[Ip-health] 2007 Victories - Fewer Patents, More Compulsory Licenses

[B.Baker@neu.edu]

2007 Victories - Fewer Patents, More Compulsory Licenses:  The Knock-Off
Effects of India's Strict Patent Act and Thailand's Compulsory Licenses
Professor Brook K. Baker, Health GAP, December 11, 2007

Activists have long claimed that access to medicines campaigns set
precedents that have a snowball effect.  What we are now seeing, given
India's victory against Novartis in the drug company's challenge to section
3d of the India Patent Act and given Thailand's highly publicized campaign
to issue compulsory licenses on both AIDS and heart disease medicines, is a
new wave of patent withdrawals and a growing wave of compulsory licenses.
This reciprocal wave action creates a wider opening for continuing access
to newer and lower costs medicines.  But the promise of this opening will
only be realized if more countries amend their patent acts to take
advantage of the TRIPS-compliant, definitional flexibilities that India has
enacted and if more countries use the TRIPS-compliant flexibilities for
issuing compulsory licenses for generic medicines that Thailand has used.

Patent victories

In the summer of 2006, following massive August 7 protests in Bangalore and
Bangkok, GlaxoSmithKline withdrew its patent application for
lamivudine/zidovudine (Combivir or Combid), an important first-line
combination antiretroviral, both in India and, perhaps even more
significantly, in Thailand.  The withdrawal in India was clearly obligatory
under India's new Patent Act 2005, which has strict standards preventing
patenting of mere combinations of existing medicines, and was relatively
straightforward, even under Thailand's easier, more "Westernized" patenting
standards.  Combivir was a simple fixed-dose combination of two earlier
discovered drugs and involved neither newness nor an inventive step.  The
principal new "ingredient" in the combination was silicone - a trivial
addition graphically represented by Indian demonstrators when they dumped
sand in front of the Glaxo office.  The anti-Combid victory in Thailand was
reminiscent of an earlier activist victory in 2004 where a robust civil
society movement forced Bristol Myers Squibb to abandon its patent on ddi.

Although Glaxo saw the writing on the wall, Novartis did not and tried to
mount a TRIPS and constitutional challenge to section 3d of the Indian Act.
Once again protestors mounted an international campaign, and good lawyering
by the Lawyers Collective and others resulted in a resounding defeat for
Novartis in the Chennai High Court, in August, when all of Novartis's
efforts to undermine India's strict standards for patentability were
defeated.

At the time, activists claimed that the Novartis case had critical
implications for access to medicines, certainly for AIDS drugs, but for
other medicines as well.   There were thousands of patent applications
waiting in the India 1995-2005 patent "mailbox," the vast majority of which
involved minor tweaks on pre-1995 medicines.  If Novartis had won, many of
those patent applications would have been pursued and many might have
succeeded.  However, with Novartis's defeat, the pharmaceutical industry
began to strategically review its mailbox filings, and its new filings as
well, to weed out the clearly unmeritorious applications.

The most recent example is further withdrawals by GlaxoSmithKline of two
ARV patent applications, on Abacavir and Trizivir (GSK drops claims on two
AIDS medicines, The Economic Times, 7 Dec 2007).  Sources report that
Glaxo's decision to withdraw those applications was in response to
Novartis's loss and was undertaken to avoid a patent-defeat precedent that
might have undermined its attempts to pursue patent claims in countries
with weaker patent standards.

The growing evidence of India's success in stopping the flow of patent
applications on trivial variations of existing products should lend courage
to activists and patent reformers in other countries.  India has clearly
set a new and defensible standard for patenting only truly innovative
pharmaceutical products.  The Philippines parliament is already considering
a statutory amendment in line with section 3d of the Indian Act, but the
momentum should not stop there.  Other countries can lighten the load on
their under-resourced patent offices and ensure high standards of
patentability for medicines by taking the route forged by India.

The Indian success has also been reinforced by the availability of
pre-grant opposition procedures, which allow consumer groups, generic
companies, and IP specialists to intervene and challenge weak patent
applications.  There are already fifteen pre-grant oppositions in India
concerning AIDS medicines and the number is likely to grow as public
interest groups begin to appreciate the importance of stopping 90-95% of
the patent applications on pharmaceutical patents that can be rejected
under the Indian standard even though they sail through the U.S. patent
office.

Compulsory licensing victories

Activists in Thailand have waged a near decade-long campaign to convince
the Thai government to issue compulsory licenses on AIDS medicines.
Although the first effort in 1999 concerning ddi was unsuccessful because
of fears of U.S. trade retaliation, activists persisted and new leadership
in the Thai Health Department issued compulsory licenses on efavirenz,
lopinavir/ritonavir, and clopidrogel in late 2006 and early 2007.  Of
course, Thailand was not the first developing country to issue compulsory
licenses on AIDS medicines.  Malaysia and Indonesia had done so earlier for
first-line regimens, and over half a dozen countries had done so in Africa
as well.  However, in terms of middle-income countries with large
populations living with HIV/AIDS, Thailand was the first to issue licenses
on higher-cost, second-line medicines.  Brazil had threatened such
licenses, but in the end had improvidently settled for price concessions
instead.

