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  Number 277 | Agosto 2004
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What Was Signed Away in CAFTA Threatens Millions of Lives

A card circulating all over Central America shows a white pill mounted on a beautiful gold ring. The caption reads: “Medicine doesn’t have to be a luxury.” But that’s exactly what it could become once the Central American Free Trade Agreement with the United States comes into force. There is urgent need for reflection and action to keep public health services from becoming inaccessible to those who really need them.

Nicaraguan Initiative for Access to Essential Medicines

When it comes to public health, the Central American Free Trade Agreement (CAFTA) is effectively backtracking on previous advances. This can be illustrated symbolically by the image of a woman, a chronic patient, walking away from a health center or public hospital in Nicaragua—or any other Central American country—where she was given a prescription for a medicine without which her illness will be more grueling and her life more difficult and bitter. The woman is retracing her steps because the hospital doesn’t have the medicine. Furthermore, she won’t be able to find it as cheap anywhere else. The price of brand name medicines is prohibitive for someone whose salary doesn’t even cover the list of basic essential goods, written up without ever considering that people get sick.

Her steps take her away from the hospital, which she believed would be the starting point of a new path. Holding her prescription in one hand and seeking charity from passers-by with the other, she’ll try to gather the price of the medicine written on the prescription, a piece of paper that contains the possibility of her living a little longer. She knows that, and so do those in her country’s health ministry and government, but unlike her they aren’t out on the streets, with nothing but an unfillable prescription and the threat of worsening illness and death hanging over her.

We’ve seen this scene again and again at the traffic lights: women, children, sometime women carrying children on their hip, prescription in hand, asking passersby for coins to help buy another dose of life. Cancer, HIV/AIDS, malaria and tuberculosis abound in both rural and urban areas of Central America and those who contract such illnesses find it hard to understand that the medicines that would help them live are either unavailable or inaccessible because their countries’ government agreed to reduce access to cheap medicines in exchange for advantages in other commercial transactions.

Health was not prioritized in Central America

Not even the healthy understand it. Just as steps were taken internationally to safeguard the right to affordable medicines and health care, especially in developing countries, more or less establishing that health comes before commercial interests in any free trade agreement, Central America has backtracked so much in signing CAFTA that some things are now worse than before those steps were taken.

The backward steps are well known. It’s common in Central America for health only to become a priority on our respective countries’ political agendas when we’re hit by natural disasters and epidemics. In light of this, it was easy to imagine that health would not be defended in the CAFTA negotiations when threatened by regulations in the chapter on intellectual property rights. And in effect that’s exactly what happened. So now, if all countries ratify the agreement as it stands, we will undoubtedly find ourselves facing a situation that will have alarming consequences for millions of Central Americans, particularly those in a critical economic situation who suffer from chronic or serious illnesses. The intention and consequences of the regulations related to intellectual property rights that were agreed to will make affordable medicines, the generic pharmaceutical products so vital for their survival, impossible for the majority of those patients to get. The only alternative is brand-name medicines with patent protection or data exclusiveness, but they are simply unaffordable for the poor.

US negotiated its objectives
using pressure and threats

The CAFTA negotiating process, which mainly took place during 2003, was characterized by pressure from US negotiators to push issues to the limit of or well beyond what had been agreed to within the World Trade Organization (WTO), so that its rules could later be interpreted as only minimum standards. From there, the United States sought alternatives that would considerably strengthen its big pharmaceutical companies’ area of influence. When certain points clearly contradicted the WTO’s trade regulations—norms the United States had agreed to—the Central American countries tried to argue that they wanted to stay within that framework. But the pressure and positions wielded by the United States always prevailed and they ended up conceding almost everything.

The negotiating teams met in the different member countries for nine of the ten rounds of negotiations. The tenth was the official conclusion in Washington in December 2003 when the United States, El Salvador, Nicaragua, Honduras and Guatemala signed the document. Costa Rica only finalized the negotiation of certain points in January of this year. More recently, the Dominican Republic was brought into CAFTA, even though it hadn’t participated in the negotiations with the five Central American countries.

