Social Justice, Medical Aid, and Acupuncture.

from the excellent blog Catalyst for Breakfast

Social Justice, Medical Aid, and Acupuncture. Part 1: Voluntourism

Posted on August 5, 2011 by Beth| Leave a comment

Since I will be taking a four month trip to learn about traditional Thai and Chinese medicine in Thailand next year, I have been pondering the significance of medical volunteer work abroad. What is the goal of medical service in other countries? Why do we volunteer in other areas when there are certainly people in need of free medical services in our own countries, states, cities and communities? It can seem like the flight of fancy of a privileged class of practitioners, or an extension of the colonial or missionary mindset, but on the ground what does it offer to the travelers and to the communities they work with?

Travel can teach people about different cultures and can open their minds to new ways of acting in the world, but traveling is a privilege and should be recognized as such. In the case of medical-practice-based traveling, at least the traveler can offer something in return for the opportunity to live in a new place for a short period of time. What kind of “return” does this look like in practice?

This thorough 2009 qualitative study summarizes some of the conundrums of global health and international medical volunteer work: Perceptions of short-term medical volunteer work: a qualitative study in Guatemala(1). The entire article is worth a thorough working-over, but here I provide the general background, minor discussion and conclusions:

…..There is growing interest among healthcare providers in the field of global health; over 25% of all 2008 United States (US) medical school graduates participated in global health experiences during medical school. Beyond medical school, there are countless opportunities for physicians to volunteer their services abroad in resource poor countries, frequently in the form of medical missions that last for a week or two at a time. Several editorials in the medical and social sciences literature have raised important questions about potential unintended consequences of such short-term medical volunteer work [1-9]. Editorials such as these raise concern about the ability of short-term volunteers to provide safe and effective medical services in the setting of language and cultural barriers that impair clear communication between patients and healthcare providers. They also raise concerns about a lack of follow-up care for patients who receive treatment from groups with a short-term presence. They raise ethical concerns about people without formal medical training participating in these groups, or medical professionals practicing beyond the scope of their expertise and practice at home, in a setting where they are not held accountable for the consequences of medical interventions made.

In addition to basic questions pertaining to patient safety, these editorials raise important questions about the impact of short-term medical missions on the larger medical systems in the countries they visit. For example, it is suggested that short-term medical groups that are not integrated with local medical systems do not understand local medical needs, and consequently, their efforts will be misguided.

Furthermore, there is suggestion that groups providing free medical care in other countries undermine the livelihood of medical providers who depend on payment from patients in those countries. The literature in medical anthropology is filled with examples of unintended consequences of medical programs that pay insufficient attention to local conditions and culture and, perhaps more importantly, fail to consider the potentially incompatible and harmful cultural assumptions and values embedded in those programs [10,11].

With countless groups from wealthy countries participating in shortterm medical volunteer work abroad, it is critical that we evaluate the safety and effectiveness of these interventions for patients, as well as the larger implications and consequences of such work on the development of medical systems and the health of communities where this work takes place. The editorials summarized above were written by medical professionals from wealthy countries with an interest in global health, and these writings serve as an important starting point in this discussion. Even more important, however, are the opinions and perspectives of those who live and work in the countries where this work takes place, and thus far, their voices have not been heard.

…Short-term medical volunteer work may be seen as one extension of those interests in the post colonial era. As such, short-term medical volunteers often bring with them, albeit unconsciously, attitudes that foster dependence and lack respect for local practitioners and local knowledge and practices related to health. Understanding how short-term medical volunteer work is perceived by those living and working in receiving communities is a critical first step in designing and implementing healthcare programs that provide needed healthcare services to supplement and complement local healthcare systems without undermining their efforts. Specifically, we sought to explore the perceived utility and perceived impact (positive and negative) of short-term medical volunteer work in Guatemala from the perspective of healthcare providers and health authorities in Guatemala. Because of the short time available for the research, this study focuses on the perceptions of these individuals and not on the impact of short-term volunteer programs. Its purpose is to identify and describe the range of perceived issues surrounding short-term medical volunteer work as a basis for future indepth studies.

…Our study, although small in scope, is one of the first to systematically and critically examine the effects of shortterm medical volunteer work. All major thematic areas in our results underline the challenges of outside groups working as equal partners. Is it paternalism or cooperation? Is it charity or aid? Is it experimentation or quality care? Have all stakeholders been properly identified? Let us say that a recipient community has been appropriately consulted and involved to develop the most suitable intervention with strong community ownership. Omitting other healthcare providers, organizations, and the Ministry of Health may nevertheless jeopardize the long-term success and sustainability of any effort. The very real power and wealth differential between short-term medical groups and their host communities make trust, understanding, and true partnership difficult.

…According to our results, recipient communities may perceive very tangible benefits from short-term volunteer groups: Free or discounted care, improved access to healthcare overall, access to highly-trained specialists, and access to procedures not always possible within the local infrastructure. Local providers enjoy exchanging experiences and knowledge with foreign visitors, and appreciate the influx of supplies that accompany volunteer groups.

White Coat = Authority

On the negative side, it appears some of the least sophisticated groups offer services or treatment that are seen to be at best duplicative, and at worst, harmful. For example, though some drugs may remain effective 1–2 years past their expiration date, the perception of harm may arise from using drugs that are no longer considered safe, legal, or effective in the US. Similarly, a surgical group not planning for appropriate local follow-up could also be seen as acting recklessly and creating the potential for harm. Such issues may be easily solved with proper planning and supplies. On the other hand, many situations described by our respondents do not present the opportunity for an easy fix. Well-intentioned, well-prepared groups provide services that may help many but may harm others though unforeseen externalities. For example, free care from outsiders improves access in the short-run, but may undermine local healthcare providers, and in the long-run may reduce access: The government might close public clinics with patient volumes that are dropping, and private physicians might leave for areas without competitors providing free care. This could only further increase the dependence on external assistance.

…Finally, it is our hope that this paper will stimulate studies into the economic, political, and health outcomes of short-term volunteer programs to critically assess their quality and effectiveness. What is the effect of the concentration of such services on the government investment in healthcare infrastructure and services in those areas? Do free or very low cost services provided by short-term volunteers truly draw patients away from private practitioners or state services? Are outcomes for procedures (e.g., cataract removal) or conditions (e.g., diabetes) different when care is provided by the regular healthcare system versus by short-term medical volunteers?

The above article brings up so many good points that have only begun to be addressed in a systemic way over the past few years. As recently as March 2011, a narrative article was published in Health Affairs which succinctly illustrates the challenges of participating in (much less creating and operating) a short-term medical volunteer program. Dr. Teeb Al-Samarrai, an MD with a strong interest in international health and development, wrote this article as a 2nd year resident who traveled to Uganda with Yale’s medical study abroad program to work in a hospital in Mulago. Here are some key excerpts from Adrift In Africa: A US Medical Resident On An Elective Abroad. (2):

“Virtually on her own and unsupervised in a Ugandan hospital, a young doctor develops suggestions for improving overseas medical training.

…“This wasn’t part of my orientation,” I thought. I’d prepared to work alongside senior Ugandan physicians, not to become a senior physician at the country’s major hospital before the end of my first day. But I’d trained in a medical culture of multitasking efficiency and realized there was no time to waste.

