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Abstract

This paper is concerned with the impacts of strict patents in the pharmaceutical industry, focusing on the Trade Related Aspects of Intellectual Property Rights (TRIPs) Agreement. It discusses the historical and current policy context, to better understand how strict patents affect the availability of essential drugs in developing countries.

The research shows that the pharmaceutical industry prioritises profit above health. Strict patents reduce the availability and affordability of new essential drugs in developing countries, and thereby have a negative impact on the health of the world’s poor. Larger pharmaceutical companies benefit more than smaller companies because they have a monopoly in the industry. They invest more in research and development and, linked to economies of scale, are better positioned to exploit markets for new drugs.

The example of India highlights the importance of generic production and essential drugs in developing countries. It shows that while TRIPs promotes economic growth of the industry and encourages investment in research and development of new drugs, it increases the prices of new essential drugs, thereby isolating benefits from the majority poor populations in developing countries.

The paper suggests that based on historical and current trade policy, developed countries have an ethical obligation to allow poorer countries to develop infrastructure for their pharmaceutical industry, a responsibility not being fulfilled. It suggests TRIPs be revised under a more ethical framework. This includes increasing public funding of research and development, shortening the length of patents and allowing developing countries to generically produce essential drugs.

The paper highlights the interconnectedness of social, economic and political factors that could increase the availability of essential drugs in developing countries. It highlights the importance of better understanding the issues surrounding strict patents, and why the scientific community is critical to this process, in terms raising awareness and collaborating with independent organisations and concerned citizens to ultimately press governments for change at the national and international level.

Table of Contents

1. Introduction

1.1 What are Patent Laws?

1.2 What is TRIPs?

1.3 Focus and Structure of the Paper

2. Pharmaceutical Industry for Profit or for Improving Health?

2.1 Scale of Profits

2.2 Investment Priorities

2.3 Diffusion

3. Essential Drugs and Generic Production

4. Impacts of TRIPs

4.1 Main advantages

4.2 Main disadvantages

4.3 The Doha Agreement and Compulsory Licensing

5. Conclusions

6. References

1. INTRODUCTION

‘As the ancient scourge of polio was rolled back by his vaccine 50 years ago, Jonas Salk, the inventor of the polio vaccine was asked why he never took a patent out on the medicine, a patent that would have made him wildly rich. “There is no patent,” he replied … “Could you patent the sun?”’ (Salon.com magazine 2001).

This paper explores the impacts of pharmaceutical patents on drug availability in the third world, focusing on the impacts of the Trade Related Aspects of Intellectual Property Rights (TRIPs) Agreement. It highlights the value of essential drugs and generic production in developing countries, using India as a case study. It also explores alternatives to TRIPs and the role of the scientific community.

1.1 What are patent laws?

A patent can be defined as ‘a monopoly right granted to person who has invented a new and useful article, an improvement of an existing article or a new process of making an article’. It consists of an exclusive right to manufacture the new invented article, or manufacture an article according to the invented process for a limited period. During the term of patent, the owner of the patent, i.e. the patentee can prevent any other person from using the potential invention .

Figure 1: Brief History of Patent Law

The timeline below illustrates the brief recent history of patents in the world .

1880-1882

Patent statutes introduced in most European countries

1883

Paris Convention for the Protection of Industrial Property – cornerstone of the modern international patent system.

1947 International Patent Institute (IIB) established at the Hague

1970

Patent Co-operation Treaty signed in Washington, D.C.

1978

International Patent Institute integrated into the European Patent Office (EPO)

1979

Bayh-Dole Act passed-granted permission to U.S. universities to license and profit from federally sponsored research*

1980

International Patent Documentation Centre (INPADOC) integrated into the EPO

In the pharmaceutical industry patents have a straightforward objective. They provide a strong incentive for companies to invest in the research and development of new drugs, knowing that they will be able to recuperate costs and, subsequently, profit from the new drug. However, patents enable parent companies to control the price and availability of new drugs. There is no competition from other companies to produce the drug, which would usually lower the price. Thus, increasing the length of patents can reduce the availability of new essential new drugs in developing countries, with knock on health problems.

Essential drugs can be broadly defined as those that satisfy the health care needs of the majority of the population. They should, therefore, ideally be available at all times in adequate amounts; in the appropriate dosage forms; at reasonable (affordable) price; and, meeting the criteria of quality, safety and efficacy (New Strait Times 1998).

Under the term of a patent, drugs, essential or non-essential, can only be produced by the parent company. This means that there is no competition from other companies to produce the drug, and the parent company can charge a high price for the drug, effectively making the drug unavailable for poorer people.

New drugs tend to be more available to developed countries, because people are more affluent and can afford higher prices. For this reason, pharmaceutical companies tend to market their drugs at developed countries. Overall, developed countries benefit more from new technology and advances in science because their governments, companies, and people can afford to buy into the technology.

The World Trade Organisation’s (WTO) Trade Related Aspects of Intellectual Property Rights (TRIPS) Agreement, which extends the length of patents, enables companies to significantly increase their profits and increase the technology gap between developed and developing countries.

1.2 What is TRIPs?

The Trade Related Aspects of Intellectual Property Rights (TRIPs) was added to the General Agreement on Tariffs and Trade (GATT) at the end of the Uruguay Round of trade negotiations in 1994. It came into full force in January 2005, and its inclusion by the World Trade Organisation (WTO) was the ‘culmination of a program of intense lobbying’ by the United States, supported by the EU, Japan and other developed countries .

The United States strategy of linking trade policy to intellectual property standards can be traced to senior management at Pfizer (a large United States pharmaceutical firm) in the early 1980s. Pfizer mobilised corporations and made maximising intellectual property privileges the number one priority of United States trade policy .

According to the WTO, ‘TRIPs is an attempt to strike a balance between the long term social objective of providing incentives for future inventions and creation, and the short term objective of allowing people to use existing inventions and creations’ .

The following requirements of TRIPs all have a bearing on the pharmaceutical use of patents .

? Copyright must be granted automatically, and not based upon any “formality”, such as registrations or systems of renewal.

? National exceptions to copyright (such as “fair use” in the United States) must be tightly constrained.

? Patents must be granted in all “fields of technology” (regardless of whether it is in the public interest to do so).

? Exceptions to patent law must be limited almost as strictly as those to copyright law. In each state, intellectual property laws may not offer any benefits to local citizens which are not available to citizens of other TRIPs signatories (this is called “national treatment”). TRIPs also has a most favoured nation clause.

? Patents in the pharmaceutical industry will apply for 20 years, instead of 10 to 15 years.

Some developing countries began to grant their own patent protection in the late 1980s, but TRIPs is a compulsory requirement for any country who wants to be a member of the World Trade Centre, and with that memberchip access to international markets and trade relationships. Countries which do not adopt TRIPs can be disciplined through the WTO’s dispute settlement mechanism, which is capable of authorising trade sanctions against dissident states . Therefore, the economic and poltical threats, which could cripple a poor economy, effectively forced developing countries to ratify the agreement.

The TRIPs agreement makes it easier to obtain and enforce patents. It increases the length of pharmaceutical patents, from 10 to 15 years to 20 years, which encourages companies to invest more in research and development and promotes economic growth. However, it favours developed countries, which have the capacity to enforce their rights globally, and create more exclusive trade options under the Intellectual Property Rights (IPRs). Developed countries have more pharmaceutical infrastructure and companies that are used to using patents to make profit.

1.3 Focus and structure of this paper

Chapter 1 introduced the main contentions of using strict patents in the pharmaceutical industry. It explained how patents work, and the main changes that TRIPs will make to the pharmaceutical industry.

Chapter 2 shows the monopoly of a handful of large pharmaceutical companies in the pharmaceutical industry. It provides a sense of the scale of the profits made by these companies, contrasting the investment priorities and types of drugs produced with those that are needed in developing countries. The Chapter debates whether the industry is for profit or health, briefly highlighting how companies make false claims through advertising in developing countries.

Chapter 3 introduces the idea of essential drugs and generic production, exploring the benefits with a case study of India. Chapter 4 shows how TRIPs will restrict generic production of essential drugs, and the impacts this will have on the majority poor populations in developing countries. The conclusion, Chapter 5, suggests how TRIPs could be revised under a more ethical framework, exploring the historical and current drug policy context, with particular emphasis on the role of scientists.

2. PHARMACEUTICAL INDUSTRY FOR PROFIT OR HEALTH?

In an attempt to understand how pharmaceutical companies control the availability of essential drugs, and use patents to make substantial profits, this chapter debates whether the pharmaceutical industry is for profit or health. It looks at the scale of profits made by the pharmaceutical industry and their investment priorities, also challenging whether ‘diffusion’ of biotechnology works to provide essential drugs to developing countries.

2.1 Scale of profits

There is a very familiar trend in the international pharmaceutical industry. A handful of multinational companies, originating from developed countries, have a great deal of economic power, which gives them control over drug availability and health. They also lobby governments to make trade policy which suits their profit making agenda. In 1996 the first ten multinational pharmaceutical companies accounted for approximately 36 per cent of the world pharmaceutical sales of US$ 251 billion .

Table 1: The World’s Top Ten Pharmaceutical Companies in 2003

Company Pharma Profit ($million) Pharma Sales ($ million) Pharma Operational Profit Margin

Pfizer 12,920.0 28,288.0 45.7%

Merck & Co. 10,213.6 21,631.0 47.2%

GlaxoSmithKline 7,598.2 26,979.0 28.2%

Johnson & Johnson 5,787.0 17,151.0 33.7%

AstraZeneca 4,006.0 17,841.0 22.5%

Novartis 3,857.3 13,497.4 28.6%

Wyeth 3,505.5 12,386.6 28.3%

Aventis 2,969.6 15,705.4 18.9%

Abbott 2,739.0 9,304.0 29.4%

Takeda 2,446.6 6,838.3 35.8%

Group Subtotal 56,042.9 169,621.8

Average 31.8%

Source: Adapted from Scrip Report 2003

The pharmaceutical sector racks up the largest legal profits of any industry, with an average 18.6 % return on revenues in 2001 (Resnik 2001).

However, Table 1 shows that the top ten companies achieved a much higher average profit margin of 31.8% in 2003. Thy have a monopoly over the industry. Linked to economies of scale, larger companies can exploit larger market penetration to increase their profits. For example, Pfizer and Merck & CO, two out of the top three pharmaceutical companies in 2003 according to gross sales, had a profit margin of 45.7% and 47.2% respectively. This was much higher than the average profit margin of the top ten companies (31.8%), which illustrates the relationship between economic power and power of market exploitation.

The pharmacetical industry justifies their high profits with the argument that a great deal of time and money is invested in the research and development of new drugs. In 1998, developed countries spent US$520 billion on research and development, more than the total economic output of the world’s poorest 30 countries. In 2003, it was estimated that the average cost of producing a new chemical compound is around US$ 200 million . Thus, the industry is keen to protect their investments and subsequently reward their efforts by making a great deal of profit. However, there are ethical issues as to whether the scale of the profit can be justified, given the healthcare problems that exist in developing countries resulting from the unavailability of essential drugs.

Large pharmaceutical companies maintain their monopoly by investing great sums in legalities to lobby governments into protecting the industry, by making strict patent law. ‘The combined worth of the world’s top five drug companies is twice the combined GDP of all sub-Saharan Africa and their influence on the rules of world trade is many times stronger because they can bring their wealth to bear directly on the levers of western power’ (Borger 2001).

One of the leading US biotechnological companies, Genentech, has four times as many lawsuits to protect its patents as it has products (Fowler 1996). At least one company has been created in the US whose ‘main business,’ according to the Wall Street Journal, ‘is buying up broad patents and then sueing other companies for alleged infringements’ (Fowler, 1996).

Thus, there is also the issue that investing so much money and time in litigtion is highly unproductive, when this money could be better spent on research and development of new drugs, and subsidising the cost of essential drugs in developing countries.

2.2 Investment priorities

The world market for pharmaceuticals shows a clear division: non essential drugs are produced and targeted at developed countries promising high profits, while developing countries are still in need of basic healthcare and essential drugs.

Of the 1223 new drugs marketed between 1975 and 1996, only 13 were developed to treat tropical diseases – and only four were directly the product of pharmaceutical industry research. In recent years, drug companies have produced thousands of new compounds but less than 1% are for tropical diseases .

In 1998, global spending on health research was US$70 billion , but 90% of the money spent on health research and development focuses on medical conditions responsible for only 10% of the world’s burden of diseases (Benatar 2000). Only US$300 million was dedicated to research for vaccines for HIV/AIDS and only US$100 million to malaria research, diseases with the highest mortality and morbidity rates in the world, and devastating in developing countries.

‘It would be more profitable to develop a drug designed to enhance sexual performance for Anglo-American males than to develop a medicine designed to treat or prevent malaria’ (Resnik 2001).

There is also the suggestion that pharmaceutical companies focus more effort on a certain drug in developing countries when it is in their research interest; “Of diseases in the Third World, AIDS is getting the most attention and focus. Not coincidentally, it is also one of the few diseases that remain a threat to First World countries” (Censored 2000).

Pharmaceutical companies are able to devote their resources to non-essential drugs targeted at the richer markets of developed countries and at the same time, exploiting the markets in developing countries by influencing the world price for drugs. For example, pharmaceutical companies have long resisted “differential pricing” on their US$12,000-a-year courses of anti-AIDS drugs, which would allow a course to cost less in Cameroon than in Canada . Thus, the effect of purchasing power parity means that the prices are even higher in real terms in developing countries.

Drug Aid

In many cases, drug companies will provide drugs to developing countries at cheaper cost as aid. For example, in March 1998 Glaxo Wellcome (UK) announced that it would sell its anti-HIV drug AZT for 70 per cent below the normal price to pregnant women in developing countries . However, drug aid is not always beneficial. Reich et al (1999) found that out of 16,566 drug donations shipped from the US to 129 countries between 1994 and 1997, 10-40% were listed on neither the national essential drug lists nor the WHO model of essential drugs in developing countries. Also, 30% of shipment items had a year or less of shelf life (ibid.).

Advertising and false claims

There is also evidence that companies, in addition to prioritising non-essential drugs for developed countries, exploit markets in developing countries by convincing people that they need non-essential drugs. A survey, in the Annals of Internal Medicine found that ‘62 per cent of the pharmaceutical advertisements in medical journals were either grossly misleading or downright inaccurate’ (Madeley 1999).

There has been much criticism of the advertising in developing countries, claiming it is particularly persuasive in nature and that people are misinformed and encouraged to believe wild promises. This illustrates the exploitative nature of the pharmaceutical industry, and the quest for profit at the expense of health.

“In the corporate headquarters of major drug companies, the public relations posters display the image they like to present: of caring companies that bring benefit to humanity, relieving the suffering of the sick. What they don’t say, is that, so far, their humanity has not extended beyond the limits of the pockets of the sick” (Hilton 2000).

In summary, the pharmaceutical industry is for profit. A handful of economically powerful companies use economies of scale to exploit the markets of developed and developing countries. As a whole, the pharmaceutical industry is:

? Priortising investment in non-essential comfort-oriented drugs for the wants of the more affluent in developed countries, whilst neglecting the needs for essential drugs for poorer people, particularly in developing countries.

? Investing heavily in litigation and patents to restrict competition from other companies, and enable control over the price and availability of drugs.

? Exploiting people in developing countries, using persuasive advertising to make false claims.

? Motivated by profit, not health.

As Smith (1994) points out, ‘There is a direct conflict between the pursuit of health and the pursuit of wealth.’

