How To Avert The Coming Drug Access Crisis

Interview With Ellen ‘t Hoen, Senior IP Advisor At UNITAID

Ellen ‘t Hoen is the senior advisor on intellectual property and medicines patent pool at UNITAID, a financing mechanism for the scale-up of treatments for HIV/AIDS, tuberculosis and malaria, where she is focused on the development of the group’s patent pool for medicines. She came from a decade with Médecins Sans Frontières (MSF) Access to Essential Medicines Campaign, where she acted as director of the group’s policy and advocacy work. ‘t Hoen recently published a book entitled, “The Global Politics Of Pharmaceutical Monopoly Power,” which is available here. The project was financed by the Dutch Ministry of Foreign Affairs. The book is largely based on her experience with MSF, and was published before she joined UNITAID.

Intellectual Property Watch: One of the key flexibilities of the World Trade Organization Trade-Related Aspects of Intellectual Property Rights – TRIPS – agreement that you mentioned in the book is compulsory licences. You say in the book that fifty-two countries have issued them… how much of the pharmaceuticals market do these compulsory licences represent?

Ellen ‘t Hoen: You often hear that that compulsory licensing doesn’t work and that countries do not make use of the WTO Doha Declaration on TRIPS and Public Health. When I started to look into the use of the TRIPS flexibilities a bit more deeply, I actually found that many countries on a routine basis make use of the Doha Declaration on TRIPS and Public Health, through compulsory licensing or government use of patents, and the non-enforcement rights that LDCs [least developed countries] have under paragraph 7 of the Doha Declaration on TRIPS and Public Health [Note: paragraph 7 releases LDCs from obligations to enforce certain parts of the TRIPS agreement before 2016].

In particular, “government use licences,” [which] do not require prior negotiation with the patent owner. Many countries do this on a routine basis in their day-to-day procurement activities. So they say ‘we authorise such-and-such to import the following medicines, regardless of the patent status.’ Some make reference to a national emergency, others do not.

So far, compulsory licensing has been predominantly used in the area of HIV/AIDS and that of course also has to do with [the fact that] … there’s money to procure medicines for HIV/AIDS: there’s no Global Fund to pay for cancer or heart disease, or any significant financing that helps create a market.

Second, the generic versions of certain AIDS medicines were actually available, and that’s also in a way the bad news. Because the countries that currently use the flexibilities to allow the use of generic ARVs all depend on imports from India.

Indian producers are able to make generic versions of these medicines because of the 1970 Indian Patents Act which excluded product patents for medicines. As of 2005, India has to comply with the TRIPS Agreement and has started to grant product patents on medicines. So very soon this is going to change. Generic versions of newer drugs will not become available automatically until after the 20-year patent term has run out. Unless of course India starts granting compulsory licences or other mechanisms are put in place to ensure that generic producers can continue to play this role, such as the patent pool.

IPW: Has India shown an interest in compulsory licences?

EtH: That is at this point not clear. They have legislation that would allow it, but when are they going to use it?

Looking at Thailand, the question is also will India be prepared to deal with the controversy that will likely be a result of a compulsory licence. African countries and in particular the LDCs have largely been left alone when they take measures to allow the import of generics. But if India starts giving compulsory licences to its industries, I think that might provoke much harsher responses.

Those that do not like compulsory licences have always tried to ring-fence it and limit the use or scope of the flexibilities as much as possible. You may remember the debates at the WTO on a limited list of diseases eligible for compulsory licences, that only contained diseases for which there were either no products or only products that were off-patent.

Countries such as Brazil and Thailand – so called middle-income developing countries – represent an important growth market for pharmaceutical industry. And the growth potential in their traditional markets – Europe and North America – is limited, has pretty much come to a standstill.

So the right-holding industries do not want to see governments on a routine basis issue compulsory licences and allow a generic industry to flourish, while that is the terrain they see [as] their new market opportunities.

IPW: Is there any particular significance to the reaction over compulsory licences on drugs for non-communicable diseases as opposed to communicable diseases?

EtH: Well from a medical point of view, of course there isn’t – it’s whether you die of AIDS or whether you die of heart disease… well, you’re dead. It’s just as serious.

Thailand issues these compulsory licences in the context of its health and medicines policy. Thailand makes it clear, it separates the market. The compulsory licences are for supplying the public sector which would not have access to these drugs had they had to pay the premium brand name price. The private sector market remains untouched by the compulsory licence.

If companies are worried about compulsory licensing, the best way to avoid it is to make sure to offer the drugs at prices that people can afford. Or you allow others to produce them and join the UNITAID Patent Pool. You can enter into licence agreements on reasonable terms.

IPW: And can you talk about the August 30th agreement [at the WTO] and the need for the capacity to manufacture generic medicines?

EtH: Because a compulsory licence is predominately for the domestic market, a country like India could not export huge amounts of what they would produce on their compulsory licence. So that would put countries without production capacity at a disadvantage of making use of compulsory licensing. If you don’t have a domestic industry – most countries don’t – you would not be able to make use of it in a world where all medicines may be patented. That was the idea behind the August 30 decision – to take away the limitations on exports of products produced under compulsory licences.

