[Ip-health] Former Bush Aide and USAID Lawyer on WHO CIPIH Report

[Mike Palmedo]

http://www.tcsdaily.com/article.aspx?id=051906B

Healthcare in the Developing World: Obstacles and Opportunities

By John Gardner
Tech Central Station
9 May 2006

In the run-up to next week's World Health Assembly in Geneva, a recent
report from the Commission on Intellectual Property and Health (CIPIH),
appointed by the World Health Organization (WHO), claims to show that a
high standard of protection for intellectual property in pharmaceuticals
is hurting healthcare in the developing world.

Though the report couches its recommendations carefully and acknowledges
the research and innovation undertaken by Western pharmaceutical
companies, underlying the report is a dangerous idea that would take
away incentives for drug companies to innovate and -- ironically -- slow
the process of bringing needed drugs to the developing world.

The report relies on General Comment No. 14 on Article 12 of the
Convention on Economic, Social, and Cultural Rights from the UN's
Economic and Social Council, which declares that it is incumbent on
States "and other actors in a position to assist" -- this means you,
American business firms! -- to provide international assistance and
cooperation. The General Comment, while not legally binding, is
considered "authoritative guidance" and "therefore constitute[s] an
important foundation for arguments that treat access to essential
treatments, preventives and diagnostics as a right."

Practically, this means that there will be even more pressures on U.S.
drug companies to give up their intellectual property rights and patent
protections, under the rationale of improving access to healthcare. But
where will the innovations of tomorrow come from, if not from profits on
the drugs of today? Already U.S. consumers complain that they are
cross-subsidizing sales of drugs elsewhere in the world in markets that
adopt price controls. And what incentive do drug companies have to
invest in products for the developing world if they cannot reap the
benefits of that investment?

The report recommends that "[c]ountries should seek through patenting
and licensing policies to maximize the availability of innovations" --
but it does not agree with the usual understanding that reliance on the
free market itself offers the greatest innovations. Instead, it states
that "[c]ountries should provide in their legislation powers to use
compulsory licensing ... where this power might be useful as one of the
means available to promote, inter alia, research that is directly
relevant to the specific health problems of developing countries."

While it shies away from a direct attack on patents themselves, the
report's bias in favor of generic drugs is clear. As it notes, "[m]ore
than three decades of reverse engineering "on-patent" drugs (process
engineering) has made Indian companies extremely proficient in speeding
generic drug development." Granted, India's new patent law is far better
than having no patent law for drugs (as the country did for 30 years
until recently), and Indian drug companies are playing an increasingly
important and responsible role in the global market. Certainly, all
would agree on the need to reduce the cost of drug development -- a
concern of Western companies as much as of the patients who need their
drugs.

But the report also commends India's new patent law for providing that
only compounds with demonstrated "superior efficacy" may receive full
patent protection, to avoid "copycat" patenting that in the Commission's
view only extends patents to remove competition from cheaper generic.
Even if this were true (a large and unwarranted assumption), to prove
"superior efficacy" companies would presumably have to go through
clinical trials -- at huge expense -- which would therefore have to
begin early in the patent term. While generic manufacturers are busy
preparing to market on the first day after the end of patent
exclusivity, the original company is therefore effectively denied the
right to enjoy the full fruits of its labor. Rather than choosing to
invest the "monopoly profits" from the patent on inherently more risky
new discoveries, therefore, the company would likely focus its attention
on refinements to existing products, which would lead to an overall loss
in innovation. So the law discourages the very risk-taking so necessary
to scientific innovation.

The report downplays the ways in which the current intellectual property
system is already working. It notes that the "average prices of
pharmaceuticals tend to be lower in developing countries". On this
theory, there is already a massive subsidization of drugs for the
developing world by the West.