The civil society and private sectors that accompanied the negotiations were always limited by not having access to the text under discussion, which made it very hard to analyze the regulations actually being negotiated. They only received summaries passed on by the negotiating teams. Nicaragua’s was the only negotiating team to publish the text, but with certain restrictions that contradicted the intention behind publicizing it: it could be only accessed on one computer located in the Ministry of Development, Industry and Trade (MIFIC) and only read on the screen; it couldn’t be reproduced. Worst of all, most of the text was bracketed, making it hard to distinguish clearly what the detailed position of the negotiators really was at any moment.

The FTAA has the same aim and
Central America set a bad precedent

The Free Trade Area of the Americas (FTAA) negotiations cover all countries in the Americas, but are currently at a standstill due to express resistance on certain points by Brazil, a co-chairing member of the negotiating process. Together with the other MERCOSUR countries, Brazil is waging the fiercest battle against caving in to US pressure; it wants to establish free trade within a context that respects international norms and allows exchange that is more equitable. Among other points, it does not accept giving up access to generic medicines in exchange for advantages in other commercial issues, as proposed by the draft FTAA document. But the Central American countries did not defend Brazil’s position in the CAFTA negotiations, thus setting a bad precedent for the FTAA.

Following CAFTA, the United States started to negotiate a similar treaty with the Andean countries (Peru, Ecuador, Colombia and Bolivia, but excluding Venezuela), with the clear aim of gradually undercutting the possibility of any common Latin American position, region by region. Events are showing that after being forced to make compromises in certain multilateral negotiations, the United States has turned its attention to regional and bilateral commercial agreements whose repercussions will be felt in all regions of the world due to the current interrelation of economies and the fact they will act as precedents. The problem is even more serious because the public knows almost nothing about these regional and bilateral treaties, as they are frequently negotiated in secret and are very technical.

Central America’s perspective on the position held by Brazil and MERCOSUR was illustrated by Nicaragua’s Álvaro Porta, MIFIC’s foreign trade director, during the last FTAA summit, held in Miami in November 2003: “Brazil and MERCOSUR want to sit in the same seat to see the film without paying what we’ve paid.” This “payment” includes reduced protection for our agricultural products, or, worse still, the de-protection of people’s health by obstructing access to vital and cheap medicines for the majority of the Central American population.

Discussion of the TRIPS agreement:
Renouncing our own advantages

For some years now the WTO has been trying, with greater or lesser success, to establish international regulatory free trade standards throughout the world. In 1994, the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) was signed, following exhaustive discussions. This aimed to guarantee that all WTO member countries would have a similar system for the legal protection of intellectual property rights. Since then, we have seen a glut of campaigns across the world in defense of royalties and copyright and legal persecution of pirating and illegal copying. It is precisely here that we find one of the confusions that clouds reality and makes the most negative consequences of the restrictive protection of copyright hard to distinguish clearly. The big problem is the commercial—and moral—comparison between a CD, a doll, a machine and a medicine.

The negotiating teams from the Central American countries and the United States have maintained a common discourse in defense of modernizing the intellectual property system. This was undertaken in an already very advanced way in 2000 when all of our countries either adopted or renewed their patent laws, incorporating the contents of the TRIPS agreement before CAFTA came along.

The US proposal to increase protection levels, which is aimed only at defending the interests of its big businesses, is know as “TRIPS plus” to highlight the fact that the United States is seeking intellectual property protection in all free trade agreements it promotes that goes beyond even the provisions signed in the WTO via TRIPS.

The TRIPS agreement established intellectual property protection standards that are seriously unfavorable for developing countries. The obvious reason is that most creation and invention takes place in the most developed countries, which have the resources and means to invest in research and development, leaving the others to figure out how to guarantee patent royalty payment to the rich ones as compensation for the investment put into their inventions and creations.

Nevertheless, not everything in the TRIPS agreement was negative, particularly because certain flexibility for pharmaceutical products was included to protect health in the developing countries and minimize the possible negative effects of requirements established according to the developed countries’ perspective.

Patents on medicines are understood as economic compensation for the expenditure invested in inventing or developing a new molecule or procedure. According to the TRIPS agreement, the royalties on patent medicines should last 20 years. But as patents can block people with limited economic resources from accessing medicines, TRIPS established various flexibilities, including:
* The right of countries to issue compulsory licenses
* The right of countries to decide when to issue a compulsory license
* The right of countries to buy medicines through parallel imports
* The freedom of countries to decide whether to grant a concrete protection period for pharmaceutical test data.

