K M Gopakumar, Third World Network

Lead Author: K M Gopakumar
Additional Author: Sangeeta Shashikant   
Organization: Third World Network
Country: India

Abstract

International intellectual property (IP) rules and pressures from industrialized countries and the pharmaceutical industry has severely incapacitated the ability of developing country governments to take measures to ensure prompt availability of affordable medical products. This has greatly compromised the fulfilment of human rights especially the right to health and the right to science. Use of flexibilities within and outside of the TRIPS Agreement has become the dominant approach to address concerns over access to patented medical products following the TRIPS patent regime. However, the strategy of using TRIPS flexibilities to facilitate access to affordable medical products is based on several assumptions, which are unrealistic and flawed in the context of developing countries. Apart from these assumptions, TRIPS-plus provisions in the free trade agreements (FTAs), bilateral investment treaties (BIT), pressures from developed countries, voluntary licenses and IP enforcement initiatives are adversely impacting the use of TRIPS flexibilities. Against this background this submission proposes reform of the existing international IP regime to facilitate access to new medical products at affordable price. It proposes replacing the mandatory product patent regime with a mechanism that allows the manufacturing and marketing of generic alternatives subject to payment of a fix royalty for a fixed duration. This mechanism is based on the principle of non-exclusivity and reasonable royalty. Compared to the patent system this mechanism has minimal transaction cost. Further it effectively address existing policy incoherence and advances human rights. 

Submission

Intellectual Property (IP) and Access to Affordable Medical Products: A New Paradigm

I. Introduction

There is a need to separate the issue of access to off-patent medical products1 from access to patented medical products. In the former situation, medical products are usually available at affordable prices, however due to various factors patients may not have access to the needed medical products. Governments however do have sufficient policy space to overcome these obstacles.

Where medical products are patented, the monopoly conferred to the right holders results in exorbitantly priced medical products unaffordable to patients especially living in developing countries. International IP rules2 , and pressures from industrialized countries and the pharmaceutical industry has severely incapacitated the ability of developing country governments to take measures to ensure prompt availability of affordable medical products. This has greatly compromised fulfilment of human rights especially the right to health and the right to science.

This submission elaborates on the constraints in using TRIPS flexibilities, and explains why voluntary licenses are not appropriate solutions for facilitating access to affordable medical products. It also discusses the policy incoherence between international human rights law and trade law arising from the international IP regime. Finally this submission proposes a simple, cost effective and efficient solution to facilitate access to affordable new medical products, while compensating originator companies for their efforts.

II. Use of TRIPS Flexibilities: Is it a Solution?

Use of flexibilities within and outside of the TRIPS Agreement became the dominant approach to address concerns over access to patented medical products following the TRIPS patent regime. The past political consensus to address “access” concerns is articulated in the Doha Declaration on the TRIPS Agreement and Public Health (Doha Declaration).3 Following the Doha Declaration, a handful of countries have used TRIPS flexibilities to gain access to affordable generic alternatives. However developments in the last two decades of the TRIPS Agreement suggests that use of flexibilities alone does not provide a viable and sustainable solution for addressing concerns of high prices of medical products emanating from the patent monopoly.

The strategy of using TRIPS flexibilities to facilitate access to affordable medical products is based on several assumptions, which are unrealistic and flawed in the context of developing countries.

First, it is assumed that every country has pharmaceutical manufacturing capacity. Most developing countries and almost all LDCs except Bangladesh, lacks such capacity. The vast majority of developing countries are net importers of pharmaceutical products, especially the active pharmaceutical ingredients (APIs). Thus many developing countries cannot use TRIPS flexibilities effectively without depending on another country. Further, as there are a number of entry barriers, the growth of generic industry is limited.4 3

Article 31(f) of the TRIPS Agreement does not allow use of compulsory licenses predominantly for export purpose. WTO members attempted to rectify this situation with the 30th August 2003 decision (subsequently translated into a proposed amendment of the TRIPS Agreement), which waived the requirement of Article 31(f) when a compulsory license is used to export to a country with inadequate manufacturing capacity. However this decision has failed to offer an effective solution.5

Therefore for countries that do not have manufacturing capability, the successful use of TRIPS flexibilities is dependent on the availability of affordable generic versions in another country and the willingness and ability of such a country and its generic producers to promptly facilitate export of the needed pharmaceutical products.

Second, many developing countries do not incorporate TRIPS flexibilities in their domestic law in an optimal manner. This is usually due to pressures from the pharmaceutical industry and developed countries as well as the technical assistance programs of developed countries and international organizations such as WIPO, which are known for promoting adoption of stronger IP standards and reducing the scope of flexibilities6 . Without incorporation of flexibilities in the domestic law, it is impossible to use the TRIPS flexibilities. 7 Further, due to the lack of capacity (financial and human resource) many developing countries do not undertake substantive examination of patents or are heavily dependent on foreign IP offices (e.g. the European Patent Office, the US Patent and Trademark Office, Japan Patent Office) to conduct the substantive patent examination8 . Thus most developing countries are not in a position to effectively apply flexibilities related to the scope of patentability (such as with regard to novelty, inventive step and industrial applicability). 9

Third, the effective use of TRIPS flexibilities also depends on the existence of robust public health institutions. To invoke a compulsory license or government use, adequate information about a particular disease and its burden is imperative. Absence of such information hinders use of TRIPS flexibilities10. However, usually developing countries struggle to monitor and collect information on its national public health situation thus making it challenging to use TRIPS flexibilities as such decisions may be challenged by the patent holder.

Fourth and most importantly, it is assumed that there is global legal and political consensus with regard to use of TRIPS flexibilities. This is far from reality. There is ample evidence that developing countries that have used TRIPS flexibilities have come under immense pressure from developed countries and/or been threatened with sanctions by developed countries. 11 12 This political pressure is aimed at deterring developing countries from using TRIPS flexibilities.

Additionally, in the last 20 years developed countries have made numerous efforts to prevent/deter developing countries from using TRIPS flexibilities.

Developed countries have insisted on the inclusion of TRIPS plus obligations in free trade agreements (FTAs) that extends monopoly of the right holder as well as limits the scope of flexibilities available to developing countries. 13 Developed countries also insist on investor-state dispute settlement (ISDS) measures either in FTAs or in bilateral investment treaties (BITs). These provisions create a chilling effect on countries with regard to use of TRIPS flexibilities, as there is constant fear of a pharmaceutical company initiating ISDS measures that may result in the government being penalized.14 4

Additionally, numerous IP enforcement initiatives sponsored by the pharmaceutical industry and developed countries have emerged at the national, regional and international levels. These initiatives are about introducing TRIPS plus enforcement measures (including criminal sanctions and border measures) and conflating IP issues with issues concerning quality of medical products. As a result, generic medicines have been seized in transit, and anti-counterfeiting laws threatened access to generic medicines.15

In a nutshell, two decades of TRIPS has shown that the mere existence of TRIPS flexibilities does not automatically translate into availability of affordable medicines. There are significant barriers to developing countries utilizing TRIPS flexibilities, and thus it does not offer a sustainable solution coherent with the right to health.

Voluntary license (VL)

Voluntary licenses are often considered to be a solution to address access concerns. However VLs have significant shortcomings. It is an ad hoc approach to access to medical products. Whether or not a VL is to be issued, for which products, on which terms depends on a particular company. Originator companies prefer VLs as it allows them to impose restrictive conditions that forestall or control competition in the market. VLs are also geographically restricted, often excluding many middleincome countries from the scope of the license.16 VLs may also undermine use of TRIPS flexibilities. For example, VLs issued by the Medicine Patent Pool covers patents that are facing pre-grant opposition in major generic manufacturing countries like India, which may deter effective prosecution of oppositions.17 VLs do not offer comprehensive and effective solution consistent with the fulfillment of the right to health.

III Policy Incoherence International human rights law obligates countries to respect, to protect and to fulfill socio, economic and cultural rights such as the right to health and right to science. Access to affordable generic alternatives is a prerequisite to fulfillment of the right to health. The right to science obligates states to ensure its citizens enjoy the benefits of scientific progress and its applications. However, this is not possible without affordable access. Similarly, the existing IP regime creates policy incoherence with sustainable development goals (SDG) especially with targets sets in SDG 3 on communicable and noncommunicable diseases, which cannot be met without access to new affordable medical products. The international IP regime, especially product patent protection and data exclusivity, incapacitates developing countries from fulfilling their human rights obligations, thus resulting in policy incoherence between the international obligations on human rights and trade law. Twenty years of experience with TRIPS shows that the strategy of using TRIPS flexibilities to address the incoherence between human rights and trade law has not delivered the desired result. Therefore it is important to address the root cause of the policy incoherence i.e. process and products patents on medical products.

IV Proposal

Against this background we propose amending the TRIPS Agreement to explicitly exclude mandatory patenting of medical products and processes for the manufacturing of medical products. Developing countries should be given full policy space to devise their patent regime related to medical 5 technologies. In line with the TRIPS amendment, IP provisions of FTAs and BITs should be reformed to exclude medical products from IP protection or investment enforcement especially product patents and data exclusivity. As an interim measure, the TRIPS Council should adopt a waiver for medical products from the mandatory patenting provisions under Article 27.

We also propose a new mechanism based on the principle of non-exclusivity.

Under this mechanism once a new medical product obtains marketing approval from the US Food and Drug Authority (USFDA) or the European Medicines Agency (EMEA) manufacturers from developing countries should be allowed to produce and market generic versions of the new medical product against payment of a fixed royalty for a duration of five years following the marketing approval of the generic version from respective national or regional medical products regulatory agencies. The royalty rate should be determined as per the development status of each country but in any case should not exceed 5% of sales in the country. The permission to manufacture is automatic and not based on a licensing agreement with the Originator Company. Royalties will be collected by the DRAs as an escrow and transferred to the originator companies that developed the medical products. The administration of royalties collection should be governed in a transparent manner. Royalties will not be given for modifications of existing NCEs approved for human or animal use such as new use, new formulation or new drug delivery system or modified diagnostic or vaccines. DRAs should have full freedom to rely on originator’s data to approve the generic products.

Compared to the patent system this mechanism would be more cost effective as it is focused on access to medical products and not on patents. Automatic, voluntary or compulsory licenses are about managing patents, which requires significant institutional capacity and resources, often lacking in developing countries. Further, right holders obtain multiple patents on the same medical product leading to patent evergreening and confusion in identifying the relevant patents.18 Under the proposed mechanism there is no need for a complicated institutional mechanism. Additionally as discussed above, there are significant obstacles in the use of TRIPS flexibilities, thus justifying the need for an easier mechanism to facilitate access to affordable medical products.

Unlike patents, which compromises access, the proposed mechanism ensures prompt access to affordable new medical products to people living in developing countries. It also compensates the originator for their efforts, avoiding claims of free riding.

Impact on Policy Coherence: The scrapping of patent protection for medical products and restoration of policy space for developing countries will ensure coherence between human rights law and international trade law as developing countries will be capacitated to meet their human rights obligations especially the right to health and right to science. The freedom to produce medical products against a royalty payment would further also incentivize local production and contribute towards the achievement of other SDGs especially SDGs 8, 9 and 10.

Impact on Public Health: The suggested mechanism would further the SDG 3 by ensuring the availability of medical products at affordable cost, enabling also the introduction of new and efficacious products in the public health programs.

Advancing Human Rights: Human rights jurisprudence recognizes state’s obligation to fulfill human 6 rights of their citizens. Non-availability of new medical products at an affordable cost coupled with limitations of TRIPS flexibilities prevents countries from fulfilling their human rights obligations.19 This proposal simplifies access to affordable medical products thus strengthening government’s ability to fulfill their human rights obligations, leading to the advancement of human rights.

Implementation: The proposed mechanism is easy to implement without any additional cost. As mentioned above the patent system and use of flexibilities requires huge institutional and administrative capabilities. The current system is also susceptible to pressure from industry and developed countries, which in turn paralyzes developing country governments, adversely impacting the right to health and science. The proposed mechanism moves away from the patent system, and focusing instead on access to the final product, which has received marketing approval from regulatory authorities. It would not require huge institutional and administrative capabilities as existing regulatory authorities may be used. The only additional task is for DRAs to act as royalty collectors on behalf of the originator companies. This mechanism thus ensures that people enjoy the benefit of scientific progress while at the same time making an appropriate contribution to advance the further research and development. 

Bibliography and References

1 The term “medical products” hereafter should be understood to include medicines, vaccines, diagnostics and medical devices. 
2 International IP rules includes the compulsory product patent regime under the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) and TRIPS Plus provisions containing in regional and bilateral Free Trade Agreements including data exclusivity provisions. It also includes the investment treaty provisions. 
3 The Declaration clearly states that ““… we affirm that the Agreement can and should be interpreted and implemented in a manner supportive of WTO members' right to protect public health and, in particular, to promote access to pharmaceutical products for all. In this connection, we reaffirm the right of WTO members to use, to the full, the provisions in the TRIPS Agreement, which provide flexibility for this purpose”. Doha Declaration on the TRIPS Agreement and Public Health . 
4 The existing trade and invest regime creates obligations on developing countries, preventing them from providing a policy environment to promote local manufacturing. The Agreement on Trade Related Investment Measures (TRIMS) and other investment rules, which are part of the Free Trade Agreements (FTAs), also compromise the efforts of many developing countries to achieve self-sufficiency in manufacturing of medical products by making the application of many local production stimulation tools like local content rule, export obligation, etc. as illegal. 
5 The offered solution contains cumbersome procedures and makes it almost impossible for countries, which do not have manufacturing capabilities to use the mechanism to obtain pharmaceutical products through a CL exclusively for export purpose from another country. So far, there have only been one instance where this mechanism has been used to facilitate access to pharmaceutical products for HIV/AIDS. See MSF, Seven Years On, ‘August 30 Decision’ has Failed to Improve Access to Pharmaceutical products and Remains Virtually Unused WTO Must Reform the Rules . 
6 An external review of WIPO’s technical assistance programme notes: “the Review Team found that when discussing international treaties, the orientation of plans was toward promoting accession to international treaties administered by WIPO. While the importance of flexibilities was noted, practical and proactive advice on how to use such opportunities was limited.” See WIPO, An External Review of WIPO Technical Assistance in the Area of Cooperation for Development. < http://www.wipo.int/edocs/mdocs/mdocs/en/cdip_8/cdip_8_inf_1-annex1.pdf>. Also see , According to Prof. Peter Drahos, “[o]ver the years the steady drip of technical assistance leads to the formation of technocratic trust in the EPO’s systems. A strong belief forms that the EPO’s systems produce quality results and that belief in turn forms the basis of decision-making by patent examiners in underresourced developing country patent offices. Technocratic trust thus fosters a circle of decision-making in which the EPO trains developing country examiners to make decisions in their own countries that predominantly benefit foreign companies, including European companies”. Peter Drahos, “Trust Me”: Patent Offices in Developing Countries, Working Paper, Centre for Governance of Knowledge and Development . 7
 7 According to the MDG Gap Taskforce Report, many countries are yet to amend their national laws to incorporate TRIPS flexibilities fully. MDG Gap Taskforce Report 2012 < http://www.un.org/millenniumgoals/2012_Gap_Report/MDG_2012Gap_Task_Force_report.pdf. 
8 According to Prof. Drahos, “[o]ver the years the steady drip of technical assistance leads to the formation of technocratic trust in the EPO’s systems. A strong belief forms that the EPO’s systems produce quality results and that belief in turn forms the basis of decisionmaking by patent examiners in under-resourced developing country patent offices. Technocratic trust thus fosters a circle of decisionmaking in which the EPO trains developing country examiners to make decisions in their own countries that predominantly benefit foreign companies, including European companies."Peter Drahos, “Trust Me”: Patent Offices in Developing Countries, Working Paper, Centre for Governance of Knowledge and Development . 
9 For instance, South Africa does not have a substantive patent examination system in place. Government of South Africa, National Policy on Intellectual Property (IP) of South Africa, 31-32, http://ip-unit.org/wp-content/uploads/2013/09/DRAFT-IP-POLICY.pdf. 
10 For instance, the Indian Patents Office rejected a compulsory license application for diabetic medicine Saxagliptin. One of the ground for rejection was the lack of evidence to prove whether the said medicine is available at affordable price. The decision states that “ in the absence of exact quantum of Saxagliptin required and the number of patients vis-a-vis doctors prescriptions as against the opther options existing in the market, the question of accessibility and affordability cannot be determined”. Lee Pharma Ltd v Astra Zenaca AB C.L.A No 1of 2015  
Ellen t' Hoen, The Global Politics of Pharmaceutical Monopoly Power ( AMB Publishers, Diemen, 2009) 44--58. 
12 In 2007 when Thailand issued a CL, the EU Commissioner wrote a letter stating “neither the TRIPS Agreement nor the Doha Declaration appear to justify a systematic use of compulsory license wherever medicine exceeds certain prices”. See Letter from Peter Mandelson (then EU Commissioner) on Compulsory licensing of pharmaceutical patents in Thailand, http://www.wcl.american.edu/pijip/documents/mandelson07102007.pdf . In the case of India, after it issued its first CL, political pressure forced India to enter into a bilateral discussion with the US on the protection and enforcement of IP, which in turn seems to have created a chilling effect on India’s effort to declare certain patents as public health important to facilitate speedy issuance of CL. Dilasha Seth & Soma Das, DIPP Defers Decision on Issuance of Compulsory Licence for Cancer Drug Dasatinib, The Economic Times (16 October 2014) < http://articles.economictimes.indiatimes.com/2014-10-16/news/55106950_1_cancer-drug-dasatinib-health-ministry-compulsorylicence >. Also see The US pressure forced India in 2014 to set up a bilateral process with the US to discuss IP issues. The US India Joint Statement dated 30 September 2014 states: “Agreeing on the need to foster innovation in a manner that promotes economic growth and job creation, the leaders committed to establish an annual high-level Intellectual Property (IP) Working Group with appropriate decisionmaking and technical-level meetings as part of the Trade Policy Forum” https://www.whitehouse.gov/the-press-office/2014/09/30/usindia-joint-statement. 
13 A WTO working paper states that some 54 Regional Trade Agreements (RTAs) were found to contain at least one of the pharmarelated provisions. Further, it also found that the provision most frequently included in RTAs relates to patentability criteria and exclusions, with over one-quarter of the 165 agreements in the sample. See Raymundo Valdés & Runyowa Tavengwa, Intellectual Property Provisions in Regional Trade Agreements, WTO Economic Research and Statistics Division, . See Expert Memo on Effects of TRIPS Plus Provisions on Access to Medicines , < http://infojustice.org/wp-content/uploads/2015/06/Effects-of-TRIPS-Plus-IP-Provisions-on-Access-to-AffordableMedicines.pdf>, UNDP and UNAIDS, The potential Impact of Free Trade Agreements on Public Health, Issue Brief, < http://www.unaids.org/sites/default/files/en/media/unaids/contentassets/documents/unaidspublication/2012/JC2349_Issue_Brief_FreeTrade-Agreements_en.pdf > 
14 Pharmaceutical MNC Eli Lilly already filed arbitration notice against Canada seeking CND 500 million compensation for the rejection of patents on Strattera and Zyprexa under the investment protection provisions of the North American Free Trade Agreement (NAFTA), See Public Citizen, U.S. Pharmaceutical Corporation Uses NAFTA Foreign Investor Privileges Regime to Attack Canada’s Patent Policy, Demand $100 Million for Invalidation of a Patent < http://www.citizen.org/documents/eli-lilly-investor-state-factsheet.pdf>. 
15 In 2008 alone there were 17 seizures of generic medicines in transit by the authorities of Netherlands. In 2009 Germany also seized a consignment of generic medicine in transit. This was seized after the government of India approached the WTO dispute settlement mechanism challenging the EU customs regulation , See Brook Baker, Settlement of India/EU WTO Dispute re Seizures of In transit Medicines: Why the Proposed EU Border Regulation isn’t Good Enough, PJIP Research Paper Series , http://digitalcommons.wcl.american.edu/cgi/viewcontent.cgi?article=1026&context=research. See also Kenya’s High Court Strikes down Anti-Counterfeit Act, https://www.opensocietyfoundations.org/press-releases/kenya-s-high-court-strikes-downanti-counterfeit-act
16 The Gilead VL on Sobofusvir allows the licensee to market the medicine in 91 countries but it excludes countries accounted for 73 million people living with HCV, which is roughly 46% of people need HCV treatment. See Hep C Coataion, Gilead’s License on Hepatitis C drugs, Sofosbuvir and Ledipasvir: a Fool’s Bargain < http://www.hepcoalition.org/advocate/advocacy-tools/article/gilead-slicense-on-hepatitis-c >
 17 For a critique of Medicine Patent Pool ‘s initial VL see ITPC –IMAK , The Implications of the Medicines Patent Pool and Gilead License on Access to Medicines Treatment , < http://static1.1.sqspcdn.com/static/f/129694/13358037/1312910374040/ITPC+I-MAK+- +The+Broader+Implications+of+the+MPP+and+Gilead+Licenses+on+Access+-+FINAL+25-7- 2011.pdf?token=oZDgMnwEbDsZWo9yYiUuzdbDtOk%3D > 8
 18 An investigation by EU Competition Commission found that pharmaceutical companies files numerous patent application on the same medicine to prevent generic entry. Further these companies also use divisional application to delay the patent examination and create legal uncertainty to prevent the generic introduction. See the Executive Summary of Pharmaceutical Sector Inquiry Report , < http://ec.europa.eu/competition/sectors/pharmaceuticals/inquiry/communication_en.pdf> . According to a study by the Initiative for Medicines and Access to Knowledge (I-MAK), pharmaceutical TNC Abbot has obtained multiple patents for its antiretroviral combination of ritonavir and lopinavir known as Kaletra, and it would extend the patent monopoly from its original patent expiry of 2014 (ritonavir) and 2016 (lopinavir) to 2028. This study states that the Harvard University researchers found 108 patents filed by Abbot, which can be used to extend the market exclusivity. See < I-MAK, Secondary Patenting: A Threat to Affordable, Generic ARVs (December 2012) . 
19 The following medicines are part of WHO’s essential list of medicines: trastuzumab (cancer), daclatasvir (hep C), sofosbuvir (hep C), bedaquiline (TB) and delaminid (TB) but are not available at an affordable price in most developing countries due to patent protection or pending patent applications. Even though, there are voluntary licenses available for daclatasvir (hep C), sofosbuvir (hep C) the price is still very high compared to prices patients would get as a result of normal generic competition. It is worth noting that many countries with a high Hep C burden are excluded from these licenses. High prices of these medicines deter cash strapped developing country governments from including these new and effective medicines into their public health programs. Certain countries have included Sofosbuvir in their public health programmes but restrict access to patients at critical stage. Despite the availability of effective anti-virals that can cure patients, treatment has not been scaled up nor universal access provided due to exorbitant prices. This is also true even in the case of developed countries such as Spain. 
 