So we began making the medical rounds on forty-some patients, in a hospital I did not know, in a country I’d just arrived in, and in a language in which all I could muster were, “Hello, how are you?” and “Thank you.” My hours of studying Luganda, the complexities of Uganda’s colonial history, and the subtleties of HIV care seemed irrelevant.

Patients’ “vital signs” were only occasionally measured or noted. The medicine ward contained no blood pressure cuffs or thermometers, unless an intern happened to have one in his pocket. The interns’ responsibilities were dizzying, and their knowledge base varied. The economic and technological limitations of the medical care they could deliver verged on paralyzing.

…Inside, I was numbed by the realization that Mulago wasn’t an isolated rural clinic in the middle of nowhere: It was the premier referral hospital in a crowded metropolis in a country heralded as an HIV/AIDS success story. If this was success, I wondered, what did failure look like? My mind whirred, trying to calculate the incalculable other Mulagos, the smaller Mulagos throughout Africa, in more remote regions and poorer countries. It continued to whir as I tried to count the uncounted, the patients who never made it through Mulago’s doors, who never made it to any hospital at all.

Before the end of my third week at the hospital, I asked to work on an infectious disease ward. After all, that was the work I’d come for. I was told that it was still exam time at Mulago, and there’d still be no one to supervise me. I insisted. Although no expectations were laid out for me, I tried to set realistic ones for myself. Feeling more comfortable and familiar with Mulago, I began on the men’s infectious disease ward. Each day the ward intern and I did rounds on nearly sixty patients. I let him lead the way, both of us having growing confidence in what I knew and had to offer.

Interns from adjacent wards began to wander over, asking questions, wanting to present challenging cases. I didn’t always know the answers. But I taught the importance of performing a careful exam, listening to a patient’s medical history and personal story, and then creating a differential diagnosis (weighing the probability of one disease versus other diseases) while remaining willing to reassess it. Each day I was humbled by the dedication of the interns I worked with, who were eager to learn as much as possible. I was also humbled by the patients we treated and by those whom we could not treat, and by the caring and patience of their families. Day by day, we lived Mulago together

When I returned to my residency program in the United States, I asked faculty members what their expectations were of the role of visiting medical students and residents at Mulago. Although they were devoted to Mulago and to the experience of residents there, I didn’t get a clear answer.

Nor did I find clear guidance when I reviewed the medical education literature. There appears to be no standard for medical schools in the United States that outlines the necessary supervision for medical trainees—or delineates their roles, responsibilities, and expectations while they are working abroad. Moreover, many medical trainees go abroad with little more than a naïve desire to help and find themselves unprepared for the academic, emotional, and cultural challenges, not to mention the morally ambiguous situations, they might face.

Like many medical trainees, I went abroad to learn, to serve, and to be challenged. I and others want to be pushed out of our comfort zones and see the realities and necessities of medical care in resource-poor settings. We are drawn to this work because it helps us appreciate the dedication and skills of colleagues abroad as well as giving us a sobering perspective on health care disparities and priorities in countries that differ from our own. We can see diseases we’ve only read about, and we can hone diagnostic skills that atrophy in the technology-driven American health care system.

Even more, it is a form of service. We want to help. Ideally, we work with the guidance of seasoned physicians from our host country, home institution, or both.

Although I had ideas I could have tucked into the Mulago suggestion box, the most important recommendations I have now pertain to medical schools on this side of the Atlantic:

Suggestion:Determine the roles of US medical trainees and their responsibilities for patients during an international elective.

Suggestion:Determine who is responsible for supervising the trainees.

Suggestion:Define what kind of supervision the host institution is to provide for the trainees.

Suggestion:Determine how trainees’ home institutions can support host institutions in defining responsibilities for teaching and patient care.

As those of us in the United States consider our continuing role in international health and medical education, I hope we can do so realistically and creatively. Perhaps a portion of tuition fees at US medical schools could be devoted to helping host countries and institutions hire local physicians to deliver patient care and also to teach US trainees. Such a system would provide a sort of counterweight to the brain drain that both drives and is driven by the global hierarchy of medical care. Or, as my residency program now does, perhaps an adviser from the home institution could spend part of his or her time at the host institution, both to advise US students and to offer targeted instruction for students at the host institution.

Although my experience in Uganda was not what I expected it to be, it was incredibly valuable. I realize that many medical educators would maintain that this means “living Mulago” was a successful international elective. Well, yes and no. In the absence of guidance and supervision, I initially struggled to define my role and responsibilities, yet I ultimately gained a clinical and ethical foothold that gave me one of my most meaningful clinical and learning experiences. In the process, I acquired a lens that allowed me to glimpse some of the gaps in our approach to international medical education.

As medical schools continue the process of shaping and fine-tuning international medical curricula, I hope many of us will ask how much more students and residents could benefit clinically, culturally, and emotionally if they had more guidance and supervision. Separating the difficult from the impossible is something that can be accomplished. We need to continue to heighten our skills in distinguishing between the two when shaping global health programs. Surely, when future doctors benefit, their future patients—wherever they might be—will benefit, too.”

Al-Samarrai’s experience sounds disconcerting, as the mechanisms of “aid” and the failures of communication between host and guest institution were laid bare before her eyes during her time in Mulago. Significantly, she lands solidly in favor of such a medical service endeavor, especially when organized with a clearer set of responsibilities and expectations for the guest institution as well as greater investment by the guest institution in training members of the host institution.

The way Al-Samarrai describes this medical program reveals an imbalance of benefit. Providing this form of medical service gives the volunteer a significant learning experience, while the patients of the host institution may be receiving more limited care due to the limitations of not only the host institution but also the lack of efficient usage of guest institution expertise. Assumptions or ignorance of the hospital’s clinical reality, in combination with a lack of accountability on the part of the guest institution’s leadership, created a fragmented experience for the intern. These kinds of assumptions and lack of accountability leave the door open for abuse by interns who might have more self-interest than social responsibility. Luckily Al-Samarrai exhibited a true commitment to the spirit of her profession and took further steps to help bring more effective exchange of knowledge to the program in which she took part.

However, when left unstructured, this kind of medical aid project has the potential for reproducing the more imperialist leanings of some development projects which bring in foreign “experts” that consequently pack up and don’t leave any knowledge behind when they complete their volunteer time period. Or even worse, some medical aid projects bring much-needed medication to the area or begin to vaccinate parts of the population but run out of resources and leave the remaining population high and dry. Although the Ugandan medical endeavor is not overtly imperialistic in the way that some pharmaceutical-based “aid” projects have been, Al-Samarrai’s experience on the ground reaffirmed the heavy responsibility of the guest to create a clear exchange of services, in a well-defined and accountable way.

Another article outlines the concept of “voluntourism” as it is practiced in the allopathic medical community.

The excerpt below is taken from the article: Fly-By medical care: Conceptualizing the global and local social responsibilities of medical tourists and physician voluntourists (3). It provides further recommendations for the practice of culturally and socially aware medical volunteering.