Compulsory licensing:
Threatened by a “black list”

Compulsory licenses are a very important health protection mechanism. They legally allow a government, a country, to ignore the valid patent of a brand-name medicine in another country and produce the same medicine in its generic form for a given period. This implies producing an equally effective medicine at a much lower price, thus guaranteeing the health of its population. To issue a compulsory license, the government must inform the company holding the patent and adequately compensate it for any inconvenience caused.

Brazil is the only country in Latin America whose generic pharmaceutical industry could be considered of any real importance. Other countries with important generic industries include India, South Africa and Canada. Up to now, however, neither Brazil nor any other country has issued a compulsory license to ignore a patent and produce a generic medication to supply its population. While there are several reasons for this, the main one is fear of commercial reprisals from the United States. The United States has drawn up a Priority Watching List as a warning and a threat, a kind of black list on which different countries continually go up or down depending on their fulfillment or non-fulfillment—by US criteria—of commercial standards.

This Priority Watching List is used in the trade negotiations to intimidate countries that try or even propose any initiative that threatens the commercial interests of US companies. The list is eminently commercial, or economic, with no room for any humanitarian motive or criterion. Denunciations of the US lack of ethics in using the Watching List to pressure developed countries have been leveled in various international forums.

An effective mechanism for lowering prices

In this context, does it really make sense to maintain the right to compulsory licenses? Yes it does, first because it’s a right, a flexibility granted by the TRIPS agreements that should not be renounced for any reason. And second, because it’s also an effective negotiating instrument for developing countries, allowing them to pressure the multinational pharmaceutical companies to lower their prices if they want to protect themselves from the competition that would be implied by the mass production of generic medicines.

The lives of millions of people are at stake in this strategy of forcing the big companies to lower the cost of their brand-name medicines. Brazil and South Africa are examples of the good results that can be achieved by employing this strategy. They managed to force the multinationals to lower their prices, thus winning a moral battle.

Another example has come from the United States itself. The Bush government pressured the pharmaceutical industries to lower the price of certain medicines to protect the country from what at the end of 2001 and following 9-11 appeared to be a possible anthrax epidemic caused by biological attacks from terrorist groups. The US government threatened to issue compulsory licenses to lower the prices and guarantee protection for its citizens, although in the end such measures were unnecessary. Then, when the threat in its own territory was over, the United States revealed its selfish economic interests by continuing to apply pressure throughout the world to limit any such flexibility anywhere else, thus contradicting its own actions.

Today, the free trade negotiations led by the United States always include a provision aimed at limiting the right of developing countries to issue compulsory licenses. The idea is to discourage them so that no country dares use them.

The guile of the US negotiators

The TRIPS agreement explicitly allows the issuing of compulsory licenses and contains no restrictions on their use. Paragraph 5b of the Doha Declaration on TRIPS and Public Health, adopted by all WTO members on November 14, 2001, states that “each member has the right to grant compulsory licenses, the freedom to determine the grounds upon which such licenses are granted.” In other words, the countries have the right to decide when to issue a compulsory license.

Nonetheless, the United States always tries to impose conditions in its bilateral and regional negotiations to limit this right for developing countries. CAFTA was no exception. The CAFTA text does not explicitly propose limiting compulsory licenses, but does craftily remove their potential pressure by guaranteeing the multinational pharmaceutical companies their benefits through other provisions. While not directly related, these provisions indirectly obstruct the issuing of compulsory licenses, making it almost impossible to do so. The US negotiators concentrated their guile in the provisions on the exclusive use of data.

The TRIPS agreement recommends protection for the original pharmaceutical test data for a given medicine to avoid their unfair commercial use (article 39.3). But no compulsory period is established for this protection, nor are any other kinds of assumptions or conditions set for its application. As generic medicines need to refer to these data in order to be registered, it is essential in developing countries that these data be public property and therefore usable.

Parallel Importation of medicines is another flexibility secured by developing countries in the TRIPS agreement. It allows them to buy cheaper medicines and make them available to their population by looking for thoses sold cheaper on the international market than at home then importing them at the lowest price available. Any obstacle to parallel importation is harmful to developing countries.

