[Ip-health] Re: [HEALTHGAP] Ecuador's compulsory licensing policy: Corrections to media reports

[ALAN STERN RICHARD]

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Much has been made of the Ecuatorian government's plan to utilize national =
manufacturers.  The reasons given for as I understand it is 1)  that prices=
 will be much lower and that the money will go to local businesses instead =
of multi-national pharmaceutical companies. So far so good.

But I haven't seen anything about the government's intent or willingness to=
 purchase drugs from other already established generic companies such as th=
e Indian companies.  In that case the savings would be there, but  profits =
would not go to locally owned companies.   I would be very concerned about =
AIDS drugs.   Are their local companies in Ecuador prepared and qualified t=
o rapidly scale up production of AIDS drugs that meet the necessary standar=
ds of quality. This also applies of course to other drugs for other disease=
s.   If the President is truly interested in saving lives, it would be impo=
rtant for him to look at the world wide market, before deciding where to pu=
rchase generic drugs from.  (There are also companies in Argentina and Cost=
a Rica producing good quality generic AIDS  drugs, although most of the gen=
eric AIDS drugs come from India.)

I hope that this apparently excellent initiative will not place "nationalis=
tic interests" above saving lives.
Historically Ecuador has had some of the worst (highest) prices in Latin Am=
erica for AIDS drugs because of corrupt negotiations with Big Pharma.  I am=
 not sure if they have recently begun to use
generic AIDS drugs provided by the PAHO strategic fund.  But in any case, t=
he production capacity of the National Industry must be taken into account,=
 and weighed against what is already available on the World generic market.

Richard Stern

----- Mensaje original -----
De: peter maybarduk <peter.maybarduk@essentialinformation.org>
Fecha: Lunes, 2 de Noviembre de 2009, 1:31 pm
Asunto: [HEALTHGAP] Ecuador's compulsory licensing policy: Corrections to m=
edia reports
A: ip-health@lists.essential.org, Public list for Health GAP notices and di=
scussions <healthgap@critpath.org>, e-drug@healthnet.org



> Dear friends,

> You will recall last Monday, Ecuadorean President Rafael Correa announced=
 a bold new national access to medicines policy through decree no. 118, dec=
laring access to priority medicines a matter of public interest, and establ=
ishing procedures for issuing compulsory licenses.  Such licenses would aut=
horize price-lowering competition with expensive patented drugs.
>
>


> Many news articles, in Spanish, English and French, reported on the decre=
e, as well as on subsequent comments and analyses by the patent office, nat=
ional and international pharmaceutical companies, and observers. Unfortunat=
ely, several inaccuracies circled the globe through some of these reports. =
 We would like to take the opportunity to correct a few of the most common =
inaccuracies now.
>
>


> First, compulsory licenses do not eliminate or break patents.  They simpl=
y authorize use of a patented technology.  Under compulsory licenses, paten=
t holders retain their patents and a variety of related rights, including t=
he right to be adequately compensated through royalty payments and any righ=
ts reserved through restrictions set out in the license.   For example, som=
etimes compulsory licenses are limited to public, non-commercial use.  In t=
his case the patent holder would retain exclusive rights in the private mar=
ket (i.e., the right to be the exclusive seller to private pharmacies and i=
nsurers).  Ecuador will issue compulsory licenses, which is qualitatively d=
ifferent from annulling patents.
>
>


> Second, Ecuador has not predetermined the number of licenses it intends t=
o issue, nor will it license all medicines en masse.  Ecuador's patent offi=
ce (IEPI) will consider compulsory license requests on a case-by-case basis=
.  IEPI will consult with the Ministry of Public Health and take into accou=
nt the public interest that licensing a particular medicine would serve.  S=
ome news articles reported Ecuador would "license 2,214 medicines" or "elim=
inate over 2,000 medical patents."   2,214 is actually the total number of =
granted and/or requested patents for pharmaceuticals in Ecuador.  Often, mu=
ltiple patents apply to a single medicine.  Therefore, it is not even theor=
etically possible for Ecuador to issue compulsory licenses for 2,214 medici=
nes, as there are not that many patented drugs.  IEPI will proceed more met=
hodically and deliberately than reported, considering license requests for =
priority medicines case-by-case.
>
>


> Third, much speculation has surrounded the issue of royalties.   IEPI has=
 not predetermined the royalty rates it will require licensees to pay to pa=
tent holders.  IEPI will instead determine royalties according to the uniqu=
e circumstances of each case.  IEPI is currently studying international bes=
t practices in setting royalty rates, including models and equations used i=
n other countries.  Royalty rates established by IEPI are therefore likely =
to correspond to international precedent.
>
>


> Finally, some reports have suggested the WTO's TRIPS Agreement requires E=
cuador to negotiate with pharmaceutical companies before issuing compulsory=
 licenses, because Ecuador has not declared a public health emergency.   Bu=
t under WTO rules, licenses issued for public, non-commercial use are also =
exempt from the prior negotiation requirement.   Ecuador has not announced =
whether licenses would be issued for public use, but if so, Ecuador would n=
ot be required to negotiate first.   In cases where negotiation is required=
, the government need only offer reasonable terms and conditions.  If the p=
atent holder fails to reply, or refuses reasonable conditions, the governme=
nt can then proceed and issue a compulsory license.  In other words, pharma=
ceutical companies cannot hold up the government for whatever royalty rates=
 they want.  In that case the license would no longer be compulsory at all,=
 but voluntary, and the WTO rules would cease to make sense.
>
>