2.3 Diffusion

Policymakers and representatives of the pharmacetuical industry argue that relevant technology reaches poorer people by means of ‘diffusion.’ This describes the process by which drugs become available to the poor after patents expire, and when competition to make the drugs drives down the prices of the drugs so that poorer people can afford them. However, as agents of disease, including bacteria and viruses, are continually adapting to drugs and developing resistance to them, new drugs are often essential and life saving, which means it is critical they are available very soon after production in developing countries. Patents reduce the availability of new essential drugs, because they increase the time it takes for diffusion to take place, if it happens at all.

The lack of infrastructure in developing countries makes it difficult for essential drugs to reach those who need them, which can increase the time it takes for technology to ‘diffuse’ to the poor, even after patents have expired. For example, oral rehydration therapy, a simple and cheap salt-and-sugar solution, has been mass distributed since the 1980s and has greatly reduced child deaths from diarrhoea, ‘but even though it only costs 10 cents a sachet, it is still unavailable for 38% of diarrhoea cases in Third World countries.’ Another example, Penicillin, discovered in 1928 and first marketed in 1943, is unavailable to 2 billion people. (Healey 2001)

The unavailability of essential drugs therefore extends beyond a lack of access to new drugs designed to treat devastating infectious diseases [essential drugs] (Resnik 2001). 50% of people in developing nations do not have access to even basic medications, such as antibiotics, analgesics, bronchodilators, decongestants, anti-inflammatory agents, anti-coagulants and diuretics (Reich 1979-1981).

In the 1980s structural adjustment programmes were enforced on developing countries by the International Financial Institutions (IFIs), such as the World Bank and International Monetary Fund. These trade liberalisation policies involved the establishment of ‘export-processing’ zones, which offered financial incentives, such as tax concessions, to companies. By favouring privatisation and encouraging multinational companies to move their operations to developing countries, one of the supposed objectives of economic liberalisation was to assist ‘development’ and the transfer of pharmaceutical technology to developing countries.

However, there has been a lack of ‘diffusion’ of knowledge and technology. In fact, it is the lack of technology transfer measures in export-processing zones that attract pharmaceutical multinational companies. With firm control over technology, even when high-tech methods of production are used they can be kept away from the domestic economy. The southern Indian city of Bangalore has, ‘thanks to Western companies’ passion for outsourcing, grown into one of the world’s premier technology hubs and is the centre of the India’s growing IT industry’ (its export revenues rose from US$150 million in 1990 to $4 billion in 1999). However, areas surrounding Bangalore are in fact extremely ‘low-tech’. In Karnataka (also state capital), there were still only 2.73 internet connections per 1000 people in 1999; in even poorer states (like Orissa), that rate dropped to 0.12 connections per 1000 people.

‘As it turned out, there has been virtually no transfer of relevant technology by these companies to developing countries … in fact, by using the power that control over technology brings, they have eliminated many potential competitors and prevented indigenous pharmaceutical industries from developing to meet the real needs of the people of the third world’ (Kanji et al 1992). Thus, the evidence leads me to personally agree with this line and disagree that diffusion can be relied upon to make essential drugs available at times when they are needed most in developing countries.

Multinationals provide employment in developing countries, it is typically very low paid with little security, and the products (and the techniques and profits) go back to the companies of developed countries. Unfortunately, even though direct foreign investment provides low-paid jobs and does not transfer technology, those jobs are still vital for many that live in poverty and have limited employment options. This highlights why re-regulation of the corporate sector is required so that markets meet certain social criteria. For example, interfering with markets to reduce the price of essential drugs in developing countries.

“Pharmaceuticals, they are a commodity. But they are not just a commodity. There is an ethical side to this because they’re a commodity that you may be forced to take to save your life. And that gives them altogether a deeper significance. But they [big pharmaceutical companies] have to realize that they’re not just pushing pills, they’re pushing life or death. And I believe that they don’t always remember that. Indeed I believe that they often forget it completely.” (Drummond 2003)

3. GENERIC DRUG INDUSTRIES AND ESSENTIAL DRUGS

In many countries with large poor populations, such as Argentina, China, Egypt and India, national policy enabled a locally financed pharmaceutical industry to develop almost exclusively engaged in manufacturing generic drugs. These industries could ‘copy cat’ certain drugs and in some cases the manufacturing processes of other pharmaceutical companies.

This Chapter illustrates the main benefits to health of generic production in developing countries, in terms of increasing the availability of essential drugs. It uses India as a case study.

Benefits

In countries with generic drug industries, drug prices are low because the primary national objective is for the government to provide affordable drugs for its people, and develop the industry for economic welfare and greater self-sufficiency. India holds a record, with prices for many drugs 10 to 100 times lower than in developed countries. The introduction of generic antiretroviral drugs by Indian companies reduced the price of these drugs by 97% (Henry et al 2002). Research and development efforts by generic drug industries have also led to the development of vaccines against leprosy and hepatitis B, and anti-cancer drugs .

Multinational companies have less economic control over the market because the domestic drug industry controls the domestic market. Therefore, poorer people are less dependent on multinational companies and the extortionate prices that they can charge for drugs. In addition to lower cost, as will be seen from the case study of India, generic drugs have the advantage of being competitive in quality to those produced by large multinationals, originating from developed countries.

A case study of India

In India, multinationals held only a 20 per cent market share in 2000 : national pharmaceuticals have gained knowledge and capacities in research and development, which has enabled them to replicate manufacturing processes for already known drugs, and develop a bulk drug industry for various chemicals and antibiotics.

India’s local drug companies have long benefited from a relaxed patent regime.

History of patent law in India (up until the 1970s)

1856 The Act Vi Of 1856 On Protection Of Inventions Based On The British Patent Law Of

1852 Certain Exclusive Privileges Granted To Inventors Of New Manufacturers For A Period Of 14 Years.

1859 The Act Modified As Act Xv; Patent Monopolies Called Exclusive Privileges (Making. Selling And Using Inventions In India And Authorising Others To Do So For 14 Years From Date Of Filing Specification).

1872 The Patents & Designs Protection Act.

1883

The Protection Of Inventions Act.

1888

Consolidated As The Inventions & Designs Act.

1911

The Indian Patents & Designs Act.

1999

On March 26, 1999 Patents (Amendment) Act, (1999) Came Into Force From 01-01-1995.

1972

The Patents Act (Act 39 Of 1970) Came Into Force On 20th April 1972.

Source: Adapted from http://www.legalserviceindia.com/articles/patents_geographical.htm accessed 10th November 2004

In the past, India honoured patents on manufacturing processes but not patents on products, which allowed generic drug companies to ‘reverse engineer and manufacture drugs’ without paying royalties to the companies who own patents on those drugs (McNeil 2001).

The features of the 1970 Patents Act helped to promote India’s pharmaceutical industry, which specialises in generics. It has enabled considerable technological innovations and development of knowledge, with its provisions enabling the drug industry to grow at a rapid pace. (The Lancet, 2004)

The Indian Pharmaceutical industry is the pre-eminent sector in India, in terms of scientific and technological developments. India ranks among the top 15 drug manufacturing countries in the world. In 2004, the domestic drug industry met approximately ‘70% of India’s demand for bulk drugs, drug intermediates, chemicals, pharmaceutical formulations in the form of tablets, capsules and orals’ (Lancet 2004). India’s generic drug industry has enabled a huge number of people to afford essential drugs that would have otherwise been out of reach because of patent induced high prices and unavailability. Generic production therefore promoted self-sufficiency and assisted economic development.

“The Indian firm Cipla’s offer to MSF [Médecins sans frontiéres] to provide a cocktail of antiretrovirals for less than $350 a year (compared to the big boys’ $10,000) resounded like a thunderbolt. Suddenly, the emergence in the South of very low cost generics producers seems credible” .

4. IMPACTS OF THE TRIPs AGREEMENT

This chapter discusses the impacts of the TRIPs agreement (January 2005) on India’s pharmaceutical industry. It starts by mentioning the pressure and reasoning behind India’s decision to comply with TRIPs, and then examines the positive and negative aspects of the agreement, which might emerge in the next few years.

India amended the law governing patents i.e. Patents Act, 1970 by Patent (Amendment) Act, 2002, on 20th May 2003.

The main features of Patent Act, 2002, were:

? Enlargement of non-patentable inventions

? Twenty year patent term for all patents

? Burden of proof on defendant in case of infringement when a patent is for the process of producing a new product

? Making importation a right of a patentee

This Act prepared India for full TRIPs compliance, and currently, India is adapting to the changes to the pharmaceutical industry under the TRIPs Agreement, which came into force on January 1st 2005.

Indian companies have now lost the opportunity to develop processes for patent protected drugs. This could allow multinational companies to establish a monopoly over the Indian drug market, unless Indian pharmaceutical companies can compete.

Pressure to comply with TRIPs

There was pressure for India to meet TRIPs requirements because India would have otherwise been disciplined by the WTO, and ‘India’s market access rights would have been jeopardised’ along with other benefits (Lancet 2004).

There was intense lobbying, predominantly by the United States pharmaceutical industry, to impose the TRIPs agreement. PhMRA claimed that the US pharmaceutical industry loses US$500 million annually only through a lack of patent protection on drugs in India . The GlaxoSmithKlein CEO Jean-Pierre Garnier described the Indian pharmaceutical industry as price-undercutting “pirates”, and said the company “is not doing this to get a Nobel Prize.”

In response, Hamied, on behalf of the Indian pharmaceutical firm CIPLA, said “Indeed, we are a commercial company. But I market 400 products in India. If I don’t make money on a half-dozen of them, it’s no big deal. I don’t make any money on the cancer drugs we sell or drugs for thalassemia, a blood disorder that’s common in India. We sell these drugs virtually at cost because I don’t want to make money off these diseases which cause the whole fabric of society to crumble. India alone will have 35 million HIV cases by 2005, and it’s something we can’t afford.” (Lindsey 2001)

4.1 Main advantages

On the one hand, TRIPs could promote more research and development and stimulate competition to produce new drugs. On the other hand, India will lose its ability to generically produce essential drugs for its majority poor population.

Generic drug production in India has meant that research and development of new drugs has taken a back seat. Indian companies are ‘getting actively engaged in research and development of their own molecules/pharmaceutical products and processes . The Indian government is providing a range of tax concessions designed to encourage research and development, including a 10-year tax holiday on income arising from research and development. (Lancet 2004)

Thus, TRIPs is increasing investment in the research and development of new drugs. It promotes economic growth of the Indian drug industry, because companies now have patent induced control over the price and availability of new drugs. India already has more pharmaceutical products approved by the United States Food and Drug Administration (FDA) than any foreign country, which is helping the industry to obtain and enforce patents. The Indian pharmaceutical industry will be able to increase its contribution to drug discovery and development, which, given the cost-effectiveness of research and development in India, can only increase. (BJU 2003)

‘TRIPs will cement India’s position as a global pharmaceutical outsourcing hub and offshore location for research and development and other support services including strategic services in patenting and related matters.’ India is also becoming an attractive location for the outsourcing of patent drafting . In addition to these benefits to the industry as a whole, TRIPs has also imposed higher quality standards for drugs and processing.

Proponents of TRIPs argue that patent induced privatisation of the industry will lead to growth of the domestic industry that will increase the availability of all biotechnology products to poor people i.e. diffusion. However, as mentioned before, patents can reduce the availability of new essential drugs by restricting short term diffusion. Thus, although TRIPs may encourage more research and development of drugs, these drugs will be less available to poorer people who cannot afford them at times when they need them most.

However, there are counter-arguments that TRIPs will not make new drugs unaffordable. For example, Shantha Biotech, which was first to launch the indigenously developed hepatitis-B vaccine in the country in 1997, has secured the World Health Organisation (WHO) certification for its product “Shanvac B” (now marketed at “Hepashield”). Shantha is the only company in India to get this certification for the hepatitis-B vaccine, and it is being provided at a quarter the price of the previously imported vaccine (Jayaraman 2001).

However, despite greater availability of a few specific drugs, linked to some Indian companies obtaining licenses, the price of new drugs over the next few years is likely to be relatively high in terms of what the population is used to and can afford.

4.2 Main Disadvantages

Under TRIPs, there will be more consolidation in the pharmaceutical industry, as larger companies are more capable of using patents to secure higher profits. Linked to economies of scale, these companies will be able to exploit the patent system to out-compete other companies. Multinationals such as GlaxoSmithKline, which already operate in India, will have a particular advantage. Smaller companies will be less capable of buying into the strict patent system. Merely securing a patent from America’s patent office costs at least $4000. Defending it in court can cost millions (Economist 2002).

Although TRIPs does not patent old drugs already on the market, there is still a backlog of products waiting for grant of product patents, some which may already be on the market, as product claim applications have been filed since January 1 1995. Unless Indian companies have stopped manufacturing such drugs completely, a large number of litigation and infringement suits will ensue .

TRIPs restricts India’s generic industry and longer patents provide additional incentive for foreign investment in India. This could actually pose a threat to India’s pharmaceutical companies. At an international level, Indian companies’ advantage in cheap vaccines for hepatitis or rabies may be eroded by potential development of cocktail vaccines that promise delivery of multiple vaccines in a single shot (Jayaraman 2003). Although TRIPs encourages growth of the industry and creates some large winners, it creates many losers.

Since the 1970s, India’s poor population has benefited from a range of drugs available at relatively low prices. The industry is efficient at making generic varieties and has a number of different companies able to produce such drugs, which means that new drugs on the market can be imitated both quickly and easily. This provides a means of sharing the benefits of technological advancement in developed countries with developing countries, usually isolated by a gap in technology. According to some reports, India is home to the fastest growing rate of new infections in the world (Hankins 2003). Without the benefits of generic drug production, the population of India could suddenly be faced with a health crisis.

According to a recent Times of India report; the price of cancer drug Gleevac has risen from to Indian Rs120, 000 ($2,590) from its price just a few months ago of Indian Rs4000 ($86.35) – 30 times more, because of TRIPs .

4.3 The Doha Agreement and Compulsory Licensing

TRIPs has a clause that allows governments to override patents and provide essential drugs to the poor in some circumstances. Working with Non Government Organisations (NGOs), Brazil and a group of African countries pressured policymakers to revise TRIPs. The meeting in Doha, November 2001, between the world’s trade ministers attempting to organise a new round of trade negotiations (Health Affairs 2004), led to the Doha “Declaration on the TRIPS Agreement and Public Health.” This declaration affirmed that TRIPS “should be interpreted and implemented in a manner supportive of WTO members’ right to protect public health and, in particular, to promote access to medicines for all.”

‘It affirmed the right of nations to use the exceptions of TRIPS, such as the compulsory licensing provision, to meet public health concerns, specifically stating that “public health crises, including those related to HIV/AIDS, tuberculosis, malaria and other epidemics, can represent a national emergency” and thus facilitate the right to use compulsory licensing’ (World Trade Organisation Declaration 2001).

‘Governments can issue compulsory licenses to allow other companies to make a patented product or use a patented process under licence without the consent of the patent owner, but only under certain conditions aimed at safeguarding the legitimate interests of the patent holder’ . For example, the Supreme Court of India may interfere to justify the dispensation of drugs at an affordable price on the grounds of concern for public suffering. They can grant a compulsory license for companies to produce a generic drug. If required, the government may also fix the price of these drugs as well as the royalties to be paid to the inventor for the remaining term of patent .

A further 30 August 2003 Amendment to the Doha Agreement enables governments to let their pharmaceuticals generically produce drugs for other countries, as well as their own people, in times of ‘acute suffering.’ Previously, Article 31(f) of the TRIPS Agreement stated that products made under compulsory licensing must be “predominantly for the supply of the domestic market”. (WTO Press Release 2003) This applied directly to countries that could manufacture drugs, limiting the amount they could export. It will now be possible for countries to import cheap generic drugs in times of ‘acute suffering’.