AMIT SENGUPTA, People's Health Movement and Third World Network

Lead Author: Amit Sengupta
Additional Author: K M Gopakumar
Organization: Peoples Health Movement and Third World Network
Country: India

Abstract

Drugs developed using biotechnology are different because they are produced in living cells. The molecules, which make up these drugs, are larger in size and more complex than the ‘small molecule’ drugs manufactured using the chemical synthesis method. Biotherapeutic products (BTP) are increasingly being used for treating cancer one of the prioritised non-communicable disease (NCD). However, BTPs are not accessible at affordable price. Even the non-originator BTPs is not affordable. Access to BTPs is critical for treating both communicable and non-communicable diseases. However, there are three main barriers to access to affordable BTPs viz technology, intellectual property and regulatory barriers. This submission mainly focuses on the bio-similar regulatory pathway, which makes the availability of non-originator BTP costly. Submission makes 6 proposals to facilitate availability of non-originator BTP affordable price.

Submission

Introduction

The next new-frontier of disease control lies in finding remedies that can effectively cure and control cancers and several degenerative diseases. The field of biotechnology is starting to deliver entirely new forms of treatment. Drugs developed using biotechnology are different because they are produced in living cells. The molecules, which make up these drugs, are larger in size and more complex than the ‘small molecule’ drugs manufactured using the chemical synthesis method. These drugs – termed as biotherapeutic products (BTP) – have several potential advantages as they can, theoretically, be tailored to hit specific ‘targets’ in the human body. Also known as 'Biologics' these products are fast becoming the new ‘top selling’ drugs in the global market.

The fastest growing segment of the biotherapeutics market is the recombinant glycosylated proteins segment– projected to grow annually at 25% by 2018. Within this, the monoclonal antibody segmented alone, it is projected, will grow at an estimated CAGR (compounded annual growth rate) of 41.9% from 2013 to 2018

There are 8 BTPs among the top IMS list of worlds top selling 20 medicines. There are three top selling BTPs viz. arerituximab, bevacizumab and trastuzumab are classified as essential medicine by WHO. Access to BTPs is important to achieve targets mentioned in SDG 3. BTPs are increasingly being used for treating cancer one of the prioritised NCDs.

At least eight major biologic Monoclonal Antibody (MAb) drugs are already/will be off-patent products between 2013 and 2018. These include Rituxan/MabThera, Remicade, Herceptin, Humira, Avastin, Synagis, Erbitux, and Lucentis.

Unlike in the case of conventional ‘small molecule drugs’ it is never possible to produce an exact replica of the original drug. BTPs are extremely sensitive to the manufacturing process and the starting material. As the starting material is a living cell, it is impossible to have an exactly similar starting cell. Moreover very small changes in the manufacturing process can bring about changes in the final product. Thus, even in the case of the original product, there are variations in the product – between batches and even within the same batch. Thus 'bio-generics' (also called biosimilars in the literature) can never be exact replicas of the reference molecule, that is the original BTP. Though it needs to be emphasized, as we mention earlier, even for the originator BTP, differences exist in the molecule produced in different batches.

BTPs, especially monoclonal antibodies are valuable therapeutic products, whose use is currently limited by their extremely high costs. The three most targeted products for development of bio-generics are Rituximab (used to treat leukemia, lymphomas and auto immune disorders such as rheumatoid arthititis), Infliximab and Adalimumab (both used to treat a range of debilitating auto-immune disorders such as ulcerative colitis, Crohn's disease and Psoriasis). All three have high worldwide sales and are marketed for multiple indications.

However BTPs are extremely expensive and consequently not accessible to patients, especially in Low and Middle Income Countries (LMICs). For example the cost of one vial of adalimumab (for the originator product Humira from AbbVie) would cost about $ 1000 -- almost equivalent to the average annual wage in a low income country. Even though BTPs available from the non-originator companies are available, the current price differential is extremely modest, at 40-50 per cent less than the originator price.. The high prices of BTPs are increasingly taking large share of the public health budget of many countries. According to the Colombian Health Minister Alejandro Gaviria, last year biotech medicines accounted for 35 % of the pharmaceutical market in Colombia, and the sector is growing rapidly. Similarly in Brazil while BTPs account for 4% by volume of drugs distributed through its National Health System, they account for over half of the Ministry of Health's expenditure on medicines.

This submission is focusing on access to Bio-therapeutic products (hereafter BTP) at affordable price from the non-originator companies.

Statement of the Problem

Unlike in the case of generic equivalents of small molecule originator drugs, there is no effective competition in the market for BTPs even in situations where the patents of the originator molecules have expired. Contributing to this situation is the complex structures of BTPs and their dependence on relatively complex manufacturing processes involving living cells. Current analytical methods cannot fully characterize these complex molecules sufficiently to confirm structural equivalence of a biogeneric with the reference molecule (the original BTP). This complexity brings various barriers to competition in the market. These barriers are: technological, intellectual property rights and regulatory barriers.

Technological Barriers: Manufacturing of BTPs based on using recombinant DNA technology is a relatively new area as the process involved are entirely different from those used to produce drugs through the chemical synthetic route. It is important to build technological capabilities in the BTP sector in 'non-traditional' manufacturing countries. Importantly, unlike in the case of small molecule generic industry, many Multinational pharmaceutical companies (viz. Sandoz) are entering the area of bio-generic manufacture. The latter have a stake in keeping the prices of bio-generics comparatively high, and hence repeated industry led assertions that bio-generic introduction will lead to a modest drop of 40-50% in prices. This assertion is belied by recent evidence -- for example India's Zydus Cadila has recently introduced its version of adalimumab (Exemptia) leading to a 80% price reduction . Companies from South Korea, China, India, Brazil and Argentina are now active in the bio-generics segment but face entry barriers because of the chilling effect of harsh regulatory systems (as we see later) in most parts of the world

IP Barriers: BTPs are protected through patents, date exclusivity and trade secrets. BTPs are protected through product and process patents. Unlike small molecules, in the case of BTPs process patents can act as a major barrier. Even after BTPs lose patent exclusivity, trade secrets can continue to create barriers to the entry of bio-generics. Since the knowhow around BTPs is protected through trade secrets by the originator company, bio-generic manufacturers are not in a position to exactly characterise the molecule. This is unlike in the case of small molecules where, if the original molecule is known, its manufacturing process can be determined through reverse engineering. This barrier around knowhow is linked to the regulation of marketing approval of non-originator BTPs and regulatory regimes generally support the restrictions on full disclosure through the medium of trade secrets.

Regulatory Barrier: Since late 1990’s non-originator BTPs have been known by different names viz. follow-on biologics, bio-generics, bio-betters, bio-similars, etc. Generally speaking, these nomenclatures are closely linked to the regulatory pathways followed for the approval of non-originator BTPs. Regulatory pathway for the non-originator BTPs were recognised in many Asian countries since 1990s and many such products have been available in the market for decades. The regulatory pathway followed in Asian countries was different from the bio similar regulatory pathway. The bio similar pathway was initially developed by the ICH (International Conference on Harmonization) -- a closed regulatory standard setting body consisting of only drug regulators of EU, USA and Japan and the originator pharmaceutical manufacturing associations of these countries. European Guidelines build on these standards in 2005. In 2009 the WHO Expert Committee on Biological Standardisation adopted Guidelines on Evaluation of Similar Bio-Therapeutic Products. These guidelines drew heavily from the ICH guidelines.

Since then there has been a major push for the adoption of bio similar guidelines in other countries. Including in LMICs, that conform to guidelines initially developed by the ICH, largely reflective of the interests of originator companies. These guidelines require 'head to head' comparability of the non-originator product with the originator product. According to the WHO Guideline “Demonstration of similarity of a SBP (similar bio-therapeutic product i.e. non originator product) to a RBP (reference bio-therapeutic product i.e. originator product) in terms of quality is a prerequisite for the reduction of the non-clinical and clinical data set required for licensure. After each step of the comparability exercise, the decision to proceed further with the development of the SBP should be evaluated”. Further, it states: “The basis for licensing a product as a SBP depends on its demonstrated similarity to a suitable RBP in quality, non-clinical, and clinical parameters. The decision to license a product as a SBP should be based on evaluation of the whole data package for each of these parameters should be evaluated”. According to WHO Guideline “If comparability exercises and/or studies with the RBP are not performed throughout the development process as outlined in this guidance document, the final product should not be referred to as a SBP”. Thus the WHO Guidelines insist that the non-originator has to prove not only safety and efficacy but also similarity in structure with the originator product.

Such insistence is not commensurate with the science underlying BTPs. All BTPs irrespective of whether applied to originator or non-originator products are inherently variable due to the fact that they are produced from living organisms. This variability exists within batches, from batch to batch, and when production processes are improved or changed or differs between manufacturers. The variability of biopharmaceuticals is greater than that typically observed for conventional pharmaceuticals and applies to originator reference products as well as bio-generics. Even in the case of the original product, there are variations in the product – between batches and even within the same batch.


This demonstration of similarity with originator requires comparative clinical trials with the originator. According to industry sources 50% of the bio-similar development cost are as a result of the need to purchase the originator’s product. Further, the burden of proof on similarity also increases the duration of bio-generic development. Lastly, every bio-generic developer, even when a molecule is fully characterised, needs to carry out fresh clinical trials for safety and efficacy (potentially is in conflict with the Helsinki Protocol). These onerous regulatory requirements prevent significant drop in prices when bio-generics are introduced and represent the most significant barrier to affordable access to BTPs. These requirements have little scientific validity as safety and efficacy of bio-generics is what regulatory agencies need to be concerned about and not precise similarity to the originator molecule -- which anyway is virtually impossible to accomplish. Thus claims of 'similarity' of structure are arbitrary, thus placing enormous arbitrary power in the hands of regulatory agencies to reject applications for registration of new bio-generics.

Reflecting the concerns on non-availability of BTPs including bio-generics at affordable prices the World Health Assembly in 2014 adopted a resolution on BTP. This resolution stated: “to work to ensure that the introduction of new national regulations, where appropriate, does not constitute a barrier to access to quality, safe, efficacious and affordable biotherapeutic products, including similar biotherapeutic products”. The resolution further requested the Director General “to convene a WHO "Expert Committee on Biological standardization to update the 2009 guidelines, taking into account the technological advances for the characterization of biotherapeutic products and considering national regulatory needs and capacities and to report on the update to the Executive Board”. However, there is no such updating of the Guidelines on Evaluation of Similar Bio-Therapeutic Products has taken place till date. In 2015 the WHO Expert Committee on Biological Standardisation came up with a new protocol titled “Regulatory Assessment of Approved RDna derived Bio-Therapeutics” authorities states : “Products already approved under the pre-existing regulations will need to be reassessed to ensure that they meet the new requirement”. In other words national regulatory agencies should undertake a stepwise regulatory review of all biotherapeutic products already authorized for marketing, which do not meet current WHO regulatory expectations. . Thus the new guideline casts doubts on the safety of products approved through alternative regulatory pathways.

WHO's Guidelines on Evaluation of Similar Bio-Therapeutic Products was criticised for its similarity proof requirement. The current situation is summed up by two authors as follows : ““Biosimilars regulatory guidance should be reviewed in light not only of the scientific and regulatory experience gained over time, but also of the needs and interests of national health systems and pharmaceutical markets in low-resource countries . Stringent regulatory authorities such as EMA have already begun to waive requirements for comparability exercise at clinical level under appropriate circumstances. This approach is supported by academic experts who claim that non-comparative clinical trials are sufficient for regulatory purposes, and who call for pragmatic approaches focused primarily on the patients clinical outcomes and on scientific c principles, using the state-of-the-art tools” .

Further, the authors conclude that “The current WHO guidelines on similar biotherapeutic products should be reassessed based on accumulated science and experience, and in ways that foster the development and marketing of quality-assured, safe and effective biological drugs.”.
In 2014, Colombia through a Presidential Decree amended its bio-similar guidelines to enhance access to affordable BTPs. It said: “The decree will allow patients to have therapeutic alternatives of equal quality and lower price and establishes three routes for obtaining registration of bio-similars, which are: The “complete file route”: applicable to new drugs and clinical and pre-clinical tests with animals and humans should be included before approval. The “route of comparability”: applicable to drugs that are not new, but not yet sufficiently known and should include results of comparative studies between the biological drug and the bio-similar. The“short route of comparability”: applicable to known drugs with fully characterized chemical, where there is no need to repeat all experiments with animals and humans, but evidence of studies made to the drug to be produced must be provided”.
Another related issue is that originator companies often block the inter changeability of originator BTP with bio-generics. It is important that inter changeability should be permitted as is currently the case in many countries including in the EU.
This current regulatory framework is based on questionable scientific proof. As a result it prevents access to affordable BTPs’. Current regulations prevent people from enjoying their right to utilise the benefits of scientific progress and its applications (Article 15 .1 (b) of the International Covenant on Economic social and Cultural Rights). Further, it also comprises the enjoyment of Right to Health.
Against this background we propose

Proposal 1

WHO should establish a fresh panel of independent experts, free of conflict of interest, to examine the comparability requirement on the basis of latest scientific evidence and to suggest amendments to the Guidelines on Evaluation of Similar Bio-Therapeutic Products.

Proposal 2

WHO should suspend the implementation of the latest Regulatory Assessment of Approved RDna derived BioTheraupatics till the above mentioned process is over.

Proposal 3

WHO Member States should review their bio similar guidelines and the requirement to demonstrate similarity to quality, non-clinical, and clinical parameters with the originator BTP on the basis of scientific evidence.

Proposal 4

WHO Member States should make public investment to build the technological capability in developing affordable BTPs including mechanisms such as the public funding of clinical trials.

Proposal 5

All UN Member States should allow inter changeability of originator’s BTP with non-orginator BTP.

Proposal 6

Bilateral, regional and plurilateral Free Trade Agreements should not contain language that inhibits sharing of knowhow regarding BTPs, including, for example, language that provides for data exclusivity.

Bibliography and References

Note that in this submission we use the term 'biotherapeutics' for biotechnologically derived originator products and 'biogenerics' for non-originator products
http://cellculturedish.com/2015/03/10-biologics-on-best-selling-drugs-list-for-2014/ also see WHO ELM http://www.who.int/medicines/publications/essentialmedicines/EML2015_8-May-15.pdf
http://www.biopharma-reporter.com/Markets-Regulations/Filgrastim-biosimilar-is-first-Latin-copy-biologic-says-Brazil
http://articles.economictimes.indiatimes.com/2014-12-09/news/56879703_1_rheumatoid-arthritis-first-biosimilar-humira
http://www.who.int/biologicals/areas/biological_therapeutics/BIOTHERAPEUTICS_FOR_WEB_22APRIL2010.pdf
WHA 67.21 http://apps.who.int/gb/ebwha/pdf_files/WHA67-REC1/A67_2014_REC1-en.pdf#page=25 p. 68
http://www.who.int/biologicals/RA_for_BTP_for_WHO_web_editor_2_Nov_2015%282%29.pdf?ua=1
http://www.who.int/biologicals/RA_for_BTP_for_WHO_web_editor_2_Nov_2015(2).pdf?ua=1
http://apps.who.int/medicinedocs/documents/s21311en/s21311en.pdf
ibid
http://www.clarkemodet.com/blog/2014/10/biosimilar-medicines-Colombia.html#.VtLAVSmPI9I
http://gabi-journal.net/interchangeability-an-insurmountable-fifth-hurdle.html

Navneet Tewatia, FORUM OF PARLIAMENTARIANS ON HIV/AIDS

Lead Author: Navneet Tewatia
Additional Authors: Oscar Fernandes, and Dr. D S Ratna Devi
Organization: Forum of Parliamentarians on HIV/AIDS (FPA)
Country: India

Abstract

The availability of generic ARV medicines played a major role in scale up of antiretroviral therapy and reaching 16 million people. Therefore, it is important to ensure the generic availability of new health products to achieve targets set in Sustainable Development Goal (SDG) 3. SDG 3 proposes the use of TRIPS flexibilities and research and development of new health products as a means of implementation to achieve targets. This submission argues that the use of TRIPS flexibilities is challenging due to various reasons. Further, many developing countries are not in position to effectively use the TRIPS flexibilities due to various TRIPS plus obligations accepted and enforced by these countries under various Free Trade Agreements (FTAs) and International Investment Agreements (IIA). Therefore, this submission makes several proposals to reform the current Intellectual Property (IP) obligations of countries to ensure access to achieve SDG 3 targets. It also proposes changes to the current patent based R&D architecture to ensure innovation and access.

Submission

Introduction

Sustainable Development Goal No 3 i.e. Good Health and Well Being sets nine (9) targets. Target no 8 states: “Achieve universal health coverage, including financial risk protection, access to quality essential health-care services and access to safe, effective, quality and affordable essential medicines and vaccines for all”. Further Target 3.3 requires “by 2030, end the epidemics of AIDS, tuberculosis, malaria and neglected tropical diseases and combat hepatitis, water-borne diseases and other Communicable diseases”. Target 3.4 states “by 2030, reduce by one third premature mortality from non-communicable diseases through prevention and treatment and promote mental health and well-being”.

One of the most important conditions for the achievement of the SDG targets, especially those mentioned above is the availability of diagnostics, vaccines, medical devices and medicines (hereafter health technologies). Recognising this important need the means of implementation i.e. SDG 3.b has rightly stated : “Support the research and development of vaccines and medicines for the communicable and noncommunicable diseases that primarily affect developing countries, provide access to affordable essential medicines and vaccines, in accordance with the Doha Declaration on the TRIPS Agreement and Public Health, which affirms the right of developing countries to use to the full the provisions in the Agreement on Trade Related Aspects of Intellectual Property Rights regarding flexibilities to protect public health, and, in particular, provide access to medicines for all”.

The scaling up of antiretroviral therapy is facilitated by the availability of generic medicines at an affordable price. The experience of HIV/AIDS treatment programme clearly shows that if right policies are in place, universal access to treatment can be achieved. The HIV/AIDS experience should be replicated to achieve SDG targets.
We, the parliamentarians, associated with the Forum of Parliamentarians on HIV/AIDS (FPA) have no doubt to state that the important prerequisite to achieve SDG targets is the availability of generic versions of new health products at affordable price. The important step in this regard is the reform of international IP regime especially, the TRIPS Agreement and IP provisions of majority of the Free Trade Agreements.

Thus, this submission covers proposals to reform the current IP obligations of countries to ensure access to achieve targets of SDG 3. Further, it also proposes changes to the current patent based R&D architecture to ensure innovation and access.

Statement of the Problem

The international IP regime imposes stringent obligations on developing countries through the TRIPS Agreement, FTAs and IIAs. These do not address the health R&D needs of developing countries as well as access to new health technologies. Generally speaking these international legal instruments obligate developing countries to provide IP rights over and above the TRIPS Agreement, known as TRIPS plus provisions, such as; product patent protection, data exclusivity and limits the scope of public interest flexibilities. Thus, it compromises the capacity of governments to fulfil its obligations on right to health.

Problem 1 R&D

The predominant model of R&D is based on patent protection. Under this model the pharmaceutical companies are given a temporary monopoly for fixed time period to charge monopoly price over the patented products in return to recoup the R&D investment including the failed R&D investment as well as the disclosure of innovation. This model has three major disadvantages, as explained below:

First, this model does not work in the developing country context because both the governments and people cannot afford to pay high prices for the products. Therefore, the patents based R&D model will not attract investment in diseases predominantly existing in developing countries, thus resulting in a “market failure” with regard to R&D for developing countries.

Second, since the patent system allows the patent holder to set the monopoly prices, access to the outcome of R&D, especially downstream products like vaccines and medicines, is compromised for the majority of people in need.

Third, the patent based R&D system makes people to pay twice. First, the patent system benefits the patent holder without acknowledging the extensive contribution of public funds into the research of the health products research. Second, the patent holder charges exorbitant prices for the price for the health products.

One of the promises of the TRIPS Agreement was that the product patent protection would attract R&D investment to meet health needs of developing countries. However, this has not been materialised even after two decades of the conclusion of the TRIPS Agreement and a decade of compulsory product patent regime in developing countries. A study shows that out of 336 new chemical entities (NCEs) introduced from 2000 to 2011, only 4 NCEs were approved for neglected diseases. Further the study states that out of 148,445 clinical trials registered in December 2011, only 2016 were for neglected diseases. This confirms that compulsory product patent regime results in market failure with regard to R&D for developing countries.

There are several initiatives to address the underfunding of health R&D needs through product development partnerships (PDP). However, PDPs are not a sustainable model and still attracts substantial funding from a single philanthropic foundation i.e. the Bill and Melinda Gates Foundation. There is a need to develop sustainable and predictable funding in this regard.

The market failure on R&D is not limited to health R&D needs of developing countries. There is also market failure with regard to products to meet emerging health emergencies like haemorrhagic fevers like Ebola and new antibiotics.

Efforts to reform the R&D architecture to meet the health needs of developing countries is making a very slow progress at the World Health Organisation (WHO). TheWHO is suggesting setting up a voluntary pool fund under the UNDP, World Bank and WHO joint program on Tropical Disease Research (TDR) programme. However, the proposed pool fund is based on the voluntary funding and may not result in a sustainable financing mechanism.

The demonstration project, which was initiated to test the new R&D model based on the principles recommended by WHO’s Consultative Expert Working Group on Research and Development (CEWG) has so far failed to attract the required finance. “The estimated total financial requirement for implementation of these two activities for four years 2014–2017 is US$ 85 million. Member States were contacted to contribute to this voluntary fund and to date US$ 7.65 million has been contributed”. There is huge gap in the required funding.

This clearly shows the urgent need to put in place a new R&D architecture to address the R&D needs of developing countries, which can address both innovation and access.