The Association of American Medical Colleges’ (AAMC’s) offers four foundational ethical considerations prior to embarking on global health voluntourism: (1) ensuring high ethical and moral standards, (2) developing a social contract with the communities served, (3) subordinating self-interest to the interest of the communities served, and (4) ensure that core humanistic values (honesty and integrity, caring and compassion, altruism and empathy, respect for self and others) are at the forefront of all activities [23]. These ethical considerations point to a number of specific social responsibilities that physicians involved in voluntourism hold, such as ensuring that compassionate and respectful care is provided that meets the highest ethical and moral standards that the context allows for. What these guidelines lack are specific, concrete strategies for enacting ethical, socially responsible care. The 4Rs that were developed by Aboriginal leaders in Canada to guide researchers in working with their communities, which are summarized in Table 1, offer some suggestions for specific strategies [63].

Generally, socially responsible medical voluntourism is a collaborative process that considers the full participation of local communities, local healthcare workers, and local health authorities [54]. It complements principles of international solidarity and social capital within the context of civil society, where voluntourists act voluntarily and without seeking personal profit to share benefits. Physician volunteers are encouraged to develop a sense of professional and personal growth, and to examine critically what it means to be a socially responsible practitioner [93]. For example, many voluntourists seem to believe that being socially responsible means charity [60]. But charity can create dependency relationships whereas social responsibility aims at social justice, understood as developing sustainable relationships based on mutual respect. It involves working with and for communities to enable what they feel is best for them rather than using a paternalistic approach. Dickson and Dickson [60], identify a list of personal attributes that physicians need to develop as part of their professionalization and to act responsibly that include: a concern with global equity; a commitment to redressing injustices in healthcare; respect for diversity; openness to mutual learning; and embracing ethical values like human rights and social justice. The professionalization of physicians gives them norms by which their social responsibilities as voluntourists are increasingly clearly stated. It also gives physicians the information and expertise with which they may act on these norms.

The 4Rs of Ethically Sound Research -
Ethical, Principle, Strategy.
1. Respect: Valuing cultures’ and communities’ diverse knowledges regarding health matters and developing knowledge that contributes to communities’ and cultures’ health and wellbeing
2. Relevance: Ensuring that research (or practice) is relevant to the culture and community
3. Reciprocity: Incorporating a two-way process of knowledge exchange and learning, where all parties benefit from these opportunities and the development of relationships
4. Responsibility: Fostering empowerment through allowing for active participation and rigorous engagement by all parties.

These guidelines seem reasonable on paper. Any thorough international medical organization can meet the first two R’s, but it seems like the second two R’s pose the biggest challenge. Those two R’s also represent what is missing from health care in general in the U.S.- so how do we expect to be able to accomplish them abroad? Or is medical voluntourism an opportunity to hone these personal and organizational skills abroad and then bring them home to create a more just health care system in the U.S.? Please feel free to share your opinion, since this type of debate is currently raging and unresolved.

Two excellent talks regarding these issues:

TEDx Talk Rainier: Dr. Wendy Johnson – A New Paradigm for Global Health: Solidarity

Through her national and international health advocacy work, Johnson believes that the key to overcoming disease burdens in both developed and developing countries is to strengthen and rebuild public health care systems. And that is exactly what she is doing. As clinical faculty in University of Washington’s School of Public Health and Director of New Initiatives for Health Alliance International (HAI), Johnson develops projects to strengthen public primary health services and advocates for universal health care access in low-income countries.

TEDx Talk Rainier: Dr. Stephen Bezruchka

Dr. Stephen Bezruchka seeks to expose why health disparities among nations around the globe are at record highs and empowers people to address the socioeconomic inequities that have most impact on the health of populations. He is especially interested in how people in the USA don’t live very long or healthy lives. Bezruchka’s work takes him from teaching at the University of Washington’s Department of Global Health to remote regions of Nepal, where he wrote the first guidebook to travel there, set up a community health project, organized a rural hospital for the Generalist Doctor Training Program, worked with Nepali doctors to improve surgical services in district hospitals, and now consults on population health issues.

Bezruchka worked in clinical medicine for 35 years. He received the UW School of Public Health’s 2002 Outstanding Teacher Award and the 2008 Faculty Community Service Award. He founded the Population Health Forum to raise awareness of, promote dialogue about, and explore how political, economic and social inequalities interact to reduce the overall health status of our society.

To see some aspects of the debate regarding humanitarian aid and medical voluntourism, you can check out Nassim Assefi’s TED Talk page. The question below prompted an interesting discussion.

What’s the most effective model of global health aid/development, given interventions can have complex, unpredictable and longterm impacts?
A debate is raging between those who believe humanitarian aid is corrupt, ineffective, and harmful (eg Dambisa Moyos of the world) and those who believe it is the moral imperative of wealthier nations to help the poor (Bill Gates, Nick Kristof, Paul Farmer, etc). As an idealistic young doctor with a privileged life and education, I wanted to give back to the world, starting some 20 years ago when I joined my first NGO. Since then, I’ve seen many different models of global health with variable effectiveness–Doctors Without Borders approach of relieving suffering but not building infrastructure, more standard NGOs that combine the two, large UN agencies (eg UNICEF, WHO, UNFPA, ICRC), medical diplomacy (free exportation of Cuban health workers), social entrepreneurship (eg Acumen Fund), missionaries, Gates Foundation/Global Fund/World Bank, international medical research posing as aid, etc. While objective successmetrics and monitoring and evaluation plans are now the standard part of most health interventions, what do we really know about the longterm, complex outcomes of our well-intentioned health interventions? Have we propped up an illegitimate government or strengthened a democratically-oriented one? Have we destroyed local economies or sustained them? Have we exacerbated brain drain or created jobs for internationals who want to return home? Weakened local infrastructure or strengthened it? Educated or misled? Oppressed the people we were supposed to help or empowered them? Please help me figure out the most effective way to use my medical and public health skills to improve health in a global context, and in doing so, help many others who are struggling with these issues. I would love to hear your experiences, perspectives, and ideas about how to do global health work right and how you might measure the complex, longterm impacts of what you propose. (Meanwhile, ironically, the US still lacks a decent, universal, and cost-effective health care system.)

The next post here will investigate how Traditional Chinese Medicine fits into this framework for socially responsible medical voluntourism.

Meanwhile, enjoy the excellent music of radical Portland folk-punk-hardcore band Adelitas! The lyrics for the song in English can be found at the end of the article.

Adelitas: Hay Que Luchar

References:

1. Green T, Green H, Scandlyn J & Kestler A. (2009 Feb) Perceptions of short-term medical volunteer work: a qualitative study in Guatemala. Globalization and Health. 5:4. Retrieved from: http://www.fresno.ucsf.edu/global_health/downloads/PerceptionsGuatemala.pdf

2. Teeb Al-Samarrai.(2011 March) Adrift In Africa: A US Medical Resident On An Elective Abroad. Health Affairs. (30)3:525-528

3. Snyder J, Dharamsi S & Crook V. 2011. Fly-By medical care: Conceptualizing the global and local social responsibilities of medical tourists and physician voluntourists. Globalization and Health. 7:6. Retrieved from: http://www.globalizationandhealth.com/content/pdf/1744-8603-7-6.pdf

Hay Que Luchar:

Get up, raise your voice- Can’t you see that so many silences wound us? Time goes by, there seems to be no solution. And when you lose hope, know that I understand you.

Wake up!

