IFPMA position on compulsory licensing

[James Love <love@cptech.org>]

For those of you who have not seen this before, this is Harvey Bale's
post to the Treatment-access forum regarding the IFPMA position on
compulsory licensing.  

Jamie Love


Date: Thu, 15 Apr 1999 12:25:45 -0400 (EDT)
Sender: treatment@CritPath.Org
From: Treatment-access forum <treatment-access@hivnet.ch>
To: Multiple recipients of list <treatment@CritPath.Org>


Dear all,

I am Harvey Bale, Director-General of the IFPMA in Geneva. IFPMA
represents research-based pharmaceutical and vaccine companies in over
50 countries.

Re the recent Geneva conference on compulsory licensing organized by
several NGO's, IFPMA, in addition the a presentation prepared and
delivered by Mr. David Waters, prepared some talking points on
compulsory licensing that reflects the views of the research-based
industry. This document is presented below. These points were made
available to press inquirers at the meeting.

I hope that you might circulate them to interested parties. IFPMA may
further develop its basic response to the (bad) idea that compulsory
licensing (CL) is in the public interest. This position is basically
that if anyone wants to kill incentives for further research into a
targeted disease area (e.g., AIDS) then one of the quickest ways to do
this is to institute a compulsory licensing regime for drugs that treat
that disease.

Compulsory licensing benefits nobody except the fortunate commercial
entity that is the beneficiary of the largesse offered by such licenses.
In the medium and long-term, it is patients who will lack new treatments
for serious diseases that suffer, as researchers will undoubtedly stay
away from targeted disease groups subject to CL policies. Compulsory
licensing seriously detracts from the purpose of the patent system,
which as the 16th President of the US, Abraham Lincoln said, "provides
the fuel for the fire of genius."

Regards,
Harvey Bale
Email: h.bale@ifpma.org

Public Health and Compulsory Licensing:

"A poor response to the problem of the global distribution of health
care benefits," the industry declares

Geneva, 26 March 1999 - "Compulsory licensing policies offer no solution
to healthcare issues and present barriers to innovative treatments
needed by patient around the world," declares the International
Federation of Pharmaceutical Manufacturers Associations (IFPMA) in a
statement released at the occasion of a meeting on "Compulsory Licensing
and Access to Essential Drugs" held today in Geneva under the
sponsorship of certain groups.

In recent years, countries have strengthened intellectual property
protection for pharmaceutical products and, as part of this trend,
"compulsory licensing policies have been withdrawn from use," outlines
the research-based pharmaceutical industry's global organization.

The WTO TRIPs Agreement further narrows the scope of use of these
measures and reflects "the global trend to respect the right of
innovators to have a limited period of effective patent protection," the
industry says.

The IFPMA communiqué then lists a number of points that review why
governments have come to the conclusion that "compulsory licensing is a
threat to good public health and innovative treatments, and not a
solution:

* WHO states that about a third of the world's population has no
guaranteed access to quality essential medicines, "most of which are
generic, or off-patent copies of originals.

* The real challenge to access to medicines is "the repair of the
breakdown of the health delivery system in many countries.

* In addition, there are hundred, indeed thousands, of unmet needs that
can only be addressed through innovation - e.g., AIDS and other
infectious diseases, cardiovascular disease, cancer, etc.

* The risk of R&D is largely borne by the research-based pharmaceutical,
biotechnology and vaccine industries, which will invest tens of billions
of dollars annually in research and development.

* "The only feasible model" for promoting innovation in the high-risk
and resource intensive pharmaceutical industry is "to guarantee the
innovator an adequate period of exclusive rights.

* The limited period of marketing exclusivity provided by intellectual
property rights allow the innovator/patent-owner to capture revenue from
sales of the product; but "it does not grant unfettered discretion over
pricing which is a product of intense competition among companies which
have therapeutically-competitive patented and generic drugs.

* In fact, the erroneous "common sense" theory that patents, standing
alone, enable a pharmaceutical manufacturer to charge "monopoly" prices
for a product and thereby restrict access "is fundamentally flawed" - in
the real world, a wide array of factors operate to determine
ex-manufacture, wholesale and retail prices of pharmaceuticals: demand,
taxes, custom duties, wholesale and retail margins, cost of delivery,
pilferage rates, etc.

* Forcing the patent owner during the limited period of the patent term
to share the potential revenue from sales of a product "threatens the
entire innovative cycle and makes pharmaceutical innovation and delivery
a commercial unrealistic exercise." This is especially true in
developing country markets where the product must be priced at very low
level to be affordable.

* Compulsory licensing restrictions that are found in the TRIPs
Agreement "reflect the fact that these are intended to very
rarely-employed remedies for situations far outside the normal market
environment.

* Most importantly, however, "the use of compulsory licenses does
nothing to address the fundamental barriers to access to pharmaceutical
products.

* "Deficiencies in the health infrastructure that cause problems in
delivering access to pharmaceuticals are not solved by creating two or
more sources of products," and in fact doing so "will erode the
incentive for any drug manufacturers, whether pioneer or generic, to
implement that infrastructure.

* Simply put, compulsory licenses cannot begin to address the
fundamental problems that create barriers to access to pharmaceuticals
in developing countries, and cannot be portrayed as a solution to
healthcare problems. Rather, "compulsory licensing would deny patients
around the world the future benefits of the valuable scientific,
research and development capabilities of the research-based industry
from which new therapies come.

Created in 1968 as a non-profit, non-governmental organization (NGO),
the International Federation of Pharmaceutical Manufacturers
Associations (IFPMA) represents the research-based pharmaceutical
industry and other manufacturers of prescription medicines, worldwide.
The members of IFPMA are national pharmaceutical industry associations
in over 50 countries, in both industrialized and developing/emerging
countries. IFPMA is the main channel of communication between this
sector of the industry and the World Health Organization (WHO), as well
as other international organizations that are concerned with
health-related issues.

IFPMA
30 rue de St-Jean
PO Box 9
1211 Geneva 18, Switzerland
Tel: (41) 22 340 1200 Fax: (41) 22 340 1380
Email: admin@ifpma.org

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