[Ip-health] U.S. Drug Quality Smokescreen Subsidizes Big Pharma
B.Baker@neu.edu
B.Baker@neu.edu
Mon Mar 1 17:52:06 2004
U.S. USES DRUG QUALITY SMOKESCREEN IN PEPFAR PROCUREMENT POLICIES TO
SUBSIDIZE BIG PHARMA AND TO PREVENT PROCUREMENT OF LOWER COST GENERICS.
Professor Brook K. Baker
Northeastern University School of Law and Health GAP
March 1, 2004
In its public announcement and Report on the PEPFAR global AIDS initiative,
the Bush administration has purposefully obfuscated its true intentions
with respect to procurement of generic medicines. Although it now has to
acknowledge that flexibilities in international and national intellectual
property rules permit many countries to bypass patent rights in order to
gain access to cheaper generic medicines of assured quality, the U.S. is
now imposing a new barrier to generic entry, namely sham quality standards.
In essence, the U.S. disregards the international quality standard set by
the World Health Organization in its pre-qualification program and imposes
instead an illusory option ? registration by a stringent drug regulatory
agency ? or resort to an additional parallel pre-qualification regime set
at a ridiculously high standard by the U.S. The net effect is that the
U.S. will only buy on-patent anti-retrovirals with PEPFAR funds and that it
will justify higher costs and higher body counts under the false rhetoric
of quality.
Given the historic alignment of U.S. policy with the interests of the
proprietary drug industry, it was likely from the start that U.S.
purchasing decisions under PEPFAR would be slanted toward purchases of
patented medicines. Evidence for this preference came from direct
statements by certain administration officials who downplayed the
likelihood of generic purchases and instead touted the benefits of buying
"American" and buying drugs of "highest" quality.[1] In addition, USAID
procurement policy has long favored purchase of U.S. products with U.S.
donor funds, even when such procurement is not cost-competitive.
The clearest evidence of the U.S.'s intended policy on drug procurement is
contained in the CDC' call for proposals on PEPFAR (Funding Opportunity
04080)[2] which provides for $115 million in funding for each of the next 5
years as part of the overall Bush Administration treatment proposal. The
CDC has published "responses to inquiries" several of which address the
issue of generic medicines.[3] Most on point is #40:
40. Question: (a) When the US Government endorses the use of safe
and effective therapy, how is safety and efficacy confirmed? (b) For
example, if the WHO says that something is safe and effective, would
that be adequate?
Response: (a) As stated in a previous response to your questions,
the U.S. Government endorses the use of safe and effective therapy
and diagnostics at the lowest possible cost. For the purposes of this
program announcement, the following represents current guidance in
this area:
For grantees to procure pharmaceuticals that are not approved by US
FDA or another stringent regulatory agency, they would need to submit
a waiver that would address the following four points: (1) the
request must attest to issues of safety, quality and efficacy by
demonstrating that the necessary information is available if
requested (to be reviewed by appropriate authorities); (2)
demonstrate the procurement is essential to the activity; (3)
demonstrate savings; and (4) must be in accordance with national and
international laws.
For this announcement, other stringent regulatory agencies include
drug regulatory agencies of Canada, Japan, and Western Europe.
Grantees who plan to procure pharmaceuticals that are not approved by
the US FDA or drug regulatory agencies of Canada, Japan, or Western
Europe should submit a waiver that addresses the four points in the
preceding paragraph.
(b) No, a statement by the WHO that a pharmaceutical is safe and
effective is not adequate.
At this time, none of the generic antiretrovirals currently pre-qualified
by WHO are registered by the FDA or any other stringent drug regulatory
agency. Why not? Because U.S. law prevents the registration of a generic
medicine during the unexpired term of a conflicting patent! Moreover,
since no generic company would be permitted to sell its medicine in the
U.S. (or for that matter in other countries with stringent regulatory
agencies, e.g., Europe, Canada, and Japan), there is no economic incentive
whatsoever, for a generic company to seek pre-expiracy registration in rich
country markets, especially since putting a product dossier together for
submission to a stringent regulatory authority is an expensive and
time-consuming process.
Nonetheless, according to the above Q&A, WHO pre-qualification itself will
not suffice to establish safety, quality, and efficacy even though no
generic manufacturer is permitted to register an on-patent generic
equivalent with a stringent authority. The U.S. makes it sound like the
WHO pre-qualification project used a big rubber stamp in a back office to
approve generic ARVs, but, of course, the truth is far different. Where
pre-existing evidence of a comparable product is lacking, the WHO appoints
experts who perform a rigorous and comprehensive evaluation of products to
confirm compliance with international standards. In this regard,
investigators perform dossier evaluations and conduct site inspections of
manufacturing facilities. Dossiers are evaluated for compliance with WHO
recommendations and guidelines regarding the assessment of multi-source
products.[4] Assessment teams included three specialists on quality issues
and two on bio-availability/bio-equivalence. In addition, inspections are
performed for individual products at individual manufacturing sites to
assess compliance with Good Manufacturing Practices as recommended by the
World Health Organization.[5] The team of inspectors includes a leader
inspector from countries that are members of the Pharmaceutical Inspection
Co-operation Scheme, a WHO expert from its Quality Assurance and Safety:
Medicines team, and an inspector for the local NDRA. Only after this
rigorous process did the WHO pre-qualify multiple generic ARVs including
fixed-dose combinations.[6]
Both the Global Fund to Fight AIDS, TB, and Malaria and the World Bank have
accepted the stringency of the WHO pre-qualification process.[7] Both of
them, in their procurement guidelines, permit reliance on WHO
pre-qualification or registration by stringent regulatory agency. Thus,
these two highly competent agencies accept the rigor of the WHO
pre-qualification system and in fact go further to recommend fast-track
registration in recipient countries based on WHO pre-qualification.