Problem 2: Access

The main concern with the TRIPS Agreement is that access to new health technologies are being hindered by patent protection or data exclusivity. The main strategy to address this concern is through using the TRIPS flexibilities. There is no doubt about that the use of TRIPS flexibilities can enhance access to health technologies as its utilization does reduce the cost rather drastically. . For instance, the introduction of generic ARV has brought down the price from USD 10000-12000 to USD 80 for first line ARV treatment. To facilitate free ARV treatment some developing countries have issued compulsory license at several occasions.
Availability of ARVs at an affordable price has helped to realize ARV treatment coverage of 16 million, a millennium development goal target. Similarly, the issuance of compulsory license to an Indian generic company enabled introduction of generic versions of Sorafenib at INR 8,880 (about US$176) for a pack of 120 tablets against Bayer’s price of INR 288000 (USD 5600). It is important to note that the National Institute for Health Care Excellence (NICE) has refused the inclusion of Sorafenib in the public health system due to disproportionate cost compared with the marginal benefit to the patience. However, the circumstances are changing and the use of TRIPS flexibilities is getting increasingly difficult. In this regard the following facts should be noted.
First, the scaling up of first line ARV was possible due to the absence of product patent protection in India, one of the main producers of generic medicines. In 2005, India introduced product patent protection and in the 10 years, following the introduction, generic pipeline appears as drying up. The use of flexibilities in the Patents Act on the scope of patentability has played a major role in preventing patent protection for second line ARV drugs because the second line ARVs were invented prior to 1995. Section 3 (d) of the Indian Patents Act prevents patenting of known substances unless the patentee proves an enhanced efficacy over the known efficacy of the known substance. These safeguards have prevented ever-greening or seeking patents on known molecules. However, molecules invented post-1995 are now being introduced into the market. Most of these molecules are patent protected and access to these molecules will not be possible without using flexibilities like compulsory license. However, the use of TRIPS flexibilities faces many constraints even in India, which has robust pharmaceutical manufacturing capability.
Second, the use of flexibilities such as requesting of compulsory licenses by private companies is a “business decision” for generic pharmaceutical companies. Many factors affect their decisions. Legal uncertainties often prevent generic companies from using this option. Patent holders have immense resources and can complicate use of Compulsory Licenses (CLs) by threatening or engaging in litigation. This has happened to an Indian generic company that obtained a compulsory license. The patent holder initiated multiple litigation processes including appeals against the decision of granting compulsory license. These types of strategies deter generic companies from seeking CLs in future. Further, issuance of CL requires certain procedure requirements such as hearing of the patentee etc. which delays the issuance of CL.
Third, the propaganda by pharmaceutical transnational companies and the political pressure from developed countries has created a chilling effect on the use of TRIPS flexibilities. The Special 301 report of the Office of US Trade Representatives is a case in point as it is tool to exert political pressure on developing countries aimed at deterring the use of flexibilities such as government use.
Fourth, trade and investment agreements containing TRIPS Plus flexibilities compromises the ability of many UN Member states to use the TRIPS flexibilities.
Fifth, the alternative option of voluntary license (VL) has inherent limitations. It is an adhoc approach to promoting access to affordable health technologies, does not facilitate universal access, and may not result in optimal competition due to restrictions imposed on the licensee. It incapacitates government in realizing human rights obligations as the decision of whether or not there is access in a country depends on the terms of the VL. Further, VL can be used by the companies to legitimize frivolous patents and to control competition by carving out middle-income markets.
Sixth, the use of flexibilities also involves institutional capabilities and financial and human resources. A robust patent administration is important to make use of flexibilities related to the scope of patent protection, patent opposition etc. This is lacking many developing countries. Further, investment in human resources is also important to maintain the resource capabilities.
Seventh, most of the developing countries cannot use the TRIPS flexibilities due to the lack of manufacturing capability in the pharmaceutical sector. The waiver of Article 31 (f) does not offer a user-friendly solution because of the cumbersome procedures involved in utilizing the waiver. As a result the whole mechanism has only been invoked once.
The achievement of SDG 3 targets needs a massive scaling up of treatment. This requires the availability of IP protected health products (medicines, vaccines, diagnostics and health devices) at an affordable price through generic production. Therefore, there is a need to reexamine the strategy of TRIPS flexibilities and introduce a way of facilitating the availability of new health technologies that is coherent with States’ human rights obligations especially the right to health. This will facilitate achievement of SDG3
Against the above background we make the following proposals.
Proposal 1
As shown above there are many hurdles and constraints for the effective use of TRIPS flexibilities. These constraints prevent the effective and sustained use of TRIPS flexibilities, which is recognised as a means of implementation i.e SDG 3.b. Therefore, WTO Member States, especially developing countries, should be freed from the international obligation of TRIPS patent regime. Article 27 of the TRIPS Agreement should be amended to provide explicit exclusion of health technologies from the patent protection. In the absence of patent protection, generic companies in the developing countries would be able to produce the new health products without any legal barriers as in the case of patents. This will give the generic companies an automatic non-exclusive right to produce affordable versions of the health product.

In return, generic companies would need to pay a reasonable royalty to the originator companies for a reasonable period of time from the marketing approval of the health product. Details of the royalty mechanism can be developed through further expert consultations.

As an interim measure, a decision to waive the obligation of WTO Member States especially developing countries to grant patent protection to health technologies could be taken.

The above mentioned proposals would provide sufficient policy space for WTO Member States to shape their IP policies including suspension of product patent protection for medicines to facilitate generic production. Departure from the patent obligations of TRIPS Agreement is the most cost effective way to facilitate access to health technologies for massive scale up of treatment compared to use of flexibilities, which suffers from the above-mentioned constraints. This proposal will create a favourable condition for the advancement of human rights.


Proposal 2

Without prejudice to our first proposal, as an alternative we propose an automatic license system whereby UN Member States would amend their patents laws to introduce the automatic licensing of patents for the protection of public health. This is compatible with the TRIPS Agreement as Article 31 waives the requirement of seeking a voluntary license from the patent holder in the case of a national emergency or other circumstance of extreme urgency or in cases of public non-commercial use.

SDG 3.7 targets “By 2030, ensure universal access to sexual and reproductive health-care services, including for family planning, information and education, and the integration of reproductive health into national strategies and programmes”. Therefore all health products required to meet SDG targets including those required for universal health coverage should be treated as non-commercial use with a government administered price and automatic license to be issued to facilitate the generic availability. Under this automatic license generic companies would get a right to use the patented invention against a payment of royalty, which should not exceed 5% of the price of the product.

Proposal 3

In addition, developed country as UN Members should adopt a decision to waive the TRIPS plus IP obligations of developing countries related to health technologies in various free trade agreements (FTA) and international investment protection agreements in order to achieve targets of SDG 3. This is important because TRIPS plus provisions in various free trade agreements would be valid even in the absence of a TRIPS obligation on patenting of health technologies. Further, most of the IP provisions in FTAs also obligate developing countries to implement data exclusivity provisions.

UN member States having data exclusivity provisions in their domestic legislation should waive such requirement for health technologies required for meeting the SDG targets. This is important because in the absence of patents, data exclusivity can prevent the introduction of generic health technologies in the market.

Proposal No. 4

UN Member Sates should begin negotiations to draft a global R&D agreement based on the recommendations of WHO’s Consultative Expert Working Group on Research and Development Finance and Coordination. This agreement should be based on the principle of delinking of cost of R&D from the price of the product.

Bibliography and References

Belen Pedrique et al., The Drug and Vaccine Landscape for Neglected Diseases (2000-11): A Systematic Assessment, 1 (6) The Lancet Global Health (2013) e371 - e379 < http://download.thelancet.com/pdfs/journals/langlo/PIIS2214109X13700780.pdf?id=aaaffLf4nsPBKf-yg8rwu>.
Ibid
See WHO, Follow -up of the report of the Consultative Expert Working Group on Research and Development: Financing and Coordination, EB 138/39
< http://apps.who.int/gb/ebwha/pdf_files/EB138/B138_39-en.pdf >

Ibid
Martin Khor, Compulsory License and “Government Use” to Promote Access to Medicines: Some Examples, TWN, 2014

Matthew Dennis, NICE Rejects Bayer's Nexavar for Advanced Liver Cancer Following Appeal < http://www.firstwordpharma.com/node/653986?tsid=17#axzz30LDJsLRm>.
Report of UNGA, Report of the Special Rapporteur in the field of cultural rights, A/70/279, p. 19, <http://daccess-dds-ny.un.org/doc/UNDOC/GEN/N15/243/83/PDF/N1524383.pdf?OpenElement >. Also see UNITAID, The Trans–Pacific Partnership Agreement: Implications for Access to Medicines and public Health, (March 2014) <http://www.unitaid.eu/images/marketdynamics/publications/TPPA-Report_Final.pdf >

JAMES MALAR, APCASO

Lead Author: James Malar
Additional Author: Jennifer Ho
Organization: APCASO
Country: Thailand

Abstract

Intellectual Property regimes require review to ensure medicines are affordable and accessible for those who are most in need. For people living with (or having lived with) HIV, TB or malaria in developing countries of Asia and the Pacific, the promotion and protection of their right the health is an ongoing struggle. This submission calls for the need for a human rights and equity based approach to intellectual property and describes the Asia Pacific regional experience where essential drugs for HIV, TB and malaria, prevention, diagnostics, treatment and care are a luxury, rather than a right.

Submission

APCASO Submission: High-Level Panel on Access to Medicines

Introduction

APCASO is a Bangkok-based civil society network of community-based (CBOs) and non-governmental organisations (NGOs) on HIV, health, and social development, and with focus on advocacy and community capacity development in Asia and the Pacific. APCASO has prioritised access to essential health services, including access to affordable medicines, in its 2015-2020 Strategic Plan and as the current host of the Global Fund Communities, Rights and Gender Platform for Asia Pacific, will be highlighting the need for great promotion and protection of human rights in the existing or any future international trade and international intellectual property regimes. APCASO hope that this submission to the High-Level Panel ensures that HIV and TB key populations and communities have a voice in the Panel’s deliberations.


Asia Pacific & HIV

Asia and the Pacific has made tremendous progress in tackling the HIV epidemic. The majority of people living with HIV across the region (90%) live in 12 countries; China, Cambodia, India, Indonesia, Malaysia, Myanmar, Nepal, Pakistan, Papua New Guinea, The Philippines, Thailand and Vietnam. India accounts for 2.1 million of those living with HIV. The number of new infections has dramatically reduced since 2001 by 26%, with 350,000 new infections in 2012, however, infections identified among key populations is continuing to rise (UNAIDS ‘AIDS in Asia and the Pacific’ (2013)).

In the region the epidemic is largely characterised by concentrated and growing epidemics in a variety of countries, particularly among key affected populations including men who have sex with men, people who use drugs, sex workers and transgender persons. These populations must be central to any HIV response if there is to be an end of AIDS. Equally, it is key populations who must play a lead role in the response to TB and ensure that no community is left behind.

Currently, there are a number of barriers that impede an effective HIV response. These are broadly categorised as legal and policy barriers (including the criminalisation of key populations but also access to medicines for prevention, treatment, diagnostics and care); and, stigma and discrimination of key populations and people living with the disease particularly at the hands of law enforcement and health service providers. While treatment coverage has steadily increased over the last five years, equating to 51%, a 46% rise since 2009, these barriers remain require a great deal of further thought.

Are medicines affordable in Asia Pacific?

In Asia and the Pacific there are a number of indicators that highlight the significant burden that the price of medicines places on households.

• There are high-level out-of-pocket health % payments (when compared to total health expenditure) in the region. For example, in Myanmar the out-of-pocket health payment accounts for 80.68%, in Lao PDR 61.7% and in Cambodia 60.1%. (Source “Health-financing reforms in Southeast Asia: challenges in achieving universal coverage. Lancet 2011 /Figure for Myanmar: WHO National Health Account database).

• Out of pocket payment is largely for medicines and the proportion spent is closely aligned to social economic status. Drug expenditures consume 70% if the out-of-pocket health expenditures of the poor, while only 53% of the rich, and this 70% are largely spent on heavily marketed non essential and mostly ineffective medications (Source: Alberto Romualdez, Jr. et al, 2010: 94).

• Universal health coverage (UHC) should include comprehensive coverage of essential medicines and should reduce the out-of-pocket health impoverishment that is currently faced by the poor, in Lao PDR for example. (Source World Bank 2010. Out-of-pocket spending and health service utilisation in Lao PDR).

• While UHC should reduce drug expenditure, in Thailand drug expenditure increased at a rate of 9% over 5 years prior to UHC and 34% over 5 years after UHC has been full implemented. (Source Thailand Health Report 2008-10)

• This is particularly troubling given non-communicable diseases are the dominant cause of deaths in ASEAN, for example accounting for 73% in Viet Nam and Malaysia and 71% in Indonesia. (Source: WHO (2014) “Non-communicable Disease Country Profile 2014”)

• Non-communicable diseases are also rapidly increasing in many countries across the region. In Indonesia there has been close to a 20% increase between 1995-2007 in terms of % deaths caused from non-communicable disease.

• In Thailand non-communicable disease burden has increased also. But so has the access to better NCD medicines that have been access through licencing. At the same time, drug expenditures have also increased. (Assessing the implications of Thailand’s government use licenses, issued in 2006-2008”). During the period in time Thailand has seen over 80,000 more people on treatment with a benefit of around $132.4 million USD (Yamabhai, I., et al (2011)).

• For HIV and ART Thailand has seen a 50% increase of people on treatment without increasing budget (Sorakij, B/ National Health Security Office of Thailand).

• However, TRIPS-plus market exclusivity (including data exclusivity and patent term compensation for patent /marketing approval delay) is forecast to result in a 10 year additional cost of USD 5.1 billion which will reduce accessibility of medicines, reduce financial stability and increase out of pocket expenses. (Akaleenohan, C., Wibulpolpratert, S et al (2009) Extension of market exclusivity and its impact on the accessibility to essential medicines in Thailand). Analysis of the effect of TRIPS-Plus propsal. Health Policy 174-182.

• In Vietnam 50.9%, in Myanmar 45.8% and in Thailand 44.1% of total health expenditure goes to pharmaceuticals. (OECD (2012): Health at a Glance: Asia Pacific 2012)

• Vietnam, Myanmar and Lao PDR each experience greater than 10% annual average growth rate in real per capita pharma expenditure. (OECD (2012): Health at a Glance: Asia Pacific 2012)

• Affordability is often a starting point for other areas of critical importance to UHC – such as accessibility, availability, acceptability.

• Multi-drug Resistant TB treatment unaffordable despite growing cases. In Myanmar for example, it is 50x more expensive to access MDR treatment compared to treatment for standard TB.

For many people in Asia Pacific, there is still much to be done in order for those people to have affordable medicines for prevention, diagnostics, treatment and care of HIV, TB and malaria. Medicines are increasing in cost and the most significant burden is falling on the individuals who can least afford to pay it. Compounded, or possibly contributing to, rising rates of non-commutable diseases emphasises why a human rights approach to intellectual property and affordable medicines must be pursued.

A Right to Health

Every person has the inalienable right to accessing affordable medicines. It is the responsibility governments and inventors to ensure financial barriers, stigma or legal barriers do not prevent access or discourage universal health coverage to medicines, particularly for key populations of these diseases. Awareness of how this right is realised is particularly important for members of society who are particularly marginalised or vulnerable, which in the cases of TB and HIV, are the Key Populations.

The Right to Health has a long history in international human rights law. Article 25 of the Universal Declaration of Human Rights declares that:

Everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing, medical care and necessary social services.

The right to health was further developed by Art 12 International Covenant on Economic, Social and Cultural Rights:

(12.1) The State Parties to the present Covenant recognise the right of everyone to the enjoyment of the highest attainable standard of physical and mental health.

As was previously mentioned, the right to health and accessing medicines is a right of all people. However, particular care should be taken to ensure those who are most vulnerable can also realise this right. For TB and HIV, those who are most marginalised are the Key Populations,. Key Populations, as per the Global Fund Key Populations Action Plan 2014 -2017 (p. 5), defines any group that:

• Epidemiologically faces increased vulnerability and/or burden due to a combination of biological, socio-economic and structural factors;
• Access to relevant services is significantly lower for the group than for the rest of the population (and therefore requiring dedicated, strategic investments to increase coverage, equity and accessibility) for such a group; and,
• The group faces frequent human rights violations, systematic disenfranchisement, social and economic marginalisation and/or criminalisation – which increases vulnerability and risk and reduces access to essential services.

Health policies and/or programmes have the ability to either promote or violate human rights, including the right to health, depending on the way they are designed or implemented. All to often however, these key populations are left behind by other stakeholders, their rights are ignored or abused and their existence is further marginalised. While it is not access to affordable medicines alone that is preventing many key populations from realising their right to health, accessing affordable prevention, diagnostics, treatment and care is an important component of an effective response to TB and HIV.

TRIPS & Human Rights

Prior to the signing of GATT in 1994 and the establishment of the WTO the following year, countries had diverse intellectual property regimes. The rationale for TRIPS and a standardised intellectual property regime, is to encourage innovation of new useful products, and through the trade of those products, increase the wealth of WTO members. However, TRIPS can also potentially play a restrictive role in development, including through restricting access to affordable medicines.

Attempts have been made to remedy this detrimental impact of TRIPS. The WTO Declaration on TRIPS and public health makes a strong statement on the respect of fundamental human rights, stating that TRIPS:

can and should be interpreted and implemented in a manner supportive of WTO members’ right to protect public health and, in particular, to promote access to medicines for all.

Articles 7-8 of TRIPS, are where the flexible nature of the agreement, and suggested opportunity for developing countries, is contained. This flexible aspect aims to provide flexibilities to developing countries and can be utilised to serve a variety of objectives, including, public health and nutrition, the promotion and curbing the monopolistic potential of patent rights, and the encouragement of technology transfer and dissemination of knowledge. However, whilst this segment of the TRIPS appears to be of great benefit, flexibilities have been little used and/or only minimally effective – resulting in higher prices and reduces access to key medicines.

There are certainly examples that can convey improved access to medicines through the TRIPS regime, ARVs in Thailand for example. However, in Asia Pacific this example is the minority of cases. There has been minimal usage of licencing, parralell importing and the flexibilities generally, and the stronger TRIPS-Plus arrangements are likely to further hinder access to medicines.

The Global Commission on HIV and the Law Working Paper ‘Access to Medicines: The Role of Intellectual Property Law and Policy’ by Said and Kapczynski identify several key factors that have inhibited the effectiveness of flexibilities: A lack of supportive legal framework, resource constraints and limited coordination and continued unilateral pressure. That being the case, the existing TRIPS system is inadequate, or support services facilitating implementation of the system require reform at the very least.

The HIV and the Law Working Paper also makes a number of key recommendations that APCASO wishes to reiterate. For developed countries, there is a need for an indefinite moratorium on increased IP standards such as TRIPS-Plus. There is a need to credibly commit to not using unilateral threats to enhance IP protections, and all least developed countries should be exempt from compliance.

For developing countries, there is a critical need to adopt robust TRIPS flexibilities into national law as a matter of urgency: Compulsory licencing, parallel importing, retain remedial flexibility, promulgate and potential use of unfair competition laws. Developing countries must take full advantage of the transitional periods and be assisted to implement these changes. Finally, there is need to build capacity in this area. Developing countries (and members of Key Affected Populations in those countries) need to be empowered to understand and engage in patent law at national and international level.

Equity Pricing & Human Rights

In addition to those recommendations highlighted in the previous section, pricing more generally requires further consideration. The high host of many lie-saving drugs not only keeps patients from getting treatment, but also discourages health ministries from improving the quality of patient care through the use of newer or better medicines. (MSF ‘Pills and Pocketbooks’ 2001). Having a more equitable approach to pricing, could see increased access to medications for people living with HIV, TB and malaria but also motivate governments to include such medicines within any universal health care system within the country.

‘Equity pricing’ is something that should be incorporated into the TRIPS regime. That is, the price of the drug is:

fair, equitable and affordable, even for a poor population and/or health system that serves them. Equity pricing is based on the principle that the poor should pay less for, and have access to, essential medicines.

As Medicines Sans Frontieres have elaborated previously, a number of strategies can assist in achieving this:

1. Encourging generic competition – through pro-public health interpretation of TRIPS and active efforts to use compulsory licencing;
2. Differential pricing of drugs – this tiered approach works well in theory, however, there is an unfortunate reliance on the will of companies and the requirement for a strict separation of markets;
3. Adopting TRIPS safeguards into national legislation
4. Creating high volume/ high demand through global regional procurement – possibly through bulk production and pre-qualifying producers; and
5. Encouraging local production through voluntary licencing and technology transfer – largely through voluntary licencing and technology transfer.

To complement this approach, M D Nair (TRIPS and Access to Affordable Drugs: 307) has also suggested more rational R&D models, better drug delivery systems, discovery of new indications for marketed drugs, improved production of marketing logistics which could all contribute to reducing the costs of drugs.

Conclusion

APCASO wants to thank to High-Level Panel for consideration of HIV, TB and malaria community and key populations perspectives within deliberations. For many, medicines in prevention, diagnostics, treatment and care have helped them to remain well and realise a high quality of life. However, for many in Asia Pacific, more work is required. More affordable and accessible medicines, and an intellectual property rights regime that facilitates this it one critical step in ending AIDS, TB and Malaria that can help many in the region realise their right to health. While many submissions may offer greater insight and expertise, we hope to have leant our voice to those submissions requesting greater realisation of rights and equity in international intellectual property regimes design and implementation.

SEBASTIAN SAVILLE, International Doctors for Healthier Drug Policies

Lead Author: Sebastian Saville
Organization: International Doctors for Healthier Drug Policies
Country: UK

Abstract

IDHDP is an international network of over 1250 medical doctors from 100 member states with the objective for health to underpin all future policies aiming to address the world’s drug problem. IDHDP is providing a brief contribution on the inequity of access to pain medication.

In 1998, the UN General Assembly Special Session (UNGASS) on drugs issued a declaration outlining its 10-year strategy to "eliminate or significantly reduce" the cultivation of marijuana, coca, and opium poppies. "A drug-free world -- we can do it!" was the motto adopted.

This strategy has had dreadful consequences for the poorest, most marginalized and already stigmatised members of society. Whether it is incarcerations in the USA, deaths in Mexico, preventable drug-related deaths or HIV and HCV transmission in former Soviet Union countries, it is the poor and disenfranchised who have suffered the consequences.

It is unthinkable that in 2016 – the international drug control system to prevent the misuse of drugs like heroin appears to have contributed strongly in preventing access to opioid analgesics, particularly morphine and creating an unnecessary atmosphere of fear when it comes to the prescribing/dispensing of these drugs for the treatment of pain.

Submission

International drug control systems to prevent the misuse of drugs like heroin are acting as a barrier to access to opioid analgesics for the treatment of pain (1). This in spite of the fact that member states are obliged to ensure controlled medicines are made available and any restriction of access constitutes a violation of the right to health.

This has contributed to a situation where at least 75% of the world’s population, has very little or no access to opioid analgesics, particularly morphine for the treatment of pain (2). This leaves the inevitable situation of huge numbers of people suffering intolerable pain whether dying of cancer, with end-stage AIDS and other terminal illnesses, accidents with acute pain, women in labour and having complications in childbirth, wounded victims of war torn areas or many other situations that bring about severe pain (3).