The impact of Thailand's leadership is immediately apparent.  Shortly after
Thailand's bold move, Brazil issued a compulsory license on efavirenz on
May 4.  Indonesia did so even earlier, in March of 2007, though, unlike
Brazil, its license drew little attention from Big Pharma, the USTR, or the
army of right-wing think tanks that have mounted a global disinformation
campaign about the legality and propriety of compulsory licenses.
Emboldened by Thailand, Indonesia is considering additional licenses on
tenofovir, videx, and lopinavir/ritonavir.  The proactive Ministry of
Health in Thailand is also continuing to weigh additional government use
C.L.s on four cancer medicines and up to 20 additional products for
treating hypertension, diabetes, and hyperlipideamia.  Lawyers in South
Africa have petitioned the Competition Commission to obtain additional
licenses on efavirenz, both to promote competition but also to allow
co-formulation of fixed-dose combinations.

Most of the licenses thus far have been issued for government use.  This
form of licensing has certain advantages because it is widely practiced in
rich countries, including the U.S., because it obviates the need for prior
negotiations with the drug company, and because it reserves the private
sector to the patent holder's monopoly control, undermining claims that all
profits are foregone and that research and development will be undermined.

However, there are also some drawbacks to government use licenses,
especially when one considers how much pressure has been brought to bear on
Thailand even though it carved out a private-sector monopoly reserve for
Big Pharma.  The first drawback, not so apparent in Thailand as perhaps in
other countries, is that many poor people cannot access medicines in public
sector pharmacies, which often experience stock-outs or otherwise fail to
carry essential medicines.  These patients must therefore rely on private
sector pharmacies where monopoly pricing prevails.  Thus, in countries
where high disease burdens persist and where major portions of the
population are de facto dependent on private-sector pharmacies, government
use licenses may be an imperfect solution to access on the ground.  The
second drawback is that having two pricing regimes in the same country,
high private-sector prices and low public-sector prices, encourages
"arbitrage," or more accurately theft and resale of public sector medicines
to private sector consumers.  Third, avoiding negotiations may be overrated
since governments can set short time limits for such negotiations and
insist on strict pro-access terms whether by regulation or negotiation
demands.

The impact of Thailand's compulsory licensing victories will be lessened if
other developing countries do not follow suit.  In fact, a better scenario
will arise when developing countries cooperate more vigorously in the
selection and timing of compulsory licenses.  Generic producers are most
likely to invest the $1-$1.5 million dollars needed to formulate a generic
equivalent if they can see a sizeable market in developing countries that
aggregate their collective demand.  In addition, with larger, more secure,
and more predictable markets, more producers will enter the market and more
producers will manufacture at efficient economies of scale.  The
combination of competition and efficiency will result in lower prices and
more secure and redundant sources of supply.

The strongest way for countries to cooperate may well be through creation
of patent pools that allow the collective management of both compulsory and
voluntary licenses (negotiations on both in- and out-licenses).
Alternatively, developing countries could form regional "buying groups"
and/or work intensively with the Clinton Foundation (at least for ARVs).
However, in order to be able to take advantage of their South-South
strength, countries will need to be more proactive both in amending their
patent legislation to allow maximum use of TRIPS-compliant flexibilities
and in utilizing those flexibilities to actually issue compulsory licenses.

The current, countervailing strategy of Big Pharma, besides USTR
intimidation and even product withdrawals, seems to be the use of strategic
price discounts and restrictive licensing.  Although these concessions look
tempting in the short-run - since they reduce the treat of trade sanction
and product embargoes - they are futile in the long run since they are
Pharma controlled and because they deter generic entry.  An even greater
danger is presented by so-called free trade agreements where the United
States attempts to impose TRIPS-plus intellectual property protections that
hamper countries ability to ensure access to medicines for all.

Conclusion

The space that has been created by activist-backed defense of India's
strict patent standards and by activist-prompted issuance of multiple
compulsory licenses in Thailand is one of the most promising outcomes of
AIDS advocacy in 2007.  Hard fought precedents have been won, but enemies
in Big Pharma and in the U.S. government are hard at work plotting a
reversal of fortune.  It is only by building on these recent victories - by
rejecting more patents, by issuing more compulsory licenses, and by
opposing TRIPS-plus IPR provisions - that activists and pro-access forces
in developing countries can create a momentum that cannot be stopped.
Standing still is not an option.


Professor Brook K. Baker, Health GAP
Northeastern U. School of Law
Program on Human Rights and the Global Economy
400 Huntington Ave.
Boston, MA 02115
617-373-3217 (office)
617-259-0760 (cell)