It’s Normal for the U.S. to Put Corporate Profits Above Babies’ Health

The Clinton administration tried to prevent African governments from accessing generic AIDS drugs in the middle of an epidemic. Photo: Luke Frazza/AFP/Getty Images

Earlier this year, the United States tried to kill an international resolution designed to promote breastfeeding. The resolution was inspired by decades of research demonstrating the deficiencies of baby formula — including a 2016 study that found universal breastfeeding would prevent 800,000 child deaths per year.

But while discouraging the use of baby formula had a clear upside (fewer dead infants), it also had a big drawback — lower profits for the companies that sell the baby formula (that’s contributing to the death of many infants). And the Trump administration ultimately decided that it was more pro-profit than pro-life. As the New York Times reported over the weekend:

American officials sought to water down the resolution by removing language that called on governments to “protect, promote and support breast-feeding” and another passage that called on policymakers to restrict the promotion of food products that many experts say can have deleterious effects on young children.

When that failed, they turned to threats, according to diplomats and government officials who took part in the discussions. Ecuador, which had planned to introduce the measure, was the first to find itself in the cross hairs.

The Americans were blunt: If Ecuador refused to drop the resolution, Washington would unleash punishing trade measures and withdraw crucial military aid. The Ecuadorean government quickly acquiesced.

This story triggered a tsunami of progressive indignation. As well it should have: Although the administration’s attempt to protect the right of companies like Gerber to maximize profits (at the apparent expense of many human lives) ultimately failed, the effort itself was an outrage. The United States is the “leader of the free world”; we’re supposed to use our immense geopolitical power to advance the causes of freedom and democracy — not to strong-arm small countries into abetting unnecessary infant deaths for the sake of aiding a $50 billion industry.

But what the U.S. is supposed to do and what it actually does are two very different things. And while the White House’s handling of the baby formula resolution violated American ideals, it was very much in keeping with our nation’s “norms.”

In truth, the United States has long used its diplomatic might to subordinate global public health to entrenched corporate interests. In fact, under the Clinton administration, the U.S. specifically helped Gerber undermine the Guatemalan government’s attempt to encourage breastfeeding among its citizens. As Lori Wallach, director and founder of the nonprofit consumer watchdog Global Trade Watch, testified in 1999:

For four years between 1990 and 1995, U.S. based-Gerber Products Company launched a campaign to force Guatemala to eliminate an infant health law that banned the use of baby pictures on labels for baby food for children under two years of age … All of Guatemala’s domestic and foreign suppliers of infant formula and other breast milk substitutes made the necessary changes to their packaging to comply with the Guatemalan law, except Gerber.

… After several years of watching Gerber refuse to abide by its regulations, the government of Guatemala considered a ban on the company’s products altogether. It was at this point that Gerber threatened the Guatemalan government with a challenge under the GATT/WTO [General Agreement on Tariffs and Trade/World Trade Organization]. Although Gerber cannot personally launch a GATT challenge to the Guatemalan law, it was able to get the U.S. State Department to repeat its WTO threat in a face-to-face meeting with Guatemalan officials. The tactics intimidated the Guatemalan government eager to avoid the expense of defending a GATT challenge.

But the U.S. government’s most significant diplomatic assaults on public health have been launched on big pharma’s behalf. In the 1990s, the World Trade Organization adopted intellectual property rules that empowered impoverished nations to violate pharmaceutical patents in response to a “national emergency.” In 1997, Nelson Mandela decided that the AIDS crisis was such an emergency for South Africa. And it would be hard to dispute that assessment: At the time, nearly 20 percent of pregnant women in South Africa were HIV positive — and approximately zero percent could afford antiretroviral drug treatment at the patent-protected price. The average South African earned $2,600 a year; such drug treatment cost up to $10,000 annually. Mandela’s government enacted a law that allowed for the importation or local production of generic, antiretroviral drugs. The measure still guaranteed patent-holders a (small) fixed fee, but it would nonetheless reduce the cost of treatment by roughly 90 percent.

American drug companies threw a tantrum — and the Clinton administration dutifully did the same. The U.S. government (falsely) accused Mandela of violating WTO rules; rescinded trade benefits it had previously provided to South African exporters; and threatened to impose even more draconian trade sanctions on the nation’s fragile economy, if it persisted in providing life-saving health care to its people at a price they could afford. These efforts ultimately failed; once the 2000 presidential campaign put a spotlight on the administration’s policies toward South Africa, the White House decided its position was politically untenable. Clinton signed an executive order vowing that the U.S. would not economically coerce sub-Saharan Africa into paying full freight for AIDS drugs. Soon, Indian generic antiretroviral drugs brought the price of treatment down to $1 a day.

Still, the administration’s attempts to prevent poor AIDS patients from receiving life-saving medicine weren’t all in vain. As the New York Times’s editorial board noted in 1999, “American trade pressure on Thailand throughout the 1990s, for example, caused the country to put restrictions on its manufacture of cheap patented drugs and ban their import, which AIDS doctors say reduced the country’s ability to fight the disease.”