In what can only be described as a completely unacceptable contrast – the USA, Australia, Canada and the UK consumes 68% of the global supply of opioid drugs (4). These countries seem to have managed quite easily to develop systems to ensure proper access to opioid analgesics for all when it comes to the relief of severe pain.

IDHDP believes that it is time for a completely unambiguous statement from the UN that every member state should prioritize the removal of any obstructions preventing people in their country from receiving opioid analgesics when necessary.

As an organization representing doctors from over half the member states, IDHDP hopes that during UNGASS in April 2016 there will be opportunities to put in place strong directives to make deep and lasting inroads into this terrible injustice. This opportunity must not be lost.

Bibliography and References

1. (Report to the International Federation of Health and Human Rights Organisations (IFHHRO) 2012 http://www.ifhhro.org/images/stories/ifhhro/Books_reports_articles/ifhhro_poor_access_to_pain_treatment_2012.pdf)

2. (INCB Report 2014 https://www.unodc.org/lpo-brazil/en/frontpage/2015/03/04-junta-internacional-de-fiscalizacao-de-entorpecentes-lanca-o-relatorio-anual-de-2014.html)

3. (WHO Briefing Note 2012 http://www.who.int/medicines/areas/quality_safety/ACMP_BrNote_Genrl_EN_Apr2012.pdf)

4. (ESMO Report 2010 http://www.esmo.org/content/download/14123/252826/file/Global-Access-to-Pain-Relief-Evidence-for-Action.pdf)

Els Torreele, OPEN SOCIETY FOUNDATION

Lead Author: Els Torreele
Organization: Open Society Foundation
Country: USA

Abstract

Our current system for medical innovation, though heavily financed by public money, has evolved into a business model designed to maximize return on private investment. It is not effectively responding to critical public health needs and incapable of upholding the right to health. Most new medical products offer little added therapeutic benefit, and the few that do are priced too high for most people and health systems. A radically new approach, “Health Innovation as a Public Good”, is needed to reinstate medical innovation for the public interest. This approach is designed to promote innovation that improves public health outcomes globally, harnessing society’s scientific and technological progress to deliver needed health technologies that are accessible and affordable.

This new approach combines elements from the first-generation non-profit Product Development Partnerships with the government responsibility, financing and leadership present in other sectors of strategic importance such as aerospace and defense. Focused on delivering therapeutic advances, it pursues a mission-oriented R&D pipeline informed by global public health needs. Publicly financed and under direct public leadership, it identifies priorities, deploys public and private sector implementing partners, allocates resources, manages portfolios, and makes critical decisions in a transparent and accountable way. Committed to open science and the commons, results are made publicly available to promote data sharing, crowdsourcing, and follow-on innovation. The resulting therapeutic interventions are public goods that can benefit all.

Financed by public money and not aimed at generating financial return, this new approach is cost-effective and sustainable. As it generates cheaper medicines for all public health needs, the Health budget’s savings made when buying these medicines are reinvested for further innovation. Taken together with less wasteful R&D processes, a broader spectrum of health needs can be addressed in a more efficient way.

Submission

1. Introduction

For a sustainable solution to the chronic crisis in access to medicines, the way in which medical innovation is defined, conducted, regulated and financed must be redesigned. It should be redirected to improve health outcomes as a matter of social justice and rights; not to generate profit. Medical innovation must be designed to generate improved health interventions, available and accessible to all, and contribute to the progressive realization of the right to health. For the purpose of this submission, “Public Health Innovation” will be used to designate medical innovation that addresses unmet health needs globally and delivers therapeutic advances that are affordable and accessible to all .

Despite the widespread belief that biomedical innovation has led to an era of unprecedented medical progress, there is mounting acknowledgement of the deficiency and inefficiency of our current medical innovation model . This model fails because it lacks public health directionality, leaves pharmaceutical innovation in the hands of a profit-driven system that provides few levers for the public to control the way priorities and prices are set, misdirects incentives for research which results in wasteful and duplicative processes, relies on high rent-seeking private finance, and has become unaffordable even for the wealthiest health systems.

In the current model, governments reward private investors who develop new health technologies with patents and monopoly pricing in a non-transparent “market.” This is so even when significant public investment has supported research and irrespective of a new product’s added therapeutic value. Economic and regulatory incentives have resulted in a highly financialized pharmaceutical business sector that fails to deliver the public health innovation we need. The majority of new medicines brought to market offer no therapeutic benefit over existing medicines. The few new drugs that do are unaffordable for most, save the wealthiest and well insured. Critical health needs remain unmet, such as treatment for poverty-related diseases, multidrug-resistant bacterial infections, and emerging infections like Ebola and Zika viruses . Though the challenge of access to medicines has long been a concern for low- and middle-income countries, high prices now threaten equitable access to treatment in the world’s wealthiest countries.

The UN High-Level Panel has the unprecedented opportunity to call for a radical change. It should recommend a new approach to medical innovation that transforms the way the world treats medicines and other health technologies—not as luxury commodities but as public goods. Public Health Innovation must be driven by public health needs and social justice; be transparent and accountable to the population; and deliver products and interventions that improve health outcomes, and that are accessible and affordable to all. This new approach should harness science and technology for the public interest, not profit. It should not rely on private capital that needs return on investment to finance research and development.

This submission lays out the principles of such an approach, but the details—particularly around implementation and governance—will require further thinking and discussion among a broader group of stakeholders, which the panel could initiate.

2. A New Approach: “Health Innovation as a Public Good”

“Health Innovation as a Public Good” (the “New Approach”) combines elements from the first-generation Product Development Partnerships (PDPs), that manage not-for-profit needs-driven health technology development, with the government responsibility that is assumed in other sectors of strategic importance such as aerospace and defense.

In this New Approach, a decentralized network of public and private partners is implementing a mission-oriented R&D pipeline, tightly managed according to target product profiles informed by patient and public health needs. Financed by public money, the network functions under direct public leadership, has a participatory governance structure, and is ultimately accountable to citizens. Following R&D priorities defined by WHO and including all unmet global health needs, it identifies Public Health Innovation opportunities, allocates resources, manages portfolios, and makes critical stop/go decisions in a transparent and accountable way. Results are made publicly available to promote transparent data sharing, crowdsourcing, and follow-on innovation. Resulting therapies are public goods and available at a small margin over cost in what is essentially a generics market (under government license or contract).

In order to be financially sustainable, and in contrast to current approaches that focus on neglected diseases, the New Approach is applied across all global public health needs including therapeutic areas that are targeted by the commercial system and consume a large part of governments’ pharmaceuticals budget (e.g. cancer, hepatitis C, cardiovascular disease). The substantial savings generated from less costly medicines in these areas can be pooled and allocated to Public Health Innovation responding to all health needs, for instance through a global biomedical R&D fund as proposed by others .

Given that it focuses on what the commercial system does not deliver, the New Approach is expected to develop in parallel, building upon ongoing public-interest initiatives that could come together into a crosscutting approach to advance the right to health and address public health needs, utilizing public resources in a cost-effective way.

“Health Innovation as a Public Good” differs from other existing and proposed approaches and initiatives, including PDPs or the WHO/TDR proposed pooled fund for diseases of poverty. Its key defining principles are:
- It is a new systemic approach to Public Health Innovation, as opposed to a focus on only a specific neglected therapeutic niche or neglected population;
- It relies on public leadership, and is accountable to government(s) and citizens through a transparent, participatory governance structure. (These details need to be defined, and would include a critical role for WHO);
- Like PDPs, it actively manages R&D projects and portfolios, from discovery research, to implementation of the health interventions. This differs from the “funding investigator-driven research projects” approach that is customary in the public health sector;
- It considers Public Health Innovation a public good, which does not need to generate return on financial investment. It will be financed by public funds and be driven by public leadership, though the private sector would play an important role as a partner in the innovation process.
- It presents a structural, global, transformative and rights-based solution to the chronic problem of unequal access to medicines and to misdirected medical innovation that results from a market-based approach to health; it is not simply a remedy for the worse symptoms of that approach.


3. Core elements for the design of a “Health Innovation as a Public Good” approach

The current R&D system delivers what it was designed for: sales, profits, and a prosperous pharmaceutical industrial sector. These objectives shape R&D priorities, processes, and financing, in ways that often conflict with Public Health Innovation that is accessible and affordable to all.

In the New Approach, the R&D system is fundamentally redesigned to meet global health needs and improve health outcomes. It consists of the following four elements:

3.1. R&D priorities that are determined by global health needs

Goal: Health-needs are prioritized, available scientific knowledge is utilized, and the sole aim is to improve health outcomes.

What we have now:
The commercialization of medical research creates multiple perverse incentives that steer R&D priorities and decision making away from Public Health Innovation. The profit motive dis-incentivizes the prioritization of cost-effective responses to health needs. Instead, investments aim at maximizing sales and tend to prioritize “me-too” drugs and “evergreening” strategies that provide no therapeutic advance over existing medicines. Without a regulatory requirement to demonstrate added therapeutic value, it is no surprise that more than 70% of new medicines are no better than what existed.6

The lack of Public Health Innovation has been well documented for so-called type II and III diseases, which predominantly affect people living in developing countries. Yet, other health needs remain sidelined, including new antibiotics to combat growing multi-drug resistant infections. Only when infectious disease outbreaks become a global security concern is there financial incentive to fund needed R&D efforts—as with the Ebola and Zika virus outbreaks. Disease prevention and cure is neglected, as chronic or life-long treatments offer better prospects for medicines sales.

Profit motives also create wasteful distortions in the drug R&D processes. Most critically, research skews toward what can be patented and commercialized, rather than what brings most medical benefit. When those two objectives occasionally overlap it is by chance; not design. In its most extreme manifestation, commercial disease mongering has artificially created markets, as in the cases of restless leg syndrome, pre-menstrual dysphoric disorder, or low testosterone. In 2014, 41% of new drugs approved by the FDA targeted rare diseases. While such treatments are needed, Orphan Drug legislations that guarantee high prices and generous profit margins may further skew R&D priorities away from public health needs. A recent study found that in cancer research, many more trials test treatments that could prologue survival of terminal patients by a few months than that would improve long-term survival for early stage cancer patients. The latter studies take longer and are more complex, clashing with financial markets’ demand for immediate gains.

What the New Approach offers:
The efficiency of the R&D process will dramatically increase by focusing squarely on improving health outcomes, without needing to take into consideration patentability, financial markets, or commercial prospects. It will target resources to address public health needs, determined by a WHO-driven process that can build on the recently created Global R&D Observatory. It will mobilize the world’s scientific knowledge and technological capacity to provide cost-effective solutions for those needs. This may involve acquiring government access to patented technologies to further the public interest, as allowed under international law . Freed from the need to only pursue patentable technologies, a wealth of scientific opportunities that remain unexplored—or have been abandoned—will become viable.

Regulatory reform that demands evidence of improved effectiveness over existing options is a straightforward but crucial change that could be enacted today, improve the efficiency of the current system significantly, and be catalytic towards the aspired “Health Innovation as a Public Good” approach described here .

3.2. Sustainable and transparent public financing

Goal: Public financing for that is cost-effective, sustainable, transparent and accountable to the tax payer.

What we have now:
There is significant public investment in R&D throughout the process, including basic research on which much biomedical and medical R&D relies. Product development is often financed, in part, by private capital. The pharmaceutical industry justifies high drug prices by citing the need to yield returns on such investments and to fund future innovation. Despite the lack of transparency on the actual cost of commercial R&D , it is clear that financing medical innovation with private capital is needlessly costly, and that the public ends up paying twice—once for the research, and again for the pricey medicines.

In recent years, the pharmaceutical sector has become exceedingly “financialized.” It is interdependent with speculative financial markets and relies on equity investors and venture capital seeking to maximize returns in the short term. This is made possible by high drug pricing in a third-party payer “market,” and driven by aggressive marketing. Focused narrowly on maximizing shareholder value, pharmaceutical companies spend more on repurchasing their own corporate stock and boost their stock prices than on R&D, while stifling innovation.

In addition, policy makers often assume that public research funding should be used to promote knowledge-based economic growth—by de-risking and bankrolling private sector efforts—rather than to further public health goals. As a result, public investments are typically undervalued when risk and rewards for medical innovation are assigned, and decisions on R&D priorities and prices are left to the private sector despite that their primary objective is to maximize shareholder value.

What the New Approach offers:
Because it relies on public financing (possibly supplemented by philanthropic funding), this approach does not require private capital, which is expensive and demands high and quick returns. Instead, by generating affordable medicines in place of expensive products, the savings produced within health budgets by buying cheaper medicines will be invested in R&D for the public interest, which itself would be less costly and wasteful than the current commercial model (see 3.3).

3.3. Effective and efficient management of R&D processes for improved health outcomes

Goal: Public Health Innovation that is cost-effective, uses available scientific knowledge to improve health outcomes, and is mission-oriented

What we have now:
Though the risk of failure exists at each step along the R&D pipeline, the current system has institutionalized and accepted failure as inevitable attrition, without disciplining it, while transferring its cost to the payer through ever-higher prices.

Many discovery and development projects in the pharmaceuticals industry “fail” not because the candidates are not effective, but because of business considerations. These include, “patent position not strong enough,” “competition too far ahead,” or “expected market size less than another project.” The industry’s many mergers and acquisitions are typically accompanied by closing down R&D centers or portfolios. The resulting loss of knowledge and potentially valuable research is logged as “failure.” And its cost internalized into the overall cost of R&D. 28

A related inefficiency is that the pharma industry discards many potential medical breakthroughs simply because they are non-patentable (compounds that are already known, previously patented, or not inventive enough). Similarly, research efforts are wasted by trying to “invent around” competitors’ patents and by trying to find a patentable compound within a compound class of proven benefit. Other inefficiencies result from research secrecy, causing duplication—if not distortion (see 3.4)—of results, as well as from the lack of mission-oriented research (i.e. with the goal of improving a specific health outcome) that characterizes much of the curiosity-driven or technology-driven innovation.

If the need for patent protection is removed, medical innovation can benefit from existing knowledge, as shown by DNDi’s development of fexinidazole, a resurrected drug candidate that is currently in phase III clinical development as a breakthrough therapy for sleeping sickness, a neglected disease.

In contrast to basic research, biomedical innovation to address health needs and improve health outcomes must be guided by the end result, and closely managed to achieve to desired outcomes (not just scientific publications). An inspiring example from another sector is DARPA, the U.S. Defense Advanced Research Projects Agency. In contrast to NIH and other public health research funding schemes, where funding decisions are based on scientific merit as judged by peer-review, DARPA commissions mission-oriented project research to tackle a well‐defined innovation challenge. Funding recipients are judged based on whether they have met specific milestones, and the development process is actively managed.

An interesting step into that direction was the creation of the US National Center for Advancing Translational Sciences (NCATS). Established to fund and accelerate translational R&D, it focuses on mid to late stage development of new health technologies. By transferring these to the private sector for end-stage development and commercialization, it essentially subsidizes and de-risk the private sector within the current commercial model. As a consequence, and critically distinct from a Public Health Innovation approach, there is no commitment to affordable pricing that would reflect the public contribution, nor is there a development pathway for technologies that could address unmet health needs that are not commercially attractive.

Another interesting example to learn from is BARDA, the Biomedical Advanced Research and Development Authority. It was created by the US government to develop, manufacture and procure medical countermeasures to respond to health security threats like chemical and biological incidents or attacks and public health emergencies, showing that it is possible to harness government responsibility towards needed health innovation, if considered a strategic priority.

What the New Approach offers:
Much wasteful R&D could be eliminated and promising avenues could be freely and fully explored by actively managing mission-oriented R&D projects and portfolios in ways that are analogous to DARPA, BARDA and PDPs. Available science and technology can be harnessed as needed by obtaining government licenses with sole goal of addressing health needs and improving outcomes. The New Approach relies on a combination of grants, milestone prizes, and contracts to enlist relevant public and private partners. Guided by public health needs, independent of patentability or commercial prospect, and focused on efficiency and cost-effectiveness, the economics of Public Health Innovation are more amenable to public financing.

3.4. Transparent and evidence-based innovation, based on independent research

Goal: Reliable and publicly available evidence on safety and efficacy, in particular comparative effectiveness, obtained through independent studies, with open and transparent methods and shared data.

What we have now:
Safety and efficacy research and documentation are held by researchers and companies with vested financial interests in positive outcomes. Under the guise of commercial confidentiality, a systemic lack of transparency in the underlying research data and methods precludes adequate oversight and exposes people to potentially harmful treatments.

Companies tend to highlight products’ potential benefits while downplaying their harms, including hiding known risks. The cases of Vioxx and Avandia are just the tip of this iceberg. In addition, and as highlighted under 3.1, regulators do not require drug makers to demonstrate improved effectiveness over existing products. This has incentivized a flood of “me-too” drugs for which the benefits are not established, but are promoted through heavy marketing30. The public health perils of this situation are increasingly highlighted by public health and human rights campaigners worldwide.

Beyond these harms, there is massive waste and duplication in both public and private clinical research as a result of non-published and non-shared research data.

What the New Approach offers:
An independent global network of existing clinical trial centers committed to Public Health Innovation, will conduct open source public interest clinical research under public leadership. It will work in close collaboration with regulatory and health authorities to design and conduct the clinical development of new candidate treatments with potential public health impact to demonstrate improved effectiveness over available interventions in a cost-effective way. Clinical trial designs, methods, results, and data will be in the public domain, providing full transparency, including on costs, and allowing follow-on research.

Like the regulatory reform proposed under 3.1, building such an independent clinical trial network and initiating public-interest trials is a crucial, and potentially catalytic step towards “Health Innovation as a Public Good” that can be implemented today.