This was regarded as a victory by the developing world and as a defeat by the research-based drug industry.

However, there are serious questions as to whether compulsory licensing can even work. ‘No generic medicines have been manufactured this way in the past decade, treating no patients in any country worldwide’ (Attaran 2003). ‘Threats of compulsory licensing might be useful when rattling sabres with drug companies to lower medicine prices, but only a single (and unusually powerful) developing country, Brazil, has ever succeeded in doing so. As such, compulsory licensing or the threat of it has seldom had any practical effect for public health’ (Attaran 2004).

Nevertheless, the pharmaceutical industry in developed countries has objected, with the United States leading the objections. ‘America’s drug industry has fought tooth and nail to impose the narrowest possible interpretation of the Doha declaration, and wants to restrict the deal to drugs to combat HIV/Aids, malaria, TB and a shortlist of other diseases “unique to Africa” .’ This means that the industry is against the use of compulsory licencing, and only prepared to accept its use in Africa, which is very unethical when most developing countries do not have sufficient access to essential drugs. It highlights the ruthlessness of paharnceutical companies, in terms of seeking maximum profit even at the expense of the world’s health.

Compulsory licensing and the amendments to TRIPs are positive in respect to health care in developing countries. The changes suggest that governments do respond to pressure and there has already been some admission on their part that TRIPs could be revised under a more ethical framework. However, even with these amendments, TRIPs does not tackle the root problems of unequal power relations between developed and developing countries, which give rise to the unequal access to pharmaceutical biotechnology.

5. CONCLUSION

This chapter argues in favour of alternatives to TRIPs. It starts by summarising the benefit of increased public funding in research and development. It shows the close ties between science, business and government and goes on to explores wider policies, highlighting the ways that the scientific community can promote more ethical drug policy.

Public funding

If a larger proportion of research and development of new drugs was publicly funded, then this would encourage more investment into the development of essential drugs, which are needed in developing countries.

Data submitted to the Joint Economic Committee of Congress by the National Bureau of Economic Research reveals that public research, not private, led to 15 of the 21 most essential drugs introduced between 1965 and 1992, and other studies in the 1990s suggest that only a minority of important drug discoveries in recent years (estimates range from 17% to 40%) were the result of commercial research (O’Leary 2002). This shows that public funding is paramount to the production of essential drugs, and therefore to health in developing countries. The combined effect of shortening patents and increasing public funding in the pharmaceutical industry would ensure that not only are more essential rugs produced, but that they also reach those who need them.

The next section shows that scientists need to devote more attention to the unethical nature of drug policy and voice concerns to the public. This involves deconstructing a scientific agenda from the economic agenda of government and big business.

Governments, science and big business

Scientists ideally work to discover “truth” and gather knowledge to help people. Research and development, however, tends to be profit-driven, and there are conflicts between seeking scientific advancement and helping people, because helping people is not always profitable. Government policy supports the pharmaceutical industry, as strict patents favour the expansion if the industry and economic growth. Although business and governments are therefore dependent on scientists to design new drugs and technology, their common agenda allows them to exert political and economic control over science. Any social objective to deliver essential drugs to the poor is lost in this agenda. Scientific search for ‘truth’ therefore becomes a quest for profit, because of the vested interests of government and business.

The United States Office of Management and Budget reported that academia, in addition to federal funding, receives millions of dollars for research from donors and the private industry.

“Bioethicists at the University of Toronto take funding from GlaxoSmithKline, Pfizer and Merck to write editorials on bringing biotechnology to the developing world . . . Bioethicists at the University of Pennsylvania take money from Pfizer to write an article explaining why physicians should not accept gifts from companies like Pfizer. (Engler 2004) This shows the irony whereby large companies control information which should criticise their activities.

In the United States, even federal money comes with strings attached. Federally funded experiments and research are subject to massive amounts of bureaucratic regulation and oversight. Members of academia are now increasingly involved in the private sector. ‘This means that, even in basic research, funding is not free from profit motives or federal regulation, and the research is not necessarily a pure drive for more knowledge .’ Thus, it is hard to separate science from the profit motives of business and politics, which share a common agenda. Scientific information can be biased because it is conditioned by this agenda.

‘Today the most powerful players outside government are private corporations. They contribute financially to political parties in the US, Europe and elsewhere and a neo-liberal trade agenda has become the mantra of virtually all elected political parties. The price governments have to pay for this support is to ensure that their electoral platform corresponds quite closely to the agenda of big business.’ (Shutt 2001)

It is unfortunate that science, politics and business are so intertwined that it is difficult for the benefits of biotechnology and knowledge to jump the political and economic hurdles to reach developing countries.

It means that scientists need to be more vigilant about the type of drugs they help to produce, and what they endorse. Moreover, the scientific community need to play a more active role in raising awareness about pharmaceutical issues, so that people become more informed and capable of working with other groups, such as NGOs and members of the scientific community, to press governments for change. Scientists and the public can apply pressure to regulate the corporate sector, by imposing corporate social standards in the trade of drugs, and deconstruct those pressures from big business that controls science and information.

Public mistrust

Governments have control over science. They manipulate the science often finding a balance between where public support lies and where the money lies. This has resulted in public mistrust and scepticism in science. In the UK, for example, the public was informed by government that BSE could not be transmitted from cattle to humans, and the government promoted British beef and the industry for around ten years, before it emerged that there was a human form of the disease, variant CJD. Mistrust and scepticism was the result.

Scientific ignorance can also weaken the ties between science and the public. People may ignore the science because it is viewed as obscuring a larger picture (Michael, 1996). Science can be difficult to understand and, as mentioned, communication through the media reflects the agenda of business and government. If people do not trust the scientific media or understand the science of issues, their uncertainty can be compounded by a general mistrust of science and the scientific community. It is also important to consider that people also have different views on issues, which highlights the need for better communication and debate. New abortion procedures to people who are already pro-life are simply ‘more efficient ways to kill unborn babies,’ whereas to pro-choice advocates they are safer, less intrusive ways of protecting the choices and health of mothers .

People need to feel that a scientific organisation has no vested interests. This is why independent organisations for public scientific awareness and education are important to build up this trust. In Britain, this includes COPUS (Committee on Public Understanding of Science) run by the Royal Society. There is also the Wellcome Trust, which informs the public on science policy and practice (as well as contributing to researching social implications of sciences) “The culture of science needs a sea-change, in favour of open and positive communication with the media.’ If these independent scientific institutions, collaborating with NGOs and the scientific community, can succeed in informing and educating people, ‘it will pay for itself many times over in renewed public trust’. (UK Select Committee on Science and Technology 2000)

Agreeing with this line of thinking, if independent scientific organisations can give more attention to health problems in developing countries, then they can raise public awareness about these issues. The potential to change policy rests on a more informed public.

Individual scientists and the scientific community, collaborating with independent organisations, can debate ethical issues and highlight the importance of improving health in developing countries by increasing the availability of essential drugs. “Some of the favourite topics of bioethicists seem trivial compared with the important health issues facing people in the world’s poor countries and in impoverished regions in rich countries” (BMJ 2004). “The risk of dying from maternal causes in sub Saharan Africa is 1 in 16. In Western Europe it is 1 in 4000.” Bioethicists could focus their attention on the morality of a world system that allows “500 000 girls and women [to] die every year – 99% in developing countries – from preventable conditions and injuries related to pregnancy and childbirth.” (Lancet 2004)

It is especially important to make younger people more aware of the issues pertaining to the use of strict patents, in order to produce an informed public in the long term. Thus, there needs to be more attention to such issues in colleges and universities, as part of a curriculum, then younger people could debate for themselves the fairness of TRIPs. Again, a more informed public would be less likely to accept the ‘unfair’ policies enforced by their governments.

Therefore, policy must change. After all, it is the wider policies that enable corporations to exploit poorer people, who cannot afford to buy into technology. Roy Vagelos, the former head of Merck, claims that “‘A corporation with stockholders can’t stoke up a laboratory that will focus on Third World diseases, because it will go broke’ … ‘That’s a social problem, and industry shouldn’t be expected to solve it .’ Although biased from an industry viewpoint, he does make the point that companies are by definition profit motivated and that giving companies greater freedom is not in the best interests of health, especially poorer people.

Historical policy context

‘One cannot separate economics, political science, and history. Politics is the control of the economy. History, when accurately and fully recorded, is that story.’ (Smith, 1994). There are wider policies that need to be considered. Patents are a form of imperialism.

In the nineteenth and twentieth centuries rich, powerful states, including Britain and other European countries, exploited third world colonies. Richer states exploited the natural resources and workforce of the colony, and efficient supply chains were constructed for this purpose, based on unequal power relations. Although developing countries gained economic dependence in the 1960s and early 1970s, an economic dependence continued. Developed countries lent large sums of money to developing countries, and these debts became unpayable due to the rise in interest rates. Developing countries, instead of investing in health, still have to repay these debts, and they have become economically dependent on the companies and governments of developed countries, who control trade policy.

Thus, based on a historical trade policy context, governments in developed countries have the responsibility to help developing countries supply drugs to their populations.

‘Enormous agricultural subsidies ($310 billion) in developed countries deny the agrarian populations of poor countries the opportunity to export products and accumulate wealth’ (OECD, Paris 2002). The subsidies alone are roughly equal to the entire gross domestic product (GDP) of sub-Saharan Africa. ‘Redirecting just 1 percent of this government spending to global health would more than double the foreign aid spent to control HIV/AIDS, malaria, and tuberculosis combined.’

President Yoweri Museveni of Uganda opines that giving priority to medicine patents in trade negotiations has been a “red herring” and that “if there were no agricultural subsidies…we [Africans] would earn enough money to buy all the drugs we want” (Wall Street Journal Editorial 2003). Although I think that reducing agricultural subsidies is just one element of improving pharmaceutical infrastructure in developing countries, he makes a valid point that improving the distribution of drugs is linked to redistributing wealth between countries.

Kanji et al (1992) take this further to point out that a country’s pharmaceutical and health policy cannot be isolated from its general development startegy. November et al 1982 elaborates by stating that ‘dependence on products [drugs] and the agents and institutions which make them available, fosters the notion that the solution to illness resides in the purchase and consumption of medications rather than improvements in living condtions’ (November et al 1981).

I agree with this line of reasoning that links the unavailability of essential drugs in developing countries to wider policies, and highlights the need for more sustainable development that takes into account the vulnerability of the poor by imposing strict social criteria in drug policy and trade, rather than strict patents (economic criteria). It should be emphasised that shortening the time length of patents is one important factor among many that could improve the avilability of essential drugs and all round healthcare in developing countries.

Melrose, 1982, says that ‘companies should keep to their declared obligation of making sure that drugs “have full regard to the needs of public health” and demonstrate special social responsibility in poor countries by not advertising non-essential multivitamin tonics, cough and cold preparations and expensive and irrational combination drugs (Melrose 1982).’ Although I agree that corporations need to behave more responsibly, this should be a legal prerequisite rather than an ‘obligation.’

Ironically, there is great potential and ability of the large pharmaceutical firms, which have been so criticised in this text, to develop more essential drugs for the poor. The private sector has a great deal of knowledge and capital, which can be used to produce new essential and non-essential drugs. Thus, although public funding would help to give priority to essential drugs, the private sector should still contribute significantly. This is especially the case in the foreseeable future because the private sector is largely responsible for the production of all new drugs. ‘If Pfizer, Merck, Glaxo-Wellcome, and other pharmaceutical companies do not develop drugs that plague developing nations then …there is a real danger that people in developing nations will become therapeutic orphans’ if the pharmaceutical companies lack the proper incentives to develop drugs for the developing world’ (Reich 1979-1981).

Thus, the final part of the conclusion looks at ways of regulating the corporate sector.

Regulating the corporate sector

Governments can regulate the pharmaceutical industry in two broad ways, either by direct control, usually by making legal requirements, or by creating incentives. A mixture of the two strategies can be effective.

Control involves regulating and monitoring biotechnology companies and pharmaceuticals through the creation of legal requirements. For example, when these organisations develop drugs/ vaccines, governments can mandate them to comply with research and manufacturing standards to ensure products are safe and efficacious . Governments can control drug prices furthermore because they often have authority over the granting and use of patents. For example, in the US, the government has the right to license drugs to other companies if the patentee does not make it available to the public on reasonable price and terms. Such a right is currently focused on drugs that have been developed with public support . It needs to extend to drugs developed with private support.

Although laws are paramount in regulating corporate conduct, there is the issue that corporations have no moral obligations over and above the requirement to comply with the law (Friedman 1970). Governments can, in this regard, create further incentives for these organisations to engage in developing drugs/ vaccines that benefit populations in developing countries. For example, it could create subsidies or offer grants for research in certain areas. The Orphan Drug Act, introduced in the US in 1983, creates tax and marketing incentives for those companies that engage in creating drugs for rare diseases. Also, governments could commit to purchasing future critical drugs/ vaccines in order to minimise the ‘private entity’s financial risk’ .

Ideally, TRIPs should be replaced by policy which curtails the power and influence of the private sector, by shortening the time length of patents, allowing generic production in developing countries, and at the same time increasing public funding of research and development.

In summary, making more ‘ethical’ drug policy is dependent on:

? International policies

- removing TRIPs, shortening the length of patents; allowing developing countries to generically produce essential drugs.

- subsidising research and development of essential drugs.

- regulating the corporate sector: ensuring that essential drugs are reasonable priced; ‘a price that allows the company to earn its money but also promotes accessibility and equity’ (Brody 1996) & (Spinello 1992).

? National policies

- providing funding and technical support for NGOs who raise awareness of the issues surrounding the use of strict patents in the pharm,aceutical industry.

- Promoting education in schools; collabortaing with independent scientific organisations to provide information publicly, through the media.

- Setting an example by increasing public funding in research and development; prioritising investments in essential drug production; greater transparency; governments more accountable to the public than companies.

- Campaigning for fairer drug policies at the international level

? Education and public awareness

- Informed people in developed countries, able to raise issues pertaining to the use of strict patents and resist ‘unfair’ policies.

? The role of the scientific community

- a scientific community that focuses more on third world issues and health problems, and raises awareness about the underlying policies that cause an imbalance in wealth and health.

- Independent scientific organisations that can communicate information to the public and collaborate with scientists and NGOs, and raise concerns with business and government.

- campaigning for ‘truth’ and sharing of knowledge, as well as more regulation of the corporate sector, and governments who are more accountable to the public.

This paper highlights the interconnectedness of social, economic and political factors which can improve the availability of essential drugs in developing countries.

To end on a more positive note, pharmaceutical companies have created life-saving drugs which have helped to save millions of lives, but these drugs have tremendous potential to save many more lives and alleviate suffering by helping to curb the incidence of various infectious diseases, which cripple the social and economic fabric of developing countries. The paper also highlights the importance of better understanding the impacts of TRIPs in developed countries, so that governments are pressed to change policies at the national and international level. The role of the scientific community is critical, in terms of having more say and control over drug policy, and helping to increase public awareness about drug policy. Ultimately, a concerted effort between the scientific community, public and NGOs can resist ‘unfair’ drug policy and some of the exploitative practices of pharmaceutical companies.

7. REFERENCES

Books/Journals

Attaran, A. (2003) Assessing and Answering Paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public Health: The Case for Greater Flexibility and a Non-Justifiability Solution. Emory International Law Review 17, no. 2 (2003): 743–780.