It’s not the time for remorse, bitter pasts. Let’s not let this suffering detain us. Our thoughts torment us, and knowing what to do, we end up paralyzed. And what if our hands had the power to break down the old walls, and nothing could stop us?

The future remains unwritten, in spite of the illusion of control- If we want anarchy, we have to fight for it – with militancy and love. It’s coming to end, this cruel empire. centuries of dementia, oppression, extermination. Let the storm rain down, drown this hell and we will know how to swim..

Organizing resistance with strategy and persistence- For freedom, for humanity never giving up. I know how easy it is to lose hope in this world of war and fear but come on we have one life nothing more- let’s fight for a better world. And you’ll see that our hands do have the power to make our dreams real, to build a new reality.

Indian NGOs confront GWU Law School efforts to push maximalist IPR norms in India

by Judit Rius
KEI
4. March 2010 - 17:10

The ties between Universities and businesses are often complex and blurred. Private companies or trade associations fund research and seminars, and have consulting relationships with faculty members, trying to shape public policy and judicial decisions on a wide range of issues. A particularly interesting industry/university connection concerns something called the "India Project," that is associated with the George Washington University (GWU) Law School.

The GWU India Project was started in 2003 and its stated objective is to "create interactions between leading US, European, Asian and Indian academics, industry leaders, lawyers, judges and policy-makers in the field of IP." With backing by a number of major corporations with extensive patent and copyright interests, the India Project targets high level Indian government officials and judges, who are invited to participate in a number of seminar and trips, to receive training and advice in how to increase the level of patent and copyright protection in India, featuring one-sided presentations from a selective group of "experts."

Recently, a number of Indian journalists and NGOs have been to press their own government and GWU for more transparency of this University/Industry advocacy effort.

On February 26, 2010, several NGOs sent a letter to Mr. Shri Anand Sharma, Indian Minister of Commerce and Industry (letter reproduced below) demanding transparency and more information on these meetings and for the Indian government to put a stop to such industry sponsored lobbying with Indian judges and policymakers.

The following are excerpts from two recent reports by Indian journalists, and the Indian civil society letter:

Latha Jishnu for the Business Standard: Insidious India project. MNC-backed IP summits try to influence sitting judges on patent law enforcement issues pending in Indian courts. Reports:

"Grandly titled, `The India Project,' GWU has brought several delegations of American IP heavyweights from leading law firms, judges of the Federal Circuit (the central US court of appeal) and a clutch of academics primarily to teach Indians "the importance of IP." That’s what Raj Dave, manager of the India Project, an alumnus of IIT-Khargapur who is now partner in a Washington law firm, has been saying repeatedly."

"These symposiums are all sponsored by big business, many of whom have a vested interest in how the judiciary is tackling the numerous patent cases now being fought in the high courts and the Supreme Court. The 2009 symposium, for instance, was sponsored by Novartis, The Pharmaceutical Research and Manufacturers of America, which is the association of the big boys of the US pharma industry; Intellectual Ventures, a firm specializing in buying up IP rights of other companies; software giant Microsoft and chip designer Qualcomm. The grand sponsor has been the US-India Business Council (USIBC), a lobby that which has been leading a powerful campaign against certain provisions in the Indian Patent Law."

"This year’s event (February 14-18) had USIBC and Gilead Sciences as the sponsors and among those attending the February conclave was the Controller General of Patents PH Kurian along with senior lawyer Amarjit Singh Chandiok who has appeared for the government in a case where Bayer has challenged a key section of India’s patent law. Sponsors, who pay hefty sums to send delegates to the events, are also allowed to make presentations, an opening that some companies have used to push their own case. In what has come as a shock to participants at the 7th IP Summit held last month in Delhi and Mumbai is that Gilead was allowed to make a presentation on its AIDS drug Tenofovir, the patent for which has been rejected by the Indian Patent Office. Gilead’s appeal against the rejection is pending with the Intellectual Property Appellate Board (IPAB). The presentation made by the company had this closing warning: "The licensing model — Gilead licenses its patents to generic firms — is at risk and the decision by the IPAB will send a powerful signal about prospects for tech transfer partnerships with Indian companies."

Ramesh Shankar for Pharmabiz: Experts, NGOs oppose CII-GWU summit on IP for strong patent regime in India.
Reports:

"Even as the Confederation of Indian Industry (CII)'s two-day 'Summit on IP' in association with the George Washington University (GWU) has got underway in Mumbai, several public interest groups and experts have raised eyebrows expressing apprehensions that the one-sided focus of IP Summit is detrimental to Indian interests.

This is highly disturbing, as the merits of a strong IP law regime is being contested globally, and there are no empirical proofs of the benefit of a stronger IP law regime. The World Intellectual Property Organization's (WIPO) Development Agenda has clearly shown that strong IP law regimes are not an unquestionable good. It emphasises a balanced IP law regimes instead of a strong one, which must be a regime that takes into consideration the developmental level of each country. Even WIPO agrees that intellectual property is not an end in itself, and that a strong IP law regime but a tool that has to be used carefully, the NGOs and experts said.

The NGOs, who will soon send a missive to the CII and other concerned organisations, said the US patent system is widely recognized as having broken down completely and is currently being reconsidered at multiple levels -- at the legislative level by the Congress and the Senate in the form of the Patent Reform Acts, at a judicial level by the Supreme Court of the USA, and at the administrative level by the USPTO.

Given that, it is questionable what effects the US to India knowledge transfer, which is touted as the prime objective of these summits, will have.

Vehemently opposing the summit, experts said that the US law on patents, for instance, does not have many of the public interest provisions that the Indian law does. The US government and industry lobby groups like PhRMA and IIPA, which contribute to the US Trade Representative's annual Special 301 report, have consistently opposed many public interest provisions various laws, such as the provisions for post-grant oppositions. They have also consistently pushed for a "TRIPS-Plus-Plus" regime, repeatedly pressuring the Indian government to enact legislation to cover optical discs; to implement the WIPO Internet Treaties, which India has so far refused to sign; to strengthen criminal enforcement of IPR beyond the requirements of Art. 61 of the TRIPS agreement; to introduce data exclusivity, which a governmental committee has in the past rejected as against Indian pharmaceutical companies' interests."

The following is the letter sent by Indian NGOs to the Minister of Commerce and Industry:

INDIAN CIVIL SOCIETY LETTER

Friday, February 26, 2010

To: Shri Anand Sharma,
Honorable Minister of Commerce and Industry
Room No. 45, Udyog Bhavan
Rafi Marg New Delhi – 110 001
Tel: 2306 1492 / 1008 Fax: +91-11-23062947

Re: Summits on Intellectual Property by George Washington University India Project and CII, and
Re: Ethics of interaction with Indian Judges, law and policy makers at these summits

Honorable Minister,

We, the undersigned public interest organizations and individuals from different fields, note with great concern meetings and "interactions" being organised annually with Indian judges and policy makers on intellectual property as part of so-called summits on intellectual property (IP Summits).
These IP summits in major cities of India are organised annually by the India Project of the George Washington University of the United States, and the Confederation of Indian Industry (CII) with funding from multinational pharmaceutical companies, industry associations and corporate law firms. Even though George Washington University claims to organise and co-sponsor with the Confederation of Indian Industry, industry sponsorship is prominently displayed at the IP summit (See annexure 1).