Bibliography and References

REFERENCES
1. Medical innovation can be described as the process by which society addresses individual and public health needs by developing novel preventive or therapeutic strategies that improve health outcomes. Health technologies like diagnostics, medicines, vaccines and medical devices, individually and combined, are elements of that process - tools to achieve improved health outcomes. Medical innovation is thus much broader than developing novel health technologies – it’s about devising and implementing strategies and health interventions that improve health outcomes at the community level, which may or may not include using health technologies (often referred to as health commodities).
2. To clearly distinguish Public Health Innovation from technological innovation that delivers new products or interventions without any therapeutic benefit (and thus not addressing any unmet need), for instance me-too drugs and various types of evergreening
3. D Light & J Lexchin, “Pharmaceutical research and development: what do we get for all that money?” BMJ 2012; 344:e4348 http://www.pharmamyths.net/files/BMJ-Innova_ARTICLE_8-11-12.pdf ; E Torreele, “Only a radical overhaul can reclaim medicines in the public interest”. PloS online 2015, http://blogs.plos.org/yoursay/2015/10/13/talking-about-drug-prices-access-to-medicines/; N Price, “Problems of Innovation-Deficient Pharmaceutical Manufacturing.” NEJM 2013; http://www.nature.com/nrd/journal/v11/n3/abs/nrd3681.html; Public Health, Innovation and Intellectual Property Rights, report of the Commission on Intellectual Property Rights and Health, 2006, http://www.who.int/intellectualproperty/documents/thereport/ENPublicHealthReport.pdf?ua=1
4. M Mazzucato, “Big Pharma ows a debt to society”, Providence Journal 2015, http://www.providencejournal.com/article/20151103/OPINION/151109838; M Mazzucato, “The Creative State”, Project syndicate 2015, http://www.project-syndicate.org/commentary/government-investment-innovation-by-mariana-mazzucato-2015-04
5. W Lazonick, Profits without Prosperity”, Harvard business Review, https://hbr.org/2014/09/profits-without-prosperity; W Lazonick, Tax Dodging Just One Part of Pfizer's Corrupt Business Model, Huffington Post 2015, http://www.huffingtonpost.com/william-lazonick/tax-dodging-just-one-part_b_8721900.html;
6. Prescrire International 2015; 24(159): 107-110. “New drugs and indications in 2014. Some advances this year, but many drugs are poorly evaluated, too expensive, or more dangerous than useful”, http://bit.ly/1Amp61o; Wemos position paper 2014, “Added Therapeutic Value: European citizens should get their money’s worth”, http://bit.ly/1tmYDa5;
7. S Hall, “The Cost of Living: New drugs could extend cancer patients’ lives—by days. At a cost of thousands and thousands of dollars, prompting some doctors to refuse to use them”. New York Times, October 20, 2013. http://nym.ag/1e5jdUR; R Knox, $1000 pill for Hepatitis C spurs debate over drug prices. NPR, December 30, 2013. http://n.pr/1dkkCd7
8. E Porter, “A Dearth of Innovation for Key Drugs”. The New York Times, July 22, 2014. http://nyti.ms/1PX7n2s; E Torreele & P Olliaro, Al Jazeera 2015. http://www.aljazeera.com/indepth/opinion/2014/11/ebola-west-africa-wake-up-call-2014112125429230915.html; B Pedrique et all, “The drug and vaccine landscape for neglected diseases (2000–11): a systematic assessment”, the Lancet 2013, http://www.thelancet.com/pdfs/journals/langlo/PIIS2214-109X(13)70078-0.pdf
9. J Millman. “The drug that’s forcing America’s most important-and uncomfortable-health care debate”. The Washington Post, July 24, 2014. http://wapo.st/1pOM9rf ; E Palmer, “France health minister says EU will fight price of Gilead’s Sovaldi”. Fierce Pharma, July 11, 2014. http://bit.ly/1m7zY5q
10. We use the term Public Good in a broad way, to indicate goods that are benefiting all and therefore should be available to all, a commons rather than a private good (as opposed to the narrower economic meanings it also has).
11. Building upon efforts like the WHO’s Priority Medicines for Europe and the World reports (http://www.who.int/medicines/areas/priority_medicines/en/), their Global Observatory for Health R&D (http://www.who.int/research-observatory/about/en/), and their R&D blueprint (http://www.who.int/csr/research-and-development/blueprint/en/)
12. To illustrate the potential for cost saving: Roche’s revenues over the past 10 years for Herceptin and Avastin were around $40Bn and $55Bn respectively (http://pdl.com/royalty-revenue/historical-product-revenue/); in 2015, Novartis’ expensive cancer drug Gleevec generated $4.6Bn; (http://www.statista.com/statistics/278114/novartis-top-drugs-based-on-revenue/) while Gilead recorded a record revenue of $19Bn from its hepatitis C drugs (http://www.fiercepharma.com/story/gileads-hep-c-juggernaut-continues-q4-even-us-sales-fall/2016-02-02
13. M Balasegaram et al, “A Global Biomedical R&D Fund and Mechanism for Innovations of Public Health Importance”, PLoS Med 2015, http://journals.plos.org/plosmedicine/article?id=10.1371/journal.pmed.1001831
14. D Reddy & M Spigelman,” Product Development Partnerships: an innovative approach to tackling neglected diseases”, 2014, http://devpolicy.org/product-development-partnerships-an-innovative-approach-to-tackling-neglected-diseases-20140528/
15. WHO/TDR 2016, How to accelerate health product development for diseases of poverty http://keionline.org/sites/default/files/2016Fund6%20pager.pdf
16. A Kesselheim, “Rising Health Care Costs and Life-Cycle Management in the Pharmaceutical Market”, PLoS Medicine 2013, http://journals.plos.org/plosmedicine/article?id=10.1371/journal.pmed.1001461; Green & Riggs, “Why Is There No Generic Insulin? Historical Origins of a Modern Problem”, NEMJ 2015, http://www.nejm.org/doi/full/10.1056/NEJMms1411398; Kasia Lipska, “Break up the insulin racket”, 20 Feb 2016, http://www.nytimes.com/2016/02/21/opinion/sunday/break-up-the-insulin-racket.html?_r=0
17. WHO Report of the Consultative Expert Working Group on Research and Development,2012, http://www.who.int/phi/CEWG_Report_Exec_Summary.pdf?ua=1
18. Infectious Diseases Society of America, “Bad bugs, no drugs: as antibiotic discovery stagnates, a public health crisis brews”, 2004, http://www.fda.gov/ohrms/dockets/dockets/04s0233/04s-0233-c000005-03-IDSA-vol1.pdf; WHO Global Action Plan on Antimicrobial Resistance, 2015, http://www.who.int/drugresistance/global_action_plan/en/
19. IP-based incentives are fundamentally unsuited to drive Public Health Innovation. This is mainly because: 1) there is no intrinsic connection between patents and improving health outcomes for patients (patentability criteria do not include improving patient outcomes, and it is impossible to know at the moment when a patent is applied for whether or not the patented technology will work in patients); 2) there are many opportunities for medical innovation that fall outside the realm of technologies that can be patented, such as open source research, innovation in health service delivery, developing off-patent compounds, adapting dose-regimens, or combining existing drugs; 3) many health technologies that are being patented and developed have little or no therapeutic value, but nonetheless are marketed aggressively and divert needed health care resources; and 4) IP is ultimately a tool to reward (private) financial investment, which is at odds with a commons-based approach to providing affordable access to needs-based medical innovation in the most cost-effective way.
20. PLoS Special Theme issue on disease mongering, 2006, http://collections.plos.org/disease-mongering
21. http://blogs.fda.gov/fdavoice/index.php/tag/rare-diseases/
22. J McDuling, “Why rare diseases are big pharma’s latest obsession”, 2013 http://qz.com/145941/why-rare-diseases-are-big-pharmas-latest-obsession/
23. E Budish et al, "Do Firms Underinvest in Long-Term Research? Evidence from Cancer Clinical Trials”, American Economic Review 2015, 105(7): 2044–2085
24. J-A Rottingen et al, “Mapping of available health research and development data: what's there, what's missing, and what role is there for a global observatory? http://www.thelancet.com/pdfs/journals/lancet/PIIS0140-6736(13)61046-6.pdf
25. While IP reform is not sufficient to achieve genuine medical innovation, it will be necessary to enable affordable access to new and existing health technologies as a human right, and also to ensure access to research tools and scientific knowledge. This is the subject of other submissions to the HLP (for instance by Brook Baker and Tahir Amin)
26. See J Powers submission to the HLP
27. E. Steven et al, “The Role of Public-Sector Research in the Discovery of Drugs and Vaccines”, N Engl J Med 2011; 364:535-541, http://www.nejm.org/doi/full/10.1056/NEJMsa1008268
28. There is a longstanding debate (e.g. D Light, 2011, http://bit.ly/1rpmlV1; S Morgan et al, 2011, http://1.usa.gov/1XPSO6i) about the actual cost of developing a new medicine, with cited figures ranging from less than US$40 million in actual R&D expenditures in a non-profit context such as PDPs (e.g. DNDi, 2014, http://bit.ly/1ceGd9w) to US$2.6 billion taking into account the costs of capital and failures in a financialized business model (e.g. Tufts University, 2014, http://bit.ly/1Hfvx6G). Without entering into this discussion here, a critical factor in estimating the cost of bringing successful medical innovation to the patient is the way in which the risk of failure, or attrition, is taken into consideration. Unfortunately there is little debate or transparency about how R&D processes as described here influence attrition rates, and therefore the overall cost of R&D, thereby validating perpetuating the statistics of an inherently wasteful system.
29. W Lazonick & O Tulum, US biopharmaceutical finance and the sustainability of the biotech business”, Research Policy 2011, 40, 1170-1187; Andersson et al, “Bio-Pharma: a financialized business model”, Critical Perspectives on Accounting 2010, 21, 631-641
30. E Rosenthal, “Ask Your Doctor if This Ad Is Right for You, NY Times 2016, http://www.nytimes.com/2016/02/28/sunday-review/ask-your-doctor-if-this-ad-is-right-for-you.html?emc=edit_th_20160228&nl=todaysheadlines&nlid=61241252&_r=0
31. See W Lazonick and colleagues submissions to the HLP
32. M Mazzucato, “How tax payers prop up Big Pharma and how to cap that”, 2015, http://www.latimes.com/opinion/op-ed/la-oe-1027-mazzucato-big-pharma-prices-20151027-story.html
33. W Lazonick & M Mazzucato, “the risk-reward nexus in the innovation-inequality relationship: who takes the risks? Who gets the rewards?”, Industrial and Corporate Change 2013, 22, 1093-1128
34. See M Mazzucato submission to the HLP
35. DNDi, 2014, p.19 in “An Innovative Approach to R&D for neglected patients. Ten years of experience & lessons learned by DNDi”, http://www.dndi.org/images/stories/pdf_aboutDNDi/DNDiModel/DNDi_Modelpaper_2013.pdf
36. http://www.darpa.mil/
37. https://ncats.nih.gov/
38. http://www.phe.gov/about/BARDA/Pages/default.aspx
39. Based on experience, the non-profit PDP DNDi estimates the actual expenditures to develop a new drug for a neglected disease between 30-40 Mn euro, p.20 in “An Innovative Approach to R&D for neglected patients. Ten years of experience & lessons learned by DNDi”, http://www.dndi.org/wp-content/uploads/2009/03/DNDi_Modelpaper_2013.pdf
40. M Angell, “The Truth About the Drug Companies: How They Deceive Us and What to Do About It”, 2004, with summary by author on http://www.nybooks.com/articles/2004/07/15/the-truth-about-the-drug-companies/
41. The AllTrials Campaign for transparency in clinical trial data, an initiative of Ben Goldacre, BMJ, Centre for Evidence-based Medicine, Cochrane Collaboration, James Lind Initiative, PLOS and Sense About Science and is being led in the US by Sense About Science USA, Dartmouth’s Geisel School of Medicine and the Dartmouth Institute for Health Policy & Clinical Practice http://www.alltrials.net/; Wemos position paper 2014, “Added Therapeutic Value: European citizens should get their money’s worth”, http://bit.ly/1tmYDa5
42. T Lemmens & C Telfer, “Access to Information and the Right to Health: The Human Rights Case for Clinical Trials Transparency”, American Journal of Law and Medicine 2012, 38, 63-112, 1932436;
43. C Schmucker et al, Extent of Non-Publication in Cohorts of Studies Approved by Research Ethics Committees or Included in Trial Registries, PLoS ONE 2014, http://journals.plos.org/plosone/article?id=10.1371/journal.pone.0114023; D Gitig, “We’re being left in the dark about over a third of our clinical trials”, Ars Technica 2016, http://arstechnica.com/science/2016/02/were-being-left-in-the-dark-about-over-a-third-of-our-clinical-trials/

Katherine Pettus and Sunil Kumar Aggarwal

Lead Author: Katherine Pettus
Additional Author: Sunil Kumar Aggarwal
Organization: The author is an independent contractor
Country: USA

Abstract

This proposal focuses on expanding accessibility and affordability of medicines essential to the management of severe pain, mental health, and substance use disorders. It recognises their dual status as traditional medicines, which confers additional rights and protections afforded to country-level and local health systems in which they are utilised. States parties have disregarded these protections under their national drug control systems, contributing to crisis-level shortages and/or unavailability of essential controlled pharmaceutical medicines, especially in low and LMIC countries.

Unavailability undermines the human right to health, as well as the guarantees of respecting traditional and nonconventional medicine compounds and health practices. In support of the proposal, reference is made to the central treaty governing "narcotic" drugs as a schema which has granted the pharmaceutical industry monopolistic patent rights to traditional plants and their derivatives and the inability of this schema to withstand intellectual property rights claims scrutiny under existing global trade agreements which require due respect for "prior use" and traditional medical knowledge claims. Given this, the proposal envisages duly licensable local and sovereign in-country production of opium, cannabis, and relevant traditional medicine plants to address under-and untreated population needs in pain relief, palliative care, substance use disorders, mental health care, and other medical and preventive health services with a combination of modern medical scientific community knowledge and practices with traditional medical knowledge.

Submission

Proposal: To encourage UN member states, especially where consumption of controlled medicines for pain, palliative care, mental health and dependence disorders, is low to inadequate according to the International Narcotics Control Board, to wholly produce, manufacture, and regulate these substances for medical and scientific use in their domestic and regional markets, having due regard for constitutional constraints and limitations as well as traditional medicine practices.

IMPACT ON POLICY COHERENCE: The contribution reduces the incoherence in rules between international human rights and trade law, and public health objectives. It addresses the specific aspects of the right to health, and to controlled medicines for palliation and the treatment of pain, substance use, and mental health disorders. Furthermore, it protects and preserves traditional medicine, respects indigenous rights, and enhances the rights of specific demographic groups, within the framework of the Sustainable Development Goals.

IMPACT ON PUBLIC HEALTH: 
The expected results will allow sovereign states to regulate their own medical and scientific access to biotic substances that the pharmaceutical industry has held under state-backed monopoly since the early 20th century, for the commercial preparation of essential medicines controlled under the schedules of the UN drug conventions. Mandatory import and export licenses required by the conventions and in themselves associated with low consumption of controlled medicines, will be moot and unnecessary if countries grow their own, retrieve, preserve, and utilise traditional knowledge, and develop national pharmaceutical industries under compulsory licensing exceptions. The proposal should incentivise the preservation of rich cultural traditions, allow national pharmaceutical companies to become more involved in the market, and reduce the prices of medicines on the WHO Model list, where these have been distorted by non-market mechanisms introduced by non-rational implementation of drug control conventions.


ADVANCING HUMAN RIGHTS: Increasing rational access to controlled medicines allows countries to fulfil their obligation to provide treatment for substance use and mental health disorders as well as to provide pain relief and palliative care for children, adults, and older persons.[1] Human rights experts have reiterated these obligations, which are laid out in multiple sources, including the cornerstone Declaration of Human Rights and the International Covenant on Economic, Social, and Cultural Rights, General Comment 14, and opinio juris.


IMPLEMENTATION: The political, financial and institutional work needed to bring the contribution to its expected results would be considerable, although the groundwork has been laid at the Commission on Narcotic Drugs, the World Health Organisation, the Human Rights Council, the UNGA, the World Trade Organisation, The International Labor Organisation, global civil society, and in the academic and scientific literature. Supporting educational work and training of health professionals by including palliative care, treatment of pain, mental health disorders, and substance use disorders into health curricula, will advance public health outcomes and support achievement of the Sustainable Development Goals.

I. Relevant Facts:
1. Approximately one billion persons have no access to modern health care,[2] 5.5 billion people live in countries with little or no access to controlled medications.[3] Availability of essential medicines in the Low and LMIC is estimated at 60% of need, and essential controlled medicines at less than 20%, with these figures varying greatly between countries, and within countries and regions.[4] This lack of access to medicines is a primary cause of avoidable suffering and death around the world. It also impinges on productivity and economic growth.
2. The Preamble to the Single Convention on Narcotic Drugs makes clear that its overall aim is to advance the “health and welfare of mankind” and explicitly recognizes that “the medical use of narcotic drugs continues to be indispensable for the relief of pain and suffering and that adequate provision must be made to ensure the availability of narcotic drugs for such purposes…”[5] The operational paragraphs of the Convention itself, however, focus heavily on drug control, do not state that countries have an obligation to ensure the adequate availability of controlled medicines, or offer any guidance on what States must undertake to achieve this goal. For example, the Convention sets out reasonable minimum regulatory requirements for the prescribing of controlled medicines at national levels but explicitly allows Member States to impose stricter rules if they deem that necessary. The Convention does not require that such rules be proportionate and avoid interfering needlessly with the availability of controlled medicines.
3. In the absence of specific operational paragraphs guiding states parties in the rational provision of “narcotic drugs [sic] for medical and scientific purposes” the placement of medicines the WHO has designated as “essential” (i.e., morphine in all preparations) in the schedules of the international drug conventions, amounts to the imposition of a de facto trade rule or patent that impedes rational access to those medicines, including to biotic germplasm starting materials, and creates multiple negative public health externalities, including a health workforce untrained in their appropriate use.
4. The UNGASS preparatory process has revealed that a plurality of states, supported by well established civil society organisations, in addition to the academic and scientific communities, want to explore textual “flexibilities” in conventions, and take a public health, and person-centered, rather than criminal justice approach to the “World Drug Problem.”
5. Traditional medicine must be protected beyond intellectual property aspects. The vast quantities of knowledge and wisdom that have been accumulated by traditional and indigenous populations over millennia should be respected, revived, and preserved for future generations. There must be respect for medicinal plants and the communities which cultivate them.[6]
6. Global ageing of populations and the increasing burden of noncommunicable and communicable diseases on all ages and demographic groups, are increasing pressure on UN member states to provide palliative care services for children, adults, and older persons. Such provision will not be possible, especially in low and middle income member states, without national production of traditional medicinal plants, and the participation and support of pharmaceutical industries in provision of controlled medicines.
7. The international drug control treaties, combined with human rights and trade law, provide an enabling normative and technical matrix to support UN member states who wish to do so, to cultivate and manufacture the plants used to make traditional medicines for pain relief, palliative care, and other “medical and scientific purposes.”

Discussion:
1. States’ obligations under international human rights law to ensure equitable access to safe, effective, quality and affordable essential medicines, is complicated by the fact that few responsible authorities are aware of the enabling provisions of the Single Convention on Narcotic Drugs, and have enforced unduly strict supply control measures in conformity with the ideological climate of the “war on drugs.”
2. Although states parties are obliged to limit their licit use of plants and preparations listed in the schedules of the drug control conventions to “medical and scientific purposes,” authoritative and accessible legal interpretation of this “exception” is entirely absent from opinio juris.
3. Under customary, non-expert interpretations, signatories to the treaties are mandated to ensure that persons (natural or artificial) wishing to cultivate, manufacture, or distribute plants or their preparations “for medical and/or scientific purposes,” must obtain special licenses issued by the competent authorities in member states, including import and export licenses where indicated for commercial purposes. Moreover, the International Narcotics Control Board strictly monitors global production, consumption, and distribution of biotic materials and commercial preparations listed in the schedules of the conventions, particularly the Single Convention on Narcotic Drugs.
4. Although cost is a factor affecting access to both controlled and uncontrolled medications, the often unduly restrictive regulations hindering access to those that are controlled (ostensibly to prevent diversion and abuse),[7] reinforce low demand for such medicines. In small markets,[8] pharmaceutical companies either leave or raise the prices of what are often low profit medications, to cover their costs, if produced at all.

II. Legal support for proposal:
1. The Single Convention allows for traditional use, and all “medical and scientific use.”[9]
A. “The term ‘medical purposes’ does not necessarily have the same meaning at all times and under all circumstances. Its interpretation must depend on the stage [type and development] of medical science in the particular time [and place] in question; and not only modern medicine, sometimes referred to as ‘western medicine,’ but also systems of indigenous medicine such as those which exist in China, India and Pakistan, may be taken into account in this connection.”[10] Also taken into account should be geographic patterns of immigration, globalization, and cultural exchange that have brought elements of traditional medicine systems from their origins to other countries where they are intercalated in local medical usage.
B. The Single Convention allows countries to interpret the treaty according to their own “constitutional, legal and administrative systems” (Art.35). Any party that incorporates the right to health or relevant key elements in its constitution would be entitled to take whatever measures were necessary to ensure that its citizens had adequate access to pain relief and palliative care.
2. Parties to the WHO Constitution recognise the right to traditional medicine[11].
3. Right to [the highest attainable standard of] health is supported, at minimum, by the following:
A. Universal Declaration of Human Rights, 1948, (Art.25);
B. International Covenant on Economic, Social and Cultural Rights,1966, (Art.12), General Comment No. 14 of the Committee of the Economic, Social and Cultural Rights, 2000;
C. Convention on the Rights of Child, 1989,
D. African Charter of Human Rights and the Peoples, 1981,
E. Protocol in the American Covenant on Human Rights dedicated to the economic, social and cultural rights,1988,
F. European Social Charter, 1961, and its additional protocols, etc.
G. Mandates of several intergovernmental agencies entrust stakeholders with the responsibilities of realizing the right to health: WHO, UNFPA, UNDP, AU, EU, OAS (Protocol on Rights of Older Persons)
H. Sustainable Development Goals, Goal 3.
4. Under the right to health, states have the obligation:
A. To arrange sufficient installations, resources, services, and functional programs for public health and health care. Many states are failing to fulfill these obligations. By contrast, nonconventional medicines (NCMs) and practitioners are often, or could easily be, readily available in these states, mostly without state investment, due to the health sector’s ability to source widespread existent local resources. For example, in Ghana and Swaziland there are between 10,000- 25,000 patients per modern medical doctor versus 100-200 patients per traditional practitioner.[12]
B. To make health installations, resources, services, and public health and health care programs accessible to all citizens without discrimination. This right to health obligation implies physical, economic, and cultural dimensions of accessibility. Affordability is often an obstacle to accessible formal health services. Yet NCMs often have low costs.
C. To make health care and public health infrastructure, resources, services, and programs readily acceptable to all users in terms of satisfaction with medical ethics and cultural sensitivity.
D. To adopt appropriate legislative, administrative, budgetary, judicial, promotional and other measures to fully realize the right to health, including an “obligation to refrain from prohibiting or impeding traditional preventive care, healing practices and medicines”[13]. Entitlement of right to health includes access to essential medicines[14].

Discussion:
1. The 1961 ratification of the Single Convention on Narcotic Drugs can be read as a multilateral patent grant by the international community to member states with pharmaceutical industries to cultivate, manufacture and market so-called “narcotic” substances derived from commonwealth plants that grow wild all over the planet.
2. The stakes of this interpretation are political: the received global narrative is that narcotic plants and substances are controlled under international law because addiction is “evil” and narcotic substances are harmful when “abused.” This narrative justifies strict national and international regulatory and law enforcement policies to control “illicit” cultivation, manufacture, distribution, and consumption of plants having narcotic properties and the substances derived therefrom. Health information distributed to the public based on such a narrative, insofar as it would only highlight harms of such plants and substances and not therapeutic benefits, would contravene states’ legal obligations to respect the right to health by not engaging in “deliberate withholding or misrepresentation of information vital to health protection or treatment”[15].
3. By embedding all these measures in a normatively “anti-drug” framework, defining any unsupervised (by INCB) production and use as “illegal” or “illicit,” the Single Convention effectively granted to the pharmaceutical industry as it existed in the mid-twentieth century, exclusive legal rights to the world’s biotic commons for industrial purposes and also usurped many traditional, folk, and commons medical and cultural uses of these biota.
4. Ratification amounted to “patenting” the global biotic commons of narcotic plants because viable pharmaceutical industries only existed in the US, Western Europe, the Soviet Union and the UK at that time.
5. There was, and with the exception of India and Brazil, still is, no viable pharmaceutical industry in the global south. There was also a body of traditional medicine that utilised the now outlawed plants and compounds derived therefrom. The de facto patent imposed by the Single Convention de jure trumped those indigenous and traditional intellectual property rights and seed sovereignties.
6. Their traditional sources of “narcotic” medicine having been outlawed, states parties of the drug conventions without pharmaceutical industries are wholly dependent on external pharmaceutical companies for medicines both controlled and “essential” under international law.
7. The view from the intellectual property lens offers some solutions though: if states parties to the WTO accept the argument that the Single Convention amounts to a patent achieved by means of a multilateral treaty, a global intellectual property rights takeover, they may be persuaded to adopt more pro-active strategies utilising the evolving normative framework of international trade mechanisms. These include the Doha Agreements and compulsory licensing.
8. International narcotics control via law enforcement, because it is a different body of international law, amounts to a form of subsidy and state protectionism for the pharmaceutical companies, who then claim free trade privileges that trump indigenous medicine. Countries should be able to claim, for example, intellectual property rights (IPR) in traditional knowledge of opioids and cannabinoids under GATT, thus helping foster local systems for production of cannabis and opium for medicinal purposes in these countries, specifically by utilising traditional knowledge and integrating into health systems.[16]
9. Retrieving, curating, and respecting traditional medicinal and cultural uses, and supporting subsistence farmers of these crops, will introduce a narrative of respect and healing to counter the pre-21st century monolithic narrative of “evil” and “addiction” described above.