Benatar, S. (2000) Avoiding Exploitation in Clinical Research. Cambridge Quarterly of Healthcare Ethics 2000; 9: 562-65

BJU (2003) Fitzpatrick (Ed) International Volume 92 No

Corporate response: Competitive response and risk management
Corporations are faced with meeting economic, environmental and social goals. There are two key ways in which corporations will respond within the economics of climate change:

· Competitive response and developing the opportunity set – mainly focuses on mitigation. Climate change becomes a focus of corporate attention and corporations launch new business opportunities;
· Risk management – mainly focuses on adaptation and corporate responsibility. Increasingly, markets will start to focus on the net carbon position of companies and businesses will integrate climate change risk into their policies and procedures.

Increased corporate focus on climate change
Over the past year, the public discourse on climate change has been active:

· In advance of the Bali conference, 150 leaders of global companies issued a communiqué underscoring the urgency of climate change action. The business leaders wrote that a legally binding UN agreement to reduce greenhouse gas emissions is necessary for businesses to make the right investments in clean technologies and infrastructure, and that an extended carbon market needs to be part of the framework because it allows for flexibility and a low-cost transition to a low-carbon economy;
· As businesses have advocated for a robust post-Kyoto agreement, companies are channelling funds towards increasing the supply of clean technology and investment in the sector has grown;
· Businesses also have been vocal at the G8, underscoring the need for a ‘rapid and fundamental strategy to reach a low-carbon world economy’ in a paper delivered to Prime Minister Fukada of Japan at the G8 meeting in Hokkaido-Toyako;
· A McKinsey survey reveals that 60% of global executives regard climate change as strategically important and a majority consider it important to product development, investment planning and brand management. 34% of executives in China, 37% of those in Europe and 40% of respondents in India report that their companies frequently or always consider climate change in overall strategy.

Competitive Response – Where are the opportunities?
Markets for climate change products and climate change-related businesses are growing fast:

· In 2007, there were nearly 500 Private Equity and Venture Capital deals in climate change – representing $13.5 billion of investment. This is up 46% from 2006;
· There were 1,900 Private Equity and Venture Capital investors in climate change in 2007;
· In 2007, Germany, China and the United States were the leading investors in new renewable energy capacity with $14 billion, $12 billion and $10 billion respectively;
· There are close to 300 mutual fund managers acting in the climate change space, along with a growing number of hedge funds and private equity managers;
· No less an oilman than T. Boone Pickens has announced plans to build 4 GW of wind capacity in Texas – and is running commercials promoting alternative energy;
· Renewable businesses are growing to scale. Iberdrola Renovables was the second biggest IPO of 2007 by funds raised, with a deal value of $6 billion – and the funds raised by IPOs for clean tech companies across the board increased by over 300%, from $7.5 billion in 2006 to $32 billion in 2007;
· As part of the Masdar Initiative, Abu Dhabi – an emirate that holds about 8% of the world’s oil reserves – broke ground in 2008 on a revolutionary clean city. The broader initiative, which was launched in 2006, aims to promote energy efficiency and develop alternative sources of energy and $15 billion has been announced for new green investments;
· Alternative energy dominates capacity additions in some markets: wind made up 40% of newly installed electric power generation capacity in Europe in 2007;
· Estimates show that the global market for emissions trading will soon be worth $150 billion;
· Global investment in sustainable energy broke all previous records with $148.4 billion of new money raised in 2007, an increase of 60% over 2006;
· The IEA forecasts a massive scale-up of investment to $45 trillion in order to meet the joint objectives of build-out of the energy infrastructure and mitigation of climate change.

Risk Management – What are the risks and how are they being managed?

· The insurance industry has already begun to feel the effects of climate change and takes the issue seriously. In the US insurers have started to cancel homeowner policies in hurricane and wildfire risk areas;
· In 2007, a group of global insurers, re-insurers and brokers developed a set of ‘ClimateWise’ principles in response to global warming, designed to promote greener policies. The principles will enable companies throughout the world to build climate change into their business operations;
· Some insurance companies are already adjusting their products and services to suit emerging markets that have resulted from climate change such as weather risk, carbon trading and the clean technology industry;
· The Carbon Disclosure Project (CDP) operates to create lasting relationships between shareholders and corporations regarding implications for shareholder value and commercial operations presented by climate change. It represents 385 institutional investors with a combined $57.5 trillion of assets under management;
· A coalition in the US, led by Ceres, has encouraged improved climate change disclosure and governance at dozens of companies and has engaged with regulators such as the Securities and Exchange Commission by calling for publicly traded companies to assess and fully disclose their financial risks from climate change;
· We are seeing more attempts to measure the net carbon position of companies and then assess carbon risk or carbon beta.

In summary, Climate Change awareness and Clean Technology is here to stay, and is rapidly becoming a mainstream agenda item for most companies – regardless of the product, demographic, and sector.

The flood of counterfeit goods into the United States from the Far East, and especially China and India, has reached all time highs and is creating significant economic damage at home. This incredibly damaging, criminal activity is spurring the development of IP protective measures, such as security holograms.
Hologram Image

No-one wins when counterfeit products reach the market – the consumer buys goods which are not what they thought they were, while there may be serious consumer safety issues involved. Meanwhile, the manufacturer reaps the adverse reward of negative press and consumer comments because the counterfeit clings like a parasite to their brand image and reputation. The retail distributor finds they have goods they cannot sell and quite possibly, legal consequences of holding counterfeit products they ought not to have in the first instance.

The issue is how to protect your own brand and intellectual property in a cost effective manner, and at the same time, ensure security measures are in place which will deter counterfeiters from using your product as the basis for a counterfeit operation. The analogy of a homeowner ensuring all the doors and windows are locked, whilst fitting a highly visible alarm system to deter opportunistic thieves, is very appropriate in this context.

By applying a low-cost security device, design detail or production element to your product, you are making it harder for counterfeiters to profitably reproduce your goods. Security holograms provide an excellent method for separating your product from the competition, and counterfeiters will be assessing a range of products to see which is simpler, cheaper and most profitable for them to replicate. Making it more difficult to create a good imitation of your product by the counterfeiters, reduces the risk your product will be targeted by to begin with.

Security holograms can be produced as 2D or 3D images, the design of which is extremely difficult and costly for a counterfeiter to copy. You can use the hologram on the packaging (where it can act as a tamper evident safety feature) or place them on the actual product themselves. The presence of a security hologram acts in exactly the same was as a homeowner’s alarm system – it warns potential thieves to steer clear and try their hand at another product which is easier (and cheaper) to counterfeit.

The reasons why security holograms are highly effective in acting as a deterrent to counterfeiting, are because they are cost effective, deliver multiple security functions and can be easily customized and applied to your products or to protect other intellectual property you own.

Security holograms provide a highly visible guarantee that the goods are genuine and are not seeking to hoodwink customers with fake branding; in this regard, holograms are powerful components of your brand identity if you include them. Further security functions they perform include providing evidence the goods have not been tampered with and where they are used in conjunction with the brand image itself, they serve to protect the intellectual property which a brand represents. The hologram itself can be subjected to fast and effective optical validation, which provides an additional layer of protection for your goods and reputation as well as being an additional mechanism to convey data such as stock and handling information.

Security holograms cannot be copied using photocopiers or computer scanners, which is a favorite technique utilized by counterfeiters. It is also apparent when a hologram is real or not, given the ability to present a moving image to the viewer – the only way a counterfeiter can get around this security barrier is to source counterfeit holograms. This is prohibitively expensive to do, or the alternative, to leave the hologram off their counterfeit products, quickly serves to mark them out as not genuine.

As counterfeit products rise and the ability of the fraudsters to deceive the consumer increases, it is vital for companies to protect their brand and reputation. Security holograms are cheap to produce, and very simple to apply and manage through the distribution chain. The simple presence of a security hologram is enough to deter many counterfeiters from even attempting to replicate your product, which makes it easier to target those counterfeiters who are attacking your intellectual property rights and reputation.

Biochemistry

Glucosamine was first prepared in 1876 by Dr. Georg Ledderhose by the hydrolysis of chitin with concentrated hydrochloric acid. The stereochemistry was not fully defined until the 1939 work of Walter Haworth. D-Glucosamine is made naturally in the form of glucosamine-6-phosphate, and is the biochemical precursor of all nitrogen-containing sugars. Specifically, glucosamine-6-phosphate is synthesized from fructose 6-phosphate and glutamine as the first step of the hexosamine biosynthesis pathway. The end-product of this pathway is UDP-N-acetylglucosamine (UDP-GlcNAc), which is then used for making glycosaminoglycans, proteoglycans, and glycolipids.

As the formation of glucosamine-6-phosphate is the first step for the synthesis of these products, glucosamine may be important in regulating their production; however, the way that the hexosamine biosynthesis pathway is actually regulated, and whether this could be involved in contributing to human disease remains unclear.

Indications

Oral glucosamine is marketed as a treatment of osteoarthritis. Commonly sold forms of glucosamine are glucosamine sulfate and glucosamine hydrochloride. Glucosamine is often sold in combination with other supplements such as chondroitin sulfate and methylsulfonylmethane.

Glucosamine may take weeks to months before improvements in symptoms are noticed.

Restoration of cartilage

A 2009 review concluded that “Little evidence suggests that glucosamine is superior to a placebo treatment in restoring articular cartilage.”

Osteoarthritis pain

A 2009 scientific review of available studies concluded that glucosamine sulfate, glucosamine hydrochloride, and chondroitin sulfate have individually shown inconsistent efficacy in decreasing OA pain, but many studies confirmed OA pain relief with glucosamine and chondroitin sulfate in combined use.

Health effects

Since glucosamine is a precursor for glycosaminoglycans, and glycosaminoglycans are a major component of joint cartilage, supplemental glucosamine may help to prevent cartilage degeneration and treat arthritis. Its use as a therapy for osteoarthritis appears safe, but there is conflicting evidence as to its effectiveness. A Cochrane 2005 meta-analysis of glucosamine for osteoarthritis found that only “Rotta” preparations (including older studies) found beneficial effects for pain and functional impairment. It also found that when only the studies using the highest-quality design were considered, there was no effect above placebo. In addition, in vitro analysis of glucosamine has revealed that glucosamine inhibits cartilage cell characteristics. Studies reporting beneficial effects have generally used glucosamine sulfate. Chondroitin sulfate is sometimes used in conjunction, and animal studies suggest that chondroitin may increase its efficacy. Two recent randomized, double-blind controlled trials have found no effect beyond placebo in reducing pain, while one found an effect beyond placebo.

Use

A typical dosage of glucosamine salt is 1,500 mg per day. Glucosamine contains an amino group that is positively charged at physiological pH. The anion included in the salt may vary. The amount of glucosamine present in 1500 mg of glucosamine salt will depend on which anion is present and whether additional salts are included in the manufacturer’s calculation. Glucosamine and chondroitin are “apparently poor candidates for transdermal [through the skin] absorption”, but glucosamine’s metabolite N-acetyl-D-glucosamine (NAG) appears to be a better candidate. The ability of NAG to permeate the skin is enhanced by ethanol and dimethyl sulfoxide (DMSO). DMSO is used to help deliver drugs in veterinary care, but is not approved for use on humans.

Glucosamine is a popular alternative medicine used by consumers for the treatment of osteoarthritis. Glucosamine is also extensively used in veterinary medicine as an unregulated but widely accepted supplement.

Contraindications

Clinical studies have consistently reported that glucosamine appears safe.

Allergy

Since glucosamine is usually derived from shellfish, those allergic to shellfish may wish to avoid it; however, since glucosamine is derived from the shells of these animals while the allergen is within the flesh of the animals, it is probably safe even for those with shellfish allergy. Alternative sources using fungal fermentation of corn are available.

Some commercially sold glucosamine supplements have other questionable ingredients added such as chinese skullcap, in addition to the more typical chondroitin, and MSM which is often seen too. “Allergic” type reaction may well be to these other ingredients and not the shellfish. People with reactions to these concoctions should also look at such things as red dyes and other needless additives. As noted above, the shellfish warning is just that warningresumably done by the lawyers and not because of a real problem.[citation needed] First hand experience with these since they first appeared in the USA has shown that the “red” pills are much more likely to cause a reaction, and the white ones do not unless chinese skullcap or other herbal additives are also included.[original research?]

Glucose metabolism

Another concern has been that the extra glucosamine could contribute to diabetes by interfering with the normal regulation of the hexosamine biosynthesis pathway, but several investigations have found no evidence that this occurs. A review conducted by Anderson et al. in 2005 summarizes the effects of glucosamine on glucose metabolism in in vitro studies, the effects of oral administration of large doses of glucosamine in animals and the effects of glucosamine supplementation with normal recommended dosages in humans, concluding that glucosamine does not cause glucose intolerance and has no documented effects on glucose metabolism. It should be mentioned that the authors of the above mentioned review paper (Anderson et. al.) were financially supported by Cargill, Incorporated, Eddyville, IA, a manufacturer of glucosamine as mentioned in the acknowledgments section of the paper. Other studies conducted in lean or obese subjects concluded that oral glucosamine at standard doses does not cause or significantly worsen insulin resistance or endothelial dysfunction.

Legal status

United States

In the United States, glucosamine is not approved by the Food and Drug Administration for medical use in humans. Since glucosamine is classified as a dietary supplement in the US, safety and formulation are solely the responsibility of the manufacturer; evidence of safety and efficacy is not required as long as it is not advertised as a treatment for a medical condition. The U.S. National Institutes of Health is currently conducting a study of supplemental glucosamine in obese patients, since this population may be particularly sensitive to any effects of glucosamine on insulin resistance.

Europe

In Europe, glucosamine is approved as a medical drug and is sold in the form of glucosamine sulphate. In this case, evidence of safety and efficacy is required for the medical use of glucosamine and several guidelines have recommended its use as an effective and safe therapy for osteoarthritis. The Task Force of the European League Against Rheumatism (EULAR) committee has granted glucosamine sulphate a level of toxicity of 5 in a 0-100 scale, and recent OARSI (OsteoArthritis Research Society International) guidelines for hip and knee osteoarthritis also confirm its excellent safety profile.

Bioavailability and pharmacokinetics

Two recent studies confirm that glucosamine is bioavailable both systemically and at the site of action (the joint) after oral administration of crystalline glucosamine sulfate in osteoarthritis patients. Steady state glucosamine concentrations in plasma and synovial fluid were correlated and in line with those effective in selected in vitro studies.

The bioavailability of glucosamine sulfate is around 20%.

Natural sources

Glucosamine is naturally present in the shells of shellfish, animal bones and bone marrow. It is also present in some fungi, such as Aspergillus niger.

Pharmacodynamics

The possible effects of glucosamine sulfate in patients with osteoarthritis may be the result of its anti-inflammatory activity, the stimulation of the synthesis of proteoglycans, and the decrease in catabolic activity of chondrocytes inhibiting the synthesis of proteolytic enzymes and other substances that contribute to damage cartilage matrix and cause death of articular chondrocytes.

Glucosamine is an essential substrate in the natural formation of the GAG matrix.

Glucosamine is thought to stimulate synovial production of hyaluronic acid and is also claimed to inhibit cartilage degrading liposomal enzymes.

Clinical studies

There have been multiple clinical trials of glucosamine as a medical therapy for osteoarthritis, but results have been conflicting. The evidence both for and against glucosamine’s efficacy has led to debate among physicians about whether to recommend glucosamine treatment to their patients.

Multiple clinical trials in the 1980s and 1990s, all sponsored by the European patent-holder, Rottapharm, demonstrated a benefit for glucosamine. However, these studies were of poor quality due to shortcomings in their methods, including small size, short duration, poor analysis of drop-outs, and unclear procedures for blinding. Rottapharm then sponsored two large (at least 100 patients per group), three-year-long, placebo-controlled clinical trials of the Rottapharm brand of glucosamine sulfate. These studies both demonstrated a clear benefit for glucosamine treatment. There was not only an improvement in symptoms but also an improvement in joint space narrowing on radiographs. This suggested that glucosamine, unlike pain relievers such as NSAIDs, can actually help prevent the destruction of cartilage that is the hallmark of osteoarthritis. On the other hand, several subsequent studies, independent of Rottapharm, but smaller and shorter, did not detect any benefit of glucosamine.