India’s patent laws and access to essential medicines

Sir, as you are aware, when India’s patent law was amended in 2005 (mandated by the WTO TRIPS Agreement), the Indian Parliament included key public health safeguards to ensure the continued manufacture and supply of safe, effective and affordable Indian generic medicines.
The availability and affordability of generic medicines is crucial not only for Indian patients but also for those in the rest of the developing world. Currently 92% of people living with HIV on treatment in low- and middle-income countries use generic drugs mostly from India.

Attempts to change India’s pro-public interest IP laws

Since 2005, there are continuing attempts through cases against the government of India (Novartis vs. Union of India, Bayer vs. Union of India) by the multinational pharmaceutical industry and through free trade agreement negotiations with developed countries to force India to adopt greater standards of intellectual property protection which are far beyond the mandatory levels required by the WTO-TRIPS Agreement. This is aimed at preventing the domestic production, registration and export of essential medicines by Indian generic manufacturers.
The Indian courts too are constantly faced with the difficult prospect of multiple litigations where they are balancing private patent rights with the fundamental rights of life and health enshrined in the Indian Constitution.

US Industry funded IP Summits

In this regard, we are extremely concerned about the "IP Summits" organised by the US based George Washington University India Project in collaboration with CII.

Sponsors of the George Washington University’s IP Summits which include the US-India Business Coalition (USIBC), pharmaceutical companies and the law firms that represent them in patent disputes before the Indian courts have the privilege to nominate speakers and be included in all programmes including in meetings and discussions that involve Indian judges and senior government policy makers.

Over the years, prominent sponsors and organisers of these summits have included multinational pharmaceutical companies like Novartis, Gilead Sciences, Intellectual Property Owners Association, The Pharmaceutical Research and Manufacturers of America (PhRMA) and the US-India Business Council (USIBC). (Annexure 2). The manner in which these Summits have been used by these sponsors in relation to pharmaceutical patents is discussed in greater detail below.

The sponsors of the IP summit also include Intellectual Ventures, Microsoft, and Qualcomm. These companies have a vested interest in software patents as they have already amassed a large number of such patents in the few countries that allow for patenting of software.

As things stand, computer programmes per se are not patentable in India by virtue of being excluded from patentability by section 3(k) of the Indian Patent Act. Indeed, Parliament in 2005 rejected an attempt to create exceptions for that provision. Still, these companies wish to change the Indian Patent Office's application of the law to go against the dictate of the Indian Parliament, and are doing so by time and again questioning the Indian law.

Many academics, civil society organizations, and people from the indigenous software industry as well as the free/open source software community have pointed out the hazards of changing the law on software patents to the Indian software industry. Yet these voices are not allowed to be present at meetings such as these organized by CII.

Interactions with the judiciary as part of these IP summits

This year’s programme – the 7th IP Summit was held from 14-18 February 2010 in Delhi and Mumbai. On 14 February, an ‘Interaction with Judiciary and Moot Court on IPR’ organised by GW University and CII as part of the programme at the National Law University in Dwarka, Delhi.

According to sources, the moot court problem placed before the judges related to enforcement of intellectual property rights. This is an area of growing controversy as developed countries like the US and EU and their multinational pharmaceutical companies are pushing for greater enforcement – these issues are before the courts in many cases (sub-judice) and it is of great concern that judges of the Supreme Court and Delhi High Court were presented with similar problems at a summit funded by multinational pharmaceutical companies. It is evident that the Supreme Court, the Delhi High Court, the Ministry of Law and Justice and the Ministry of Commerce and Industry were not fully informed of who was funding/co-organising this summit.

Moving away from what is usually an academic exercise with students, at this moot court, practising lawyers argued the problem before sitting judges. Given the funding of these summits and the statements of George Washington University staff and organisers, we are hard pressed to believe that such interactions are merely academic exercises. This is confirmed by the following quote of one of the prominent staff members of the George Washington University:

"…one of the goals of the India Project -the objective of which was to create interactions between leading US, European, Asian and Indian academics, industry leaders, lawyers, judges and policymakers in the field of intellectual property - was to work closely and cooperatively with Indian judges to ensure not just enaction but enforcement of patent laws. Because it's all fine to have good laws but the important thing is to enforce them." [Emphasis added. See: Intellectual Property experts to help India revamp laws, RediffNEWS, February 01, 2006, Annexure 3]

2010 IP Summit – Attacking Section 3(d) – India’s safeguard against evergreening of patents

As the Honorable Minister is aware, the USIBC, a prominent sponsor of this year’s IP summit, has published a report criticising India’s patent law; specifically the report has attacked Section 3(d) of the Patents Act, 1970. This provision in fact stipulates that companies should not be able to obtain patents in India for medicines that are not actual inventions, such as drug combinations or slightly improved formulations of existing medicines and actually ensures patents should only be granted on medicines that are truly new and innovative. While the USIBC attempted to invite the Hon’ble Minister to the release of this report during his visit to the US last year, the Hon’ble Minister made it clear during his visit that India takes its role in supplying safe, effective and affordable medicines seriously.

Patient groups such as the Cancer Patient Aid Association and PLHIV networks have argued for strict patentability criteria and have filed pre-grant oppositions against patent applications claiming patents on new forms, combinations of known medicines – to protect domestic production of essential cancer, Hepatitis C and AIDS medicines.

As the Honorable Minister is also aware, having lost the case to strike down Section 3(d) of the Patents Act two years ago, Novartis has now launched fresh legal proceedings in the Supreme Court of India to weaken this critical public health safeguard. This case will have important implications on the patentability criteria of medicines and hence has implications for Indian patients.

The law firm representing Novartis in the Supreme Court case challenging the scope of Section 3(d) also presented at this meeting how Section 3(d) did not comply with TRIPS and the interpretation of Section 3(d) it wants the Indian Patent Office to adopt (Annexure 4). Incidentally, Novartis has been a prominent sponsor of the IP Summits. Apart from their lawyers, Novartis also featured prominently on the rest of the agenda of this year’s summit both in Delhi and in Mumbai.

2010 IP Summit - Pharma companies lobby against patent rejections

Apart from the interactions with the judiciary, policy makers and key government officials also feature prominently in these meetings. That these meetings are being used as forums by companies to promote their intellectual property and to lobby for either law amendments or even to plead their cases currently pending before, for instance, the Indian Patent Office is clear from the agenda and the programme.

This year, for instance, Gilead Sciences, a sponsor of the IP summit 2010 used its presentation to discuss why it deserves a patent on the drug tenofovir – a key AIDS drug at a time when its appeal against the rejection of its patent applications is pending before the Indian Patent Office. The audience during such "presentations" as noted above features policy makers and government officials including from the Patent Office. For your reference, the presentation made by Gilead Sciences is attached (Annexure 5).

We believe that it is highly unethical and inappropriate that a meeting organised and/or funded by such companies includes in it interactions with the Indian judiciary and patent office officials before whom are pending appeals filed by pharmaceutical companies against patent rejections decisions.

CII fails protect national interest and domestic industry

In this regard we will be writing separately to the Minister on the role of the CII which we believe no longer promotes the interests of India or of domestic companies. CII’s IP agenda is consistently against the interests of domestic industry and undermines India’s negotiating positions in international forums and free trade negotiations. Specifically meetings organised by CII are lobbying against some of the strong positions on IP taken by India to protect its national interests in the international arena. In this context, we request the government of India to disassociate with CII on any of its IP agendas and programmes.