Instead of being able to rely on pre-qualification by this stringent,
strongly endorsed multilateral program, the U.S. goes it alone again,
imposing a unilateral requirement whereby generics will be subjected to an
under-specified additional stringent regulatory review by "appropriate
authorities," a review which is likely to be equivalent to that required by
a U.S. generic registrant proving bio-equivalence for the marketing of an
off-patent medicine. (An added legal uncertainty in this approach is
whether bio-equivalence review will even be permitted during the first
five-years of data exclusivity specified by U.S. law.[8])
Even if a waiver process is cobbled together in good faith, a dubious
proposition, regulatory approval will not occur in time to permit initial
purchase of generic ARVs, including generic fixed-dose combination
preferred by the WHO. Instead, U.S. proprietary companies will undoubtedly
get the first contracts. Once they become the initial suppliers, there
will be additional barriers to generic entry because procurement agents
might wish to avoid confusion by health care providers and consumers over
the introduction of new medicines with different appearance and packaging.
Thus, the status quo of purchase of higher priced patented ARVs is likely
to continue well into the future of the PEPFAR initiative.
These purchases will undoubtedly be more costly, but it is conceivable that
the U.S. government has already planned sourcing from patent-holders in
setting its financial projections for ARV purchases (70% of the 55%
treatment piece of PEPFAR funds =3D 38.5% x $14 billion). Although t=
he
immediate effect might be that the targeted number of people living with
AIDS will be treated ? two million by 2008 ? the true costs of creating
this Pharma slush fund will still be considerable. First, money that could
be used to treat four times as many people ($140 per year ? Clinton
Foundation ? vs. $562 per year ? patent holders' best price =3D 1/4) or =
to
build even more treatment capacity will be wasted instead to subsidize the
involvement of U.S. pharmaceutical companies. Second, the potential market
for generic producers will be significantly decreased, thereby deterring
generic entry and decreasing potential economies-of-scale that might lead
to even lower prices. Third, this unnecessary, extra cost is borne by U.S.
taxpayers who once again are asked to subsidize the world's most profitable
industry.
Scarce PEPFAR treatment dollars are now sitting in a widely touted slush
fund from which the Bush administration will repay its staunch PhRMA
allies. PEPFAR risks becoming a PEP"FARCE" as Ambassador Tobias and other
Pharma bagmen siphon money that could buy fixed-dose combination generics
for approximately 1/4 of the lowest priced, multi-pill patent equivalents.
People living with HIV/AIDS will die as the U.S. continues to pursue its
policy of killing generic competition and ensuring market hegemony by Big
Pharma. All U.S. "concessions" at Doha and in the August 30 Paragraph 6
Implementation Agreement are illusory in light of the U.S.'s demonstrated
intent to defund purchase of generic under the false banner of product
safety. Vodoo quality standards will not fool U.S. seniors buying
medicines from Canada, nor should they fool people living with AIDS and
their allies.
_________________________________________
1. Dr. Anthony Fauci, director of the National Institute of Allergy and
Infectious Disease is reported as saying that there will not likely be any
"direct purchase" of generic drugs. "It's likely we will try to get the
best possible price from drug companies ? for 'classic drugs,' where the
efficacy is proven and the quality we are sure of." He nonetheless
acknowledged that there might still be an opening for indirect purchases by
local programs that buy generics directly through lawful sources. Sabin
Russell, AIDS relief showcase of Bush's Africa tour: Critics wary of
funding level, focus on abstinence, San Francisco Chronicle (July 7, 2003).
Attacking the quality of generics has been a long-term strategy of PhRMA,
which has used the twin-icons of piracy and substandard-quality to demonize
the generic industry.
2. http://www.cdc.gov.od/pgo/funding/04080.htm (last accessed 1/7/04).
3. http://www.cdc.gov.od/pgo/funding/04080QA.htm (last accessed 1/7/04).
4. WHO, Marketing Authorization of Pharmaceutical Products with Special
Reference to Multisource (Generic) Products: A Manual for a Drug
Regulatory Authority, (WHO/DMP/RGS/98.5) and Bio-equivalence Data (Annex 9,
WHO Technical Report Series No. 863). In some instances the evaluators
used ICH guidelines to complement WHO guidelines.
5. WHO, Quality Assurance of Pharmaceuticals. A Compendium of
Guidelines and Related Materials, Volume 2, Good Manufacturing Practices
and Inspections.
6. See WHO Procurement, Quality and Sourcing Project: Access to
HIV/AIDS Drugs and Diagnostics of Acceptable Quality: Manufacturers and
Suppliers whose HIV-Related Medicines have been Found Acceptable in
Principle for Procurement by UN Agencies (Eleventh edition, December 1,
2003).
7. Global Fund, Report of the Third Board Meeting, 10-11 October 2002,
GF/B4/2; World Bank, HIV/AIDS Medicines and Related Supplies: Contemporary
Context and Procurement: Technical Guide, =B6 4.76 ( Feb. 2004).
8. Separate intellectual property rules in the U.S. create data
exclusivity for five years after regulatory approval of a new drug entity.
This rule prohibits testing a new product for bio-equivalence against the
clinical trial and product data previously supplied by the first entrant.
Thus, this data exclusivity rule could theoretically prevent even the FDA
from confirming the bio-equivalence of an unregistered generic product so
that it might be purchased and consumed overseas via PEPFAR procurement.