Due to these controversial results, some reviews and meta-analyses have evaluated the efficacy of glucosamine. Richie et al. performed a meta-analysis of randomized clinical trials in 2003 and found efficacy for glucosamine on VAS and WOMAC pain, Lequesne index and VAS mobility and good tolerability.

Recently, a review by Bruyere et al. about glucosamine and chondroitin sulfate for the treatment of knee and hip osteoarthritis concludes that both products act as valuable symptomatic therapies for osteoarthritis disease with some potential structure-modifying effects.

This situation led the National Institutes of Health to fund a large, multicenter clinical trial (the GAIT trial) studying reported pain in osteoarthritis of the knee, comparing groups treated with chondroitin sulfate, glucosamine, and the combination, as well as both placebo and celecoxib. The results of this 6-month trial found that patients taking glucosamine HCl, chondroitin sulfate, or a combination of the two had no statistically significant improvement in their symptoms compared to patients taking a placebo. The group of patients who took celecoxib did have a statistically significant improvement in their symptoms. These results suggest that glucosamine and chondroitin did not effectively relieve pain in the overall group of osteoarthritis patients, but it should be interpreted with caution because most patients presented only mild pain (thus a narrow margin to appraise pain improvement) and because of an unusual response to placebo in the trial (60%). However, exploratory analysis of a subgroup of patients suggested that the supplements taken together (glucosamine and chondroitin sulfate) may be significantly more effective than placebo (79.2% versus 54%; p = 0.002) and a 10% higher than the positive control, in patients with pain classified as moderate to severe (see testing hypotheses suggested by the data).

In an accompanying editorial, Dr. Marc Hochberg also noted that “It is disappointing that the GAIT investigators did not use glucosamine sulfate … since the results would then have provided important information that might have explained in part the heterogeneity in the studies reviewed by Towheed and colleagues” But this concern is not shared by pharmacologists at the PDR who state, “The counter anion of the glucosamine salt (i.e. chloride or sulfate) is unlikely to play any role in the action or pharmacokinetics of glucosamine”. Thus the question of glucosamine’s efficacy will not be resolved without further updates or trials.

In this respect, a 6-month double-blind, multicenter trial has been recently performed to assess the efficacy of glucosamine sulfate 1500 mg once daily compared to placebo and acetaminophen in patients with osteoarthritis of the knee (GUIDE study). The results showed that glucosamine sulfate improved the Lequesne algofunctional index significantly compared to placebo and the positive control. Secondary analyses, including the OARSI responder indices, were also significantly favorable for glucosamine sulfate.

A subsequent meta-analysis of randomized controlled trials, including the NIH trial by Clegg, concluded that hydrochloride is not effective and that there was too much heterogeneity among trials of glucosamine sulfate to draw a conclusion. In response to these conclusions, Dr. J-Y Reginster in an accompanying editorial suggests that the authors failed to apply the principles of a sound systematic review to the meta-analysis, but instead put together different efficacy outcomes and trial designs by mixing 4-week studies with 3-year trials, intramuscular/intraarticular administrations with oral ones, and low-quality small studies reported in the early 1980s with high-quality studies reported in 2007.

However, currently OARSI (OsteoArthritis Research Society International) is recommending glucosamine as the second most effective treatment for moderate cases of osteoarthritis. Likewise, recent European League Against Rheumatism practice guidelines for knee osteoarthritis grants to glucosamine sulfate the highest level of evidence, 1A, and strength of the recommendation, A.

A 2009 small study has concluded that glucosamine reduces cartilage turnover in osteoarthritis patients in response to physical training.

See also

Chitosan

Chitobiose

Methylsulfonylmethane

References

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^ Vangsness Jr, C.; Spiker, W.; Erickson, J. (2009). “A review of evidence-based medicine for glucosamine and chondroitin sulfate use in knee osteoarthritis”. Arthroscopy : the journal of arthroscopic & related surgery : official publication of the Arthroscopy Association of North America and the International Arthroscopy Association 25 (1): 8694. doi:10.1016/j.arthro.2008.07.020. PMID 19111223.  edit

^ Towheed TE, Maxwell L, Anastassiades TP, et al. (2005). “Glucosamine therapy for treating osteoarthritis”. Cochrane Database Syst Rev (2): CD002946. doi:10.1002/14651858.CD002946.pub2. PMID 15846645.  Cochrane entry.

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^ a b PDR Health

^ Garner ST, Israel BJ, Achmed H, Capomacchia AC, Abney T, Azadi P (2007). “Transdermal permeability of N-acetyl-D-glucosamine”. Pharm Dev Technol 12 (2): 16974. doi:10.1080/10837450701212560. PMID 17510888. 

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^ Scroggie DA, Albright A, Harris MD (July 2003). “The effect of glucosamine-chondroitin supplementation on glycosylated hemoglobin levels in patients with type 2 diabetes mellitus: a placebo-controlled, double-blinded, randomized clinical trial”. Archives of Internal Medicine 163 (13): 158790. doi:10.1001/archinte.163.13.1587. PMID 12860582. 

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^ Monauni T, Zenti MG, Cretti A, et al. (June 2000). “Effects of glucosamine infusion on insulin secretion and insulin action in humans”. Diabetes 49 (6): 92635. doi:10.2337/diabetes.49.6.926. PMID 10866044. 

^ Anderson JW, Nicolosi RJ, Borzelleca JF (February 2005). “Glucosamine effects in humans: a review of effects on glucose metabolism, side effects, safety considerations and efficacy”. Food and Chemical Toxicology : an International Journal Published for the British Industrial Biological Research Association 43 (2): 187201. doi:10.1016/j.fct.2004.11.006. PMID 15621331. 

^ Muniyappa R, Karne RJ, Hall G, et al. (November 2006). “Oral glucosamine for 6 weeks at standard doses does not cause or worsen insulin resistance or endothelial dysfunction in lean or obese subjects”. Diabetes 55 (11): 314250. doi:10.2337/db06-0714. PMID 17065354. 

^ Pouwels MJ, Jacobs JR, Span PN, Lutterman JA, Smits P, Tack CJ (May 2001). “Short-term glucosamine infusion does not affect insulin sensitivity in humans”. The Journal of Clinical Endocrinology and Metabolism 86 (5): 2099103. doi:10.1210/jc.86.5.2099. PMID 11344213. 

^ Biggee BA, Blinn CM, Nuite M, Silbert JE, McAlindon TE (February 2007). “Effects of oral glucosamine sulphate on serum glucose and insulin during an oral glucose tolerance test of subjects with osteoarthritis”. Annals of the Rheumatic Diseases 66 (2): 2602. doi:10.1136/ard.2006.058222. PMID 16818461. 

^ “Dietary Supplements”. U.S. Food and Drug Administration. http://www.cfsan.fda.gov/~dms/supplmnt.html. Retrieved December 10, 2009. 

^ “Effects of Oral Glucosamine on Insulin and Blood Vessel Activity in Normal and Obese People”. ClinicalTrials.gov. June 23, 2006. http://www.clinicaltrials.gov/ct/show/NCT00065377. Retrieved December 10, 2009. 

^ Jordan KM, Arden NK, Doherty M, et al. (December 2003). “EULAR Recommendations 2003: an evidence based approach to the management of knee osteoarthritis: Report of a Task Force of the Standing Committee for International Clinical Studies Including Therapeutic Trials (ESCISIT)”. Annals of the Rheumatic Diseases 62 (12): 114555. doi:10.1136/ard.2003.011742. PMID 14644851. 

^ Zhang W, Moskowitz RW, Nuki G, et al. (September 2007). “OARSI recommendations for the management of hip and knee osteoarthritis, part I: critical appraisal of existing treatment guidelines and systematic review of current research evidence”. Osteoarthritis and Cartilage / OARS, Osteoarthritis Research Society 15 (9): 9811000. doi:10.1016/j.joca.2007.06.014. PMID 17719803. 

^ Persiani S, Roda E, Rovati LC, Locatelli M, Giacovelli G, Roda A (December 2005). “Glucosamine oral bioavailability and plasma pharmacokinetics after increasing doses of crystalline glucosamine sulfate in man”. Osteoarthritis and Cartilage / OARS, Osteoarthritis Research Society 13 (12): 10419. doi:10.1016/j.joca.2005.07.009. PMID 16168682. 

^ Persiani S, Rotini R, Trisolino G, et al. (July 2007). “Synovial and plasma glucosamine concentrations in osteoarthritic patients following oral crystalline glucosamine sulphate at therapeutic dose”. Osteoarthritis and Cartilage / OARS, Osteoarthritis Research Society 15 (7): 76472. doi:10.1016/j.joca.2007.01.019. PMID 17353133. 

^ Cohen MJ, Braun L (2007). Herbs & natural supplements: an evidence-based guide. Marrickville, New South Wales: Elsevier Australia. ISBN 0-7295-3796-X. 

^ Scientific Opinion of the Panel on Dietetic Products Nutrition and Allergies on a request from the European Commission on the safety of glucosamine hydrochloride from Aspergillus niger as food ingredient The EFSA Journal (2009) 1099, 1-19

^ Largo R, Alvarez-Soria MA, Dez-Ortego I, et al. (April 2003). “Glucosamine inhibits IL-1beta-induced NFkappaB activation in human osteoarthritic chondrocytes”. Osteoarthritis and Cartilage / OARS, Osteoarthritis Research Society 11 (4): 2908. PMID 12681956. .

^ Chan PS, Caron JP, Orth MW (July 2006). “Short-term gene expression changes in cartilage explants stimulated with interleukin beta plus glucosamine and chondroitin sulfate”. The Journal of Rheumatology 33 (7): 132940. PMID 16821268. 

^ Bassleer C, Rovati L, Franchimont P (November 1998). “Stimulation of proteoglycan production by glucosamine sulfate in chondrocytes isolated from human osteoarthritic articular cartilage in vitro”. Osteoarthritis and Cartilage / OARS, Osteoarthritis Research Society 6 (6): 42734. doi:10.1053/joca.1998.0146. PMID 10343776. 

^ Dodge GR, Jimenez SA (June 2003). “Glucosamine sulfate modulates the levels of aggrecan and matrix metalloproteinase-3 synthesized by cultured human osteoarthritis articular chondrocytes”. Osteoarthritis and Cartilage / OARS, Osteoarthritis Research Society 11 (6): 42432. PMID 12801482. 

^ Chan PS, Caron JP, Orth MW (November 2005). “Effect of glucosamine and chondroitin sulfate on regulation of gene expression of proteolytic enzymes and their inhibitors in interleukin-1-challenged bovine articular cartilage explants”. American Journal of Veterinary Research 66 (11): 18706. doi:10.2460/ajvr.2005.66.1870. PMID 16334942. 

^ Uitterlinden EJ, Jahr H, Koevoet JL, et al. (March 2006). “Glucosamine decreases expression of anabolic and catabolic genes in human osteoarthritic cartilage explants”. Osteoarthritis and Cartilage / OARS, Osteoarthritis Research Society 14 (3): 2507. doi:10.1016/j.joca.2005.10.001. PMID 16300972. 

^ Chu SC, Yang SF, Lue KH, et al. (October 2006). “Glucosamine sulfate suppresses the expressions of urokinase plasminogen activator and inhibitor and gelatinases during the early stage of osteoarthritis”. Clinica Chimica Acta; International Journal of Clinical Chemistry 372 (1-2): 16772. doi:10.1016/j.cca.2006.04.014. PMID 16756968. 

^ a b Swarbrick J, ed (2006). Encyclopedia of Pharmaceutical Technology. 4 (Third ed.). Informa Healthcare. pp. 2436. ISBN 978-0-8493-9399-0. 

^ Manson JJ, Rahman A (January 2004). “This house believes that we should advise our patients with osteoarthritis of the knee to take glucosamine”. Rheumatology (Oxford, England) 43 (1): 1001. doi:10.1093/rheumatology/keg458. PMID 12867572. 

^ Adams ME (July 1999). “Hype about glucosamine”. Lancet 354 (9176): 3534. doi:10.1016/S0140-6736(99)90040-5. PMID 10437858. 

^ McAlindon TE, LaValley MP, Gulin JP, Felson DT (March 2000). “Glucosamine and chondroitin for treatment of osteoarthritis: a systematic quality assessment and meta-analysis”. JAMA : the Journal of the American Medical Association 283 (11): 146975. doi:10.1001/jama.283.11.1469. PMID 10732937. 

^ Reginster JY, Deroisy R, Rovati LC, et al. (January 2001). “Long-term effects of glucosamine sulphate on osteoarthritis progression: a randomised, placebo-controlled clinical trial”. Lancet 357 (9252): 2516. doi:10.1016/S0140-6736(00)03610-2. PMID 11214126. 

^ Pavelk K, Gatterov J, Olejarov M, Machacek S, Giacovelli G, Rovati LC (October 2002). “Glucosamine sulfate use and delay of progression of knee osteoarthritis: a 3-year, randomized, placebo-controlled, double-blind study”. Archives of Internal Medicine 162 (18): 211323. doi:10.1001/archinte.162.18.2113. PMID 12374520. 

^ Hughes R, Carr A (March 2002). “A randomized, double-blind, placebo-controlled trial of glucosamine sulphate as an analgesic in osteoarthritis of the knee”. Rheumatology (Oxford, England) 41 (3): 27984. doi:10.1093/rheumatology/41.3.279. PMID 11934964. 

^ Cibere J, Kopec JA, Thorne A, et al. (October 2004). “Randomized, double-blind, placebo-controlled glucosamine discontinuation trial in knee osteoarthritis”. Arthritis and Rheumatism 51 (5): 73845. doi:10.1002/art.20697. PMID 15478160. 

^ Richy F, Bruyere O, Ethgen O, Cucherat M, Henrotin Y, Reginster JY (July 2003). “Structural and symptomatic efficacy of glucosamine and chondroitin in knee osteoarthritis: a comprehensive meta-analysis”. Archives of Internal Medicine 163 (13): 151422. doi:10.1001/archinte.163.13.1514. PMID 12860572. 

^ Bruyere O, Reginster JY (2007). “Glucosamine and chondroitin sulfate as therapeutic agents for knee and hip osteoarthritis”. Drugs & Aging 24 (7): 57380. doi:10.2165/00002512-200724070-00005. PMID 17658908. 

^ Clinicaltrials.gov

^ Towheed TE, Maxwell L, Anastassiades TP, et al. (2005). “Glucosamine therapy for treating osteoarthritis”. Cochrane Database of Systematic Reviews (Online) (2): CD002946. doi:10.1002/14651858.CD002946.pub2. PMID 15846645. 

^ Hochberg MC (February 2006). “Nutritional supplements for knee osteoarthritis–still no resolution”. The New England Journal of Medicine 354 (8): 85860. doi:10.1056/NEJMe058324. PMID 16495399. 

^ Vlad SC, LaValley MP, McAlindon TE, Felson DT (July 2007). “Glucosamine for pain in osteoarthritis: why do trial results differ?”. Arthritis and Rheumatism 56 (7): 226777. doi:10.1002/art.22728. PMID 17599746. 

^ a b Reginster JY (July 2007). “The efficacy of glucosamine sulfate in osteoarthritis: financial and nonfinancial conflict of interest”. Arthritis and Rheumatism 56 (7): 210510. doi:10.1002/art.22852. PMID 17599727. 

