Use Competition Law For Wider Access To Cheap Medicines?

The topic of access to medicines has gained momentum in recent years as high prices of new medicines affect developing countries and developed countries. The role of competition legislation in preventing market abuses and monopoly situations has been pointed to as a possible lever to facilitate access to generic medicines and balance the potential negative effects of intellectual property protection.

On 26 September, a session organised by the International Generic and Biosimilar Medicines Association (IGBA) looked at the role of competition in promoting access to generic medicines. The panel was held during the World Trade Organization Public Forum, taking place from 26-28 September.

Roger Kampf, counsellor in the WTO Intellectual Property, Government Procurement and Competition Division, moderating the session, mentioned Article 8.2 in the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) which allows for appropriate measures to be taken “to prevent the abuse of intellectual property rights by right holders … or the resort to practices which unreasonably restrain trade or adversely affect the international transfer of technology.”

Article 31(k) (Other Use Without Authorization of the Right Holder) also refers to anti-competitive practices, he said.

South Africa – Most Unfair Competition Cases Settled Before Court

Mustaqeem De Gama, counsellor at the South African permanent mission to the WTO, remarked that implementing competition regimes comes at a particular cost for countries, and given the concentration of industries, governments are often faced with a dilemma because industry employs workers and contributes to fiscal revenue. The concentrated nature of the economy in many developing countries makes it difficult to implement competition policies, he added.

De Gama mentioned the case of the South African HIV pandemic and the 1998 episode during which some multinational pharmaceutical companies took the government of South Africa, then led by Nelson Mandela, to court for breaching the TRIPS obligations. This episode, he said, gave rise to the 2001 WTO Doha Declaration on TRIPS and Public Health.

South Africa has a Competition Act [pdf] from 1998, last amended in 2000. The application of competition rules gives governments much wider scope in remedies, he said. Examples of anti-competitive behaviours would include price fixing among competitors, or the allocation of geographical territories, he said. In some instances, patent owners affect the market, such as when they require distributors to buy a complete range of products, instead of what the distributors need.

He remarked that many of the matters that have come before the South African Competition Commission have been settled through voluntary licences or agreements with affected parties. He cited a case in which a company refused to licence its antiretroviral product and at the same time admitted that prices were unaffordable for at least 80 percent of South Africans. Before the referral could be prosecuted, the company reached a settlement, agreed to licence to generic manufacturers, also agreed that the product could be exported to sub-Saharan Africa, that the product could be combined with other antiretrovirals, and that the royalties would be limited to 5 percent of net sales.

With the rise of non-communicable diseases, the South African competition authority is receiving probes against various companies in relation to cancer drug price fixing, exorbitant prices, and market position abuses, he said.

Generic Industry Calls for More Stringent Competition Rules

Sergio Napolitano, director, Legal and External Relations, Medicines for Europe & IGPA, referred to a trilateral study carried out by the WTO, the World Health Organization, and the World Intellectual Property Organization, underlining the chapter on competition and intellectual property.

According to Napolitano, research and development (R&D) is stimulated through both IP and competition, and the role of competition authorities should extend to products which are off-patent, and monitor what happens on the market.

He said “TRIPS-plus” provisions on competition and trade agreements would be necessary in free trade agreements. TRIPS includes prescriptive IP rights provisions, and permissive competition rules, which is fine, he said, but it depends how those provisions are implemented in national legislation. Stronger wording on competition rules would facilitate discussion at the multilateral and plurilateral levels, he said.

The role of competition authorities should go beyond illegitimate practices, into policy activities, he argued. There is growing political discussion in Europe, and internationally on the concept of pricing, and the impact of IP rights, Napolitano said.

Although there are no perfect prices, competition mechanically brings prices down, he said, adding that industry cannot sell at a loss, setting prices too low runs the risk of companies leaving the market, he said.

Pharma Needs Generic Competition, Calls for Reasonable Rules

Guilherme Cintra, senior manager, Innovation, Intellectual Property and Trade at the International Federation of Pharmaceutical Manufacturers Association (IFPMA), underlined the importance for the research-based pharmaceutical industry of the existence of “strong and robust” generic competition.

He said innovation is spurred by the constant threat of generic competition, pushing research-based companies outside of their comfort zone.

In order to have robust generic entry and competition it is important that countries enact “very reasonable regulatory laws that allow for harmonised and reasonable market authorisation that do not try to disguise industrial policies through requiring all kinds of double testing that can affect not only the originator but also the generic,” he said.

Cintra cited the United States 1984 Drug Price Competition and Patent Term Restoration Act [pdf] (known as the Hatch-Waxman Act) as an example of successful legislation. He said in the US about 80 percent of prescriptions are for generic medicines but the country is also a leader in innovation.

On IP and competition, he said the simple refusal to licence per se is not necessarily an anti-competitive measure. It is inherent in the patent system to licence exclusively and benefit from market exclusivity for a period of time. If competition laws are created to consider any exclusion of competitors “while you are enjoying your legitimate patent right … it defeats the purpose of the patent system,” he argued.

Patients at the Receiving End, Need to Be Involved

Robert Johnstone, patient advocate for the International Alliance of Patients’ Organisations (IAPO), underlined the need for “meaningful patient involvement” in political and regulatory decisions. Patients, he said, are at the receiving end of the medication, and should be at the discussion table.

According to Johnstone, there are “huge disparities” across Europe in terms of access to medicines. He cited disparities within the United Kingdom, citing in his personal case a six month wait to get a new wheelchair.

The IAPO also advocates for sustainable investment in health, so that the next generations can get universal access to health, he said.

He also stressed the importance of improving data collection for doctors and patients around the world, as most people with long-term non communicable diseases end up getting several conditions which are treated with several pharmaceutical regimen, leading to interactions some of which are not understood, he said.

 

Image Credits: Catherine Saez