Disparity In Access To Medicines Spurs “Humanitarian” Patent Licensing

“There are shameful access disparities around the world” to life-saving medicines, Harvard University Global Access in Action project Co-Director Quentin Palfrey said at a 26 September Center for Strategic and International Studies event in Washington, DC. And while some of the challenges to fuller access involve pricing, getting medicines to poorer countries or populations means overcoming the obstacles of insufficient research and development (R&D) incentives, access barriers and polarised politics, he said.

One increasingly employed mechanism for overcoming those obstacles is “humanitarian” patent licensing, Palfrey and other speakers said.

In 2014, 22 million people of the 37 million living with HIV globally lacked access to necessary medicines, said Palfrey. But drug prices aren’t the only problem he said: Many medicines aren’t available at any price in some markets. One reason for that is that the patent system does a poor job of incentivising R&D into solutions to problems that mostly affect the poor, he said. The patent bargain works well where willingness and ability to pay are a good proxy for societal needs, but when that doesn’t apply, non-patent incentives may be needed, he said.

Another access challenge arises from the fact that the patent regime rewards innovators that invent new and useful products by creating a temporary monopoly, said Palfrey. In the context of life-saving drugs, vaccines and diagnostics, that can cause suffering for people who are “priced out of the market” for such essential needs. A third obstacle is the fact that the political climate around access to medicines is “highly polarised” and heavily focused on ideas that have little chance of coming to fruition in the near term, such as fundamentally restructuring the intellectual property system, he said.

Global Access in Action seeks to identify best practices that have the potential to save lives without necessarily encountering the sorts of trade-offs that cause acrimony and make solutions impossible, Palfrey said. Among the project’s current focuses is finding best practices in the pharmaceutical industry that can increase access to medicines and R&D incentives, he said.

Historically, in dealing with public health challenges such as HIV/AIDS, companies have set different tiers of pricing for different countries according to the affluence of the market, Palfrey said. This increases access to the drugs, but there is also some “rough justice” associated with pricing level cut-offs. Another model is to segment markets using different channels for branded drugs and generics, with two different prices in the same market, said Palfrey.

One best practice is voluntary licensing involving contracts with generic manufacturers to distribute and sell drugs in markets where branded companies can’t make money, Palfrey noted. Voluntary licensing has several advantages, he said. It authorises generic manufacturers to distribute patented medicines in certain countries. It allows multiple licensees to sell generic versions at prices of their own choosing in certain low and middle- income nations. Licensees pay royalties to patent owners, but the agreement does not have to be principally a money-making deal; it can bring economies of scale.

Voluntary licensing can cut the risk for generic manufacturers and lower costs, said Palfrey. Sustainability and scale are “baked into the process,” allowing the program to expand as far as the market will bear. It creates competition by offering licences to multiple generic manufacturers.

The structure is potentially a “win-win-win,” said Palfrey. Pharma companies are able to run their corporate social responsibility programs in a way that may allow them to break even. Philanthropic donors will see drug prices drop over time. And more poor people will have access to medicines, he said.

Design issues in voluntary licensing include the scope of a particular agreement, Palfrey said. If it involves IP owned by multiple entities, the contract should include a mechanism to lessen the friction around who is entitled to manufacture and licence, he said. Patent pools offer more potential revenue and incentives.

Market definition is also important. The places where the model has been used most successfully are the very lowest income countries and those where philanthropic assistance is available, said Palfrey. The thorniest market problem, however, is that the poorest people often live in countries with a wealthy population as well, he said. That makes it difficult to set the price for drugs, so some sort of market segmentation may be needed to allow companies to make money while participating in a humanitarian licensing scheme.

Another model for humanitarian licensing is donation of research, patents and medicines, which involves sharing IP, a key method for expanding access to medicines, said Palfrey. Companies could also do more to share research, he said Failure to share – in situations such as the Ebola outbreak, where several companies had been working on medicines but hadn’t collaborated – could be chalked up to corporate resistance to sharing research, he said. But non-disclosure agreements, confidentiality protections or other mechanisms could reassure innovators looking to collaborate, he said.

Case Studies

The University of California, Berkeley Office of Intellectual Property & Industry Research Alliance wants to maximise the public benefit of R&D, said Assistant Vice Chancellor Carol Mimura. It created a humanitarian licensing program and developed a repository of deal terms and business models. The problem, however, is that IP licensing of technologies invented by the university is always difficult because the inventions are early-stage, she said. The program faces market failure, where a product based on university research is needed in countries that can’t pay. Where there is little motivation for companies to invest in the R&D needed to take bench science into the market, partnership is the answer, she said. Public-private or product development partnerships “de-risk” the R&D phase so all players can receive return on investment, she said.

Gilead couldn’t do what it has done in the area of HIV research without IP, but also without recognising that some diseases have a disproportionate impact on poor people, said Gilead Sciences, Inc. Executive Vice President, Corporate and Medical Affairs Gregg Alton. The issue is how to balance the commercial needs of a business with the needs of poor people, he said.

Gilead discovered in 2006 that its tiered pricing model wasn’t working, and that its drugs were reaching only a few of the many who needed them, Alton said. Gilead partnered with Indian companies that were successful in enabling access to products to distribute its medicines in the developing world. It launched a licensing program that allowed multiple manufacturers to compete on price, resulting in a “tremendous reduction in price” (around 80 percent) and in giving access to around 30 million people relying on HIV drugs daily. In 2011, Gilead was the first company to join the Medicines Patent Pool, he said.

It’s clear how much research, innovation and technology contribute to outcomes in developing countries, and the agriculture sector is as dependent on technological change as the health sector, said Robert Bertram, USAID Bureau for Food Security chief scientist. The technologies needed for access have become increasingly proprietary over the past decades, whether public or private, he said. But there is a need to bring agricultural innovation to bear in developing countries, an idea many proprietary rights owners are excited about, he said. USAID seeks to protect the interests of the world’s farmers in accessing a diversity of technologies, using a mix of patents, licensing and plant variety patents, said Bertram.

 

Image Credits: CSIS