> Please see below for Essential Action's Backgrounder on "Ecuador's Presid=
ential Declaration on Access to Medicines and Compulsory Licensing."  You c=
an also download a PDF at:  http://www.essentialaction.org/access/
> >
>

>
> President Correa's decree is available online, in Spanish, at: http://www=
.sigob.gov.ec/decretos/.  We hope to make an English translation of Preside=
nt Correa's declaration available in short order.
> Thank you, and please feel free to contact me with any questions.  - Pete=
r Maybarduk, Attorney, Essential Action, peter.maybarduk@essentialinformati=
on.org
>

> Ecuador=92s Presidential Declaration on

> Access to Medicines and Compulsory Licensing


> =96 Backgrounder =96


> Quito, Ecuador, October 26, 2009 =96 Today, Ecuador=92s President Rafael =
Correa declared access to priority medicines affecting the health of the Ec=
uadorean population to be a matter of public interest.  Under Andean Commun=
ity law, the declaration opens the door to competition of generic medicines=
 with patented brand-name drugs, through use of an internationally recogniz=
ed legal mechanism called compulsory licensing.  The declaration should lea=
d to government policies that expand access to medicines.


> Globally, competition has consistently proven the most effective method t=
o reduce medicine prices, and ensure prices continue to fall over time.  Ov=
er the last ten years, generic competition has produced a revolution in HIV=
/AIDS treatment, reducing prices for first-line antiretrovirals from around=
 $10,000 to around $100 per year, and enabling over four million people wor=
ldwide to access treatment.

>
By issuing a compulsory license, a government can authorize competition wit=
h patented products, including the importation, domestic production, distri=
bution and/or sale of generic medicines.  In exchange, licensees pay reason=
able royalties to the patent holder, set by the government according to the=
 circumstances of each case.  Compulsory licenses do not =93eliminate=94 or=
 =93override=94 patents.  Instead, they authorize the use of patented techn=
ology under enumerated conditions.


> Countries=92 right to issue compulsory licenses =93on grounds of their ch=
oosing=94 is enshrined in the World Trade Organization=92s TRIPS Agreement =
(1995) and unanimous Doha Declaration (2001) on intellectual property and p=
ublic health. The WTO=92s Doha Declaration also states, =93the [TRIPS] Agre=
ement can and should be interpreted and implemented in a manner supportive =
of WTO Members' right to protect public health and, in particular, to promo=
te access to medicines for all.=94


> Ecuador=92s Presidential declaration does not on its own issue a compulso=
ry license.  Rather, it authorizes procedures by which the government can s=
ubsequently decide, case-by-case, to issue compulsory licenses for priority=
 medicines (as determined by the Ministry of Public Health), based in publi=
c interests such as reducing treatment costs and enabling greater access to=
 treatment. The declaration follows public pronouncements by President Corr=
ea articulating a vision of intellectual property as =93a mechanism for dev=
elopment for the people,=94 and is an important step toward access to medic=
ines for all.


> Many countries have used compulsory licenses to promote public interests =
and remedy anti-competitive practices in a variety of sectors.  Today, the =
United States is perhaps the most frequent user of compulsory licensing; in=
cluding the government use of defense technologies, and judicially-issued l=
icenses to remedy anti-competitive practices in information technology and =
biotechnology, among others.  Canada routinely issued compulsory licenses d=
uring the 1960s and 70s to develop its national pharmaceutical industry.   =
In recent years, a number of countries have issued compulsory licenses to i=
mprove access to medicines, including Thailand, Malaysia, Eritrea, Mozambiq=
ue and Indonesia, among others.


> In 2007, Brazil issued a compulsory license for the HIV/AIDS medicine efa=
virenz.  Brazil has provided treatment to hundreds of thousands of people l=
iving with HIV/AIDS and saved well over US$1 billion through its combined m=
edicines strategy of domestic production, importation, negotiation and comp=
ulsory licensing.


> President Correa signed the declaration Friday, but his office released i=
t today.  The declaration enables Ecuador=92s government officials to consi=
der introducing generic competition with some of the country=92s expensive =
patented drugs, including second-line HIV/AIDS treatments that cost more th=
an double the current competitive price, and lifesaving cancer treatments t=
hat exceed $35,000 per person, per year, and which some hospitals cannot af=
ford.  The UNAIDS 2008 report estimated 42% of Ecuadoreans needing antiretr=
oviral therapy received it.  Resource constraints in Ecuador limit availabi=
lity of treatment.


> Ecuador=92s declaration cites Constitutional principles as well as provis=
ions of the National Development Plan and international agreements, includi=
ng the WTO TRIPS Agreement and the World Health Assembly Global Strategy an=
d Plan of Action on Public Health, Innovation and Intellectual Property.  T=
he declaration charges the Intellectual Property Institute of Ecuador (IEPI=
) with establishing royalties and the terms of licenses, in compliance with=
 all applicable national legislation and international rules. The President=
ial declaration incorporates requirements of the WTO=92s TRIPS Agreement an=
d Andean Community legislation, including excerpting some passages word-for=
-word. IEPI has published an administrative guide to compulsory licensing f=
or the use of Ecuador=92s government agencies.


> For more information, contact:


> Peter Maybarduk

> Attorney

> Essential Action

> Access to Medicines Project

> peter.maybarduk@essentialinformation.org

>

>
 >







































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