Oxfam's trademark confusion

Counterfeit and substandard medicines in developing countries are becoming a critical problem. A report released by Oxfam earlier this month(1) claims to have the answers: stop treating fake medicines as an intellectual property problem, and do whatever it takes to bolster local regulation. Oxfam's diagnosis is only half-correct.  Unfortunately, the same can't be said for its prescriptions. 

Oxfam's main beef with current approaches to the problem the conflation in certain pieces of legislation of intellectual property issues such as patents with trademarks. Exhibit A is Kenya's 2008 Anti Counterfeiting Act, which was designed to protect Kenyan citizens from the increasingly ubiquitous counterfeit products that are flooding the local market, from fake tyres to dodgy toothbrushes. 

While such products are not without their dangers and economic costs, a more pressing concern is the staggering proportion of counterfeit and substandard medicines circulating in the country, which recent studies have put as high as 38 per cent(2).

Proponents of the 2008 Act hoped it would finally put a floor under the plummeting quality of the country's medicine supply; as most physicians know, medicines that contain therapeutically sub-optimal levels of active ingredient can promote drug resistance and lead to clinical failure. 

Oxfam's criticism of Kenya's anti counterfeiting bill is not without grounds: from a legal perspective, it is a badly drafted law that attempts to achieve too much.  The bill defines counterfeiting as an intellectual property breach of a protected good, which can include "the manufacture, production, packaging, re-packaging, labelling or making, whether in Kenya or elsewhere, of any goods whereby those protected goods are imitated in such manner and to such a degree that those other goods are identical or substantially similar copies of the protected goods."

In theory, this could outlaw well-made generic copies of drugs that are on-patent anywhere overseas.  Seeing that the vast majority of drug patents are not registered in developing countries like Kenya, this could suddenly reduce the range of generic medicines available to physicians, undermining competition while doing little to address drug quality.

It is little wonder that the Indian generic industry, for which Africa is a major market, has been vocal in their opposition to the bill. Similarly, it does little to address the substandard but legal copy drugs which constitute a large proportion of African markets.

Oxfam also has a point when it claims that drug patents have little to do with quality, a distinction that seems to have been blurred in the Kenyan bill, which further defines counterfeiting as "the manufacturing, producing or making of copies, in Kenya or elsewhere, in violation of an author's rights or related rights."

While patents are useful for rewarding innovators, they tell us little about the quality of a product. It is therefore unfortunate that this definitional confusion has crept not only into the Kenya bill, and potentially into nascent counterfeiting legislation in neighbouring Uganda.  

These criticisms notwithstanding, Oxfam and its allies in the health activist community stray onto less certain ground with their insistence that the enforcement of trademarks - another form of intellectual property - is irrelevant to improving the quality of medicines. 

Greater protection for trademarks is included in the Kenya bill, but Oxfam argues that the majority of substandard medicines are not a result of criminal, deliberate trademark infringement, but rather poor manufacturing processes by legitimate manufacturers, so the problem is one of regulation rather than intellectual property.

The notion that trademarks have little role to play into improving the quality of the medicine supply is short-sighted.  The quality of medicine supply in developed markets such as the US and the EU is extremely high not because of the existence of regulators such as the FDA or EMA.

How could those bureaucracies possibly have the capacity to check every new consignment of medicines? Rather, the quality of medicines is high because companies jealously defend their reputations for manufacturing products of a consistently high quality. 

If consumers begin to perceive that reputation is unjustified, companies would rapidly lose market share and go out of business. Central to this is branding, which signals to consumers the quality of a product.  But to signal quality effectively, manufacturers need to be able to protect their brands from counterfeiters. The main mechanism for so doing is registration and enforcement of trademarks, something that is easy to do in the US and EU, but extremely difficult in countries such as Kenya.

The inability to protect trademarks affects not just the well-known multinational pharma powerhouses, but also manufacturers of generic medicines. The good reputations of generic manufacturers such as Cipla and Ranbaxy have not arisen spontaneously, but rather through consistent investment in the factories and standards necessary to manufacture high-quality generic medicines. 

These companies also suffer from counterfeiters imitating their branding, which poses a risk not just their bottom line, but also to unwitting patients. This problem can also affect smaller legitimate local manufacturers in countries like Kenya. 

Far from being an anti-patient pro-corporate tool, trademark protection is a necessary pre-condition for a marketplace filled with quality products. Trademarks protect all producers of quality products, big and small, as well as their customers. The need to cultivate brand identity based on reputation should also preclude the emergence of the primarily Indian and Chinese manufacturers of low-quality copy drugs.  Pro-consumer advocates should therefore welcome the inclusion of trademark protection in local legal regimes and international agreements such as TRIPS (indeed, the 1994 agreement requires that the trademark laws of member jurisdictions are compatible with each other). 

That being said, trademark laws are useless without proper enforcement, which can be slow and patchy in countries with corrupt, inefficient courts. For trademarks to perform their role of signalling quality, drug manufacturers need to be able to defend their brands; this requires strong, independent courts, a proper rule of law and efficient legal systems. Unfortunately many legal systems are beset with corruption, with judges too easily bought. 

Oxfam's proposed solution to poor drug quality in developing countries is more funding for local and regional Drug Regulation Agencies (DRAs). In countries with a weak rule of law, such a strategy will have minimal impact, as DRAs become a target for corruption: in 2007, China executed the head of its drug regulator for allegedly accepting bribes from counterfeiters. Also in 2007, drug inspectors in Orissa, India, were accused of working in cahoots with counterfeiters, as was the case in Argentina in 2009 when a drug counterfeiting scandal went right up the ministerial level. Many more smaller cases go unreported every year. 

Even discounting for corruption, DRAs are merely the icing on the cake for ensuring the quality of the medicines supply.  Even though they could theoretically check each factory for Good Manufacturing Practice, it is unrealistic to expect them to check every subsequent manufactured batch. Neither can they intercept and check every consignment of imported medicines.

In reality, a high quality medicines supply is a product of the successful interplay of civil law and trademark protection.  This allows consumers to obtain redress against negligent manufacturers through the courts on the one hand, while allowing manufacturers of quality medicines to defend their brands on the other.  Regulation has a role, but it cannot create what is not there already.

In the short-term, shortcomings in legal and regulatory systems can be circumvented by new technologies which allow consumers to verify the quality of medicines, for example SMS-based authentication of the kind pioneered by Ghana's mPedigree. In the longer term, a high quality drug supply can only be achieved from the bottom up, as companies seek to maintain competitive advantage through maintaining the integrity of their brands. Trademarks are essential to this process. 

As countries in the East African region such as Uganda and Tanzania develop their own counterfeiting laws, they would do well to consider the central role of intellectual property rights related to trademarks.  Getting bogged down in arguments about patents draws attention away from the real causes of fake drugs. The situation on the ground is far too urgent.

(Oxfam has exercised its right-to-reply to this article. read more at: Keeping an 'Eye on the Ball': Oxfam responds)