^ Petersen, G.; Saxne, T.; Heinegard, D.; Hansen, M.; Holm, L.; Koskinen, S.; Stordal, C.; Christensen, H. et al. (Jul 2009). “Glucosamine but not ibuprofen alters cartilage turnover in osteoarthritis patients in response to physical training1″. Osteoarthritis and Cartilage 18: 34. doi:10.1016/j.joca.2009.07.004. ISSN 1063-4584. PMID 19679221.  edit

External links

Glucosamine article, Mayo Clinic

General Glucosamine and Chondroitin Sulfate information from the Arthritis Foundation.

“UDP-N-acetylglucosamine Biosynthesis,” Diagram including IUBMB nomenclature and links.

PDR Health Summary of drug information on glucosamine from the publishers of the Physician’s Desk Reference.

“Glucosamine/Chondroitin Arthritis Intervention Trial (GAIT),” ClinicalTrials.gov registration and information.

“Effects of Oral Glucosamine on Insulin and Blood Vessel Activity in Normal and Obese People,” ClinicalTrials.gov information.

“NIH News: Efficacy of Glucosamine and Chondroitin Sulfate May Depend on Level of Osteoarthritis Pain,” Wednesday, February 22, 2006.

“Glucosamine and Chondroitin for Arthritis: Benefit is Unlikely,” Summary of and commentary on research findings, including GAIT.

v  d  e

Dietary supplements

Types

Amino acids Bodybuilding supplement Energy drink Energy bar Fatty acids Herbal Supplements Minerals Prebiotics Probiotics (Lactobacillus, Bifidobacterium) Vitamins

Vitamins and minerals

Retinol (Vitamin A) B vitamins: Thiamine (B1) Riboflavin (B2) Niacin (B3) Pantothenic acid (B5) Pyridoxine (B6) Biotin (B7) Folic acid (B9) Cyanocobalamin (B12) Ascorbic acid (Vitamin C) Ergocalciferol and Cholecalciferol (Vitamin D) Tocopherol (Vitamin E) Naphthoquinone (Vitamin K) Calcium Choline Chlorine Chromium Cobalt Copper Fluorine Iodine Iron Magnesium Manganese Molybdenum Phosphorus Potassium Selenium Sodium Sulfur Zinc

Other common ingredients

AAKG Carnitine Chondroitin sulfate Cod liver oil Copper gluconate Creatine/Creatine supplements Dietary fiber Echinacea Elemental calcium Ephedra Fish oil Folic acid Ginseng Glucosamine Glutamine Grape seed extract Iron supplements Japanese Honeysuckle Krill oil Lingzhi Linseed oil Milk thistle Melatonin Red yeast rice Royal jelly Saw palmetto Spirulina St John’s wort Taurine Wheatgrass Wolfberry Yohimbine Zinc gluconate

Related articles

Codex Alimentarius Enzyte Metabolife Hadacol Nutraceutical Multivitamin Nutrition

v  d  e

Anti-inflammatory products (M01A)

Pyrazolidine/Butylpyrazolidines

Ampyrone  Clofezone  Kebuzone  Metamizole  Mofebutazone  Oxyphenbutazone  Phenazone  Phenylbutazone  Sulfinpyrazone

Acetic acid derivatives

and related substances

Aceclofenac  Acemetacin  Alclofenac  Bromfenac  Bumadizone  Bufexamac  Diclofenac  Difenpiramide  Etodolac  Fentiazac  Indometacin  Ketorolac  Lonazolac  Oxametacin  Proglumetacin  Sulindac  Tolmetin  Zomepirac

Oxicams

Ampiroxicam  Droxicam  Lornoxicam  Meloxicam  Piroxicam  Tenoxicam

Propionic acid derivatives

Alminoprofen  Benoxaprofen  Dexibuprofen  Dexketoprofen  Fenbufen  Fenoprofen  Flunoxaprofen  Flurbiprofen  Ibuprofen  Ibuproxam  Indoprofen  Ketoprofen  Naproxen  Oxaprozin  Pirprofen  Suprofen  Tiaprofenic acid

Fenamates

Flufenamic acid  Meclofenamic acid  Mefenamic acid  Tolfenamic acid

Coxibs

Celecoxib  Etoricoxib  Lumiracoxib  Parecoxib  Rofecoxib  Valdecoxib

Other

Nabumetone  Niflumic acid  Azapropazone  Glucosamine  Benzydamine  Glycosaminoglycan  Magnesium salicylate  Proquazone  Superoxide dismutase/Orgotein  Nimesulide  Feprazone  Diacerein  Morniflumate  Tenidap  Oxaceprol  Chondroitin sulfate

Categories: Amino sugars | Monosaccharide derivatives | Monosaccharides | Dietary supplementsHidden categories: All articles with unsourced statements | Articles with unsourced statements from May 2009 | Articles with unsourced statements from December 2009 | All articles that may contain original research | Articles that may contain original research from December 2009

If imitation is indeed the sincerest form of flattery, then the Chinese can be very sincere flatterers indeed. But if you prefer prosperity over flattery it would be wise to take precautions against losing your shirt (or at least the rights to it) in one of the world’s most dangerous IP jungles. It isn’t that the legal regime is deficient – it’s enforcement that’s lacking. For the present at least, China is a net importer of intellectual property. A relatively lawless IP environment is advantageous to China’s short-term interests, just as a strictly enforced IP environment suits the interests of net IP exporters such as the United States. This issue has been constant irritant in relations between China and Western nations, as well as Japan. Nevertheless, China’s enforcement of intellectual property has steadily improved in recent years.

Protecting intellectual property (IP) in China requires a multi-pronged strategy including registration, workplace security, employee contracts, commercial contracts and enforcement.

Registrations

China’s IP registration regimes are more or less consistent with international standards.

Trademarks – are protected on a first-to-file basis, with an exception for well-known trademarks. Do not rely on the “well-known” exception, however (unless you are Coca-Cola), because whether a particular trademark is “well-known” or not is a time-consuming argument that keeps IP lawyers in business all over the world. If a trademark uses words, the Chinese language equivalent should also be registered.

China has adopted the international Classification of Goods and Services under the Nice Agreement, and has also adopted the international registration regime under the Madrid system.

FIE Business Names – must be in Chinese and registered with the local Administration of Industry and Commerce before an application to set up a Foreign Invested Enterprise can be submitted (see this site’s Company Startup Guide for details on company name registration). Since China does not have a national register of business names, registrations are valid only within a particular locality (and an FIE business name cannot be registered in any location except its location of establishment). Trademark registrations offer better protection in this respect.

Patents & Designs – are protected on a first-to-file basis. China is a member of the Paris Convention, so filings in a member country within applicable time limits can also gain priority in China. More ominously, compulsory licenses may be granted (i) to qualified enterprises if the owner of the patent fails to license the patent on reasonable terms, and (ii) in the event of a national emergency. Because of this, many foreign companies do not register patents for sensitive technology in China. See Technology Transfers and Licensing for related information.

Copyrights – Copyrighted material may be registered with the China National Copyright Administration. As in the United States, copyrights are not granted on a first-to-file basis. Registration does serves as useful evidence of ownership of a copyrighted work, but it is not a legal precondition to enforcement.

Software – is considered copyrighted material and may be registered with the China National Copyright Administration. Registration requires the filing of source code (with some code blacked out). As a consequence, many foreign companies refuse to register their software in China.

Domain Names – are protected on a “first-to-file” basis. A foreign company
must have an FIE or Representative Office in order to register a “.cn” domain name in China.

Workplace Security

It is strongly advised to create a “plumbing” system to control IP leakage in the workplace.

IT systems and any hard copies of IP should be kept in an access-restricted, secure location.

Confidential information should be distributed on a strict “need to know” basis.

Confidential material should be marked “Confidential Information” in Chinese in anticipation of possible litigation in Chinese courts.

Employees

Independently investigate the reputation and trustworthiness of applicants for sensitive positions during the recruitment process.

Labor contracts should be prepared carefully. You should consider including the following in all labor contracts:

Confidentiality obligations

Non-compete clauses – Post-termination non-competition clauses should be limited to a reasonable geographic area and time limit. Compensation is also required to be paid during the period of non-competition.

Assignment – Although China recognizes the work-for-hire principle, the labor contract should clearly assign ownership of intellectual property created in the course of employment; otherwise IP rights may prove practically impossible to enforce against an employee who creates an IP-related work for hire.

Product Selection

Despite the additional tax breaks and incentives available, think carefully before manufacturing products that require new and sensitive technology in China. Components requiring new and sensitive technology may be imported into China in a secure manner for integration with the rest of the product.

Commercial Contracts

Since many commercial arrangements, even sourcing materials and components, can necessitate an exchange of intellectual property, adequate protections should be included in the contracts and associated documentation.

Administrative Enforcement Action

Various government organs have the power to take administrative action against IP infringers:

National Copyright Administration – The NCA is the “big gun” of the Chinese IP enforcement arsenal and is endowed with broad enforcement powers. They may order cessation of the infringing activities, confiscate illegal income, confiscate and destroy illegal copies, and impose fines.

State Administration of Industry and Commerce – The SAIC and its local AICs have a reputation for efficient trademark enforcement action, including investigations and raids. The SAIC also handles disputes regarding business names, registered trademarks, trade secrets, and passing off activities.

Customs – may confiscate products that infringe trademarks, copyrights and patents.

China Patent Office – may help with patent enforcement through investigation, mediation and raids.

General Administration of Quality Supervision, Inspection and Quarantine – may get involved if product quality and health issues are at issue.

Administrative enforcement is a relatively inexpensive and efficient alternative to litigation, and it is easier to win a conviction.

Litigation

If administrative action fails to bring the desired result, litigation may have to be resorted to. Chinese courts can issue injunctions and award damages, although in practice their enforcement powers are typically weaker than in Western nations.

Criminal Prosecution

Criminal liability, including imprisonment, can be imposed for IP violations, although successful prosecutions are rare. Financial thresholds that must be met before criminal liability can be assessed can be difficult to prove. These thresholds include:

RMB50,000 turnover for knowingly selling goods with counterfeit registered trademarks

RMB50,000 turnover or RMB30,000 profits if trademarks are applied to goods without authorization

International Enforcement

Products that infringe intellectual property rights can be interdicted by customs at the destination port. It is also possible to seize the overseas assets of infringers located in China.

Technology Transfers and Licensing

Foreign investors often license technology and intellectual property such as trademarks, patents, copyrighted material and trademarks to the FIEs they invest in. A foreign party may also license technology to unaffiliated Chinese companies, such as in manufacturing or management contracts. Unlike joint venture contracts, licensing contracts can be governed by foreign law.

Proper licensing will help the foreign party control its technology and secure the payment of royalties (registration is required for the latter). Only the brave, however, will dare to license sensitive technology to an entity which the foreign party does not control.

Technology transfers are understandably less common than licensing and are usually used as part of the foreign investor’s contribution of technology to a Foreign Invested Enterprise as Registered Capital.

Technology Restrictions

Chinese foreign trade law recognizes three categories of technology: Permitted, Restricted, and Prohibited. These are contained in a catalogue that lists specific technologies.

Permitted technology is simply technology which has not been classified as Restricted or Prohibited.

Restricted technology may not be imported without a license, and is generally related to the chemical, petrochemical, biochemical, biological, and petroleum refining industries.

Prohibited Technology is technology that is considered to endanger national security, the public interest, or public morals by placing people’s lives or health at risk or destroying the environment.

Paperwork

A license for restricted technology must be approved by and registered with the Commission of Foreign Trade and Economic Cooperation (COFTEC). COFTEC will adjudicate a license application within 30 days. Licensing contracts for Restricted technology are effective only after COFTEC issues the corresponding Technology Import License.

Prohibited technology may not be brought into China.

Certain types of Permitted technology, while not subject to licensing requirements, are still subject to filing with COFTEC.

Technology transfers relating to certain major projects must be registered with and approved by the Ministry of Commerce. Trademark licenses must be filed with the
China Trademark Office within three months of execution in order to remit royalties out of China. Foreign trademarks must be recorded at the China Trademark Office in order to remit royalties out of China. Trademark recordation takes about a year and a half.

Improvements

A foreign company may not prohibit a licensee from improving the licensed
Technology, and these improvements become the property of the improver.

Technology as FIE Capital Contributions

Technology may be contributed as part of an FIE’s Registered Capital; however, the FIE will then become the owner of the technology and the foreign contributor will have to license the technology from the FIE if it wants to use it.

Technology contributed as capital is required to be appraised upon importation and should also be appraised by the Ministry of Commerce or the relevant local COFTEC as soon as the FIE is approved.

Since the Company Law requires 30% of the Registered Capital of an FIE to be contributed in currency (20% of the initial installment of Registered Capital), it follows that alternative forms of contribution, including technology, cannot total more than 70% and 80%, respectively.

The most striking fact about India’s legal system is the difference between investor protection provided by the law as opposed to protection in practice. Table 2.1 compares India’s scores relative to different legal-origin country groups examined in the law and finance literature (by LLSV and others), and other emerging markets along several dimensions of law and institutions. As discussed above, with the English common-law system, India has strong protection of investors on paper. For example, the scores on both creditor rights (with a score of 4/4 in LLSV (1998), based on the Company’s Act of 1956, to 2/4 in DMS (2005), based on the Sick Industrial Companies Act of 1985) and shareholder rights (5/6) are the highest of any country in the world.

Corruption is a major systemic-problem in many developing countries and is of particular importance for India. Studies by the World Bank (World Development Report 2005) have found that corruption was the number one constraint for firms in South Asia and that the two most corrupt public institutions identified by the respondents in India (as well as in most countries in South Asia) were the police and the judiciary. Based on Transparency International’s Corruption Perception Index, India has a score of 2.9 out of 10 in 2005 (a higher score means less corruption), which ranked 88 out of 140 countries (with the range being 1.5 to 9.7), and the ranking relative to other countries has not improved much over the past ten years.

Next, we have two measures for the quality of accounting systems. The disclosure requirements index (from 0 to 1, higher score means more disclosure; LLS 2006) measures the extent to which listed firms have to disclose their ownership structure, business operations and corporate governance mechanisms to legal authorities and the public. India’s score of 0.92 is higher than the averages of all LLSV subgroups of countries, including the English origin countries, suggesting that Indian firms must disclose a large amount of information. However, this does not imply the quality of disclosure is also good. In terms of the degree of earnings management (higher score means more earnings management; Leuz, Nanda, and Wysocki 2003), India’s score is much higher than the average of English origin countries, and is only lower than the German origin countries, suggesting that investors have a difficult time in evaluating Indian companies based on publicly available reports. It seems that while Indian companies produce copious amounts of data, form triumphs over substance in disclosure and with an accounting system that allows considerable flexibility, there is enough room for companies to hide or disguise the truth.

The efficiency and effectiveness of the legal system is of primary importance for contract enforcement, and we have two measures. First, according to the legal formalism (DLLS 2003) index, India has a higher formalism index than the average of English origin countries, and is only lower than that of the French origin countries. The legality index, a composite measure of the effectiveness of a country’s legal institutions, is based on the weighted average of five categories of the quality of legal institutions and government in the country (Berkowitz, Pistor, and Richard 2003). Consistent with other measures, India’s score is lower than the averages of all the subgroups of LLSV countries, suggesting that India’s legal institutions are less effective than those of many countries, and that it will be more difficult; for India to adopt and enforce new legal rules and regulations than other countries.

