UNCTAD: Bundle Of Opportunities To Improve Medicines Access In LDCs

Access to essential medicines in least developed countries (LDCs) could be facilitated through local production, according to a report released today by the United Nations Conference on Trade and Development.

The changing landscape in the global pharmaceutical sector is giving LDCs a window of opportunity to favour local production, but those countries need to take measures to become attractive markets for investors, and at the same time follow public health imperatives.

The report, entitled Investment in Pharmaceutical Production in the Least Developed Countries: A Guide for Policy Makers and Investment Promotion Agencies, aims to provide policymakers with a tool to understand the manufacture and distribution of pharmaceuticals worldwide, and to present appropriate policies that could attract investment and technology transfer. The report is being released in the context of the fourth UN Conference on the Least Developed Countries, taking place from 9-13 May in Istanbul, Turkey.

Conjectural changes are happening in the pharmaceutical sector, with major players in developed countries facing the expiration of patents on some high-revenue drugs, and a shortage of new drugs to replace them. That situation is pushing those companies to seek partnerships with prominent generic manufacturers both in developed and in developing countries, according to the report.

The implementation of the World Trade Organization Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), giving intellectual property protection to health products, in large developing countries such as India, now prevents those countries from reverse-engineering new drugs, says the report. Those developing countries’ generic manufacturers are now increasingly producing for developed-country markets, but still are providing generic medicines to countries that have not implemented TRIPS, such as the LDCs.

Under TRIPS, which was concluded in 1994 and came into effect in 1995, least-developed countries had a transition period of 10 years, until 2005 to implement the agreement. This deadline was extended to 2016 for pharmaceutical products. A further extension might be in order, or some waiver, according to the report. Some developed country pharmaceutical companies declared in February that they support an extension of the deadline (IPW, Public Health, 10 February).

According to the UNCTAD report, some developing country generic manufacturers have “begun to examine the possibility to engage in foreign direct investment in LDCs to produce medicines while they are increasingly aiming at selling their own output in more profitable developed country markets.”

LDCs should seize the current shifts in the pharmaceutical sector to attract foreign direct investment in that sector. However, some caution needs to be exercised, the report said. In particular, the development dimension must be strategically integrated into investment promotion efforts.

Appropriate infrastructure for pharmaceutical production and human resources are often insufficient in LDCs to ensure “sustainable production of quality pharmaceuticals at low cost,” says the report.

“Regardless of how attractive LDCs may be to generic manufacturers that are eyeing the possibility to develop generic versions of medicines that are patented elsewhere as a result” of TRIPS, “investors will need assurances by governments” that the basic prerequisites for the manufacture of high-quality medicines at low cost are present in the countries. The report says governments are responsible for creating a policy environment to that effect.

The choice of medicines to be produced locally also needs to follow a public health perspective, although “local firms may also need to produce drugs other than those identified in order to be sustainable in the long run,” the report said. Government purchases should be considered carefully because of the lack of insurance systems in most LDCs and the inability of individuals to purchase medicines out of their own resources.

According to the report, technology transfer needs to be part of any investment in the local production or pharmaceuticals and policies “affecting technology transfer need to strike a balance between onerous protections that would stifle any hope of spillover effects and an absence of protection for undisclosed proprietary knowledge.”

Also, it is in the interest of most LDCs to focus their efforts on attracting generic manufacturers rather than “big research and development-based pharmaceutical companies in developed countries.” The ability to legally produce generic medicines that are under patent protection elsewhere is an advantage of LDCs, but probably not enough to convince foreign firms to invest in local production, as industries need to see that basic requirements, such as.an upgrade of human resources, in particular in the pharmaceutical and managerial fields, access to stable electrical power, clean water and other related infrastructure, to support them are in place.

Advance purchase commitments by governments, with preference to local manufacturers, could also provide some market attractiveness to industries, as well as the standardisation of drug regulations and related intellectual property standards, and procurements, the report said.