The Doha Conference: A historical declaration

According to lawyer, economist and World Health Organization (WHO) consultant Carlos Correa, the points in the TRIPS agreement were written in a rather confused way that left them open to different interpretations regarding increasing patent protection levels vs. extending and encouraging the flexibilities favoring developing countries.

To remove any doubts about the intention and interpretation of these international protection standards, all WTO member countries, the United States included, signed the historic “Declaration on TRIPS and Public Health” during a Conference held in Doha, Qatar, in November 2001. In so doing, they committed themselves to protecting public health above and beyond any other commercial interest.

The following is the main message of this declaration:
We agree that the TRIPS Agreement does not and should not prevent members from taking measures to protect public health. Accordingly, while reiterating our commitment to the TRIPS Agreement, we affirm that the Agreement can and 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.

In this connection, we reaffirm the right of WTO members to use, to the full, the provisions in the TRIPS Agreement, which provide flexibility for this purpose. (paragraph 4)

The US undermines the Doha Declaration

Following the TRIPS agreements and the Doha Declaration, the United States has taken a very hard stand in all of the free trade agreements it has negotiated in the world—first NAFTA and now the agreements with Chile, Singapore, Morocco and Central America—or is currently negotiating—Andean community, Panama, Thailand and countries of the Southern Africa Customs Union. The aim is to undermine the Doha Declaration through provisions that guarantee the monopoly of products from its transnational pharmaceutical companies in all those countries.

In the last FTAA meeting, held in Miami in November 2003, US trade representative Robert Zoellick declared that, despite the very serious consequences that the intellectual property rights chapter proposed by his country would have on health, he would continue negotiating in those terms if his colleagues—the Latin American trade ministers—so desired.

And it seems that at least his Central American colleagues did so desire. Thus rather than setting the ceiling for negotiations, the TRIPS agreement and the Doha Declaration became the floor, with the ministers—Zoellick’s counterparts—going far beyond them in defending certain doubtful commercial interests without ever considering that doing so mortgaged the health of the vast majority of their compatriots. CAFTA has amounted to a self-inflicted tragedy.

Generic medicines:
Essential, proven and valuable

According to the WHO, a generic medicine is an interchangeable pharmaceutical product that is chemically and biologically equivalent to the innovative product, which means that it offers the body the same benefits as the original brand medicine. Generics are generally manufactured under license from the original pharmaceutical company and can be marketed under a common international name or under another commercial name.

Generic doesn’t mean counterfeit or of inferior quality. In collaboration with other UN organizations, the WHO has recently implemented a project to pre-grade medicines, including generic medicines. Many generic antiretrovirals used with HIV/AIDS patients have been pre-graded and the WHO has confirmed that they meet international quality standards. This list is regularly updated.

Up to now, demonstrating a generic medicine’s bio-equivalence was enough to register the medicine and attain marketing approval, given that the trials and tests previously carried out for the original medicine had fully demonstrated that it was effective and safe for patients. Conducting the necessary trials and presenting the test data require a considerable investment that the companies producing generic medicines cannot afford. Quality generics have been used effectively for many years, providing valuable alternatives for thousands of patients who need them to stay alive.

Victory for generics in the fight against AIDS

By increasing the competition, generic medicines also force a drop in the prices of brand name medicines. The clearest example of this potential is what has happened in recent years with the average price of antiretroviral medicines used for treating patients with HIV/AIDS.

In just two years, the introduction into the market of quality generic antiretroviral drugs caused a drastic fall in the price of brand names, without resulting in any disaster for the multinational pharmaceutical industry. The average international price of brand name antiretrovirals was originally around US$10,500 per patient per year. After the generics began to compete, the price of brand names dropped to $700 per patient per year by 2003. And the generics themselves dropped in price, with a top-of-the-line generic version falling from $2,700 per patient per year to just over $200 by 2003. In Guatemala, brand name antiretrovirals dropped from $4,198 in 2002 to $686 the following year, when the generic versions could be bought for $352. These are surprising and revealing figures.

It has been estimated that with no access to generic medicines, Costa Rica’s health coverage would be reduced from 100% to 19%, while in the United States health expenditure would double. Strengthening the competitiveness of generic drugs also allows public health systems to acquire more inputs and not constantly depend upon the good negotiating will of multinational companies or donations from international organizations and NGOs.