But the August 30 decision is really a decision gone wrong. It’s a very good example of diplomatic compromise with little practicality. The mechanism put in place is difficult to operate, because it is based on a case-by-case, drug-by-drug, country-by-country process. You cannot maintain a generic drug industry based on an order-by-order supply decision making process.

You may in the future see the occasional shipment – since 2003 we have seen one from Canada to Rwanda. That required an enormous amount of mobilisation, involvement and money put up front by organisations such as MSF to make it happen. And even then it took four years. The company involved has since then stated never to want to do it again.

IPW: And can you answer the pharmaceutical industry’s argument that too much focus on developing the generics industry might damage innovator company interests in developing nations and limit the supply of future medication?

EtH: In the past pharmaceutical companies have en masse abandoned research into neglected diseases. That’s why they became neglected diseases. Much of the innovation for tropical diseases comes from military research and government research that comes out of the old colonial systems: the tropical disease centres and the Vietnam War, which gave for example a number of malaria drugs.

So I don’t quite see that argument. I don’t think that if we close down the generic industry in the developing world that big pharma will spontaneously start reinvesting in tropical neglected diseases.

If anything, looking at the history of the European pharmaceutical industries, they were not interested in having very strong patent protection until they actually reached the level where they could become innovators themselves. We’re probably going to see similar developments in developing countries. But that will not automatically provide a solution for neglected areas of R&D.

IPW: So then let’s talk about solutions. You mentioned several different ideas for changing the innovation or incentive landscape, can you talk about or expand on these ideas?

EtH: One of the core principles which was a theme at the negotiations of the intergovernmental working group on public health, innovation and intellectual property (IGWG) is looking at separating … the cost of the R&D from the price of the products. The World Health Assembly resolution 60.30 asks the WHO to develop proposals along those lines.

If you maintain a system in which innovation is dependent on being able to charge high prices through patent monopolies, you’ll obviously have the problem of high prices. But also an R&D agenda setting that will go [in the] direction of those areas that represent profitable markets. Such a system will never deliver a product for, say, sleeping sickness.

Some of the product development initiatives, such as the DNDi, have the principle of separating the cost of the R&D from the price. That doesn’t mean that there isn’t any profit to be made. Obviously, the commercial partners of these PDPs [product development partnerships] are companies that keep a commercial interest, but in this model you don’t have to charge premium prices to finance the cost of your R&D.

IPW: How about the idea of patent pooling, especially as UNITAID has launched a patent pool initiative last year, and do you know about the status of that patent pool?

EtH: We are working on establishing a patent pool, it’s not going to be a UNITAID patent pool; it will likely be run by a separate licensing agency.

Initially, we focus on HIV/AIDS, on the newer molecules to stimulate the development of fixed-dose combinations, including for children. If you look at the first line fixed-dose combinations that we have today for US$ 85 per patient per year, they were developed and are produced in India and they could do that because the individual compounds making up the three-in-one pill were never patented in India, so there were no barriers to put the products together.

But to do the same with the newer medicines is going to be much more difficult because you have multiple patents and multiple patent owners. And some of these new medicines are likely to be patented in India. This raises the question: where are the fixed-dose combinations of newer treatments going to come from?

The HIV medicines patent pool will be a royalty-based system, so we’re not asking patent holders to just give up their IP … and it will be a needs-driven one. Together with the WHO we have identified the lists of ‘missing ARVs’ – a kind of wish list for the patent pool to pursue – We are holding informal consultations with the rights holders and with the generic industries to find out what are the conditions under which collaboration is possible and those consultations are going very well.

The next steps will be to bring different stakeholders together and to develop an implementation plan, possibly based on different scenarios. We want to set it up as a model so similar IP issues in other disease areas can be addressed following this model. But we want to start with HIV to see whether we could make it work – it is of course an experiment.

The patent pool that we are proposing will solve certain problems. There will be lots of other problems that are not solved by a patent pool. It’s certainly not an answer to all of the R&D needs that currently exist.

But I think it will be an answer to the situation we’re entering into now, where increasingly these important medicines are patented, more and more widely. And the question is where are the generics going to come from, where are fixed-dose combinations going to come from, where are paediatric combinations going to come from – those are the questions that the patent pool aims to answer. And if we get it right, we can. I’m convinced of that, but it requires all the players to want to come to the table.

IPW: What are the major issues you’d like people to take away from the research you did on this?

EtH: I think the main messages are: [First] the Doha Declaration has been much more important than people have recognised. Second: if we don’t now put additional international systems in place, we are going to run into a second drug-price crisis, because of the more widespread patenting.

Third, we have to recognise that research and development is very costly, we have to recognise that it has to become much more health-needs driven, and that we need to define alternative financing mechanisms to the patent-only model we’re in now to make that happen.

The final message is perhaps that there are good proposals on the table – just look at the richness of the IGWG process – that can get implemented, patent pool being one, and it would be a lost opportunity not to do that.