[Random-bits] FTC ASKED TO INVESTIGATE GILEAD EFFORT TO CONTROL MARKET FOR AIDS DRUGS INGREDIENTS
James Packard Love
james.love@keionline.org
Wed Feb 14 23:24:36 2007
http://www.keionline.org/misc-docs/15feb07gilead_pr.pdf
Press Release, 15 Feb 07
FMI James Love +1.202.332.2670, cell +1.202.361.3040, =20
james.love@keionline.org (See attachment for patent and health =20
experts contact information)
FTC ASKED TO INVESTIGATE GILEAD EFFORT TO CONTROL MARKET FOR AIDS =20
DRUGS INGREDIENTS
[Complaint available here:
http://www.keionline.org/misc-docs/ftcgilead12feb07.pdf]
Washington, D.C. February 15, 2007. Knowledge Ecology =20
International (KEI) has petitioned the U.S. Federal Trade Commission =20
to seek remedies for anticompetitive practices by the pharmaceutical =20
company Gilead. The advocacy group claims that Gilead is using =20
patents on a government funded AIDS drug invented at Emory University =20=
to cut-off low cost supplies of ingredients for two AIDS drugs.
KEI charges Gilead with using licenses to patents on the AIDS drug =20
emtricitabine in 45 countries to control the supply of the =93active =20
pharmaceutical ingredients=94 (APIs) to more than 100 other countries, =20=
and control the market for a second AIDS drug (tenofovir) that is =20
generally off-patent in developing countries.
Northeastern University School of Law Professor Brook Baker notes =20
Gilead=92s licenses =93(1) split and tie-up the market for active =20
pharmaceutical ingredients, (2) seek royalties on approved sales even =20=
when patents are not in force, and (3) prevent additional sales in =20
unapproved markets even where tenofivir and emtricitabine and their =20
combinations are not patented.=94
According to the KEI complaint, =93This action imposes higher costs for =20=
AIDS drugs in more than 150 developing country markets. The United =20
States government is the largest purchaser of AIDS drugs in the =20
developing world, and is harmed by this anticompetitive practice.=94
According to Ellen =91t Hoen from the humanitarian group MSF, =93In the =
=20
case of tenofovir (TDF) the cost of the API may account for 80% of =20
the total cost of production. Limiting access to API for the =20
production of TDF will inevitably keep the price artificially high.=94
Announced in 2003, the President's Emergency Plan for AIDS Relief =20
(PEPFAR) is the largest commitment ever by any nation for an =20
international health initiative dedicated to a single disease =96 =20
initially $15 billion over five years. Fifty-five percent of the =20
PEPFAR budget is for the treatment of individuals with HIV/AIDS, and =20
in FYs 2006 through 2008, 75 percent of those outlays will be spent =20
on the purchase and distribution of antiretroviral drugs. PEPFAR =20
supports programs in 120 developing countries.
The KEI complaint details a scheme by Gilead to partition the =20
developing world in half, and license certain companies to sell =20
tenofovir and emtricitabine in one part of the world on the condition =20=
that companies restrict the buying or selling of APIs with companies =20
who sell in the other part of the world.
=93The patent landscape on the two drugs is very different. Gilead has =20=
used the patents on emtricitabine in 45 countries to control the =20
market for APIs in the entire developing world, not only for this =20
drug, but also for tenofovir, a drug that is actually off patent in =20
most countries,=94 said KEI Director James Love.
The main focus of the Gilead licensing strategy is to co-op the =20
generic manufactures, so that they only sell or buy APIs with =20
companies approved by Gilead. For receiving a license to use the =20
Emory patents in 45 countries, the license requires payment of =20
royalties in countries where Gilead does not hold a patent, and to =20
not compete in countries that collectively have 2.5 billion residents.
By partitioning the market in this way, Gilead has made generic =20
suppliers of APIs less efficient, and reduced the number of =20
competitive suppliers in all markets, leading to higher prices for =20
AIDS drugs purchased by US government funded health programs.
KEI told the FTC that the patents on emtricitabine were based upon =20
publicly funded research grants to Emory University, and that as a =20
consequence, the US government can easily demand changes in the =20
Gilead licensing practices, by threatening to exercise its royalty =20
free rights in the patents.