And a little over a decade after the Clinton administration caved, Barack Obama’s White House revived America’s crusade against affordable health care in the developing world. As the Huffington Post’s Zach Carter reported in 2013:

The Obama administration is seeking to curb efforts to exempt the world’s poorest countries from expansive trade rules that would substantially increase the price of life-saving medicine and other products.

The regulations would extend intellectual property rules currently used in developed countries to a few dozen nations currently classified by the United Nations as “Least Developed Countries” (LDCs), including Haiti, Bangladesh, Rwanda, Somalia, Chad and several other nations in sub-Saharan Africa. Because many of the nations classified as least developed exhibit very high rates of HIV and AIDS, the proposed rules have raised concerns among human rights advocates who note that higher drug prices will result in lower treatment levels.

… The Obama administration has [also] spent over a year pressuring the Indian government to abandon its policy of providing a less expensive generic version of a new cancer drug. India, which features a per capita income of about $1,400 a year, is not considered a least developed country, but rather a “lower-middle-income country” and, as such, is required to comply with WTO treaties.

When Donald Trump withdrew the United States from the Trans-Pacific Partnership (TPP) trade pact, many commentators lamented the move as an abdication of American leadership on the world stage. This weekend, many of those same pundits condemned the White House’s crusade against breast feeding in nearly identical terms. And yet, one of the TPP’s core aims was to enrich American corporations at the expense of global public health.

The trade agreement would have expanded the reach of both American pharmaceutical patents and “data exclusivity” protections — rules that bar generic drugmakers from accessing clinical test results conducted by branded drug companies. The latter rules, which applied specifically to an emerging class of drugs known as “biologics,” essentially mandate a misallocation of resources (by forcing generic drugmakers to conduct needless clinical trials on pharmaceuticals that have already been proven effective) and also violate bedrock ethics of medical research (by exposing human subjects to clinical trials that have no medical purpose, since the effects of the drug are already known). Together, the TPP’s provisions would have drastically increased drug prices in the Pacific Rim’s poorer countries — while also making it more difficult for the U.S. Congress to weaken the extraordinary data-exclusivity protections that big pharma extracted from the Obama administration, in exchange for supporting the Affordable Care Act. For these reasons, the agreement was vigorously opposed by Doctors Without Borders, the AIDS research group amfAR, and many other public health organizations.

To be sure, one can more easily craft a coherent public policy argument for strong drug patents than for protecting the profits of baby formula manufacturers. Rewarding innovators with monopoly pricing power compensates them for the costs of research, and ostensibly incentivizes future innovation. But as Dean Baker has argued, echoing a fairly broad consensus among his fellow economists, “a 16th-century system of patent monopolies derived from the feudal guild system is not an especially good way to finance the development of drugs in the 21st century … a drug patent that raises the price of a prescription drug to 100 times the generic price has the same distorting and corrupting impact as a 10,000 percent tariff.”

There are other, more efficient ways for the American government to encourage pharmaceutical research — ones that don’t have the effect of pricing the poor out of the market for life-saving health treatments, or directing an exorbitant share of global income into the coffers of a few giant firms. Nobel Prize–winning economist Joseph Stiglitz has suggested a prize system in which the government buys up the patents of drugs that prove themselves effective, and then allows them to be retailed as generics. Baker has made the case for direct, public financing drug research through a tripling of the National Institutes of Health (NIH) budget. Beyond allowing all new drugs to be sold at a free-market price, these alternatives would also enable the government to direct pharmaceutical investment toward the most pressing public health needs, rather than the most potentially profitable lines of research.

But one doesn’t have to accept the case for radically reforming the patent system to recognize that barring poor countries from manufacturing generic drugs is a bad, unjust policy. As the Times noted in its 1999 editorial criticizing Clinton’s crackdown on generic AIDS medications in South Africa, “[p]harmaceutical companies would lose little if they found legal and controllable ways to let poor countries — which offer scant market anyway — reproduce drugs or buy them cheaply.”

The fact is, the Clinton and Obama administrations did not push to export America’s high prices to the developing world because they believed that doing so was necessary to spur pharmaceutical innovation. Rather, they did it for the same reason that Trump’s team bullied Ecuador into dropping its sponsorship of a breastfeeding resolution: Major corporations exert some influence over all aspects of U.S. politics, but they absolutely dominate on low-visibility issues — especially, on ones that pit their interests against those of poor people who do not live in the United States.

It is politically difficult for Democratic administrations to deliver massive tax cuts to their corporate benefactors. But it’s generally quite painless for them to impose corporate America’s will on weaker countries in trade disputes. (And it’s even more painless for GOP presidents to do so.)

All of which is to say: The Trump administration’s attack on breastfeeding isn’t outrageous because it broke with the long-standing norms of American politics, but rather, because it upheld them.

Trump Is Undermining Global Public Health. That’s Normal.