[Ip-health] AMA J Ethics: Patents, Pricing, and Access to Essential Medicines in Developing Countries

[Matt Price]

http://virtualmentor.ama-assn.org/2009/07/pfor1-0907.html

Patents, Pricing, and Access to Essential Medicines in Developing Countries
Steps are being taken by health activists worldwide to change patent
and trade laws that have made essential medicines unavailable to so
many for so long.

Brook K. Baker, JD

Of the 12 million people living with HIV/AIDS in developing countries
who will die within 3 years without immediate access to affordable
antiretroviral medicines, only 4 million were receiving treatment at
the end of 2008. Access to a much broader list of essential medicines
(those defined as essential for health by national governments or the
World Health Organization, or WHO) is equally dismal. Recent WHO
studies found that public pharmacies in developing countries had only
one-third of essential medicines available onsite, and the private
pharmacies had only two-thirds of medicines available. End prices were
2.5 and 6.5 times international reference prices at public and private
pharmacies, respectively [1]. As poor as availability of essential
medicines is, access to newer medicines, including those for chronic
diseases, is even worse, because these patent-protected medicines are
too expensive to be included on essential medicine lists. Finally,
there has been so little research and development into neglected
diseases that affect primarily poor people in poor countries that
medical treatments do not even exist for these conditions [2].
Learning Objective Learn about steps taken by health activists
worldwide to change patent and trade laws that have made essential
medicines unavailable to so many for so long.

Many factors contribute to a lack of access to existing medicines in
developing countries: tattered health systems, insufficient numbers of
health workers, weak regulatory regimes, and poor procurement and
distribution systems. Other conditions=97import duties and taxes,
mark-ups throughout the distribution chain, and even corruption and
product diversion=97coalesce to produce high drug prices. Weak research
and development (R&D) capacity and limited investment in R&D combine
to restrict research on neglected diseases in developing countries.
But clearly one of the factors most implicated in unavailability (and
unaffordability) of medicines in developing countries is the current
intellectual property regime=97a regime that allows proprietary drug
companies with intellectual property monopolies to charge high prices
and maximize profit by the sale of medicines that only rich and
well-insured people can afford while simultaneously deprioritizing R&D
into products that poor people need.

The unconscionable gap in access to life-saving and life-enhancing
medicines reflects a massive disconnect between, on the one hand, the
perceived interests of rich countries in the global North and the
proprietary pharmaceutical companies that research, develop, and
produce patented medicines and, on the other hand, the interests of
developing countries in the global South. This disconnect occurs at
the intersection of two separate systems: national and international
intellectual property regimes, and global patterns of poverty and
income inequality.

In terms of trade policy, the U.S. government has consistently
supported the commercial interests of the highly profitable U.S.
pharmaceutical industry at the expense of access to more affordable
medicines in developing countries [3]. The prime example of this sense
of priorities occurred in multilateral negotiations that established a
uniform system of international intellectual property rights in 1994:
the WHO=92s Agreement on Trade-Related Aspects of Intellectual Property
Rights (TRIPS) [4].

The TRIPS agreement introduced minimum global standards for protecting
and enforcing nearly all forms of intellectual property rights (IP),
patents, copyrights, and trade secrets, including those applying to
pharmaceuticals. It covers basic principles, standards and use of
patents, IP enforcement, dispute settlement, and other subjects. Under
its key provisions, WTO member countries must provide patent
protection for a minimum of 20 years from the filing date of a patent
application for any invention, including a pharmaceutical product or
process, that fulfills the criteria of novelty, invention, and
usefulness.

Preceding patent-rule pluralism in both the developed and developing
world had allowed discrimination between fields of invention, for
example by excluding medicines, but TRIPS expressly outlawed such
discrimination. Similarly, it was no longer permissible to
discriminate against imports in favor of local products, thus allowing
major pharmaceutical companies to control the place of production.
Because of TRIPS, the major pharmaceutical producers succeeded in
consolidating their monopoly power internationally=97they have exclusive
rights under TRIPS to exclude others from =93making, using, offering for
sale, selling, or importing=94 patented pharmaceutical products or
=93products made with a patented process=94 [4]. When a patent holder can
exclude others, it frequently charges monopoly prices, and its
profit-maximizing strategy in developing countries is typically to
sell medicines at high prices to the rich even if that price excludes
purchase by or for the vast majority of a country=92s population.

