These reforms are essential to ensuring continued and improved access to essential medicines for all who live in South Africa.

Why is the PharmaGate plot unacceptable?
On January 16 the Mail & Guardian exposed a R6 million pharmaceutical company plot, described by Minister of Health Aaron Motsoaledi as ‘genocide’. While calling the plot ‘genocide’ may have been hyperbole, it helped put the spotlight on the urgent need to reform South Africa’s patent system to increase access to life-saving medicines.

The PharmaGate plot went beyond acceptable lobbying practices. Among others, it was proposed that a front organization called Forward SA would be set up. Though Forward SA would by all appearances be authentically South African – it would have an apparently reputable person as its public face, it would in fact be run from the United States. Similarly, the plot envisaged that ‘independent’ research should be commissioned, but that this research should then be sent to a PR agency in the United States to be manipulated to fit the objectives of the plot. On both these counts, the plot explicitly set out to mislead policy-makers and the South African public. This is both unethical and an affront to our democratic values.

Extensive opportunity for acceptable lobbying
It has been six years since the Department of Trade and Industry (DTI) began developing South Africa’s IP policy. In that time the pharmaceutical industry has had extensive opportunity to lobby the government through more transparent and acceptable means than those outlined in the PharmaGate plot. Early drafts of the IP policy from mid-2012 had already taken into account pharmaceutical company submissions. Then. like all other interested parties, industry had the opportunity to comment during the public comment period from September to October 2013. We are also aware of a number of face-to-face meetings between industry and officials from the Department of DTI during the development of the policy.

There has clearly been sufficient public consultation on South Africa’s IP policy. It is now up to the DTI to rapidly finalise the policy. Whether the current government can finalise a pro-public health policy, in line with their Constitutional obligations, before the elections will be a test of their commitment the Constitution and to improving the lives of all in South Africa. Failure to finalise the policy before the elections would suggest that the current administration have bowed down to foreign industry pressure to delay the policy as outlined in the PharmaGate plot.

Why is a policy delay problematic?
The draft IP policy suggests a number of reasonable changes to South Africa’s outdated patent laws. None of these reforms will break the patent system or do away with patents. On the contrary, each one is entirely legal under international trade law. Countries like Argentina, Brazil and India have already implemented many of these reforms in order to protect the health of their citizens.

The draft IP policy, for example, proposes that South Africa starts examining patent applications before granting them. It also proposes that we must set the bar higher when deciding whether a medicine deserves a patent. Implementing these two measures will ensure better competition and that generic medicines can enter the market at an earlier stage and drive prices down quicker. (See TAC’s submission on the draft policy for more detail). Ultimately, the faster the policy is finalised, the sooner government and medical aids schemes can stop being overcharged for many life-saving medicines.

Why focus on MSD?
Merck, Sharp and Dohme (MSD –the multinational pharmaceutical company Merck & Co is known outside the United States as MSD) is the company most clearly implicated in the PharmaGate scandal. Michael Azrak, Managing Director of MSD East and Southern African and Head of the Innovative Pharmaceutical Association of South Africa’s (IPASA) intellectual property committee, explicitly endorsed the plot in a leaked email sent to members of IPASA on January 10th.

On Wednesday members of the executive of IPASA resigned as a result of their involvement in this plot. In view of this we demand to know whether Merck intends to keep Mr Azrak on in his position as the Managing Director of MSD East and Southern Africa, given his endorsement of the plot. We also want to know whether MSD stands by their support of the plot. We cannot simply pretend the scandal never happened. Just as we hold government to account, we must also hold the private sector accountable when they act unethically.

In a memorandum handed over to MSD representatives at a meeting today we demanded that:
– Individuals at MSD locally and Merck and Co in the United States explain and clarify their involvement in the PharmaGate plot.
– MSD and Merck & Co state publically whether they support the views expressed by Michael Azrak in the leaked e-mails and whether they will continue to employ Azrak in his current position.
– MSD and Merck and Co state publically their role in identifying PAE, the public relations company that produced the plot.

*For media enquiries please contact:*
Lotti Rutter
+27 81 818 8493 <>

Marcus Low
+27 82 962 8309 <>

*Notes to editors:*
– Only generic competition has consistently proven to bring drug prices down to their lowest level, yet is often blocked in South Africa due to low quality patents. Instead many medicines here
continue to be priced out of reach.
– For example, Trastuzumab to treat breast cancer costs over R550,000 for annual treatment, higher than in India, the UK, Russia or Belgium. Aripiprazole to treat depression, costs 35 times more than in India and will remain under patent protection until 2033. Linezolid, one of the only effective treatments for drug resistant TB, is priced at R676 per pill, whilst it is available at only R25 per pill in India. Imatinib, to treat cancer, is still 91% higher than the generic equivalent in India.
– South Africa’s current system for granting patents is a dream for the foreign pharmaceutical industry. South Africa does not examine patent applications to assess their validity, instead, as long as the appropriate paperwork is filled out and fees are paid, the patent will be granted automatically. As a result, South Africa grants more patents than most developed and developing countries. In 2008, South Africa granted 2,442 pharmaceutical patents (only 16 of which were for South African companies), whereas Brazil granted 273 patent applications between 2003-2008. Studies show that South Africa grants 40% more patents than even the US and Europe given the same set of patent applications.

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