[Ip-health] PIJIP/KEI Panel on Barton/Pfizer Proposal for Price Discrimination in Middle and Low-Income Nations

[Michael Palmedo]

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http://www.wcl.american.edu/pijip/go/blog02232009

PIJIP/KEI Panel on Barton/Pfizer Proposal for Price Discrimination in Middl=
e and Low-Income Nations

Rebecca Wolf and Daniel Rosenholtz
February 23, 2009

VIEW EVENT WEBCAST: http://media.wcl.american.edu/Mediasite/Viewer/?peid=3D=
f8a534cd-f114-42de-a3a5-b32fc7682948

On February 19, 2009, Washington College of Law Program on Information Just=
ice and Intellectual Property (PIJIP) & Knowledge Ecology International (KE=
I) hosted a roundtable discussion featuring Stanford Professor of Law Emeri=
tus John Barton and Pfizer Vice President of International Trade and Tax Jo=
seph Damond. This event was a discussion of their proposal, outlined in a l=
etter to Senator Max Baucus, for a framework to =93protect our patents abro=
ad but also demonstrate flexibility and compassion with respect to public h=
ealth crises in the developing world.=94

The letter proposes that developed countries implement pricing and reimburs=
ement policies which ensure they =93pay an adequate price to encourage rese=
arch.=94 It supports allowing least developed countries to wait until 2016 =
to implement tougher intellectual property rules mandated by the TRIPS Agre=
ement. Most notably, Barton and Damond=92s global drug and research access =
agenda contemplates a pricing scheme for middle-income countries, such as B=
razil, China, and India, which would increase the price that the richest in=
 those countries pay for medicines while allowing lower prices for the poor=
. Barton and Damond describe this as ensuring that the richest in developin=
g countries would contribute to the support of pharmaceutical R&D.

Many advocates for international access to medicine are concerned with the =
policies proposed in the Barton/Damond letter, and were eager to share thei=
r perceptions of the proposal. In addition to Professor John Barton of Stan=
ford University and Joseph Damond of Pfizer, participants in the roundtable=
 discussion included: Professor Brook Baker of Northeastern University, Pro=
fessor Sean Flynn of American University Washington College of Law, James L=
ove of Knowledge Ecology International, Rohit Malpani of Oxfam, Peter Riggs=
 of Forum on Democracy and Trade, and Maine State Representative Sharon Tre=
at.

Professor Barton discussed four main points during the KEI/PIJIP meeting. T=
he first was the importance of government reimbursements to incentivize fur=
ther drug development and to reduce the costs of new health care technology=
. Second, intellectual property has been a barrier to access in the past bu=
t prices in poor countries are now low, so it is important to charge prices=
 that can support R&D where they are affordable, and to prevent piracy. Thi=
rd, Barton proposed that the wealthiest in middle-income countries like Bra=
zil, China, and India, should pay more to support medical R&D. Lastly, thes=
e three points could be the framework for a future WTO treaty.

Joseph Damond briefly added some details about the way in which Pfizer is w=
orking to develop neglected diseases that disproportionately affect the poo=
r. He also noted that people and governments in wealthier countries support=
 most medical R&D in the world through their drug purchases.

Professor Sean Flynn addressed the problems of attempting price discriminat=
ion in nations with highly unequal income distributions. Using income stati=
stics from South Africa as an example, he showed that the profit maximizing=
 price in a country where the elite has a disproportionate share of resourc=
es will price out over 80% of the population. Even within the wealthiest 20=
% of the population, those in the middle and lower end of the distribution =
would have trouble affording monopoly prices. If the South African market w=
as to be segmented so the =91rich=92 obtained medicine through private sect=
or insurance companies, and the =91poor=92 obtained them through the govern=
ment, many working people would earn too much to qualify for the public sec=
tor, but would still be unable to afford insurance with adequate drug cover=
age. [Later, Joe Damon responded by asserting there is =91no market=92 in m=
ost countries =96 at least developed countries =96 because drug firms negot=
iate prices with the government.]

Professor Brook Baker pointed out that price discrepancies give additional =
incentives for piracy. State Representative Treat expressed her uneasiness =
with any program that would interfere with a state=92s ability to operate i=
ts own Medicaid and health care safety net programs. She pointed out that i=
n a recession, states=92 obligations to provide healthcare through Medicaid=
 increase as people with employer-provided insurance lose their jobs.

Peter Riggs of the Forum of Democracy and Trade and Sharon Treat both expre=
ssed concern with the way in which international trade agreements have regu=
lated Medicare and Medicaid Programs. They highlighted the importance of Me=
dicaid remaining state programs, governed by state leadership. In response,=
 Mr. Damond noted that in establishing free trade agreements, drafters neve=
r intended that state health programs would be addressed in international t=
rade agreements.

Rohit Malpani of Oxfam highlighted three main points. First, the glaring ab=
sence of civil society participation in the Barton/Damond proposal weakens =
it, because it is impossible for policymakers to know what would be best fo=
r developing countries if they do not talk to local leaders and healthcare =
providers. Second, excessive privatization of healthcare in developing coun=
tries has made it nearly impossible for many in middle income countries to =
receive healthcare at all. Finally, intellectual property issues have not b=
een resolved. At the end of the day, it is generic competition that ensures=
 medicines will reach the poorest.

James Love urged Barton and Damond to seek more input from representatives =
of middle and low income countries and global health advocates, who could o=
ffer them a new perspective. Love argued that the real economic problem is =
not pricing of drugs, but decoupling medicine research and development cost=
s from the costs that the end user pays. He cited WHO=92s Inter-Governmenta=
l Working Group=92s proposal for developing TB and Chagas treatments in Bar=
bados and Bolivia as an example of a method for decoupling these costs. The=
 Barbados and Bolivia plan would set aside a portion of each country=92s GD=
P to go to medicine research and development and would require that medicin=
es developed with those funds enter a patent pool that all participating dr=
ug manufacturers could access.