III. Implementation of proposal:
1. Governments whose competent authorities report “low to inadequate consumption of medical opioids”[17] can begin by acknowledging the WHO, INCB, and Human Rights Council reports stating that lack of palliative care and under-treatment of pain is a public health and human rights issue in their countries.[18]
2. Supported by national and international government and civil society experts, planners can conduct system-wide needs assessments detailing human and natural resource gaps, regulatory barriers, and educational deficits needed to implement the plan.
3. Matching available evidence regarding the epidemiology of pain-causing conditions such as cancer, AIDS, trauma, maternal child health, etc., against human resources and capacity, will yield baseline policy planning data, and support the development of necessary implementation collaborations. Conducting such needs assessment can be particularly challenging in countries lacking complete demographic data or comprehensive disease registries.[19]
4. Countries that have performed basic needs assessment and multi-level planning processes with affected communities, civil society, and the academic community, can begin to cultivate cannabis and opium poppies for traditional and modern medical and scientific uses.
5. Development assistance should not be predicated on prior eradication of these crops designated by governments for medical and scientific use.
6. Integrated sustainable development should be the guiding principle for crop producing communities. Such development should promote and protect the livelihoods of small scale farmers and rural workers, and should guarantee access to and control over land and common goods.[20]

Discussion:
1. The goal of sustainable development of state health sectors, for affordability and accessibility, must invariably involve maximal usage of locally sourced and renewable resources at the grounds-level, as it is less costly, less perpetually reliant on wholly external inputs, and fosters local sustainability.
2. Countries reliant on importation or having inadequate domestic production of traditional cannabinoid-based and opioid-based preparations and isolates due to restrictions of the Single Convention framework for these plants, can develop local health sector medical and public health systems in which locally cultivated opium and cannabis is internally and adequately sourced for pain relief, palliative care, and other medical and mental health care purposes.
3. Allowing the utilisation of traditional medicinal knowledge regarding controlled medicines would respect, protect, and fulfill the right to health.
4. Prior knowledge and use claims related to traditional medical knowledge and use of opium and cannabis are strong and well-substantiated, traceable to ancient times in many countries that now experience severe shortages and inaccessibility of medicinal preparations derived from these plants. Much of this ancient and early modern knowledge and use has spread globally with human migration and cultural exchange, and much of it prior to the adoption of the Single Convention treaty’s cannabis and opium patent-granting monopoly scheme. For example, to protect it from international biopiracy, India’s traditional knowledge digital library identifies the useful parts of cannabis as being constitutive of the formulation of “bhang”, therapeutically “known for a 1000 years”. Cited as documentation of “prior art” is the 87th section of vol.II of the Al-Aaanoon-fil-Tibb (“Canon of Medicine”), the 11th century Arabic language book written by Abu Ali Ibn Sina, known to medieval Europe scholars as Avicenna[21]. Such well-documented claims would invalidate, under trade agreements, any 20th/21st century commercial or monopoly patenting rights or claims to these plants and establish their open source and holding in commons, and allow for locally licensable use.
5. Rational and expedient health system development and planning for under-treated and untreated populations involving allocation, provisioning, production, stocking, and use of opium and cannabis-based preparations and isolates in implementation of preventive health, rehabilitative, and medical care programs, including pain and palliative care, mental health care, and disease-modifying therapy, will be greatly assisted by utilisation of local workforces, materials, and sustainable resource inputs and guided by traditional and modern scientific community knowledge and practices.

Bibliography and Refereces

REFERENCES

[1] Resolution WHA67.19: Strengthening of palliative care as a component of comprehensive care throughout the life course.
[2] WHO, “Inequalities are killing people on grand scale, reports WHO’s commission,” WHO Press Release, August 28, 2008.
[3] INCB Supplement 2015, Ensuring Adequate Access for Medical and Scientific Purposes.
[4] Bazargani, Yaser T., et al. "Essential medicines are more available than other medicines around the globe." PloS one 9.2 (2014): e87576; MDG Chapter 8e, “Access to Affordable Essential Medicines”;
Global Atlas of Palliative Care at the End of Life.
[5] Preamble, 1961 Single Convention on Narcotic Drugs.
[6] Rodríguez, Emilio La Rosa. 2016. "Ethics and Traditional Medicine."; Alma-Ata Declaration 1978; See WHO, “Background of WHO Congress on Traditional Medicine”, 2008, attended by over 70 member states.
[7] Vranken et al. 2014, “Legal Barriers in Accessing Opioid Medicines: Results of the ATOME Quick Scan of National Legislation of Eastern European Countries”; Husain et al. 2014, “Do national drug control laws ensure the availability of opioids for medical and scientific purposes?”; Cleary et al. 2013, “Formulary availability and regulatory barriers to accessibility of opioids for cancer pain in Africa: A report from the Global Opioid Policy Initiative (GOPI).”
[8] De Lima, Liliana 2015, "Palliative care and pain treatment in the global health agenda"; De Lima, Liliana, et al 2014, "Cross-Sectional Pilot Study to Monitor the Availability, Dispensed Prices, and Affordability of Opioids Around the Globe."
[9] See Thoumi, F 2016. Re-examining the ‘Medical and Scientific’ Basis for Interpreting the Drug Treaties: Does The ‘Regime’ Have Any Clothes? in “After the Drug Wars: report of the LSE Expert Group on the Economics of Drug Policy”.
[10] United Nations, ‘Commentary on the Single Convention on Narcotic Drugs, 1961’, p.111. Thoumi 2016: LSE Report: “without clearly defining the terms ‘medical’ and ‘scientific’ in the conventions, it is logically impossible to claim that there is a unique way to interpret them.”
[11] As defined by the World Health Organization, traditional medicine is “the sum total of the knowledge, skills, and practices based on the theories, beliefs, and experiences indigenous to different cultures, whether explicable or not, used in the maintenance of health as well as in the prevention, diagnosis, improvement or treatment of physical and mental illness.”
[12] Mpinga, Emmanuel Kabengele, et al 2013. "Traditional/alternative medicines and the right to health: key elements for a convention on global health." p.50.
[13] General Comment No. 14. 2000. On the right to the highest attainable standard of health
[14] WHO 2008, The Right to Health Factsheet.
[15] Op. cit. 13.
[16] Mashelkar et al. 2001, “Intellectual property rights and the Third World.”
[17] See Op. Cit. 3 and WHO 2012, “Access to Controlled Medications Programme Component: Developing WHO Clinical Guidelines on Pain Treatment”.
[18] Study on the impact of the world drug problem on the enjoyment of human rights, UN doc. A/HRC/30/65, 4 September 2015.
[19] De Lima, Liliana et al. 2013, "Global framework for noncommunicable diseases: how can we monitor palliative care?"; Akol, Angela et al. 2009, “Demographic data for development decisionmaking: Case studies from Ethiopia and Uganda.”
[20] See “The Heemskerk Declaration: Final declaration of the Global Forum of Producers of Prohibited Plants” January 21, 2016.
[21] Government of India, “Bhang” in Traditional Knowledge Digital Library. Accessed 2/28/2016. http://www.tkdl.res.in/tkdl/LangDefault/Formulation/Demo_Docs/BC/unani/highlight.asp?a=/tkdl/langdefault/formulation/demo_docs/bc/unani/ah1-104.asp&b=cannabis&c=F&stypePrint=GLOBAL-SIMPLE-SEARCH?str=Global


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Sourirajan Srinivasan, LOCOST (Low Cost Standard Therapeutics)

Lead Author: Sourirajan Srinivasan
Organization: Low Cost Standard Therapeutics (LOCOST)
Country: India

Abstract

Access to medicine world over has been highly compromised by many factors including the following:
1. Patents and TRIPS Plus trends
2. High Prices of Pharmaceuticals old and new
3. Lack of Access to Technology, both formulations and APIs and Machinery
This brief paper deals with all the above 3 factors and makes some suggestions to overcome these obstacles to access.

Submission

Access to medicine world over has been highly compromised by many factors including the following:
1. Patents and TRIPS Plus trends
2. High Prices of Pharmaceuticals old and new
3. Lack of Access to Technology, both formulations and APIs and Machinery
This brief paper deals with all the above 3 factors.
1. Patents and TRIPS Plus Trends

1.1 Patents and TRIPS Plus Trends like evergreening and data exclusivity provisions have become a regular feature in bilateral treaties among member states with tremendous asymmetry in GDP and per capita incomes (that is among poor and rich countries or “weak” and “strong” countries). The UN would need to come out with a model Free trade Agreement that suggests to the “weaker” member states as to how not to draft FTAs that will not be in the long interests of such member states. A center constituted by the UNDP or suitable UN agency must provide expert advice that developing countries and LDCs can call upon. Such a center must also provide advice and expertise as to how to draft model patent laws that are consistent with TRIPS and that that does not yield to TRIPS Plus trends and pressures from developed member states. Experience of countries like India on Section 3 d that call for higher standards of patentability, pre-grant, post-grant oppositions, enabling provisions like Compulsory Licences, etc., must be shared with an idea of incorporation into national patent laws of LDCs and developing countries. Assistance and training will also have to be provided to such LDCs as necessary for assessing and evaluating patent applications.

1.2 TRIPS itself must be reviewed as it was supposed to be and some explicit provisions spelling out useful features that can be adopted by member nations must be spelt out and be part of the revised TRIPS (eg., Compulsory Licence Provisions and when it can be invoked and how to take measures against evergreening, etc).

1.3 There is a great need to rethink and reevaluate the basic assumptions of patents as intellectual property rights. There is no clear cut evidence to date that product patents promote innovation especially in the area of pharmaceuticals. If the inventor is to be rewarded, other mechanisms including prize finds must be explored. Product Patents on pharmaceuticals thereafter needs to be abolished or at worst minimized to 7 years as they are anticompetitive and especially in the area of medicines are against the welfare of the human race. A commission be appointed again to consolidate the research findings on patents and innovation and suggest suitable alternatives for encouraging innovation.

1.4 Voluntary licensing must be recognized as a means to promote IPR and monopoly by other means. Member states, especially LDCs, must be discouraged to go in for anticompetitive voluntary licensing arrangements with patent holders.


2. High Prices of Pharmaceuticals Old and New

2.1 Recent trends in the US have seen exorbitant high price increases of older drugs and especially of those that are out of patent. This reveals if anything the worst side of a profit-oriented industry that is pharma and that places profits above people. It is the right of people to have access to affordable medicines. This must be re emphasized in international covenants.

2.2 An information pool/portal that is accessible by all as to sources of low priced quality medicines must be put up with advice as to how to order. Member nations must be encouraged to import on behalf of their governments by sourcing such lower price medicines, or create suitable mechanisms thereof, in the face of extraordinary greed by certain pharma corporations causing extraordinary price hikes of useful drugs leading to life and death crisis in several cases.

2.3 Such a portal will also reveal the true costs of medicines. A Pharmacoeconomics Commission with international authority must be constituted to research on the costs of patented drugs even as it provides transparent information and calculations as to what is the real cost of out of patented formulations. Latter the exercise can be extended to cover APIs and specific technologies used in production and quality control and assurance.

2.4 Pharmaceutical pricing is a human rights issue. Prices of medicines determine the haves and have-nots in health care access. Routine judicial commissions by appropriate UN bodies with powers to pronounce which of such prices are human rights violations by companies must be constituted and with powers to act on private corporations. There is no reason why if UN can legitimize action including collective isolation/boycott including counter offensives on private armed groups/militia in certain areas of the world, something equivalent cannot be thought of with respect to corporate in pharmaceutical sector that violate human rights by unaffordable and exploitative pricing of medicines, patented or otherwise.

2.5 The UN must constitute its own body for arbitral procedures preferably under the umbrella of the International Court of Justice. Private arbitration between nations must be declared against international law especially when the issue is of medicines and human rights. The WTO can continue to arbitrate on routine trade issues even as it must refuse to recognize TRIPS Plus invocations in FTAs and declare them as illegal.



3. Lack of Technology for formulations and APIs and Machinery
3.1 Pharma production has been made into a rocket science which it is not. Nevertheless there is scope for a center (or centers) for dissemination and demystification of pharma production technology internationally and preferably located in a developing country like India. Such a center will train or organize the training of countries interested in the formulation production to begin with. Later it may help in training of technology for APIs and production machinery. Emphasis must be on appropriate technology that is simple and affordable and doable.
3.2 The function of such centers will also be to help plan technology transfers to LDCs and plan for backward integration of technological skills, and products.
3.3 Countries like Bangladesh (who have LDC status till 2033) must be particularly encouraged to move towards self-reliance and self-sufficiency in technology for formulations and APIs.

4. Conclusion
This note has been written on behalf of LOCOST (Low Cost Standard Therapeutics) based out of Vadodara, India. LOCOST, established 1984, is a civil society organisation that manufactures generic formulations and markets them at low prices for over 120 medicines. It has experience of manufacturing and production and technology transfer to Bangladesh and has been a leader in India in promoting awareness and public advocacy of over pricing of medicines in India. Its efforts – in conjunction with other civil society partners like the All-India Drug Action Network (AIDAN) – through public interest litigation (PIL) in the Supreme Court of India has resulted in all drugs in the National List of Essential Drugs to be put under price control in India.

Andrea Lucard, Medicines for Malaria Venture

Lead Author:  Andrea Lucard
Additional Author: Sylvie Fonteilles-Drabek
Organization: Medicines for Malaria Venture
Country: Switzerland

Abstract

Medicines for Malaria Venture (MMV) is a not-for-profit Swiss foundation that discovers, develops and delivers high-quality, low-cost anti-malarial medicines for the endemic world. Since inception in 1999, MMV and its partners have developed six new antimalarials; together with two drugs taken into our portfolio from DNDi, our drugs have enabled over 500 million courses of affordable, quality treatments for the world’s most vulnerable people.

We have developed and delivered these medicines within the current frameworks of intellectual property, and do not find that the current policy environment hinders creation and delivery of affordable products for neglected diseases. Instead, we have used the global policy environment—particularly patent protection—to
• Ensure appropriate freedom-to-operate in the development of these products
• Incentivize commercial partners to contribute resources and know-how
• Safeguard the quality of those products and,
• Stipulate co-investment, access and affordability of the products, using a strong contractual framework with our partners.

To make major changes in our operating model at this time could threaten our ability to help attain SDG3: By 2030, end the epidemics of AIDS, tuberculosis, malaria and neglected tropical diseases . Given the on-going financial commitments made to us by public and private donors to attain this goal, changes of this sort would be of questionable value for money and, moreover, harmful to public health in developing countries.

MMV is one of a group of similar not-for-profit organizations focused on products for neglected populations known as product development partnerships (PDPs). These organizations have been responsible for many of the 485 products that are currently in the pipeline for diseases of poverty. Many of those products have intellectual property (IP) protection that is used creatively to guarantee quality, pricing and access.

Discussions with PDPs in other fields of poverty-related and neglected diseases indicate that experience from similar organizations can be used to compliment and strengthen these findings, should the panel choose this submission.

Submission

The Sustainable Development Goal 3b spells out clearly the requirement for the development of new health technologies:

“Support the research and development of vaccines and medicines for the communicable and non-communicable diseases that primarily affect developing countries, provide access to affordable essential medicines and vaccines, in accordance with the Doha Declaration on the TRIPS Agreement and Public Health”

Engaging in the complex, technical, expensive, and time-consuming process of product development requires actors from many sectors including researchers, academic institutions, biotech firms, pharmaceutical companies, NGOs, product regulators, international bodies and health ministries. This is particularly true for products for diseases of poverty, where market returns are very small or non-existent, and thus where a clear market incentive is insufficient to attract the major pharmaceutical players. In this arena, therefore, a set of processes has been built into the product development partnerships (PDPs), which use existing structures to fill the gaps in medical needs for diseases of poverty, and rely - and will need to continue to do so - on significant grant contributions. The lack of private sector investment is not a result of IP, but from so-called market failures, and IP is used proactively to unblock scientific bottlenecks or address other access concerns along the drug development and delivery continuum. This highlights the need for ongoing public investment to the most vulnerable people in societies around the world who get disproportionally by affected these diseases.


MMV’s IP management strategy for developing antimalarials

MMV was established as a foundation in Switzerland in 1999 with the mission to reduce the burden of malaria in disease-endemic countries by discovering, developing and delivering new, effective and affordable anti-malarial drugs. MMV's partners include academia and research institutes, the pharmaceuticals industry, country partners and not-for-profit organisations. Together, MMV and its partners have brought six new medicines to market, all of which are already being used to treat people across the globe and saving lives.

Developed and refined over the past 15 years, MMV’s IP management policy provides “freedom to operate” to MMV whilst also increasing the attractiveness of projects to future pharmaceutical company partners, whose skills and experience to develop, register and market drugs, especially in the complex clinical phases, is essential. Within a clearly defined ownership framework an Open Innovation model has also been evolved, to stimulate the discovery of hits and leads in the pre-competitive stages of R&D. Appropriate use of IP may also provide a mechanism to challenge the production of poor quality medicines, providing a parallel potential health benefit. This is laid out sequentially below.

Early stage R&D

MMV collaborations in early discovery work are very open and follow an ‘open source’ or ‘open science’ model. That is, very early stage R&D supported by MMV is open, with no assignment or ownership of Intellectual Property Rights (IPRs).

For subsequent development steps, a model of open innovation is employed, in which all IP is shared among partners within a circumscribed ‘closed’ framework whereby information circulates freely within the partnership, but is limited to the partnership. The 'Malaria Box' [Spangenberg, 2013 ] is a good example of an open access initiative operating as part of MMV’s wider IP strategy which can improve efficiencies in early stage R&D [Dimitri, 2011 ].

The Malaria Box’s open model facilitates access to large (industrial) chemical libraries so that scientists are not prevented from moving ahead in translating assays into new and exciting hits due to a priori IP considerations. A condition for access to the compound set is that data obtained with it are shared in the public domain; this ensures there are no obstacles to the rapid publication and use of results, which can happen in a more closed and traditional R&D model. MMV strongly encourages (mandates in the case of the ‘Malaria Box’) that results are published within a reasonable timeframe. This is therefore a situation in which 'Open Innovation' is the most productive model.

Mid-stage and later development

A protected compound is a valuable asset and therefore patent protection is often sought before entering the translation phase of development. Thus, as projects progress, the partnerships and related IP ownership structures become clearly defined among a unique combination of expert partners (Holmes, 2013) . IP ownership is usually shared if academia is involved (often with an assignment of the IP to MMV in order to facilitate future company engagement for the development phases), but if a pharmaceutical company partner is involved, it will tend to assume ownership.

Having clearly defined patent rights at this stage is critical to engage pharmaceutical partners or sustain company interest to develop the drug. In return, a sine qua non condition for pharmaceutical partners is an agreement to specific access terms for the developed products. In its agreements, MMV (akin to most other PDPs) defines the geographic scope, pricing scales and in which sectors a country will have preferential access to the technology (along with any other access issues pertaining to the eventual marketing of the drug) [Grace 2010 ]. In order to ensure that promising projects do not wither if a company partner walks away, MMV ensures that the IP rights are either transferred to MMV or licensed to MMV on an exclusive, worldwide (malaria), paid-up, royalty-free and sub-licensable basis.

In addition to guaranteeing access at the end point of drug development, this IP protection also helps to safeguard the pathway to regulatory approval, by guaranteeing that the data sets submitted to regulators are clear and not confused by parallel but not necessarily comparable clinical trial data sets that conform to Good Clinical Practice.

Enforcing patents

For each of the seven drugs supported by MMV currently in the market, patents have never been used to block the development of generics, and there are several generic versions currently on – or soon to enter - the market. However, if a sub-par generic copy were to be on the market, MMV would be able to invoke patent infringement against the unlicensed generic company in order to block the distribution of the unsafe medicine.


Simplified overview of the MMV IP strategy

For MMV (and other similar PDPs), patent protection has never driven prices up as clear affordability and accessibility principles are embedded in the development and commercialization agreements between MMV and its pharmaceutical partners.

In summary, the MMV IP management policy is modular: each development stage requires a different approach as different partners are involved. MMV works to open up early stage knowledge beyond specific organizational boundaries to enable scientific progress in the field of malaria research, while using patents as a driver of subsequent drug development to bring innovative treatments to malaria patients worldwide. It is an example of how ‘open’ models work in the pre-competitive R&D phase, whilst clear IP ownership models work in subsequent phases (Massum and Harris, 2011 ). In this context, IP is not at all inconsistent with a rights based approach to public health.

Conclusions regarding access to medicines and the PDP model of IP management

For many PDPs, although imperfect, the current IP framework is appropriate, giving certainty to patent owners but allowing rights to be waived or not asserted when desirable. This model respects the notion of health as human right for all and takes a pragmatic approach to solving innovation bottlenecks, providing the incentives, including patents, to partners when needed, whilst giving control to the PDP to achieve their ultimate objectives – the right medicines/technologies, delivered at the right time and at the right price to the people who need them most. Contractual agreements are used to ensure affordable access.

To sum up, “IP and open innovation are […] often complementary” : patents and other IPRs enable knowledge transfer and protection that stimulate innovation (The World Intellectual Property Report, WIPO, 2011 ). In the context of NTDs, while not a panacea, PDPs are an adept and proven approach to addressing the policy incoherence of concern to the High Level Panel on Access to Medicines. Through their IP strategies, PDPs can offer a safe-house for patents and the sharing of knowledge, stimulating efforts in identification of hits in early research phases and catalysing non-commercial but socially valuable projects through the R&D life cycle.

IMPACT ON POLICY COHERENCE: For the PDP model, there is no incoherence in rules between rights of inventors, international human rights laws, trade rules, and public health objectives. PDPs specifically address gaps in R&D for NTDs and ensure equitable pricing and access terms. For this subset of global health issues, they demonstrate that the policy incoherence identified by some commentators does not apply, as long as public funding is forthcoming and the IP framework is applied strategically. As Hotez et al (2013 ) note: “IP rights can also be used in nontraditional ways, for example, to maximize positive social impact of research results and encourage follow-on research without direct monetary returns to the owner (although they are not always mutually exclusive). IP rights are intangible; they can bring additional intangible benefits such as affiliation, reputation, and good will, and other valuable outcomes such as collaboration, diversification of research funding sources, and access to networks and tools. Importantly, IP rights can be used to create industry standards, including more-open standards.”

IMPACT ON PUBLIC HEALTH: Already, PDPs have been responsible for developing more than three quarters of the approximately 380 new products for NTDs that have reached the market since 2000 (Policy Cures, 2015 ). Strategic ownership of IP by MMV and its partners incentivizes innovation to address the diseases of poverty in at least two ways: i) by stimulating the free flow of knowledge in the earliest stages of R&D, where it is most necessary, enabling the basic scientific knowledge to be developed, and ii) ensuring private sector partners join partnerships (during and after translational research phases) to ensure that their resources and know-how are utilized. Furthermore, access provisions are built into all agreements, ensuring that affordability, availability and quality are standard outcomes. In this way, PDPs can address public health needs and achieve impressive results, such as the introduction of more than 43 new products for neglected tropical diseases by 2013 (GHTC 2013 ).

ADVANCING HUMAN RIGHTS: The PDPs’ primary mission is to advance global public health goals as a fundamental human right and pursue the attainment of SDG 3. Access to safe, effective and affordable medicines is a critical pillar of effective health systems. IP is an important incentive to engage private partners in PDPs to take candidates through the critical phases of product development that will ensure that new products become available. Without clear ownership rights, it is unlikely that private sector skills and know-how will be available to PDPs. With this commitment of private partners, the PDP is able to secure commitments to access to ensure that products will be affordable to those who need them most and produced to a high quality. Invoking patent infringement against low quality generic manufacturers also ensures people will have access to safe medicines. Use of the IP system in a strategic and access-oriented way enables the PDP model to advance the human right to health.

IMPLEMENTATION: PDPs have already secured large scale public financing and are a tried and tested model that has been yielding tangible results over the last 20 years (as noted earlier). Securing ongoing commitment to this approach is likely to be much easier than for completely new mechanisms for which the return on public funds may be uncertain. The Wellcome Trust showed that PDPs “have been responsible for increased neglected disease R&D activity and are proving superior in terms of time to market, cost-efficiency, health value and innovative level of the products, when compared with industry working alone and public groups working alone in neglected disease technology development” (cited in Grace 2010).