Imposition of US based positions on IP

While George Washington University claims that its India project is to help enhance India's intellectual property law capacity, it fails to appreciate that India’s lawmakers and judiciary have a history of not only understanding intellectual property (like the Ayyangar Report) and its implications and in fact have devised the most progressive patent laws in particular in the area of food and medicines. As far back as the 1970s, the Indian government recognised the impact of patents on medicines when former Prime Minister, Mrs. Indira Gandhi said, "The idea of a better-ordered world is one in which medical discoveries will be free of patents and there will be no profiteering from life and death."

Critiques of India’s patent law by the GW University’s faculty and majority of speakers at the IP summit are not balanced with presentations supporting the Indian legislation or highlighting its importance from a right to health and medicines perspective. Groups or others with a different point of view that IP laws need to be appropriate to development needs - have little space at these meetings other than token invitations. Attempts to comment or raise questions are often ignored, cut short or even shouted down by delegates brought in by George Washington University who have a strong IP enforcement bias.

It is evident that these meetings are NOT an independent academic exercise of a US University but actually feature mostly the views of multinational pharmaceutical companies and multinational IT companies, a majority of whom feature prominently as sponsors and in the agenda.

IP summit 2010 and role of DIPP

Given this background, we are extremely concerned that these one-sided meetings have received support from the Department of Industrial Policy and Planning (DIPP). This year’s programme featured the logo of the DIPP. The messages promoted at these meetings go against India’s legal standards on patentability and several of the positions on IP being taken by India at the international level and the Ministry’s support for such meetings sends out a confused message on India’s position on these matters.

We are also surprised to learn from interviews with George Washington University staff that several of these issues have featured in trainings for Indian patent office officials. We quote below the relevant paragraph from the interview:

"We have contributed to education by heightening the dialogue and understanding between India and the U.S. on IP law. We have done so in a collaborative way, as we have much to learn from our Indian counterparts. For example, the new Indian patent law, enacted in 2005, involves a range of issues that require clarification, and the project has resulted in a two-way discussion of real importance to the future of IP protection in India and across the world. Is the new law in compliance with Indian constitutional standards? How does it compare with U.S. law in addressing issues that arise during the processing of a patent application? (With regard to this question we recently held educational sessions with patent examiners at various Indian patent offices). Is it consistent with international standards? These are just some of the issues that attract the attention of people associated with GW's India Project." [Emphasis added. Text of full interview attached to this letter as Annexure 6]

Request to cease unethical and non-transparent lobbying with judges and policy makers

Industry led initiatives with the Indian judiciary are considered unethical and unacceptable. However, CII and GW University have through their annual IP summits in India interacted closely with the Indian judiciary. GW University openly claims this as the positive outcome of the project without clarifying as to how they have organised close interactions with the Indian judges while at the same time worked on this project with the involvement of industry associations and financial support from industry sponsorship that they accept for this programme. Pushing a one-sided agenda that favours the handful of sponsors in a meeting involving higher level judiciary and very senior policymakers and representing this as an academic exercise is highly objectionable.

In light of the above, we urge, the Government of India to undertake the following:

• We re-iterate that "interactions" with the Indian judiciary and law and policy makers as part of such summits is highly unethical and improper at a time when several of the issues being discussed at such meetings are before the courts or the patent offices for adjudication. We request the government of India to take immediate steps to put a stop to such industry sponsored lobbying with judges and policymakers.
• We urge that before lending support and credibility to such exercises, the government of India acquaint itself of all the sources of funding for such meetings and the backgrounds and conflict of interests of key organisers and sponsors. We also urge the Ministry to proceed with caution in supporting such summits that push for stronger IP law regimes without taking into context the interests of Indian industry, especially small and medium enterprises, and the Indian public.
• We request the government of India to disassociate with CII on any of its IP agendas and programmes.
• We also request, that as a recipient of significant government funding and as a stakeholder identified by the government on policy matters, an official enquiry be conducted by the government of India into CII’s IP programmes and sponsors over the past five years.
• We request that the George Washington University India Project no longer be given access to the Indian patent Office, Indian Patent examiners, Indian government officials and most importantly the Indian judiciary. Given their funding, and the manner in which they have carried out their programmes and their admitted interest in the "enforcement of patent laws", they should be recognised as an industry lobby and not an independent academic institution.
• Given that George Washington University has gained access to Indian patent examiners and the Indian judiciary, we request the government of India to ask for a detailed record of all the funding of the George Washington University India Project since its inception, of the contacts and conflicts of interest of key persons associated with the Project and a detailed list, agenda, copies of presentations and notes of all formal and informal meetings held by the University in India with the judiciary, patent offices and government officials. This information should be made public as soon as possible.

Yours sincerely,

• National Working Group on Patent Law
• All India Drug Action Network (AIDAN)
• Centre for Trade and Development (Centad)
• Delhi Science Forum (DSF)
• Creating Resources for Empowerment in Action (CREA)
• Delhi Network of Positive People (DNP+)
• Drug Action Forum – Karnataka (DAF-K)
• International Treatment Preparedness Coalition – India (ITPC – India)
• Knowledge Commons
• Maharashtra Network of People living with HIV (MNP+)
• Torchbearers - Advocacy for Disabling Brain Illnesses
• Talking About Reproductive and Sexual Health Issues (TARSHI)
• Naz Foundation (India) Trust
• Centre for Internet and Society (CIS)
• Alternative Law Forum
• IT for Change
• G. Nagarjuna
• Initiative for Health Equity & Society (IHES)
• Diverse Women for Diversity
• Research Foundation for Science Technology & Ecology
• All India Peoples Science Network (AIPSN)

Cc.
1. Mr. M. Veerappa Moily
Hon’ble Minister of Law
402-A, 4th Floor, Shastri Bhawan
New Delhi – 110 001
Tel: 23387557, 23384777, 23384617
Fax : 011-23384241, 011-23387259, 011-23382733

2. Shri Ghulam Nabi Azad
Hon’ble Minister of Health and Family Welfare
Room No. 344, 3rd Floor
Nirman Bhavan
New Delhi – 110 001
Tel: 011-23061647, 23061751,
Fax: 23017798, 23792341

3. Shri Rajinder Pal Singh
Secretary
Department of Industrial Policy & Promotion
Ministry of Commerce and Industry
Room 157, Udyog Bhavan, Rafi Marg
New Delhi – 110 011
Tel: 23061815, 23061667
Fax: 011-23061598

4. Mr. D. R. Meena
Secretary - Legal Affairs
Ministry of Law and Justice
409-A, 4th Floor, Shastri Bhawan
New Delhi – 110 001
Tel: 011-23384777,
23382902, 23387259

5. Shri Rahul Khullar
Secretary
Department of Commerce
Ministry of Commerce and Industry
Room No. 143, 1st Floor
Udyog Bhawan, Rafi Marg,
New Delhi – 110 001
Tel: 23063664, 23063617
Fax: 23061796

6. Ms. K. Sujatha Rao
Secretary
Dept. of Health and Family Welfare
Ministry of Health and Family Welfare
Government of India
149-A, Nirman Bhawan, New Delhi – 110 011
Tel: 23061863 / 23063221
Fax: 23061252

7. Mr. P.H. Kurian
Controller General of Patents, Designs & Trade Marks
Boudhik Sampada Bhavan
Near Antop Hill Head Post Office
S.M. Road, Antop Hill
Mumbai – 400 037
Tel/Fax: 022-2413275

8. Prof. G. Mohan Gopal
Director
National Judicial Academy
Bhadbhada Road, P.O. Suraj Nagar,
Bhopal-462044, M.P. India
Tel: 0755-2696766 Fax: 0755-2696904

EUROPE! HANDS OFF OUR MEDICINE

Millions of people in developing countries rely on affordable generic medicines to stay alive. More than 80% of the medicines used by MSF to treat AIDS across the developing world are produced in India. But the European Commission is now shutting off the tap of affordable medicines by attacking the production, registration, transportation and exportation of generic medicines. People who need these will be left without a lifeline.

