IP Experts Discuss Access To Pharmaceuticals In Developing Countries

Bern, Switzerland – A day-long conference of experts on health issues demonstrated the range of views in the debate on how developing countries should best address their public health needs through international policies.

Dominique Sprumont of the University of Neuchâtel institut de droit de la santé, said the global push to arrange access to Tamiflu to counter a possible avian influenza pandemic is ironic given that it is “not a great drug” but just the best known so far.

Sprumont added that it is a mistaken belief that the Swiss government can influence the behaviour of Swiss pharmaceutical companies Roche and Novartis.

The 18 November event was organised by the universities of Bern, Neuchâtel and Fribourg.

Some debate at the event centred on public-private partnerships as critical to addressing the problems. Jörg Möhrle of the Geneva-based Medicines for Malaria Venture criticized governments for not holding up their end of the partnerships. Jacques Martin of the Swiss Mission to the Geneva-based international organisations disagreed, but said that governments are cautious and look for results before giving more funding.

Thomas Cottier of the event host World Trade Institute at the University of Bern asked why other governments than the United States do not give more funding. But Martin replied that, “if there is one country where public opinion doesn’t know anything about the world it is the United States.”

When asked about prospects for tax deductions for research and development or other measures to promote growth in developing countries, Martin said that for Switzerland, such proposals would face a Parliament with the view that this would mean higher taxes on Swiss citizens.

Daniel Kraus, a law professor at the University of Neuchâtel, described the possible uses of compulsory licenses. He noted that TRIPS does not specifically mention the grounds upon which a compulsory license can be granted, leaving it up to each government. Nor does it define anti-competitive practices that could lead to such a license. For instance, it does not say specifically that high prices are anti-competitive, though countries have the flexibility to base a compulsory license on price. Brazil has used compulsory license on the basis of price, he said.

Kraus also noted a problem inherent in addressing the fact that products made under compulsory licenses must be predominantly for domestic use, but that some countries that need to issue a compulsory license do not have adequate domestic production capabilities. Members were mandated under paragraph six of the 2001 Doha Declaration on TRIPS and Public Health to amend TRIPS to address this problem.

TRIPS Waiver Urgent?

On 30 August 2003, they agreed to a temporary waiver so that a majority of products made under compulsory license may be exported to needy countries lacking production capacity. Members are currently debating how to make the waiver into a permanent amendment to the TRIPS agreement.

Kraus said members should agree on a definition of what is a “lack of production capacity in the pharmaceutical sector.” For instance, a country which has a chemical industry that could be transformed to produce pharmaceuticals might be seen as having the capacity.

Least developed countries automatically qualify for the waiver. Kraus said governments that opted-out of the waiver in 2003 are considering the meaning of their commitment. So far no country has used the waiver, and he said some countries should “have the courage” to use it. He doubted that countries would be taken to a WTO dispute settlement panel for using it.

Kraus said that there is an urgent need to make permanent the TRIPS waiver allowing poor countries to import affordable drugs. This would give certainty to countries and force them to implement national legislation, he said.

Kraus also said there might be a need to further break down the groupings of WTO members, so that the most advanced developing countries are treated differently from the smaller developing countries (who are themselves separate from the least-developed countries). A Taiwanese representative disagreed with the need to further categorize developing countries.

Ingo Meitinger, deputy head of international trade relations at the Swiss Federal Institute of Intellectual Property, gave a picture of Switzerland’s effort to implement the paragraph six waiver. So far, only Canada, India, Korea and Norway have implemented it.

Switzerland’s draft law and legislative message is expected to be submitted to the Swiss Parliament on 26 November, but it is part of a larger package that could face some opposition, Meitinger said. It would be “very optimistic” to expect passage in 2007, he said, adding that it could be 2008.

At the European Union level, implementation of the waiver also is pending before the parliament, he said.

Meitinger reinforced Kraus’ argument that no other WTO member is likely to challenge a developed country for exporting to a least-developed country in need.

Giorgio Roscigno, chief executive officer for the Foundation for Innovative New Diagnostics (FIND), asked why the TRIPS debate has become centred on compulsory licenses. He argued that it should focus on finding incentives for local manufacturing, and the growth of generic drug manufacturers in developing countries.