Despite its many patent protections for drug companies, the TRIPS
agreement also outlined some key flexibilities available to countries
to safeguard public health and access to medicines. Countries were
permitted to adopt stringent standards for patentability pursuant to
their own legal system; they were allowed to issue compulsory licenses
that allowed other companies to manufacture and sell the patented
medicine so long as a royalty was paid to the patent holder and
certain procedures were followed; they were allowed to use parallel
importation to comparison shop for a brand-name medicine if it was
sold elsewhere at a lower price; and they were given transition
periods within which to become TRIPS-compliant.

Despite securing baseline intellectual property protections in TRIPS,
the United States continued a heavy-handed trade policy that
threatened developing countries such as Thailand, South Africa, and
Brazil with trade sanctions because they refused to grant even greater
TRIPS-plus rights to patent holders or proposed using TRIPS-compliant
means to access more affordable medicines [5]. These threats (e.g.,
withdrawal of special zero-tariff trade access or of U.S. foreign
investment) continued even after all WTO members including the United
States signed the Doha Declaration on the TRIPS Agreement and Public
Health, which clarified developing countries=92 leeway to issue
compulsory licenses and to otherwise ensure access to medicines for
all [6].

In the post-Doha era, the United States continues to penalize and
threaten countries that resist higher intellectual property standards
or that use TRIPS-compliant flexibilities. Moreover, despite trade
authorization legislation to the contrary, the U.S. trade
representative continues to seek enhanced, TRIPS-plus intellectual
property protections in bilateral and regional trade negotiations [7].
The Democratic Congress finally imposed limited controls on the U.S.
trade representative with respect to health-affecting intellectual
property provisions of 2007, but even the Obama administration appears
to be pursuing old-school, intellectual-property-rights maximization
strategies as evidenced by its recent report listing countries that do
not provide U.S.-level intellectual property protections [8, 9].

Neo-liberal economic theory promotes strong and enhanced intellectual
property rights, including those of pharmaceutical producers, as the
magical route to development, believing that the rising tide of
import-export economies will help fund rehabilitation of failed public
health sectors, and that intellectual property protections will
promote local research and development of medicines for indigenous
diseases found in Africa, Latin America, and Asia. This theory offers
little solace for tens of millions of people living with health
conditions that will kill them prematurely or undermine their quality
of life. A more pragmatic solution, currently pursued by health
activists internationally, is the promotion of robust generic
pharmaceutical production, operating at efficient economies-of-scale
so that medicines can be made available at the lowest possible cost.
To make these drugs available to all, activists have succeeded in
establishing funding structures such as the Global Fund to Fight AIDS,
Tuberculosis, and Malaria and the U.S. President=92s Emergency Plan for
AIDS Relief, and in agitating for greatly enhanced bilateral and
multilateral donations so that there are reliable and sustainable
reservoirs of purchasing power to support a market in generic
pharmaceuticals and finance purchase of large quantities of medicine.

Paradoxically, activists have turned to the market to solve the market
failure; they have resorted to promoting free competition and assured
purchasing power as tools of choice in making access a reality. But
those tools can only be actualized by reforming international trade
agreements and national patent schemes to facilitate global commerce
in high-quality, low-cost generic medicines. As proof of concept,
activists can point to what has happened to the pricing of AIDS
medicines, a plummet in price from more than $10,000 per patient per
year in 2000, to only $87 per patient per year 8 years later [10].

At the same time that they have turned pragmatically to the market,
activists have advocated for a more benign form of globalization, for
multilateral solidarity structures, such as the Global Fund, to
coordinate the international response to pandemic disease. Activists
have humanized their =93free generic trade=94 and =93multilateralist=94
rhetoric, however, with a call to human rights=97a call for the
immediate, or at least expedited access to medical care and affordable
medicines. They have done so forcefully, even theatrically with mass
demonstrations, civil disobedience, and intense lobbying both in the
North and the South. Often they have done so by concerted action,
calling for global days of protest against drug companies,
governments, and multinational corporations [11].

More recently, health activists have promoted new mechanisms to
encourage generic trade in medicine and to expand research into
neglected diseases. One of the most promising innovations involves the
creation of a =93patent pool=94 by UNITAID, the new international drug
purchasing facility, partially funded by an airline tax voluntarily
adopted by several countries that supports production and procurement
of improved medicines for HIV/AIDS, TB, and malaria. This patent pool
will initially seek voluntarily negotiated in-licenses of HIV-related
patents and manufacturing know-how from Big Pharma and will then
out-license rights to manufacture and sell to quality-assured generic
producers. A special feature of these licenses will provide incentive
for development of rational fixed-dose combination medicines and
pediatric formulations that the current system does not provide [12].