EVIDENCE: This submission has been based on evidence generated since the establishment of the PDPs. Although the PDPs do receive ongoing funds from a variety of public and not-for-profit sources, the model proposed is limited by the political will and economic feasibility of continuing to fund them.

Recommendations to the High level Panel

1. Recognise that there is currently a functional IP system for the research and development of diseases of poverty, provided that government and private donors continue to focus on entities that focus on diseases with little or no market value.
2. Recognise that PDPs using patents, co-investment and contractual agreements with commercial partners are currently working effectively to ensure attainment of SDG 3 by developing essential new products for NTDs.
3. Maintain a patents system that gives both flexibility and certainty for neglected disease research: IPR and global health policies need to be responsive and decision-oriented, yet predictable.
4. Recognise the value of a ‘sliding scale’ IP model, which can be applied by intermediaries such as PDPs and their partners on a case-by-case basis to guide R&D partners in deciding the strength of IPRs along the R&D pipeline, depending on the types of collaboration needed for particular tasks (and other criteria pertaining to the project). An example of this can be seen in the Lambert Agreements in the UK, which could potentially be adapted for global health purposes.
5. Promote non-exclusive voluntary licensing and other non-IP means to stimulate generic competition and increase efficiencies in medicines markets, with a clear role for not-for-profit and public sector third parties. This can include public funders globally, both bilateral and multilateral, to include more contractual safeguards on access, affordability and adoptability in science and innovation (grant) funding.
6. Review the case for some amendments to the patent framework - including patent quality and patentability criteria. More rigour is needed to prevent poor practices that may hinder innovation and access (Saha 2011) . These issues apply in other complex technology sectors and are not limited to global health (WIPO 2011), although they clearly have serious implications given that lives are at stake. Provisions outlined within the TRIPs agreement provide options to address access issues that may be created by IP.
7. Ensure that the pharmaceutical industry continues to play its role in conducting leading edge R&D, and accelerating access to medicines through:

1. Tiered pricing policies which are based on affordability criteria
2. Developing socially-responsible intellectual property management strategies
3. Non-assertion of patents in LDCs and
4. Working through public-private partnerships to help ensure sustainable improvements in healthcare delivery in poor countries.

Our submission clearly shows that with the right motives and with the right incentives the patent framework can be applied for the public good in an efficient and effective way. We nevertheless recognise that there are various examples where development of promising new health innovations has been held up for long periods of time or made impossible because patents made scientific and/or product development impossible and that additional measures may be needed to address delays in innovations for disease of poverty.

Bibliography and References

Dimitri, N. (2011). An assessment of R&D productivity in the pharmaceutical industry. Trends Pharmacol Sci, 32(12), 683-685

G-FINDER: Global Funding of Innovation for Neglected Disease, 2015 http://policycures.org/g-finder2015.html

Grace, C. (2010) Product Development Partnerships (PDPs): Lessons from PDPs established to develop new health technologies for neglected diseases

Holmes, D. (2013). The GHIT fund shows its cards. Nat Rev Drug Discov, 12(12), 894

Hotez, J, R. Cohen, C. Mimura, T. Yamada, and S. L.. Hoffman. 2013. Strengthening mechanisms to prioritize, coordinate, finance, and execute R&D to meet health needs in developing countries. Discussion Paper, Institute of Medicine, Washington, DC. http://www.iom.edu/StrengtheningMechanismsRD.

Massum H. and Harris R. (2011), Open Source for Neglected Diseases Magic Bullet or Mirage?, Center for Global Health R&D Policy Assessment, Research 4 Development, http://healthresearchpolicy.org/sites/healthresearchpolicy.org/files/assessments/files/Open%20source%20high%20res.pdf

Saha, C. N., & Bhattacharya, S. (2011). Intellectual property rights: An overview and implications in pharmaceutical industry. J Adv Pharm Technol Res, 2(2), 88-93.

Spangenberg, T., Burrows, J. N., et al. (2013). The open access malaria box: a drug discovery catalyst for neglected diseases. PLoS One, 8(6), e62906.

The Global Health Technologies Coalition website: Heath technologies. Available at: http://
www.ghtcoalition.org/files/NPPDnewproductslist_10.21.13.pdf

The World Intellectual property report 2011, available at : http://www.wipo.int/edocs/pubdocs/en/intproperty/944/wipo_pub_944_2011.pdf

United Nations Sustainable Development Information Platform accessible at:
https://sustainabledevelopment.un.org/sdgs

Sean Flynn and Luisa Guzman, AMERICAN UNIVERSITY WASHINGTON COLLEGE OF LAW

Lead Author:  Sean Flynn and Luisa Guzman
Organization: Program on Information Justice and Intellectual Property, American University Washington College of Law
On Behalf Of: Cynthia Ho, Loyola Univ. of Chicago School of Law; David Levine, Elon University School of Law; Gabriel Levitt, PharmacyChecker.com; Heesob Nam, OpenNet; Alina Ng, Mississippi College School of Law; Andrew Rens, African Scholars for Knowledge Justice
Country: USA

Abstract

The Program on Information Justice and Intellectual Property at American University Washington College of Law (PIJIP) is an academic research program devoted to promoting the public interest in national and international intellectual property policy. 

This statement calls on the High-Level Panel to promote policy coherence in the international intellectual property, human rights and global health system in part through a strong articulation and examination of the implications of the human rights duty to interpret and implement all legislation to promote the right to health and corresponding rights to access needed medicines. The submission describes why such a mandate – from the lens of international economic theory – would lead to the conclusion that states must make maximum use of routine compulsory licensing programs for pharmaceuticals to rectify intellectual property and health concerns. It then articulates how adoption of the interpretive rule should justify and motivate specific government actions – including minimizing the scope of patent rights and maximizing the use of routine compulsory licensing – that would help reduce the incoherence between rights of inventors, international human rights laws, trade rules, and public health objectives.

Submission

A.             The High Level Panel Should Expound on the Duty to Interpret and Implement Laws to Promote the Right to Health

In addressing the human rights obligations to promote access to medicines, the High Level Panel should pay particular attention to the duties of states to interpret and implement existing law to promote access to medicines. Such an obligation provides one immediate step that states can take to protect, progressively realize, and fulfil human rights obligations.  

Promoting access to affordable medicines for the poor is a widely recognized human rights duty.[1] Although the most directly applicable right to access to medicine concerns is contained in Article 12 of the International Covenant on Economic, Social, and Cultural Rights (ICESCR), it is notable that many of the sources of the right to health bind countries, such as the United States, which are not signatories to the ICESCR.[2]

The right to health, as all human rights, imposes “three types or levels of obligations on States parties: the obligations to respect, protect and fulfil.”[3] The duty to fulfil the right is sometimes referred to as a positive obligation, which includes the duty "to take steps (…) to the maximum of its available resources, with a view to achieving progressively the full realization of the rights recognized in the present Covenant by all appropriate means, including particularly the adoption of legislative measures.”[4] The obligation to fulfil requires States “to adopt appropriate legislative, administrative, budgetary, judicial, promotional and other measures towards the full realization of the right to health” (emphasis added).[5] By referencing specifically the duties of administrative and judicial arms of the state, the CESCR was highlighting the duties of state agencies to use the key resources at their disposal – which is the interpretation and implementation of law – to promote the right to health.[6]

Human rights duties to use the action of courts and regulatory agencies to promote access to medicine are encompassed as well in the duty to “protect” the right to health, which includes the duty “to regulate the activities of individuals, groups or corporations,” such as multinational pharmaceutical companies, “so as to prevent them from violating the right to health of others.”[7]

So-called “positive” and “negative” duties with regard to human rights are interrelated. Failing to interpret and implement laws to promote access to medicine could lead to state action (e.g. a decision to permit excessive pricing of medicines) that negatively affects existing access to medicines, thereby implicating the duty to “respect” human rights.

The implications of clearly and forcefully recognizing the duty to interpret and implement law to promote access to medicines are far reaching. While in some circumstances the Panel may find that components of the international intellectual property (IP) system inherently conflict with global health and human rights norms and values – more often the conflict between the regimes will lie in their implementation. To avoid such regime conflict, it is paramount that states make every effort to interpret their law – including trade agreements, intellectual property laws and consumer protection and competition laws – to promote access to medicine.     

B.             The need to interpret and implement laws to promote access to medicine arises from the economics of exclusion that intellectual property on medicines in poor countries promotes

My co-authors and I have written on the subject of the economics of exclusion that defines markets for patented medicines in poor and middle income countries.[8] The problem arises because of the extreme inequality of wealth and income that defines the markets in most developing countries. Patent and other IP rights are granted to incentivize invention and production. But these regimes were created for wealthy countries with less extreme inequality than we find in developing countries. Whether or not monopolies of pharmaceuticals benefit consumers through future innovation more than they harm them through higher prices in rich countries, in a market with extreme inequality, the balance of benefits and costs is very different. 

In countries with extreme inequality – where a small part of the population earns globally competitive salaries and the great majority is extremely poor – an unrestrained patent monopoly produces incentives to exclude the vast majority from access. The profit-maximizing firm will raise prices much higher to serve only the very wealthy portion of the demand curve -- which is highly inelastic -- creating large deadweight losses in the form of untreated people. On the other side, engaging in such practices yields very little additional profit to companies (the incentive to research and develop) compared to the global markets which are dominated by demand in wealthy countries. Costs to society from patents on needed products like medicine are enormous; the potential benefit in the form of increased incentive to develop global public goods is miniscule.

To illustrate the problem, I include several charts showing modeled behavior of a firm assumed to be setting prices at about 5% of the earnings of various income segments in different countries. The left chart shows the demand curve that such pricing would create – it shows the price that would occur if set at 5% of various income segments. At left is a chart showing the revenue generated at each price level. So if the price is set at 5% of the top 10% of earners, the assumption is that earners at that level buy the drug (producing the expected revenue) and all other segments would be priced out (producing deadweight loss). What the models show is that firms will predictable serve much larger portions of the market in wealthy countries (the they make more money by lowering prices to increase volume) than in poorer ones, because of the inequality of income.

These problems are structural. The introduction of patent or other monopolies for any essential good or service in a poor and highly unequal country can be expected – absent some other regulation or intervention – to incentivize companies to set prices at exclusionary levels. The $10,000+ being charged for AIDS drugs in the 1990s in Sub Sahara Africa – the same as charged in the U.S. – was not exceptional and it was not irrational. It was the logical outcome of a market that laws created, and laws can cabin. It is a human rights duty to respond to this truth with action.

A.             The High Level Panel should chart the ways that countries can (and must) act to promote access to medicines in the face of the globalization of intellectual property rules

The most globally efficient set of policies under such conditions would be to permit – as in times past – for the poorer and highly unequal countries to be “fair followers” and use the innovations of the wealthy at no or very low cost.[9] Such systems would help solve the access problem that global intellectual property creates – but it does not solve the innovation problem. Other systems of innovation funding are needed to meet the needs of countries whose markets are defined by the inequality described above.

The international IP system does not prevent countries from adopting the kind of routine use of compulsory licensing that is necessary to balance intellectual property with health and human rights obligations – a point that should feature prominently in the work of the Panel. But unlike in the past – where countries could elect to not patent pharmaceuticals or other essential health goods at all – now it requires affirmative state action to implement such systems. A core challenge for the High Level Panel is to move forward toward defining and promoting such systems through the UN system.

1.              The UN Panel should press countries to take full advantage of TRIPS flexibilities to limit the scope, duration and enforcement of pharmaceutical patents

One area where the duty to interpret law to promote the right to health can come into play is in the debate about what “flexibilities” exist in TRIPS to promote access to medicines. Human rights bodies have repeatedly affirmed that the flexibilities available in TRIPS to promote access to medicines must be safeguarded and implemented.[10] It is sometimes

posited that TRIPS and the Doha Declaration on TRIPS and Public Health only safeguard those features – like compulsory licensing and the freedom to allow parallel importation – explicitly mentioned in the TRIPS text. But adoption of a pro-health interpretation of TRIPS would go much further – making clear that the TRIPS flexibilities that countries can and must safeguard include the right to interpret and implement undefined terms in a manner that promotes the right to health and access to medicines.

Such an interpretation would cast light on how to promote coherence between TRIPS and pro-health policies such as those of India, Philippines, Argentina, Brazil (proposed) and other countries to limit patents on new forms and uses of known products. A strong conclusion on this issue may also be relevant to the litigation in the Eli Lilly v. Canada case being litigated under NAFTA.  

1.              The UN Panel should promote the adoption of routine compulsory licensing programs for pharmaceuticals.

An important way to balance intellectual property and public health and human rights concerns, while recognizing administrative efficiency needs, would be to set up a routine compulsory licensing system at nominal royalties such as Canada operated for many years prior to the WTO accords.[11] Such systems could be adopted through public health or competition authorities and the high Level Panel should explore how the UN could promote their creation.

Justifying routine compulsory licensing under international law is an area that calls for coherence between the IP and human rights regimes. It is often posited that a routine compulsory licensing system for medicines would run afoul of the obligation in Article 31 or TRIPS that compulsory licensing be case by case, or afoul of the obligation in Article 27 that IP rights be non-discriminatory. But neither of these arguments are clear on their face. Canada did make case by case determinations as part of its system – it just did so on a rapid basis with strong presumptions favoring licensing at low royalties. And the “discrimination” argument is not conclusive – the WTO has ruled that Article 27 does not prohibit rational differentiation.[12] There can be no more rational differentiation than a policy designed to promote human rights and global health by treating essential goods differently than widgets.[13]

Interpreting TRIPS in line with human rights obligations to promote access to medicines should lead to the conclusion that states are not prohibited from adopting routine compulsory licensing programs for pharmaceuticals– indeed, they may be required to do so where necessary to promote access to medicines. Defining this principle as a matter of international law – and then using UN institutions to promote concrete policy options in this area – would go far toward promoting coherence between public health, IP and human rights objectives.

1.              The UN Panel should promote the use of competition law to achieve routine licensing of pharmaceutical patents

A key policy tool to promote routine licensing, recently endorsed by UNDP, is through adoption or interpretation of “essential facility” and “refusal to deal” standards for needed medicine patents in competition and anti-monopoly laws.[14]

This is an area where a strong duty to promote public health interpretations of local laws (here competition laws) could help motivate states to adopt the kind of affirmative policies needed to achieve access to medicines in the face of the globalization of intellectual property law. TRIPS is very permissive with regard to what competition policies can be applied to the exercise of intellectual property rights.[15] Whether an essential facility or refusal to deal ground in a competition law can apply to a refusal to license a state granted intellectual property right is an open question of law interpretation in most countries.

Competition laws generally authorize compulsory dealing wherever the refusal to deal with a competitor maintains or extends the monopoly and causes more social harm than benefit. As discussed above, the economic case for why exclusionary practices for medicine suppliers cause more harm than good in developing countries is clear. The barrier to applying such grounds to patents is most often one of interpretation, e.g. whether an ambiguous definition of a monopoly, when silent as to its relation to intellectual property, should be applied to refusals to license patent rights.

There is a clear example where uses of competition law to promote licensing of pharmaceuticals has worked. In 2013, the South African Competition Commission embraced this reasoning and demanded licensing on key aids drugs under refusal to deal and essential facility grounds.[16] This action gave a strong regulatory incentive for other medicine suppliers to license their innovations before entering the South African market. A strong embrace of this norm elsewhere could promote routine licensing needed to lower costs without routine intervention or resort to compulsory licenses.

There are numerous agencies in the UN, including UNCTAD and UNDP, that have expertise in competition law. They should be convened with public health agencies, such as those at the WHO and UNAIDS, to work with countries to adopt widespread use of competition law strategies to promote access to medicines as one key step toward balancing human rights, global health and intellectual property laws.    

A.             The UN Panel should address the actions of countries that actively thwart use of pro-access interpretations and implementation of international law, including through unilateral trade pressure

One of the biggest barriers to the widespread adoption of policies that would promote access to medicine and implicates human rights duties is foreign policy pressure.

States are bound to promote and protect the rights to life and health not only of their own citizens, but also of the citizens of other countries affected by foreign policy, trade and assistance programs.[17] These duties include human rights obligations to avoid pressuring developing countries to give up the use of TRIPS flexibilities to promote access to medicine.[18]

The World Trade Organization’s 2001 Doha Declaration on TRIPS and Public Health was passed in direct response to U.S. pressure that sought to minimize exceptions and maximize the rights of intellectual property owners in the face of a burgeoning health crisis.[19] The agreement affirmed “the right of WTO Members to use, to the full, the provisions in the TRIPS Agreement, which provide flexibility [to promote access to medicines for all].” The World Health Organization has frequently pressed developing countries to maximize the use of TRIPS flexibilities to promote access to medicine.[20]

One of the central tools used by the U.S. to promote “TRIPS-plus” policies on access to medicines has been the “Special 301” program.[21] Another is through its free trade agreement negotiations.[22]

This an area where a pro-access interpretation of international law would be helpful. There are strong arguments that the U.S’s continued use of its Special 301 program to threaten or deny general system of preferences or other trade benefits violates the World Trade Organization ban on unilateral dispute resolution as well as ban on reciprocal, discriminatory or non-development oriented GSP programs.[23] Using a pro-access interpretation of the WTO agreement strengthens these arguments. It would be useful for the Panel to explain how a pro-access interpretation of the WTO accords would favor a determination that the continuation of 301 pressure on developing countries on medicines issues is in contravention of a coherent interpretation of international trade and human rights law.

The High Level Panel should review U.S. policy in this area and make recommendations on how it should promote coherence between IP, global health and human rights systems. This review should include how international enforcement systems – such as the human rights enforcement system and the WTO ban on unilateral trade action – could be brought to bear.   

[19] See Ellen ‘t Hoen, Trips, Pharmaceutical Patents, and Access to Essential Medicines: A Long Way from Seattle to Doha, 3 Chicago Journal of International Law 27, 30-42 (2002).

[20] See WHO, Report of the Commission on Intellectual Property Rights, Innovation and Public Health, at 126 (Apr. 2006); WHO, Global Strategy and Plan of Action on Public Health, Innovation and Intellectual Property of the Sixty-first World Health Assembly, WHA61.21, element 5.2.c, (May 24, 2008); WHO, Globalization, TRIPS and Access to Pharmaceuticals, WHO/EDM/2001.2 at 4-5 (Mar. 2001).

[21] See Special 301 and Global Administrative Law in Balancing Wealth and Health: The Battle Over Intellectual Property and Access to Medicines in Latin America (Rochelle Dreyfuss and Cesar Rodriguez-Garavito eds. 2014); Special 301 of the Trade Act of 1974 and Access to Medicine, 309 Journal of Generic Medicines 1 (2010); Sean Flynn, What is Special 301? A Historical Primer, http://infojustice.org/archives/29465

[22] The US Proposal for an Intellectual Property Chapter in the Trans-Pacific Partnership Agreement, 28 AUILR 105 (2013) (with Brook Baker, Margot Kaminski and Jimmy Koo).

[23] See Sean Flynn, How Listing Ukraine As A Priority Foreign Country In Special 301 Violates WTO Agreements, http://www.ip-watch.org/2013/05/13/how-listing-ukraine-as-a-priority-foreign-country-in-special-301-violates-wto-agreements/.

Bibliography and References

[1] U.N. Comm. on Econ. Soc. & Cultural Rights [CESCR], General Comment No. 14: The Right to the Highest Attainable Standard of Health, ¶ 2, E/C.12/2000/4 (2000).

[2] For example, health and social policies which increase mortality and morbidity implicate the right to life in Article 6(1) of the International Covenant on Civil and Political Rights  as well as Articles 22 and 25.1 of the Universal Declaration of Human Rights. Universal Declaration of Human Rights, G.A. Res. 217A(III), at Arts. 22, 25, U.N. GAOR, 3d Sess., U.N. Doc. A/810 (Dec. 12, 1948) (protecting “the economic, social and cultural rights indispensable for his dignity” and “the right to a standard of living adequate for the health of himself and of his family, including . . . medical care”)

[3] CESCR, General Comment No. 14, ¶  33.

[4] ICESCR, Art. 2(1).

[5]  CESCR, General Comment No. 14, ¶  33.

[6] Perhaps the clearest expression of the duty to promote human rights through interpretation can be found in Article 39(2) of the South African Constitution:

(2) When interpreting any legislation, and when developing the common law or customary law, every court, tribunal or forum must promote the spirit, purport and objects of the Bill of Rights.

[7] CESCR, General Comment No. 14, ¶ 51.

[8] Sean Flynn, Aidan Hollis & Mike Palmedo, An Economic Justification for Open Access to Essential Medicine Patents in Developing Countries, 37 J.L. MED. & ETHICS 184 (2009); Eina V. Wong, Inequality and Pharmaceutical Drug Pricing: An Empirical Exercise (Ctr. for Econ. Analysis, Econ. Dep’t, Univ. of Colo. at Boulder, Working Paper No. 02-19, 2002).

[9] See Jerome H. Reichman, From Free Riders to Fair Followers: Global Competition Under the TRIPS Agreement, 29 New York University Journal of International Law & Politics 11-93 (1996).

 http://scholarship.law.duke.edu/faculty_scholarship/95/

[10] See “Human Rights and Intellectual Property” Statement by the Committee on Economic, Social and Cultural Rights,” Follow-up to the day of general discussion on article 15.1( c), 26 November 2001, E/C.12/2001/15, 14 Dec. 2001, ¶ 2-3 (“any intellectual property regime that makes it more difficult for a State party to comply with its core obligations in relation to health, food, education, especially, or with any other right set out in the Covenant is inconsistent with the legally binding [human rights] obligations of the state party”); African Commission on Human and Peoples’ Rights, Resolution on Access to Health and needed Medicines in Africa, ACHPR/Res.141 (XXXXIIII)08 (November 24, 2008) (defining the human rights duty of “refraining from measures that negatively affect access, such as “(…) implementing intellectual property policies that do not take full advantage of all flexibilities in the WTO Agreement on Trade Related Aspects of Intellectual Property that promote access to affordable medicines, including entering “TRIPS Plus” free trade agreements”); U.N. Human Rights Council [UNHRC], Report of the Special Rapporteur on the Right of Everyone to the Enjoyment of the Highest Attainable Standard of Physical and Mental Health, Anand Grover, 31 March 2009, A/HRC/11/12 at ¶ 27 (developing countries “should incorporate the flexibility to: (a) Make full use of the transition periods; (b) Define the criteria of patentability; (c) Issue compulsory licenses and provide for government use; (d) Adopt the international exhaustion principle, to facilitate parallel importation; (e) Create limited exceptions to patent rights; (f) Allow for opposition and revocation procedures. In addition, countries need to have strong pro-competitive measures to limit abuse of the patent system.”
 