=93It is particularly troubling that some of the drugs were developed =20=
with federal government funding, and that the costs of any such =20
anticompetitive licensing would be paid by American taxpayers who =20
subsidize developing country purchases through the PEPFAR program,=94 =20=
said Joshua D. Sarnoff, from the Glushko-Samuelson Intellectual =20
Property Law Clinic at American University.
- 30 -
COMMENTS BY PUBLIC GROUPS AND PATENT EXPERTS
Ellen 't Hoen Policy Advocacy director MSF Access to Essential =20
Medicines Campaign
"TDF is part of the standard 1st line treatment in the West, but it =20
is largely out of reach of people in developing countries despite the =20=
fact that WHO recommends its use for 1st line. In the case of TDF the =20=
cost of the API may account for 80% of the total cost of production. =20
Limiting access to API for the production of TDF will inevitably keep =20=
the price artificially high.=94
Joshua D. Sarnoff Glushko-Samuelson Intellectual Property Law Clinic, =20=
Washington College of Law, American University
=93The potential for these critically important AIDS drugs to be =20
licensed in an anticompetitive fashion is a very serious concern, and =20=
one that definitely warrants investigation by the FTC. We should be =20
finding ways to make such drugs more affordable in developing =20
countries where they are needed and where the ability to pay for the =20
drugs is severely limited. It is particularly troubling that some of =20=
the drugs were developed with federal government funding, and that =20
the costs of any such anticompetitive licensing would be paid by =20
American taxpayers who subsidize developing country purchases through =20=
the PEPFAR program.=94
Professor Brook Baker, Northeastern University School of Law
"We need new standards to assure that rich drug companies like Gilead =20=
don't over-reach when they are forced to grant licenses for accessing =20=
essential medicines in developing countries. These so-called =20
voluntary licenses are usually granted as a result of pressure by =20
AIDS and public health activists who seek to ensure that robust =20
generic competition results in sustainable supplies of low-cost and =20
good quality medicines. This is what happened in the Gilead case, =20
but when the actual details of the licenses are revealed, we find =20
that profit-maximization still reigns supreme through terms that: (1) =20=
split and tie-up the market for active pharmaceutical ingredients, =20
(2) seek royalties on approved sales even when patents are not in =20
force, and (3) prevent additional sales in unapproved markets even =20
where tenofivir and emtricitabine and their combinations are not =20
patented. All of these illegal terms increase profits for Gilead and =20=
simultaneously raise prices in fractured developing country markets. =20=
Under the cover of good deeds, Gilead has engaged in some sharp and =20
anti-competitive practices that must be and can be addressed by the =20
U.S. government, which retains rights to correct the anti-competitive =20=
terms and to issue its own licenses to inventions it helped finance. =20=
The Knowledge Ecology International request for an FTC investigation =20
is public citizenship at its finest."
Contacts:
James Love, Director of Knowledge Ecology International
Office phone: 202 332 2670
Cell phone: 202 361 3040
e-mail: james.love@keionline.org
Brook Baker, Professor at Northeastern University School of Law
Office phone: 617 373 3217
Cell phone: 617 659 0760
e-mail: B.Baker@neu.edu
Amy Flood, Director of Public Affairs at Gilead
Office phone: 650 522 5643
e-mail: aflood@gilead.com
Randy Marks, Federal Trade Commission
Office phone:
e-mail: rmarks@ftc.gov
Joshua Sarnoff, Assistant Director of the Glushko-Samuelson =20
Intellectual Property Law Clinic at American University Washington =20
College of Law
Office phone: 202 274 4165
e-mail: jsarnoff@wcl.american.edu
Ellen F.M. 't Hoen, Director of Policy Advocacy for Doctors Without =20
Borders Essential Medicines Campaign
Office phone (Geneva): + 33 1 4021 2836
e-mail: ellen.t.hoen@paris.msf.org
----------------------------------------------
James Packard Love
Knowledge Ecology International
http://www.keionline.org
james.love@keionline.org
Washington, DC +1.202.332.2670
"If everyone thinks the same: No one thinks." Bill Walton"