Finally, as for the business environment in India, a recent World Bank survey
found that, among the top ten obstacles to Indian businesses, the three which the firms
surveyed considered to be a “major” or “very severe” obstacle and exceeding the world average are corruption (the most important problem), availability of electricity, and labor regulations. Threat of nationalization or direct government intervention in business is no longer a major issue in India. With rampant tax evasion, the shadow economy in India is significant. It is estimated to be about 23% of GDP. Creditor and investor rights were largely unprotected in practice, with banks having little bargaining power against willful defaulters. Large corporate houses often got away with default, or got poor projects financed through the state-owned banking sector, often by using connections with influential politicians and bureaucrats.

Since the beginning of liberalization in 1991, two major improvements have taken place in the area of creditor rights protection – the establishment of the quasi-legal Debt Recovery Tribunals that have reduced delinquency and consequently lending rates (Visaria (2005)); and the passing of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act in 2002 and the subsequent Enforcement of Security Interest and Recovery of Debts Laws (Amendment) Act in 2004. These laws have paved the way for the establishment of Asset Reconstruction Companies and allow banks and financial institutions to act decisively against defaulting borrowers. In recent years,-recovery has shown significant improvement, presumably because, at least in part, of a well-performing economy (Table 2.1).

2.1. Comparison of Legal Systems: India, Country Groups and Major Emerging Economics*

Creditor

Rights

Anti-director

Rights

Corruption Perception Index

Legal Formalism

Index

Legality

Index

Disclosure

Requirement

Earnings

Managem Score

India

2

5

3.3

3.51

11.35

0.92

19.1

English-origin Ave.

2.28

4.19

5.33

3.02

15.56

0.78

11.69

French-origin Ave.

1.31

2.91

4.39

4.38

13.11

0.45

19.27

German-origin Ave.

2.33

3.04

5.58

3.57

15.53

0.60

23.60

Nordic-origin Ave.

1.75

3.80

9.34

3.32

16.42

0.56

10.15

LLSV Sample Ave.

1.828

3.3729

5.24

3.5830

14.98

0.6031

16.00

China (G)

2

1

3.3

3.40

N/a

N/a

N/a

Pakistan (E)

1

4

2.2

3.74

8.27

0.58

17.8

S. Africa (E)

3

5

4.6

3.68

11.95

0.83

5.6

Argentina (F)

1

2

2.9

5.49

10.31

0.50

N/a

Brazil (F)

1

5

3.3

3.83

11.43

0.25

N/a

Mexico (F)

0

3

3.3

4.82

10.79

0.58

N/a

Malaysia (E)

3

5

5

3.21

13.82

0.92

14.8

Sri Lanka (E)

2

4

3.1

3.89

9.68

0.75

N/a

Thailand(E)

2

4

3.6

4.25

10.70

0.92

18.3

Egypt (F)

2

3

3.3

3.60

10.14

0.50

N/a

Indonesia(F)

2

4

2.4

3.88

8.37

0.50

18.3

Peru(F)

0

3.5

3.3

5.42

9.13

0.33

N/a

Philippines (F)

1

4

2.5

5.00

7.91

0.83

8.8

Turkey (F)

2

3

3.8

3.49

9.88

0.50

N/a

Korea (South )(G)

3

4.5

5.1

3.33

12.24

0.75

26.8

Taiwan (G)

2

3

5.9

3.04

14.26

0.75

22.5

Average of EM

1.69

3.63

3.60

4.00

10.59

0.63

16.61

Source of EM

* Including all emerging economies from Table 1 for which information was available. Notation (E), (F), or (G) against a country indicates that the said country belongs to English, Fresh or German legal origin groups.

28 : DMS average 30 : DLLS (2003) average

29 : DLLS (2007) average 31 : LSS (2006) average

To summarize, despite strong protection provided by the law, legal protection is considerably weakened in practice due to an inefficient judicial system, characterized by overburdened courts, slow judicial process, and widespread corruption within the legal system and government. While the need for judicial and legal reforms has long been recognized, little legislative action has actually taken place so far (Debroy (2000)). Currently, the government is trying to emulate the success of China by following the Special Economic Zone approach rather than overhauling the entire legal system.

Financial/Business Laws and Regulations in India

Red tape and regulations still rank among the leading deterrents for business and foreign investment in India leading to its latest ranking of 116 out of 155 in the World Bank’s Ease of Doing Business indicator in 2006 (World Bank, 2006). India features consistently in the second half of the sample for all aspects of business regulation (and is out of the top 100 for most aspects) except for investor protection. To start a business in India entrepreneurs have close to twice the number of procedures to follow as in OECD countries, about three and a half times the time delay and close to nine times the cost (as a proportion of per capita income). Delays and costs of dealing with licenses in India is roughly in corresponding proportions with their respective OECD values. Very recently (second half of August 2007), the Government of India has decided to improve this situation and has announced a drastic reduction in the number of approvals and permits necessary to start new business. Whether and when this translates to actual practice is yet to be seen.

It is almost twice as hard to hire people in India as in OECD countries and almost three times as hard and costly to fire them. With have considerable variation in their labor laws across states, Besley and Burgess (2004) show that during the three and half decades before liberalization began in 1991, Indian states that followed more pro-worker policies experienced lower output, investment, employment and productivity in the registered or “formal” sector and higher urban poverty with an increase in informal sector output.

In the area of credit availability, India lags behind not because of creditors’ rights (which is close to OECD standards) but because of the paucity of credit quality information through the use of public registry or coverage of private bureaus. However, India’s excellent investor protection provisions in the law should be viewed together with her performance in contract enforcement where the number of procedures and time delays are about double that in OECD countries and the costs of contract enforcement over four times that in OECD countries.

As for securities markets regulation, using the framework of La Porta et al (2006) that focuses on disclosure and liability requirements as well as the quality of public enforcement of the regulations controlling securities markets, India scores 0.92 in the index of disclosure requirements third highest after the United States and Singapore. As for liability standard, India’s score is the fifth highest, 0.66 while the sample mean is 0.47. In terms of the quality of public enforcement, i.e. the nature and powers of the supervisory authority, the Securities and Exchanges Board of India (SEBI), India scores 0.67, higher than the overall sample mean as well as the English-origin average of 0.52 and 0.62 respectively and ranks 14th in the sample.

In comparing the regulatory powers and performance of SEBI with those of the SEC (Securities and Exchanges, Commission) in the USA, Bose (2005) concludes that while the scope of Indian securities laws, are quite pervasive, there are significant problems in enforcing compliance, particularly in the areas like price manipulation and insider trading. Between 1999 and 2004, Bose finds that SEBI took action in 481 cases as opposed to 2,789 cases for the SEC even though the latter regulates a significantly more mature market. As a ratio of actions taken to the number of companies under their respective jurisdictions, SEBI’s figure comes out to be an unimpressive 0.09 while that of the SEC is 0.52. Also the ratio for action taken to investigations made is quite low for SEBI (e.g. 1 out of 24 cases of issue related manipulation in 1996-97, 7 out of 27 in the 5 year period 1999-2004). As for appeals before higher authorities – the Securities Appellate Tribunal (SAT) or the Finance Ministry – in 30 to 50% of cases, the decision goes against SEBI. Though SEBI has had some success prosecuting intermediaries, it has failed to convince the SAT in its proceedings against corporate insiders and major market players. Thus the quality of public enforcement of securities laws appears to be a problem in India.

The institution of Debt Recovery Tribunals (DRTs) in the early 90′s and the
passing of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act in 2002 were aimed at remedying the slowness of the judicial process. The SARFAESI Act paves the way for the establishment of Asset Reconstruction Companies (ARCs) that can take the Non-Performing Assets (NPAs) off the balance sheets of banks and recover them. Operations of these ARCs would be restricted to asset reconstruction and securitizatipn only. It also allows banks and financial institutions to directly seize assets of a defaulting borrower who defaults fails to respond within 60 days of a notice. Borrowers can appeal to DRTs only after the assets are seized and the Act allows the sale of seized assets. The SARFAESI Act itself, however, does not provide a final solution to the recovery problems. With the borrower’s right to approach the DRT, the DRAT (Debt Recovery Appellate Tribunal) and, in some cases, even a High Court, a case can easily be dragged for three to four years during which time the sale of the seized asset cannot take place. It is perhaps too soon to evaluate its effects on reducing defaults but, public sector banks have had some success recovering their loans by seizing and selling assets since the Act came into existence. The recovery rates of bad debts have registered a sharp rise in 2005-06, but it is difficult to separate the contribution of the booming economy to this from that of the improvement in corporate governance.

Another positive development in the area of disclosure has been the adoption of Accounting Standards (AS) 18 by the Institute of Chartered Accountants in India (ICAI) in 2001 which, among other things, makes reporting of “related party transactions” by Indian companies mandatory. Related parties include holding and subsidiary companies, key management personnel and their direct relatives, “parties with control exist” which includes joint ventures and fellow subsidiaries; and other parties like promoters and employee trusts. Transactions include purchase/sale of goods and assets, borrowing, lending and leasing, hiring and agency arrangements, guarantee agreements, transfer of research and development and management contracts. This step has gone a long way in bringing transparency to the dealings of Indian companies, particularly the group-affiliates.

The area of the Ease of Doing Business index where India fares worst is undoubtedly that of closing a business. India has the dubious distinction of being among the countries where it takes the longest time to go through bankruptcy in the world (10 years on an average). Consequently recovery rates are very low too – below 13% as opposed to about 74% in OECD countries. Kang and Naya’r (2004) point out that there is no single comprehensive and integrated policy on corporate bankruptcy in India in the lines of Chapter 11 or Chapter 7 US bankruptcy code. Overlapping jurisdictions of the High Courts, the Company Law Board, the Board for Industrial and Financial Reconstruction (BIFR) and the Debt Recovery Tribunals (DRTs) contribute to the costs and delays of bankruptcy. The Companies (Second Amendment) Act, 2002 seeks to address these problems by establishing a National Company Law Tribunal and stipulating a time-bound rehabilitation or liquidation process to within less than two years as well as bringing about other positive changes in the bankruptcy code.

Stock Exchanges in India

India currently has two major stock exchanges: the National Stock Exchange (NSE) established in 1994 and the Bombay Stock Exchange (BSE), the oldest stock exchange in Asia, established in 1875. Up to 1992, BSE was a monopoly, marked with inefficiencies, high costs of intermediation, and manipulative, practices, so that external market users often found themselves disadvantaged. The economics reforms created four new institutions: the Securities and Exchanges: Board of India (SEBI), the National Stock Exchange (NSE), the National Securities Clearing, Corporation (NSCC), and the National Securities Depository (NSDL). The National Stock Exchange (NSE), a limited liability company owned by public sector financial institutions, now accounts for about two-thirds of the stock exchange trading in India, and virtually all of its derivatives trading.

The National Securities Clearing Corporation (NSCC) is the legal counter-party to net obligations of each brokerage firm, and thereby eliminates counter-party risk and possibility of payments crises. It follows a rigorous ‘risk containment’ framework involving collateral and intra-day monitoring. The NSCC, duly assisted by the National Securities Depository (NSDL), has an excellent record of reliable settlement schedules since its inception in the mid-nineties.

The Securities and Exchanges Board of India (SEBI) has introduced a rigorous regulatory regime to ensure fairness, transparency and good practice. For example, for greater transparency, SEBI has mandated mandatory disclosure for all transactions where total quantity of shares is more than 0.5% of the equity of the company. Brokers disclose to the stock exchange, immediately after trade execution, the name of the client in addition to trade details; and the Stock exchange disseminates the information to the general public on the same day.

The new environment of transparency, fairness and efficient regulation led BSE, in 1996, to also become a transparent electronic limit order book market with an efficient trading system similar to the NSE. Equity and equity derivatives trading in India has sky­rocketed to record levels over the course of the last ten years.

In 2005, about 5000 companies were listed and traded on NSE and/or BSE. While the dollar value of trading on the Indian stock exchanges is much lower than the dollar value of trading in Europe or in the US, it is important to note that the number of equity trades on BSE/NSE is ten times greater than that of Euronext or London, and of the same order of magnitude as that of NASDAQ/NYSE. Similarly, the number of derivatives trades on NSE is several times greater than that of Euronext/ London, and of an order of magnitude comparable to US derivatives exchanges. The number of trades is an important indicator of the extent of investor interest and investor participation in equities and equity trading, and emphasizes the crucial importance of corporate governance practices in India.

Enforcing Corporate Governance Laws

Enforcement of corporate laws remains’ the soft underbelly of the legal and corporate governance system in India. The World Bank’s Reports on the Observance of Standards and Codes (ROSC) in its 2004 report on India (World Bank (2004)) found that while India observed or largely observed most of the principles, it could do better in areas like the contribution of nominee directors from financial institutions to monitoring and supervising management; the enforcement of certain laws and regulations like those pertaining to stock listing in major exchanges and insider trading as well as in dealing with violations of the Companies Act – the backbone of the corporate governance system in India. Some of the problems arise because of unsettled questions about jurisdiction issues and powers of the SEBI.

Indian Courts-an assessment

Djankov et al (2003) (DLLS) in. their analysis of “formalism” in the judicial process around the world, gave India a score of 3.34 on its formalism index, higher than the English-origin average of 2.76 but slightly lower than the average for all countries, 3.53. Among the 42 English-origin countries in their sample, India has the 11th highest level of formalism. India has the 16th longest process of evicting a tenant (212 days) among English common law origin countries (average 199 days). For collection on a bounced check, however, India has the 16th shortest duration (106 days) among English common law origin countries (average 176 days). In both cases India’s total duration of the process is significantly shorter than the overall mean duration of all the 109 countries considered (254 for eviction of tenant and 234 for collecting on bounced check). Thus, in spite of its formalism, Indian courts do not seem to perform that poorly (relatively speaking) on these two types of eases considered.

The DLLS assurance notwithstanding, case arrears and decade-long legal battles are commonplace in India. In spite of having around 10,000 courts (not counting tribunals and special courts), India has a serious, shortfall of judicial service. While the USA has 107 judges per million citizens, Canada over 75, Britain over 50 and Australia over 41, for India the figure is slightly over 10, (Debroy (1999)). In April 2003, for instance, the Supreme Court of India had close to 25,000 cases pending before it (Parekh 2001). Hazra and Micevska (2004) report that there are about 20 million cases pending in lower courts and another 3.2 million cases in high courts. A termination dispute contested all the way can take up to 20 years for disposal. Writ petitions in high courts can take between 8 and 20 years for disposal. About 63% of pending civil cases are over a year old and 31% are over 3 years old. Automatic appeals, extensive litigation by the government, underdeveloped alternative mechanisms of dispute resolution like arbitration, the shortfall of judges all contribute to this unenviable state of affairs in Indian courts. Since the same courts try both civil and criminal matters and the latter gets priority, economic disputes suffer even greater delays.

The Small and Medium Enterprises (SME) sector in India

Allen et al (2006) conduct surveys to study the extent to which the formal legal environment directly supports and regulates businesses, particularly small and medium enterprises which form an increasingly important part of the Indian industry. This seems to indicate that the small firms sector operate in a system virtually governed through informal mechanisms based on trust, reciprocity and reputation with little recourse to the legal system and deals with widespread corruption.

Over 80% of the firms surveyed needed a license to start a business, and for about half of them obtaining it was a difficult process. Government officials were most often the problem solved usually through payment of bribes or friends of government officials to negotiate. Clearly, networks and connections are of crucial importance in negotiating the government bureaucracy.

As for conducting day-to-day business, legal concerns are far less important to

them than the unwritten codes of the informal networks in which firms operate. In cases of default and breach of contract, the primary concern is loss of reputation, followed closely by loss of property, with the fear of legal consequences being-the least important concern.