But Harvey Bale, director general of the International Federation of Pharmaceutical Manufacturers and Associations (IFPMA), said there should be local production if it is economical. He said 90 percent of pharmaceutical products in developing countries are generic.

Another participant said much of the presence of pharmaceutical companies in developing countries is multinationals, not local manufacturers. Several participants from developing countries called for international protection of genetic resources and traditional knowledge, which often are the unidentified source for patented pharmaceuticals.

A Primer On WTO Procedures

Roger Kampf of the WTO secretariat gave a rundown of TRIPS provisions with direct relevance to public health. He then showed a chart that described the process for any country considering how to ensure it has sufficient supplies of a critical drug.

He said the first question for a country in need of a pharmaceutical product for public health reasons is whether the product is patented in the country. If it is not and can be produced locally, then it may be produced without licence.

If the product is not patented in the home country, but cannot be locally produced, then options depend on sources of supply. For exporters that are not WTO members, TRIPS rules do not apply. But if the exporter is a WTO member and the product is patented in the exporting country, then a compulsory licence must be issued in the exporting country, and the 2003 waiver used to export more than 49 percent.

If the product is patented in the importing WTO member, the procedures are the same, with importing country’s goal being to obtain cheaper versions of the drug. The importing country must first try to negotiate a voluntary licence with the patent holder, unless it is a national emergency. If there is no voluntary licence, compulsory licences would be issued in both the exporting country and the importing country.

As a WTO source put it, “the paragraph six [waiver] system is about addressing a public health problem in the importing country, and a legal problem in the exporting country.”

Cottier said the only impact of a compulsory license is to lower prices. But Bale said he does not think it will be used very often because there will always be non-patenting countries and significant producers in least-developed countries. For instance, he said an industry might grow up in Bangladesh as it will spill in from India once India’s new patent law takes hold.

Bale said the only country that has used the threat of compulsory licence to negotiate lower prices is Brazil, which he said has the necessary market power to be able to. Bale also said that if a country meets the test of having too small a budget, NGOs in place, and infrastructure in place, “no company will walk away.”

Pere Joan Pons of Médecins Sans Frontières (MSF) said the group is fighting for access to essential drugs because in its 500 projects in over 80 countries it sees drugs are unaffordable, no longer produced or don’t exist because of lack of research.

But sources of inexpensive generics is drying up, especially as with India’s 2005 patent law, 70 percent of HIV/AIDS patients in the world are at risk, since India is a major generic drug supplier. Pons said that in addition, wealthy countries are pressuring poor ones to comply with TRIPS or lose limited access for exports. The medicines issue is “becoming the poster child for negative aspects of globalisation,” he said. Pons also showed data that competition regularly reduces prices.

The View From IFPMA

In his presentation, IFPMA’s Bale took a soft approach, mainly raising a series of questions about the issue. But he worked in a few points from the drug industry perspective.

For instance, he said that innovation is driven by patents, and that the TRIPS agreement is flawed because the period of patent protection for pharmaceuticals, stated as 20 years, effectively amounts to only eight to ten years because much of it is used up by research and development.

Bale also countered speculation that there is a dearth of new pharmaceutical products in the research pipeline. “The pipeline is as large, indeed larger, than it has ever been,” he said, adding that the bottleneck is in getting regulatory approval for the drugs.

Bale also described the variations of prescription drugs available. In addition to the original brand-name medicines, there are bioequivalent copies – unbranded and branded generics – and non-bioequivalent “similars.” These, prevalent in Latin America, Turkey and elsewhere, are legal but may be close to counterfeits, he said. Counterfeits are “totally deceptive of their origin and not regulated at all.” They include diverted, mishandled and mislabeled medicines.

Bale also questioned statistics from MSF, and raised doubts about the success of an arrangement among Andean nations intended to lower drug prices for HIV/AIDS.

Regarding compulsory licencing, Bale said overuse would drive out innovation, often is not needed because of available competition, and said originators often can under-price generics.

He also said that countries signing bilateral free trade agreements with clauses ensuring data exclusivity for brand-name drug producers do not give up their ability to issue compulsory licences in the case of national emergency. Critics have argued that bilateral deals with the United States give data exclusivity that could undermine the usefulness of compulsory licencing by preventing competitors in the smaller signing country from accessing the data necessary to obtain regulatory approval.