Help Médecins Sans Frontières send a message to the European Commission to keep their HANDS OFF OUR MEDICINE!

India's complaint over in-transit generic seizures dropped?

Phil Taylor
08-Oct-2010
Securing Pharma

Anand Sharma India's commerce and industry minister Anand Sharma says India plans to withdraw its dispute over the seizure of Indian-made generic drugs at EU borders filed with the World Trade Organization (WTO), according to reports in the Indian press.

Several articles suggest that Sharma has decided to draw back from the dispute because of commitments by the EU to revisit its rules covering seizure of goods suspected of infringing intellectual property rights (IPR).

There has however been no official statement from any party involved in the dispute resolution procedure indicating that it has been resolved.

The complaint was filed in the wake of around several seizures by EU customs of generic shipments en route from India to markets in Latin America in 2008 and 2009 - allegedly at the request of pharmaceutical brand owners - on the grounds that they were suspected counterfeits and/or violated IPR.

The problem seemed to reside in the differing interpretation of EU Regulation 1383/2003, which allows seizure by border control agencies of products suspected of IPR infringement, and specifically its tenets on goods in transit. Customs in the Netherlands and France, for example, are said to have taken the position that if such a shipment touched ground in the EU, it is considered subject to standard customs procedures and local IPR laws.

The European Commission's Taxation and Customs Union (TAXUD) ran a public consultation on 1383 between March 25 and June 7, 2010, with a view to updating the regulation if required, but as yet has not published the results of the exercise.

India mostly exports off-patent generic drugs under the umbrella of the WTO's Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), which was passed to harmonise IPR standards and enforcement, as well as facilitate access to essential medicines in developing countries.

If the WTO dispute remains unresolved, the next stage would be formation of a WTO panel specifically to look into the complaint.

Meanwhile EU claims the Drug seizure dispute with India not resolved. Apparently there was some progress but negotiations seem to have broken down.

See also "Freer" trade may hurt access to India generic drugs

*UNITAID says 80 percent of its AIDS drugs come from India
________________

Brazil and India have requested WTO consultations on the generic drug seizures issue.

Brazil's request is here. India's request is here.

For background, SpicyIP has a number of posts on the issue here;

Stemming the Brain Drain of Health-Care Workers From Developing Countries

Published on Saturday, May 29, 2010
The Seattle Times


by Amy Hagopian, Eric B. Williams and Emily DeRiel

Last week, international health leaders meeting at the annual World Health Assembly in Geneva made history by endorsing new guidelines to prevent health-worker brain drain from developing countries.

Nations unanimously adopted a voluntary global code that sets ethical principles around the movement of health workers. It was only the second time in the assembly's history that nations agreed to an ethical code.

The Global Code of Practice on the International Recruitment of Health Personnel acknowledges the right of health workers to migrate, while also acknowledging the right to the highest attainable standard of health. It calls on rich nations to meet their own internal demands without taking health workers away from countries that can least afford to lose them.

The critical shortage of health workers in developing countries is staggering. For example, Washington state has 11,000 doctors for its 6.6 million residents; Ethiopia by comparison has 2,000 doctors for its 80 million people. This would be equal to 165 doctors for the entire state of Washington.

Low-income countries invest significant resources to train health workers. Active recruitment of their doctors and nurses systematically deprives communities and entire populations of their right to health.

The loss of these investments equates to a form of reverse foreign aid. Not only is that ethically unacceptable, but speaking strictly parochially, it undermines the efforts of the many Seattle-based organizations working to improve global health. Discovering vaccines does no good if there is no one to administer them.

While the code is welcome news for those of us who work to advance health and human rights, we must admit the final version of the code was weakened in closed-door negotiations. After U.S. lobbying, rich nations reduced their responsibility for tracking the movement of health workers or for providing technical or financial assistance to developing countries.

Nonetheless, important elements of the document were retained and governments must now take steps to implement it.

Some countries have already moved to curb their active-recruitment practices. The United Kingdom and Norway have adopted policies to refrain from recruiting health workers from severe-shortage countries. Canada, too, has ramped up training programs so as to create less demand for foreign-trained health workers. The United States should follow suit.

As an initial step, we have to do a better job of tracking health-worker migration to inform policy decisions on increasing our domestic training programs to better meet demand. While we know approximately one in four U.S. physicians and about 220,000 nurses were trained abroad (largely in lower-income countries), those data are hard to come by.

Current information systems are fragmented and privatized. The only national data source on physicians is proprietary and only available for purchase from the American Medical Association. Nurse licensure data are available only on a state-by-state basis.

With 32 million uninsured Americans soon to be eligible for care, it's time to get serious about the fact that the U.S. health work force is too small and unevenly distributed across urban and rural areas. The Council on Graduate Medical Education has predicted the U.S. will be short approximately 85,000 physicians by 2020.

Thirty years ago, the U.S. was the only nation to oppose the World Health Organization's first ethical code, which limited the marketing of infant formula in poor countries because it undermined breast-feeding. This time, the U.S. stood with 192 nations in a show of global solidarity for the health of people in poor countries.

The Code of Practice offers real opportunity. We (and all nations) must now follow through as if we really meant it — because countless lives depend on it.

Fraud in the non-profit sector

Report Sketches Crime Costing Billions: Theft From Charities
By STEPHANIE STROM
New York Times
March 29, 2008

The volunteer treasurer of the Madison County Humane Society in Indiana was charged this month with using $65,000 of the charity’s money to buy jewelry and makeup. In San Francisco, the chief financial officer of the Music Concourse Community Partnership was fired after he was accused of taking $3.6 million of the organization’s money to play the stock market.

Nonprofit leaders tend to shrug off such cases as evidence of “just a few bad apples.” But a new report, trying to identify the scope of such thefts for the first time, suggests otherwise.

The report, by four professors who specialize in nonprofit accounting, found that the typical theft from a charity was committed by a female employee with no criminal record who earned less than $50,000 a year and had worked for the nonprofit at least three years. The amount she stole was less than $40,000.

The most costly cases, the study found, involved male executives earning $100,000 to $149,000 a year. The thieves in such cases had typically been with the organization the longest.

But what is getting the attention of nonprofit leaders is the report’s estimate of the overall cost, which the authors put at $40 billion for 2006, or some 13 percent of the roughly $300 billion given to charity that year.