About half of the firms surveyed did not have, a regular legal adviser and less than half of those that did had lawyers in that capacity. For mediation in a business dispute or to enforce a contract, the first choice was “mutual friends or business partners”. Only 20% of the respondents mentioned going to courts as the first option indicating that the legal system, while not as effective as the informal mechanisms, is not altogether absent.

The informal system, however, is not perfect in resolving disputes and has its costs. About half of the respondents experienced a breach of contract or, non-payment with a supplier or major customer in the past three years. Over a third of them renegotiated while over 40% did nothing but continued the business relationships with the offending parties.

In general, the business environment of the SME sector is marked by strong informal mechanisms like family ties, reputation and trust. Legal remedies though present, are far less important than the rules of the informal networks.

References

Allen, F., R. Chakrabarti, S. De, J. Qian and M. Qian, 2006, “Financing Firms in India”, Working paper, The Wharton School.

Bose, Suchismita and Dipankar Coondoo, 2004, ‘The Impact of FII Regulations in India’, Money and Finance, July-December.

Bose, Suchismita, 2005. “Securities Markets Regulation: Lessons from US and Indian Experience”, Money and Finance, Jan-June, 83-124.

Besley, Timothy and Robin Burgess, 2004, “Can Labor Regulation Hinder Economic Performance? Evidence from India” Quarterly Journal of Economics.

Debroy, Bibek, 1999, “Some Issues in Law Reform in India”, in Jean-Jacques Dethier ed. Governance, decentralization, and reform in China, India, and Russia,. Boston; Kluwer Academic Publishers.

Djankov, Simeon, Rafael La Porta, Florencio Lopez-de-Silanes, and Andrei Shleifer, 2002. “The Regulation of Entry,” Quarterly Journal of Economics, “Courts,” Quarterly Journal of Economics, 118 (2), 453-517.

Hazra, Arnab K. and Maja Micevska, 2004, “The Problem of Court Congestion: Evidence from Indian Lower Courts”, Working Paper, University of Bonn.

Kang, Nimrit and Nitin Nayar, 2004, “The Evolution of Corporate Bankruptcy Law in India”, Money and Finance, Oct 03 – Mar 04.

In June 2007, the controversial new REACH (Registration, Evaluation and Authorisation of Chemicals) law came into effect in the European Union. Taking seven years and 1,000 pages to pass, REACH is the most complex law in EU history. Aiming to protect consumers and the environment from harmful and unsafe chemicals, the law requires manufacturers to ensure that over 30,000 chemicals have been tested and reviewed by the newly created European Chemicals Agency (EChA). For 1,500 high risk substances, manufacturers will have to prove “adequate control.” The EChA will ban ingredients posing a significant threat and ensure that cosmetic and other companies use alternatives.The law also advocates using alternatives to animal testing, so that data on toxicity to humans is obtained using means other than experiments on vertebrate animals. Since the passage of REACH, L’Oreal has announced that it will conduct safety tests on human skin cells and tissue from animals slaughtered for food, rather than live animals, to collect the new information required by the law.REACH replaces 40 separate chemicals laws in the EU. It also extends prior cosmetics laws that were based upon risk assessment and responds to ongoing calls from the scientific community for bans on confirmed and likely carcinogenic, mutagenic and reprotoxic substances in cosmetic products.Although there was little existing safety information on 99% of the man thousands of chemicals developed in the EU before 1981, the EU had banned several dangerous chemicals that remain legal in the United States, including phthalates in cosmetics. REACH is expected to put more pressure on law makers in the United States to impose tougher controls on the usage of toxic chemicals, since under the country’s Toxic Substances Control Act, the Environmental Protection Agency (EPA) has little legal authority to ban or restrict chemicals in use before 1976 because it must first prove they pose “an unreasonable risk.” It should be noted, however, that there are several shortcomings to the new European law. First, manufacturers have 11 years to register product ingredients, leaving more than a decade until all the ingredients in cosmetics products will be fully disclosed. Also, if a product was manufactured outside the EU and imported, it is not regulated under REACH.

Medical tourism (also called medical travel, health tourism or global healthcare) is a term initially coined by travel agencies and the mass media to describe the rapidly-growing practice of traveling across international borders to obtain health care. It also refers pejoratively to the practice of healthcare providers traveling internationally to deliver healthcare[1][2].

Services typically sought by travelers include elective procedures as well as complex specialized surgeries such as joint replacement (knee/hip), cardiac surgery, dental surgery, and cosmetic surgeries. However, virtually every type of health care, including psychiatry, alternative treatments, convalescent care and even burial services are available. As a practical matter, providers and customers commonly use informal channels of communication-connection-contract, and in such cases this tends to mean less regulatory or legal oversight to assure quality and less formal recourse to reimbursement or redress, if needed[citation needed].

Over 50 countries have identified medical tourism as a national industry.[3] However, accreditation and other measures of quality vary widely across the globe, and there are risks and ethical issues that make this method of accessing medical care controversial[citation needed]. Also, some destinations may become hazardous or even dangerous for medical tourists to contemplate.

In the context of global health, “medical tourism” is a pejorative because during such trips health care providers often practice outside of their areas of expertise or hold different (i.e., lower) standards of care[4][5]. Greater numbers than ever before of student volunteers, health professions trainees, and researchers from resource-rich countries are working temporarily and anticipating future work in resource-starved areas[5][6]. This emphasizes the importance of understanding this other definition.

History

The concept of medical tourism is not a new one. The first recorded instance of medical tourism dates back thousands of years to when Greek pilgrims traveled from all over the Mediterranean to the small territory in the Saronic Gulf called Epidauria. This territory was the sanctuary of the healing god Asklepios. Epidauria became the original travel destination for medical tourism.

Spa towns and sanitariums may be considered an early form of medical tourism. In eighteenth century England, for example, patients visited spas because they were places with supposedly health-giving mineral waters, treating diseases from gout to liver disorders and bronchitis.[3]

Description

Factors that have led to the increasing popularity of medical travel include the high cost of health care, long wait times for certain procedures, the ease and affordability of international travel, and improvements in both technology and standards of care in many countries.[7]

Medical tourists can come from anywhere in the First World, including Europe, the Middle East, Japan, the United States, and Canada. This is because of their large populations, comparatively high wealth, the high expense of health care or lack of health care options locally, and increasingly high expectations of their populations with respect to health care. An authority at the Harvard Business School recently stated that “medical tourism is promoted much more heavily in the United Kingdom than in the United States”.[8]

A forecast by Deloitte Consulting published in August 2008 projected that medical tourism originating in the US could jump by a factor of ten over the next decade. An estimated 750,000 Americans went abroad for health care in 2007, and the report estimated that a million and a half would seek health care outside the US in 2008. The growth in medical tourism has the potential to cost US health care providers billions of dollars in lost revenue.[9]

A large draw to medical travel is convenience and speed. Countries that operate public health-care systems are often so taxed that it can take considerable time to get non-urgent medical care. Using Canada as an example, an estimated 782,936 Canadians spent time on medical waiting lists in 2005, waiting an average of 9.4 weeks.[10] Canada has set waiting-time benchmarks, e. g. 26 weeks for a hip replacement and 16 weeks for cataract surgery, for non-urgent medical procedures.[11]

Additionally, patients are finding that insurance either does not cover orthopedic surgery (such as knee/hip replacement) or imposes unreasonable restrictions on the choice of the facility, surgeon, or prosthetics to be used. Medical tourism for knee/hip replacements has emerged as one of the more widely accepted procedures because of the lower cost and minimal difficulties associated with the traveling to/from the surgery. Colombia provides a knee replacement for about $5,000 USD, including all associated fees, such as FDA-approved prosthetics and hospital stay-over expenses. However, many clinics quote prices that are not all inclusive and include only the surgeon fees associated with the procedure.[12]

According to an article by the University of Delaware publication, UDaily:

”
The cost of surgery in India, Thailand or South Africa can be one-tenth of what it is in the United States or Western Europe, and sometimes even less. A heart-valve replacement that would cost $200,000 or more in the US, for example, goes for $10,000 in India–and that includes round-trip airfare and a brief vacation package. Similarly, a metal-free dental bridge worth $5,500 in the US costs $500 in India, a knee replacement in Thailand with six days of physical therapy costs about one-fifth of what it would in the States, and Lasik eye surgery worth $3,700 in the US is available in many other countries for only $730. Cosmetic surgery savings are even greater: A full facelift that would cost $20,000 in the US runs about $1,250 in South Africa.[12]
”

Popular medical travel worldwide destinations include: Argentina, Brunei, Cuba, Colombia, Costa Rica, Hong Kong, Hungary, India, Jordan, Lithuania, Malaysia, The Philippines, Singapore, South Africa, Thailand, and recently, Saudi Arabia, UAE, South Korea, Tunisia and New Zealand.[3]

Popular cosmetic surgery travel destinations include: Argentina, Bolivia, Brazil, Colombia, Costa Rica, Cuba, Mexico and Turkey. In South America, countries such as Argentina, Bolivia, Brazil and Colombia lead on plastic surgery medical skills relying on their experienced plastic surgeons. In Bolivia and Colombia, plastic surgery has also become quite common. According to the “Sociedad Boliviana de Cirugia Plastica y Reconstructiva”, more than 70% of middle and upper class women in the country have had some form of plastic surgery. Colombia also provides advanced care in cardiovascular and transplant surgery.

In Europe Belgium, Poland and Slovakia are also breaking into the business. South Africa is taking the term “medical tourism” very literally by promoting their “medical safaris”.[13]

A specialized subset of medical tourism is reproductive tourism and reproductive outsourcing,[14] which is the practice of traveling abroad to undergo in-vitro fertilization, surrogate pregnancy and other assisted reproductive technology treatments including freezing embryos for retro-production.[15]

However, perceptions of medical tourism are not always positive. In places like the US, which has high standards of quality, medical tourism is viewed as risky. In some parts of the world, wider political issues can influence where medical tourists will choose to seek out health care.

Health tourism providers have developed as intermediaries to unite potential medical tourists with provider hospitals and other organisations. Companies are beginning to offer global health care options that will enable North American and European patients to access world health care at a fraction of the cost of domestic care. Companies that focus on medical value travel typically provide nurse case managers to assist patients with pre- and post-travel medical issues. They also help provide resources for follow-up care upon the patient’s return.

Process

The typical process is as follows: the person seeking medical treatment abroad contacts a medical tourism provider. The provider usually requires the patient to provide a medical report, including the nature of ailment, local doctor’s opinion, medical history, and diagnosis, and may request additional information. Certified medical doctors or consultants then advise on the medical treatment. The approximate expenditure, choice of hospitals and tourist destinations, and duration of stay, etc., is discussed. After signing consent bonds and agreements, the patient is given recommendation letters for a medical visa, to be procured from the concerned embassy. The patient travels to the destination country, where the medical tourism provider assigns a case executive, who takes care of the patient’s accommodation, treatment and any other form of care. Once the treatment is done, the patient can remain in the tourist destination or return home.

International healthcare accreditation

Because standards are important when it comes to health care, there are parallel issues around medical tourism, international healthcare accreditation, evidence-based medicine and quality assurance.

The oldest international accrediting body is Accreditation Canada, formerly known as the Canadian Council on Health Services Accreditation, which accredited the Bermuda Hospital Board as soon as 1968. Since then, it has accredited hospitals and health service organizations in ten other countries.

In the United States, the best known accreditation group is the Joint Commission International (JCI). They have been inspecting and accrediting health care facilities and hospitals outside of the United States since 1999.[16] Many international hospitals today see obtaining international accreditation as a way to attract American patients.[17]

Joint Commission International is a relative of the Joint Commission in the United States. Both are independent private sector not-for-profit organizations that develop nationally and internationally recognized procedures and standards to help improve patient care and safety. They work with hospitals to help them meet Joint Commission standards for patient care and then accredit those hospitals meeting the standards.[18]

In the UK and Hong Kong, the Trent International Accreditation Scheme is a key player. The different international healthcare accreditation schemes vary in quality, size, cost, intent and the skill and intensity of their marketing. They also vary in terms of cost to hospitals and healthcare institutions making use of them.[19] A forecast by Deloitte Consulting regarding medical tourism published in August 2008 noted the value of accreditation in ensuring quality of healthcare and specifically mentioned JCI, ISQUA and Trent.[8]

Increasingly, some hospitals are looking towards dual international accreditation, perhaps having both JCI to cover potential US clientele, Trent for potential British and European clientele and Accreditation Canada. As a result of competition between clinics for American medical tourists, there have been initiatives to rank hospitals based on patient-reported metrics.[20]

Other organizations providing contributions to quality practices include:

The Society for International Healthcare Accreditation (SOFIHA), a free-to-join group providing a forum for discussion and for the sharing of ideas and good practice by providers of international healthcare accreditation and users of the same. The primary role of this organisation is to promote a safe hospital environment for patients.[21]
The United Kingdom Accreditation Forum (UKAF) is an established network of accreditation organisations with the intention of sharing experience good practice and new ideas around the methodology for accreditation programmes, covering issues such as developing healthcare quality standards, implementation of standards within healthcare organisations, assessment by peer review and exploration of the peer review techniques to include the recruitment, training, monitoring and evaluation of peer reviewers and the mechanisms for awards of accredited status to organisations.[22]
References
^ Shaywitz, D.A., & Ausiello, D.A. (2002). Global Health: A Chance for Western Physicians to Give – and Receive. The American Journal of Medicine, 113, 354-357.
^ Bezruchka, S. (2000). Medical Tourism as Medical Harm to the Third World: Why? For Whom? Wilderness and Environmental Medicine, 11, 77-78.
^ a b c d Gahlinger, PM. The Medical Tourism Travel Guide: Your Complete Reference to Top-Quality, Low-Cost Dental, Cosmetic, Medical Care & Surgery Overseas. Sunrise River Press, 2008
^ Roberts, M. (2006). Duffle Bag Medicine. Journal of the American Medical Association, 295, 1491-1492.
^ a b Pinto, A.D., & Upshur, R.E.G. (2009). Global Health Ethics for Students. Developing World Bioethics, 9, 1-10.
^ James, D. (1999). Going Global. The New Physician, 48, online. Accessed 7 May 2009. [1].
^ a b Laurie Goering, “For big surgery, Delhi is dealing,” The Chicago Tribune, March 28, 2008
^ Lagace, Martha “The Rise of Medical Tourism”, Harvard Business School Working Knowledge, December 17, 2007. Accessed July 1, 2008.
^ Linda A. Johnson, “Americans look abroad to save on health care: Medical tourism could jump tenfold in next decade,” The San Francisco Chronicle, August 3, 2008
^ The Private Cost of Public Queues in 2005, Fraser Institute
^ Wait times shorter for some medical procedures: report., Canwest News Service
^ a b “Medical tourism growing worldwide” by Becca Hutchinson, UDaily, July 25, 2005, retrieved September 5, 2006
^ “Medical tourism: Need surgery, will travel” CBC News Online, June 18, 2004, retrieved September 5, 2006
^ Jones CA, Keith LG. Medical tourism and reproductive outsourcing: the dawning of a new paradigm for healthcare. Int J Fertil Womens Med, 2006;51:251-255
^ Jones C, “Ethical and legal conundrums of post-modern procreation” Int J Gynaecol Obstet Dec 4, 2007
^ “Medical Tourism Industry Certifications and Information”
^ “Medical Tourism Magazine”, Medical Tourism Association, February 2008
^ http://www.jointcommission.org/AboutUs/Fact_Sheets/jci_facts.htm
^ “INDIA: Accreditation a must”, International Medical Travel Journal
^ http://www.worldhospitalmonitor.com
^ SOFIHA – Welcome to SOFIHA
^ United Kingdom Accreditation Forum