CAFTA is an attack on health

During the CAFTA negotiations, intellectual property experts from El Salvador, Costa Rica and Nicaragua admitted that the United States wanted to touch the public health issue and limit our countries’ right to avail themselves of the flexibilities in the TRIPS agreement. But after the negotiations, they claimed that public health had been kept away from the negotiating table to ensure it wouldn’t be raised. That is false.

Today, even after having signed CAFTA, the Central American health ministries are still not fully aware of what happened or of the damage that implementing CAFTA will do to their budgets. Not even the trade ministries have offered their respective populations any analysis of what was signed in CAFTA’s chapter on intellectual property rights, if indeed they can do so.

The following are the CAFTA provisions that attack access to medicine by clearly hindering the marketing of generic drugs:
In Article 15.9.6, compensatory periods are conceded for “unreasonable delays that occur in granting the patent,” which provides the possibility of extending the 20-year patent period to 25 years. This point yielded to the US tactic of prolonging the period in which companies can benefit from patent rights, as the United States had been proposing direct 25-year patents right from the start, independent of any conditions such as patent delays, which the Central American negotiators did not accept. They did, however, yield on this nuanced point.

Article 15.10.1(a) grants five years of exclusive data protection to the innovating company that submits undisclosed data concerning safety or efficacy in order to market a new pharmaceutical product. This means that during that time no company can access this information in order to register a generic version, which delays the possibility of alternative generic medicines appearing on the market for at least five years.

Article 15.10.1(b) established that a medicine registered for the first time—in the United States, for example—can have market exclusivity in all CAFTA countries for five years, during which time no generic medicine can be registered in our countries. Thus, between this and the previous article, US pharmaceutical products are given the possibility of a ten-year monopoly. It is an additional protection for medicines regardless of whether they have a patent.

Data and patents: How to block the competition

Data and patents are two different aspects. Patent rights are solicited from then granted in each country’s patent office, which is part of the economy and trade ministry. There is no international patent. According to the corresponding Central American legislation, patents should not last for more than 20 years and can be revoked in certain cases.

Data exclusiveness, on the other hand, is a practice by which the medicine regulatory authorities do not permit the use of registry records for an original product for purposes of registering a therapeutically equivalent generic version of that medicine for a fixed period. Data exclusiveness is completely independent of patents because the regulation and registration of medicines is the responsibility of the health ministry, which has nothing to do with the private rights involved in issuing patents. The data exclusiveness signed in CAFTA now allows the monopoly even of medicines that don’t have a patent in the country, by protecting them in such a way that no other drug can compete with them.

Data exclusiveness will now hinder the issuing of compulsory licenses, because while a country still has the right to issue them, the generic drugs produced have to be registered and registry is not allowed until the expiry of the period of exclusiveness granted to the original medicine. This strategy for blocking the possibility of a compulsory license effectively means a patent cannot be disrespected, even to protect the population’s health.

For example, if a medicine is registered in the United States and for whatever reason was not registered in Honduras, the original pharmaceutical company now has five years to do so, during which time no generic version of that product can be registered in Honduras, thus giving market priority to the original drug. But furthermore, when the US company finally decides to register its medicine in Honduras, it will have five more years of data exclusiveness during which time generic manufacturers will still be unable to request registry, as they can’t use the original drug’s data and tests. As a result, patients won’t be able to access this medicine for many years in its generic form, much less in its brand form due to its restrictive price. And this could mean the difference between life and death.

There could not be any clearer examples of commercial private goods being prioritized over the public good, in the form of health. How can the Central American negotiators who agreed to these points then claim that public health has not been touched and that they have maintained the flexibilities of the TRIPS agreements and the spirit of the Doha Declaration?

The patent “police”

Two more agreed-to points add to this already discouraging panorama. CAFTA establishes norms that turn national regulatory authorities into the effective “executors” of drug patents. The drug regulatory entity in each country’s health ministry has been given the dubious new function of informing the patent’s owner of any attempt made to register a generic drug with the information used for the original. According to CAFTA, the health ministries must stop this from happening for five years following the first registry of that medicine in any CAFTA signatory country, not just in the ministry’s own country or just for the five years following the registration of that medicine in that particular country.