“It’s a surprisingly large number,” said Paul C. Light, a professor of public service at New York University who does surveys of public confidence in charities. “We really need to take a good hard look at what’s going on in these organizations.”

The new report is based on data from the Association of Certified Fraud Examiners, which, the report said, found that “all organizations,” whether government, for-profit or nonprofit, “lose on average 6 percent of their revenue to fraud every year.” Applying that percentage to nonprofits’ total 2006 revenue of $665 billion — donations, government payments and other income — the authors came up with the $40 billion estimate.

“Determining how much theft and embezzlement takes place has been the holy grail of the sector,” said Jack B. Siegel, a tax lawyer who specializes in nonprofit matters.

If the $40 billion figure is accurate, then the money lost to fraud equaled the combined giving by corporations and foundations in 2006, said Diana Aviv, president and chief executive of the Independent Sector, which represents nonprofit groups.

But Ms. Aviv expressed skepticism about the report, noting that it relied on the fraud examiners association’s estimate of overall fraud across all sectors, including government and corporate.

“They’re lumping all those sectors together, and it could be that the for-profit sector experiences a higher level of fraud, while the nonprofit sector and government experience lower levels,” Ms. Aviv said.

Nonetheless, she said, “even if the figure is $20 billion, that’s still a huge amount and needs to be addressed.”

The report, published in the December 2007 issue of Nonprofit and Voluntary Sector Quarterly, found that losses to fraud among the 58 cases reported to the fraud examiners association in a random survey of nonprofits ranged from $200 to $17 million, with the median fraud costing $100,000.

“Most of these things are not caught by routine audits,” said Gary Snyder, who tracks nonprofit fraud in his newsletter, Nonprofit Imperative. “They’re usually done by someone in the financial area — the treasurer, the bookkeeper, the signer of checks — who knows how to avoid getting caught.”

Almost 95 percent of the reported frauds entailed loss of cash, and a majority of those involved false or inflated invoices, billing for expenses that were never incurred and check tampering.

“I gave a talk to a group of nonprofit executives a few weeks ago, and every single one of them had a fraud story to tell,” said one of the report’s authors, Janet S. Greenlee, an associate professor of accounting at the University of Dayton. “This has been going on for years, but there’s a feeling that it shouldn’t be discussed,” because of the effect it might have on donations.

Professor Greenlee — joined in the report by Mary Fischer of the University of Texas at Tyler, Teresa P. Gordon of the University of Idaho and Elizabeth K. Keating of Boston College — said the failure of organizations to punish those who steal from them was perhaps one of the biggest reasons for fraud in the sector. She said she had worked at organizations that refused to dismiss employees caught stealing.

Professor Light, at N.Y.U., said some 70 percent of respondents to a new survey among the general public thought charities wasted “a great deal” or “a fair amount.”

“Donors have already indicated,” he added, “that they don’t have a great deal of faith in the way these groups handle money.”

But it will now be harder for charities to hide fraud, because beginning with tax forms they must file for 2008, the Internal Revenue Service has added a question requiring them to disclose whether they have experienced theft, embezzlement or other fraud during the year.

“Not only will that eventually give us a much better idea of how widespread fraud is with these groups, it also gives them an incentive to have better financial controls,” said Mr. Siegel, the tax lawyer, who is credited with the idea of adding the question to the tax forms.

Mr. Siegel used to track cases of fraud among charities but “got bored,” he said, because there were so many of them.

Newspapers routinely report incidents of nonprofit fraud in their communities, but the amounts tend to be small and thus go unnoticed at a national level.

Mr. Snyder, the tracker of nonprofit fraud in his newsletter, said that through use of databases and other searches, he had stumbled across more than $700 million in fraud already this year among government agencies and nonprofits, including church-related organizations.

Asked about his favorite example of nonprofit fraud, Mr. Snyder was initially stumped.

“There are so many,” he said.

He eventually settled on the embezzlement of some $25 million from Goodwill Industries of Santa Clara County in California.

It started in the 1970s and continued until one of the participants blew the whistle in 1998. Merchandise donated to the organization was sold outside the Goodwill shops by the perpetrators, who kept the proceeds. One of the embezzlers committed suicide before arrest, and six others, all related, pleaded guilty, were fined and, in some cases, were sent to prison.

The thieves had given more than $800,000 to the organization’s president and chief executive, who parked the money in accounts in Switzerland, in Austria and on the Isle of Man and then escaped to Guatemala as investigators closed in, according to the authorities. Guatemala sent him home in 2003, but he ultimately pleaded guilty to only one charge — of tax evasion unrelated to the scandal at Santa Clara Goodwill — and walked out of the courtroom.

“I like that one,” Mr. Snyder said, “because it’s an extreme example of something typical: that no one gets in trouble for this.”

Professor Greenlee said she saw signs that charities were now trying harder to deal with fraud.

“They’re creating audit committees and adopting the provisions of Sarbanes-Oxley as best practices,” she said of the 2002 law that imposed stricter accountability on corporate governing, though not on charities.

“Boards are becoming tougher,” she said, “because they know that as fiduciaries, they are at risk of, at the very least, embarrassment.”

The Drug Industry Cashes In

November 18, 2009
Editorial
New York Times

The drug industry has been ramping up its prices in advance of any health care reforms that might clamp down on its profits. The industry’s rapid price escalation over the past year threatens to make a mockery of its deal with the Senate Finance Committee and the Obama administration to contribute $80 billion over the next decade to help pay for covering tens of millions of uninsured Americans.

The industry’s contribution will consist of drug discounts to certain Medicare beneficiaries, larger rebates on drugs bought for Medicaid beneficiaries and new fees on the industry.

We complained earlier that the industry’s contribution looked small when measured against the $1 trillion needed to cover most of the uninsured or against the $3 trillion likely to be spent on drugs in this country over the next decade. The administration got political benefits from the deal: The drug industry has not opposed health care reform as it did in previous years and has actually run commercials supporting it.

But the deal looks mostly good for the drug companies. They stand to gain tens of millions of newly insured customers who will be able to buy medicines. And the discounts the companies will provide to Medicare beneficiaries who reach a gap in their drug coverage, known as the doughnut hole, will apply only to brand-name drugs, helping the manufacturers to lock in customers that might otherwise turn to cheaper generics.

Now come the price increases. As Duff Wilson reported in The Times on Monday, the industry has raised the wholesale prices of prescription drugs by about 9 percent in the past year. That appears to be the highest annual increase since 1992.

The industry contends that it must raise prices to finance research on new drugs, and that may hold some truth given the dearth of promising new drugs in the pipelines of major manufacturers. But the increases also look designed to establish a higher price base before reform bills, if passed, try to reduce drug spending.

The industry’s maneuver suggests that the Senate’s deal with the industry should be abandoned in favor of the much tougher demands in the reform bill passed by the House. The House bill requires rebates and discounts from drug makers that may save the government about $150 billion over 10 years, according to the chief actuary for the Center for Medicare and Medicaid Services. The House bill also authorizes the secretary of health and human services to negotiate with the companies to obtain lower prices for drugs sold to Medicare beneficiaries and to a new public plan if one is approved.

The government needs every penny it can get to help cover the uninsured. Given the industry’s last-minute price increases, it seems prudent to ignore the supposed deal and demand a greater contribution.