Another innovative proposal promoted by Knowledge Ecology
International, Doctors Without Borders, and others within the WHO
Global Strategy and Plan of Action on Public Health, Innovation, and
Intellectual Property encourages research into neglected diseases by
the creation of =93prize funds=94 to reward researchers and producers for
developing medicines that have a significant therapeutic impact on
heretofore neglected tropical diseases [13]. Although advance purchase
commitments, public and private partnerships, and research grants are
other mechanisms for supporting focused research on tropical diseases,
the prize fund proposal holds special promise because it essentially
separates the market for innovation from the market for low-cost
production and sale. A prize fund rewards inventors who produce
needed, therapeutically significant innovations in research platforms,
products, and processes. The innovation must be a =93public good,=94
allowing production and sale by multiple generic producers.

The rebuff of patents, ascendancy of trade in generics, and the right
to treatment all demonstrate the impact that coordinated global
movements can have on the reconstruction of public imagination, social
institutions, and legal arrangements. Through this reconstruction, we
have changed from a world that thought treatment of people living with
HIV/AIDS in developing countries was an impossibility, (or in the
words of the World Bank, =93not economically efficient=94) to a world
where access to antiretroviral therapy has increased by a factor of 10
in just 5 years. One by one, activists have attacked structural and
legal barriers to access, including the international intellectual
property regime, and have imagined and then advocated for new
institutional arrangements and policies that might make treatment a
reality.

The access that people living with HIV/AIDS have begun to have must be
extended to poor people in developing countries more broadly. We must
develop an expanded campaign, one that deploys conflicting
discourses=97competition, public health, antiglobalization, and human
rights=97in pursuit of a precondition upon which all human development
depends: a population healthy enough to survive past middle age. In
this regard, health activists=92 amalgamated right-to-treatment
discourse is one of community and of positive and equitable rights,
through which the great global imbalance in access to medicines is
subject to radical redistribution, North to South, rich to poor, white
to black, male to female, and adult to child.
References

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June 3, 2009.
   2. Moran M, Guzman J, Ropars AL, et al. Neglected disease research
and development: how much are we really spending? PLoS Med.
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   3. Drahos P, Braithwaite J. Information Feudalism: Who Owns the
Knowledge Economy. New York, NY: New Press; 2003.
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   6. World Trade Organization. Declaration on the TRIPS agreement and
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   7. Baker BK. Ending drug registration apartheid: taming data
exclusivity and patent/registration linkage. Am J Law Med.
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   8. US Congress House Committee on Ways and Means. A new trade
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   9. Office of the United States Trade Representative. 2009 special
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  10. Medicins Sans Frontieres. Untangling the web of antiretroviral
prices. 11th ed. 2008.
http://www.msfaccess.org/fileadmin/user_upload/diseases/hiv-aids/Untangling=
_the_Web/Untanglingtheweb_July2008_English.pdf.
Accessed June 3, 2009.
  11. Smith RA, Siplon PD. Drugs into Bodies: Global AIDS Treatment
Activism. Westport, CT: Praeger; 2006.
  12. UNITAID. The medicines patent pool initiative. 2009.
http://www.who.int/hiv/amds/unitaid_patent_pool2_2009.pdf. Accessed
June 3, 2009.
  13. Love J, Hubbard T. The big idea: prizes to stimulate R&D for new
medicines. Chic Kent L Rev. 2007;82(3):1520-1554.
http://lawreview.kentlaw.edu/articles/82-3/Love%20Author%20Approved%20Edits=
(H)(P).pdf.
Accessed June 3, 2009.

Brook K. Baker, JD, is a professor at Northeastern University School
of Law in Boston, and participates in its program on human rights and
the global economy. Mr. Baker is a board co-chair and policy analyst
for the Health Global Access Project and is actively engaged in
campaigns for universal access to treatment, prevention, and care for
people living with HIV/AIDS. He writes and consults on intellectual
property rights, trade, health financing, access to medicines, and
macroeconomic constraints to health system strengthening.
Related in VM

Intellectual Property and Access to Medicine for the Poor, December 2006

Prohibitive Cost of HIV/AIDS Therapy in the United States, July 2009

Court Support for FDA Regulation of Drug Importation, July 2009