For instance, demand for antiretrovirals for HIV treatment in the West
helps assure their increasing availability in the developing world. And
while it claims that priorities for public sector funding in the
developed world are shaped by their own disease burden -- a truism,
given that public health systems pay for treatment of the diseases their
citizens have -- it ignores other types of spending, such as a large
program on developing microbicides funded by USAID precisely because of
the need in the developing world for these products and the difficulty
of finding commercial sponsors. And the report notes that American
universities such as Stanford and Yale grant research licenses to
non-profits for compounds they have developed -- more evidence that the
current system is working, but no evidence to mandate this type of
licensing for the private sector. Why does the Commission provide no
similar examples from universities in other developed countries? Could
it be that pricing policies have weakened the research capacity there?

The report notes that commercially driven research promotes synergies,
where a drug developed for one condition is found to have uses for
others. So let's get this straight: in the developed world, pharma
companies are criticized for "salami slicing" and for allegedly
promoting off-label uses. In the developing world, though, people are
begging for other uses of approved compounds. What is a company supposed
to do?

The report was clearly written with American audiences in mind. It
quotes frequently from American documents and even references the United
States as "the most successful country in biomedical innovation." Still,
when it attacks the profitability of pharmaceutical companies, it only
references U.S. companies, as though profits from generic manufacturers
or European or Asian companies are somehow immune from criticism.

At times, the report singles out American policies. It suggests that
bilateral trade agreements should not seek to incorporate intellectual
property protection in ways that may reduce access to medicines in
developing countries." This is nothing more than a shot at the U.S. free
trade agreements (FTAs) being negotiated with many countries in the
developing world. But in the absence of a comprehensive global trade
deal, these FTAs are the best tool to raise economic growth, and
therefore health, in the developing world.

There is some good news in the report. It highlights the impressive
advances in innovation in developing countries -- both of their own
research and generic products. On malaria, the report fortunately
admits, albeit softly, the key to the solution:

    "Early malaria eradication campaigns successfully employed a
combination of spraying, elimination of mosquito breeding sites, and
mass treatment to free 500 million people from the threat of disease.
Today, [Africa] is home to 90% of the malaria burden and the
overwhelming majority of malaria-related deaths. A number of tools exist
to prevent and treat the disease, including bednets, indoor residual
spraying, and artemisinin-based combination therapies." (Emphasis added.)

Spraying -- the controlled use of small amounts of DDT as now advocated
by the governments of South Africa and Zambia as well as leading
anti-malaria activists is the best way to reduce, quickly and
dramatically, the appalling and immoral toll that malaria takes,
particularly on African children. If any company is asserting
intellectual property rights protection to prevent this from happening,
I am not aware of it: resistance to using DDT comes from European
policymakers, not from patent protection.

The Commission notes that "there is an underlying moral issue" in the
discussion of intellectual property rights. Exactly so -- and this is
why simply reducing protections for Western intellectual property is not
the answer, unless the world simply wants innovation to stop. One can
even take the concept a step further: reducing poverty through economic
growth itself increases health. As people become richer, they spend more
of their income on health care.

A much better approach was proposed in a report (pdf) from a number of
civil society organizations:

    This report shows that intellectual property rights do not prevent
better health care in the developing world. Instead, governments have a
responsibility to take actions, many of them comparatively inexpensive,
that will quickly raise standards of health. Greater spending on health
care systems, better nutrition, building of small clinics, training
doctors and nurses, better water and sanitation -- these types of
interventions will raise health care quality and standards in the
developing world far more quickly and effectively than just focusing on
intellectual property issues. And Western donors need to play their
part, too, by directing their resources towards these types of
interventions rather than just trying to import Western systems.
Finally, a good bit of the solution must also come from efforts such as
the "Grand Challenges" posed by the Gates Foundation.

Unfortunately, reports such as CIPIH tend not simply to gather dust on
shelves or enter the circular file, as they so often do in the United
States. Instead, they frequently develop lives of their own, building
like tumbleweeds rolling across the desert until they reemerge as
something far more authoritative -- and frequently more dangerous --
than they were originally. It's past time to focus attention on ways of
improving economic growth in the developing world, the quickest way to
reduce poverty and so increase health, and on low-cost health
interventions that reflect the actual needs of developing world citizens.

John S. Gardner was General Counsel of the U.S. Agency for International
Development from 2001 to 2005. He also served as a Deputy Assistant to
President George W. Bush.