Another agreement was the extreme principle that a product is considered new and benefits from all rights agreed to by the simple fact of being registered for the first time in a given Central American country, even if it was previously known and registered in other countries in the region.

Central America resigned to its fate

When it came time for Central America to jointly negotiate all these very sensitive points, the United States had the advantage that Guatemala had already approved a decree on data exclusiveness and Nicaragua had been part of a bilateral agreement with the United States since 1998, which—though not clearly fulfilled—was similar to CAFTA on certain data protection points. Nicaragua’s bilateral agreement contradicts some points in the country’s patents law of 2000, something that no Nicaraguan official seems to have noticed.

These two factors favoring the United States weakened the possibility of a common Central American position. El Salvador, Honduras and Costa Rica ended up assuming the tough conditions as a bitter pill that had to be swallowed, without questioning or analyzing the consequences and the intentions behind it.

Latin America represents just 6% of the world pharmaceutical market, while Central America’s microscopic share is less than 1%. Given such figures the interest of US multinational companies in obtaining market exclusivity in our region is not immediately obvious. The only possible answer is the desire to forge models of international agreements that work in their favor, starting with the most defenseless negotiators. Making no concessions and leaving medicine access by the poor to the good will of certain companies or donations from possible organizations, the United States seems to be establishing parameters that will force other, more commercially significant countries and regions to bend to its will.

The Central American countries more or less coincide in the presence of generic and brand name drugs in their markets, with generics tending to represent around 60% and brand names around 40%. It is not hard to imagine the serious consequences for the health of the majority of people in our countries now that the CAFTA agreements make us unable to count on generic medicines. If our health budgets are already utterly insufficient, from now on they will provide far less than they used to. And the numbers of women, men and children with a prescription in hand begging for the price of some much-needed medicine will multiply in the streets of our cities and towns.

The effects will be felt immediately

CAFTA is now in the legislative body of each Central American country and the United States. The different representatives’ knowledge of what has already been signed varies. Generally, the debate on the political level, in civil society and in the media continues to focus on agriculture and textiles without showing due concern for what has been negotiated regarding the health and thus the lives of millions of Central Americans.

So far, the tendency has been to leave this issue aside because it is too technical and rather unclear. But failing to place it at the center of the debate amounts to unwittingly supporting the deliberate US strategy and concealing or underplaying what is really hidden in the chapter on intellectual property rights, which is what the United States most wants to impose in all the free trade agreements it is promoting in the world.

A few years more or less of patents, data exclusiveness and generic medicines represent greater or smaller profits for the big pharmaceutical companies. But for patients suffering from serious illnesses, they represent the difference between life and death. Contrary to the ethics and spirit of the Doha Declaration, CAFTA has sold our people’s health and future down the river.

If after the US elections CAFTA is finally ratified—under either this same Republican administration or a Democratic one—with the above-mentioned provisions restricting access to medicines, the consequences will start to be seen almost immediately.

If the text is not reviewed and modified, the only option left open to us will be to devise systems and strategies through health laws or policies that cushion CAFTA’s worst consequences as far as possible. And as this international agreement has priority over international laws, it will be essential for the different civil societies to take up ethical positions and use their lobbying and advocacy power to revert it. Nothing would be worse than resigned silence. If the woman is walking away from the hospital in silence to start begging to try and scrape together her unaffordable prescription, her right to life, it is up to us to break that silence, to use our voices to stop her from dying abandoned by her own state.

The following organizations are involved in the Nicaraguan Initiative for Access to Essential Medicines: Acción Médica Cristiana, Asociación Centramericana de Análisis y Economía de Sistemas de Salud (ACAESS), Casa de la Mujer, Centro Humboldt, CEPS, CEDEMETRA, CISAS, Colectivo de Mujeres de Matagalpa, Instituto Juan XXIII, Liga de Defensa del Consumidor, Movimiento Comunal Nicaragüense, Prosalud, Provadenic, Red Plamotanic, Servicios Comunales San Juan del Sur, IPHC, AIS-Nicaragua, Central Sanitaria Suiza, Coordinación Interinsticuional de Medicamentos Esenciales (COIME), Comité de Servicio de los Amigos Quákeros, Farmamundi, Fundap, Médicos del Mundo (Spain), Médico Internacionale E.V., Doctors without borders, OED, OXFAM Belgium and Vets without borders.

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