[11] See Jerome Reichman, Non-voluntary Licensing of Patented Inventions Historical Perspective, Legal Framework under TRIPS, and an Overview of the Practice in Canada and the USA, UNCTADICTSD Project on IPRs and Sustainable Development, Issue Paper No.5 (2003). http://www.ictsd.org/downloads/2008/06/cs_reichman_hasenzahl.pdf

[12] See Canada — Patent Protection of Pharmaceutical Products, WTO Panel Decision DS114.

[13] See Carlos Correa, Implications of the Doha Declaration on the TRIPS Agreement and Public Health, World Health Organization, EDM Series No. 12, WHO/EDM/PAR/2002.3, 43-44 (2002) (“It is implicit within the Doha Declaration that differentiation in patent rules may be necessary to protect public health. The singling out of public health, and in particular pharmaceuticals as an issue needing special attention in TRIPS implementation constitutes recognition that public health-related patents deserve to be treated differently from other patents.”). http://www.who.int/medicines/areas/policy/WHO_EDM_PAR_2002.3.pdf
 

[14] Abbott, Frederick M., Sean M. Flynn, Carlos M. Correa, Jonathan Michael Berger, and Natasha Nayak, UNDP, Using Competition Law to Promote Access to Health Technologies: A Guidebook for Low-and Middle-Income Countries, (2014). http://www.undp.org/content/undp/en/home/librarypage/hiv-aids/using-competition-law-to-promote-access-to-medicine.html. See generally Sean Flynn, Using Competition Law to Promote Access to Knowledge, Access to Knowledge in the Age of Intellectual Property, Zone Books, MIT Press, (2010). http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1654023

[15]  See TRIPS Article 31(b), (f), (k) (waiving duties to prior negotiate and restrict licenses to domestic markets and authorizing: “the need to correct anti-competitive practices may be taken into account in determining the amount of remuneration”). See Doha Declaration on the TRIPS Agreement and Public Health, Paragraph 5. For a discussion of the legal implications of the Doha Agreement, see Carlos Correa, Implications of the Doha Declaration on the TRIPS Agreement and Public Health, World Health Organization, Health Economics and Drugs, EDM Series No. 12 (2002) (“Each Member has the right to grant compulsory licenses and the freedom to determine the grounds upon which such licenses are granted”).
 

[16] See CPTech's 2003 reports for the RSA Competition Commission, in Hazel Tau et al.v GSK, Boehringer, et al. http://keionline.org/node/2074

[17] ICESCR, Art.2(1) (requiring “to undertakes to take steps, individually and through international assistance and co-operation”),  Universal Declaration of Human Rights, G.A. Res. 217A(III), at Arts. 22, 28, U.N. GAOR, 3d Sess., U.N. Doc. A/810 (Dec. 12, 1948) (requiring “national effort and international cooperation” and that “[e]veryone is entitled to a social and international order in which the rights and freedoms set forth in this Declaration can be fully realized.”); U.N. Charter arts. 55-56 (calling on members to take “joint and several action” to promote “a higher standard of living,” “solutions of international economic, social health and related problems,” and “universal respect for, and observance of, human rights”); Denmark, Summary Record, ¶ 7, E/C.12/2004/SR.37 (Nov. 16, 2004).

[18] See UNHCR, Comm. on the Rights of the Child, Concluding Observations: Thailand, ¶ 58(f), CRC/C/THA/CO/2 (Mar. 17, 2006) (admonishing Thailand to “[e]nsure that regional and other free trade agreements do not have a negative impact on the enjoyment of the right to health”); UNHCR, Comm. on the Rights of the Child, Concluding Observations: Peru, ¶¶ 48-49, CRC/C/PER/CO/3 (Mar. 14, 2006); UNHCR, Comm. on the Rights of the Child, Concluding Observations: Ecuador, Concluding Observations, ¶ 21, CRC/C/15/Add.262 (Sept. 13, 2005); UNHCR, Comm. on the Rights of the Child, Concluding Observations: Nicaragua, ¶ 16, CRC/C/15/Add.265 (Sept. 21, 2005); UNHCR, Comm. on the Rights of the Child, Concluding Observations: Philippines, ¶ 59, CRC/C/15/Add.259 (June 3, 2005) (recommending that the State use “all the flexibilities reaffirmed by the Doha Declaration . . . to ensure access to affordable medicines”); UNHCR, Comm. on the Rights of the Child, Concluding Observations: Chile, ¶ 59, E/C.12/1/Add.105 (Nov. 26, 2004) (encouraging Chile “to provide greater access to generic medicine making use of the flexibility clauses permitted in [TRIPS]”); UNHCR, Comm. on the Rights of the Child, Concluding Observations: Ecuador, ¶ 55, E/C.12/1/Add.100 (June 7, 2004) (“strongly urges the State party . . . to make extensive use of the flexibility clauses permitted in [TRIPS] in order to ensure access to generic medicine”); UNHCR, Comm. on the Rights of the Child, Concluding Observations: Botswana, ¶ 20, CRC/C/15/Add.242 (Nov. 3, 2004); UNHCR, Comm. on the Rights of the Child, Concluding Observations: El Salvador, ¶¶ 47-48, CRC/C/15/Add.232 (June 30, 2004); UNHCR, Comm. on the Rights of the Child, Concluding Observations: Uganda, CCPR/CO/80/UGA (May 4, 2004).

Marcela Vieira, Working Group on Intellectual Property of the Brazilian Network for the Integration of the Peoples_A

Lead Author:  Marcela Vieira
Organization: Working Group on Intellectual Property of the Brazilian Network for the Integration of the Peoples
Additional Authors: Pedro Villardi, Felipe Carvalho, Carolinne Scopel, Oseias Cerqueira, Clara Alves, Marina Luna (GTPI/Rebrip - Brazil)
Country: Brazil

****GTPI is composed by the following organizations: (1) ABIA – Brazilian Interdisciplinary AIDS Association; Conectas Human Rights; RNP+/MA - Network of People Living with HIV/AIDS Maranhão; FENAFAR – National Federation of Pharmacists; GAPA/SP – Support Group for AIDS Prevention in São Paulo; GAPA/RS – Support Group for AIDS Prevention in Rio Grande do Sul; GESTOS – GESTOS - HIV+, Communication and Gender; GIV – Incentive to Life Group; Group for Life in São Paulo; Group for Life in Rio de Janeiro; GRAB – Resistance Group Asa Branca; IDEC – Brazilian Institute for Consumers Protection; UAEM – Universities Allied for Essential Medicines – Brazil. More information available at: http://www.deolhonaspatentes.org.br.

Abstarct

Over the last decades, the protection of intellectual property (IP) has been the main mechanism adopted to promote research and development (R&D). However, the IP system has been inefficient to promote R&D to address the main health problems of world’s population. When products are developed, the IP system has created barriers to access to lifesaving health technologies. Barriers to access include high prices that are set by patent-holders during a period of time in which they have the exclusivity to explore the technology, allegedly as a mean to recoup their R&D investments. After two decades of WTO TRIPS Agreement, there is plenty of evidence showing that this exclusivity implies on the increase of medicines’ prices and the reduction of access to them. 

While it is necessary to adopt a R&D system on health that will not have the innovation and access problems existing in the IP system, there are also measures that can be adopted under the current system to reduce negative impacts of patents on access to medicines. Since 2001, Brazil has adopted a mechanism of joint analysis of patent applications in the pharmaceutical sector by the patent office and by the health agency, known as “Anvisa’s prior consent”. This has been an important measure to avoid unmerited patent monopolies that could hinder state’s capacity to fulfill the constitutional right to health. 

This contribution highlights the importance of the Anvisa’s prior consent in the fulfillment of the right to health in Brazil, by assuring a rigorous analysis of pharmaceutical patent applications. We call on the UN HLP to urge countries to adopt mechanisms to provide a stricter examination of patents applications in the health sector - such as Anvisa’s prior consent - and to stop questioning the application of such mechanisms by countries that adopt them.
 

Submission

Introduction – Statement of the problem

The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), signed in 1994, set minimum common intellectual property protection standards to be adopted by the World Trade Organization (WTO) members. According to TRIPS, WTO members had to recognize patents for all technological fields, including pharmaceutical sector. The TRIPS Agreement, therefore, placed medicines and other health-related technologies in the trade arena. After 20 years, it has been shown that TRIPS generates great negative social impact, since high drug prices caused by patent monopolies excludes millions of people from access to health technologies in low, middle and even high-income countries. The monopoly created by pharmaceutical patents increases the price of medicines because only one company can manufacture the medicine. It increases public and private spending on purchasing medicines and hinders the sustainability of the countries’ health systems. This has been extensively demonstrated in many documents[1]. The UN system already recognized the concerns about intellectual property protection effects on prices[2].

In order to minimize those negative effects of patents on health, TRIPS have established that WTO members countries “shall be free to determine the appropriate method of implementing the provisions of this Agreement within their own legal system and practice” (article 1) and can “adopt measures necessary to protect public health and nutrition, and to promote the public interest in sectors of vital importance to their socio-economic and technological development” (article 8), such as the health sector.

A key aspect of TRIPS implementation is how countries examine patents applications. Depending on how the examination guidelines are defined, more or less patents are granted or rejected. If more patents are granted, more monopolies are created, more technologies are taken away from the public domain and higher are the prices and lower the access. If less patents are granted, more technologies are on the public domain, more producers can manufacture the technologies, prices drop and access increases. In a public health perspective, patent examination should follow a strict standard in order to focus on genuine innovation and prevent monopolistic practices on products that are already known, hindering access by delaying the entry of generic drugs on the market [3].

Considering this relation, Brazilian authorities understood that pharmaceutical patents deserved a more careful analysis in order to reduce the negative impact on the fulfillment of the right to health and life and have adopted some measures to avoid granting of unmerited patents. In 2001, Brazil included in this national legislation the participation of health professionals in the process of examination of pharmaceutical patent applications, requiring the prior consent of Anvisa (Brazilian Health Surveillance Agency) for any patent to be granted (article 229-C, Law 9.279/96). Health professionals’ participation on the analysis of pharmaceutical patents is a measure that can be adopted by countries in order to protect public health, according to the TRIPS Agreement Article 8.

Since then, pharmaceutical patents can only be granted with the consent of Anvisa and the patent office (Intellectual Property National Institute - INPI) analysis - a double-step analysis. The rationale behind this mechanism is to give the as much accurate technical analyses as possible to patents filed in the pharmaceutical sector, by including the expertise and the interpretation of public health sector in the country. This way, the patent examination process reflects the understanding that patents are not just an industry and trade issue, but has also impacts on public health policies.

Anvisa’s role is to analyse the fulfillment of the patentability criteria as established by the Brazilian national law, in order to prevent granting of unmerited patents and also to improve the quality of the patents granted. The Anvisa’s prior consent is an important instrument that can be added to the analysis done by the patent office, making these two essential institutions work together in the pharmaceutical patents analysis.

Anvisa’s prior consent as a public health protective measure

The high prices of medicines and other health technologies are widely recognized as one of the main obstacles to the implementation of public health policies. In recognition of the foreseeable impact of monopolies on medicines prices and therefore in the sustainability of health public policies, TRIPS included a full range of permissible exceptions and protective measures, known in the literature as “safeguards”, “health protective measures” or “flexibilities”.

In 2001, the WTO member countries, including Brazil, approved by consensus in Doha, Qatar, the Declaration on TRIPS Agreement and Public Health, under which countries agreed that TRIPS does not and should not prevent members from taking measures to protect public health. In this sense, they reaffirm the right of WTO members to use, to the full, the provisions in the Agreement and to exercise its sovereignty, which include adding measures to assure the country's’ population access to medicines.

The UN Committee on Economic, Social and Cultural Rights has recognized that any intellectual property regime that makes it more difficult for a State party to comply with its core obligations in relation to health is inconsistent with the legally binding obligations of the State part [4]. Furthermore, the UN also recognized not only the right but also the duty of states to make full use of TRIPS safeguards to promote public health. The UN Human Rights Council, recognizing the need for states to create favorable conditions to ensure the full and effective enjoyment of the right to health, has urged states to make full use of the health-protective provisions of TRIPS, recognizing the concerns about intellectual property rights’ effects on prices [5].

Given the impact of patents in the public health system and access to medicine in Brazil, it is important that only products that really fulfill all the patentability requirements be protected. Therefore, the basis of Anvisa’s analysis lies on the fact that patents, when granted improperly, bring unjustifiable harm to public health, especially with to access to medicines policies, since it assigns an exclusive right to commercial exploitation of a product or process that did not attend the legal requirements for patentability, allowing the patent owner to charge high prices.

A close collaboration between health regulatory authorities and patent offices in the examination of pharmaceutical patent applications has been identified as a positive measure to enhance the examination of pharmaceutical patents from a public health perspective by several international institutions [6].

The World Health Organization (WHO) has identified it as positive since it helps to prevent concession of unmerited patents [7]. ANVISA's prior consent was considered at its creation as an innovative and exemplary practice in the public health protection.

Public health protective measures are not only those that ensures the generic competition to achieve more affordable prices during the patent term, such as compulsory license, but also the establishment of means to avoid the granting of undue patents, such as those filled solely to extend the monopoly over already known products or formulas - the so-called evergreening strategy. Many times, ANVISA's prior consent was crucial to detect and prevent evergreening methods by the patent's applicants (as in 'me too' drugs or 'patent clusters', ´markush formulas´, etc), which are especially harmful to access to health.

An important study developed by ANVISA [8] analyzes the decisions taken in the context of prior consent from 2001 to 2009 and brings some evidence to be observed. It is important to remind that ANVISA’s analysis at the time occured only after the patent application was already analyzed by INPI and was ready for approval. These numbers demonstrate the importance of ANVISA’s prior consent in the process of granting patents, once it avoided improper granting of patents. In that period, ANVISA analyzed 1,346 patent applications, out of which 988 were given prior consent, 119 were not given prior consent, 90 were denied by INPI after ANVISA’s participation in the process and 149 were in other situations (such as waiting for ANVISA’s analyzes or waiting for the applicant to answer requirements made by the agency). The main reasons for ANVISA’s denial of prior consent are shown in the table below:

Main reason for denial of ANVISA’s prior consent n. %
Lack of novelty (total or partial) 57 47.9%
Lack of inventive step 27 22.7%
Lack of sufficient description 19 16%
Product of nature 7 5.9%
Object not defined 6 5%
Late modifications on the application 2 1.7%
Application file outside the time limit 1 0.8%
Total 119 100%

Moreover, it is important to highlight that out of the 988 applications that received ANVISA’s prior consent, about 40% only received ANVISA’s approval after fulfilling some requests made by the agency. According to the study, most of these demands reduced the scope of claims, since part of the application lacked novelty, inventive step or were related to non patentable matter. In other cases, the demands were to clarify the object of protection or to enhance disclosure. This reduction in the scope of claims, from a public health perspective, is key since avoids health technologies from being taken out of public domain.

In other cases, ANVISA’s participation in the process led INPI to change its view regarding the granting of the patent application, which would have been granted if it was not for ANVISA’s participation. That happened in 90 cases. An emblematic case that shows how ANVISA’s collaboration with INPI in the analyzes of pharmaceutical patent applications can protect public health is the case of docetaxel, an anti-mitotic chemotherapy medication used mainly for the treatment of breast, ovarian, and non-small cell lung cancer. INPI had first issued a decision for the granting of the patent filled by Aventis Pharma S/A (PI9508789-3), but ANVISA denied its prior consent based on the lack of inventive step. After ANVISA’s decision, INPI changed its previous exam and denied the patent. The granting of this patent could have caused a great harm to the public programs of distribution of the medicine and to consumers in general, since the patent could be used to stifle competition in the supply of this product.

As shown, ANVISA’s participation on the analysis of pharmaceutical patent applications, in addition to prevent the granting of undeserved patents, also corrects inaccuracies in applications that in INPI’s view would be ready for approval, reducing or clarifying the scope of the object protected by the patent. Given the essentiality of medicines, as well as the impact of patents in access to medicines, ANVISA’s prior consent is a legitimate measure adopted by the Brazilian legislation to protect the right to health.

The monopoly created by a patent should last for 20 years, but if the patent-holder gets new patents for the same product, it may, in practice, extend its monopoly for an indefinite period of time, a strategy to "evergreen" patents (known as evergreening). Guidelines for the examination of patents that prevent the granting of such secondary patents are essential. To get an idea of excessive number of patent applications in Brazil: 18 patent applications for the drug lopinavir/ritonavir, 14 for darunavir, 10 for abacavir and 7 for tipranavir, all used to treat HIV/AIDS [9]. The mere existence of these applications can block competition and, in the case they are granted, the monopoly can be extended, delaying price reductions and access to these medicines.

One of the objectives of the patent system is to promote the development of new inventions. However, currently there is a decrease in the development of new pharmaceutical entities, but there is an increase in the number of patent applications. This dichotomy exists because most patent applications focus on minor changes to existing products (strategy known as evergreening). These are called secondary innovations, which often offer no therapeutic benefit and are of "low quality" in relation to the patentability requirements of novelty and inventive step. Examples are salts, ethers, polymorphs of a product (new forms) and different doses and therapeutic indications (new uses). Despite the "low quality" of such patents, they may have a high impact on health policies, blocking the use of generic medicines and allowing the company to obtain more profit from a product that could be in the public domain if there were no secondary patents. Therefore, it is necessary that countries have public health driven mechanisms to avoid the granting of this sort of patents. As shown, in Brazil, Anvisa’s prior consent mechanism has the potential to reject unmerited patents.
Anvisa’s prior consent is repeatedly applauded by human rights defenders around the world, but also has the displeasure of some sectors, specially transnational pharmaceutical companies that feel aggrieved, since they are not interested in rigorous analysis of patent applications. In some cases, pharmaceutical companies filled judicial actions over specific rejected patent requests that would question, additionally, the legitimacy of Anvisa’s prior consent. In other cases, the companies filled judicial actions questioning directly Anvisa’s participation in the patent granting process.

An important example of the second type of judicial case is the lawsuit filed by Associação da Indústria Farmacêutica de Pesquisa (Interfarma). INTERFARMA is an association of 52 pharmaceutical companies, mostly transnational, responsible for the majority of branded drugs sales in Brazil. In the case the lawsuit is judged in favor of INTERFARMA’s request, it would be the end of Anvisa’s prior consent and a great setback in the guarantee of the right to health in Brazil.

Anvisa’s prior consent mechanism has also been listed in the United States Trade Representative Special 301 list, as a mean to put pressure on Brazil to stop to apply the mechanism. This is an illegitimate and illegal mean of challenging Brazil’s sovereignty, right and duty to adopt TRIPS-compliant measures to fulfil the right to health.

Impact on remedying policy incoherence

UN human rights officials and bodies have repeatedly found that the globalization of intellectual property rights can only be squared with human rights if countries are allowed and encouraged to use the full scope of intellectual property protective measures provided in the TRIPS Agreement to protect public health and promote access to medicines [10]. The involvement of Anvisa in the analysis can contribute to verify compliance with patentability requirements, to prevent the granting of unmerited patents, to improve the quality of patents granted and to prevent barriers to access, since it brings the public health perspective to the analysis.

Impact on public health and human rights

With a stricter analysis of patentability criteria, less patents are granted and the ones granted have clearer scope of protection, reducing obstacles to production of generic versions of medicines, which can lead to more accessible prices. Lower prices increases the capacity both of the public health system and patients to purchase the needed medicines. Therefore, more people would be able to have access to lifesaving and health-increasing technologies.

The impact in the public health policy can also be economical, since it can lead to savings of financial resources. The high prices of medicines can be a burden on public health budget, putting at risk the sustainability of public policies on access to medicines. The savings allowed by Anvisa’s mechanism may be used in other areas of the health system. Areas such as prevention, health promotion and access to medicines to a larger part of the population may have more resources available if unmerited patents are not granted.

A economic study showed that the Brazilian government spent an estimated U$420 to U$519 million more for five ARVs protect by undeserved patents between 2001 and 2007 than would have spent had purchased their generic versions [11].

Brazil is the only country in the world with more than 200 million population and with a universal, free-of-charge public health system. Anyone can have access to all levels of care - from vaccines to transplants - including access to medicines. However, with a limited and short budget, the Brazilian State capacity to fulfill its population health needs can be in jeopardy if medicines - a key aspect of the right to health - are overpriced due to patent monopolies.

Implementation

While it is necessary to adopt a new R&D system on health, the negative impact of patents in access to medicines is certain to remain a global challenge over the next years. Therefore, it is necessary to increase the use of health protective measures already existing in the IP system, in order to increase as soon as possible access to needed medicines. An system of automatic compulsory licenses for already granted patents should be put in place. An for patent applications that are still pending analysis, a stricter mechanism of analysing the fulfillment of the patent criteria should be implement. This could be done by adopting mechanisms such as Anvisa’s prior consent, which is nothing more than having professionals linked to the health sector, and only to the industrial sector, analysing the patent applications for health-related technologies.

However, health protective measures still face many political barriers. Transnational pharmaceutical companies, with the support of the governments of the countries where they are based, have challenged the implementation of these measures and treating countries not to use them. This must stop immediately.

Bibliography and References

[1] Several studies show that there is a drastic reduction in the price of drugs once patents expire, due to competition from generic products that become available in the market (see, among others, "Integrating Intellectual Property Rights and Developing policy", Report of the Commission on Intellectual Property Rights, London, 2002, especially pages 29-56). In addition, a comprehensive study by the U.S. government found that on average the price of generic drugs is 43% of the branded medicine price practiced during the term of the patent (Generic drug industry dynamics. U.S. Federal Trade Commission Working Paper 248, 2002, www.ftc.gov/be/workpapers/industrydynamicsreiffenwp.pdf).

[2] UNITED NATIONS. A/HRC/RES/12/24. Paragraph 5. (2009).

[3] Reports have suggested practices of big pharmaceutical companies to block competition through the file of several patent applications for the same product. See, among others: the European Commission DG. Pharmaceutical Sector Inquiry: preliminary report, July, 2009. Available at: http://ec.europa.eu/competition/sectors/pharmaceuticals/inquiry/communication_en.pdf.

[4] UNITED NATIONS. SUBSTANTIVE ISSUES ARISING IN THE IMPLEMENTATION OF THE INTERNATIONAL COVENANT ON ECONOMIC, SOCIAL AND CULTURAL RIGHTS. Follow-up to the day of general discussion on article 15.1 (c), November 2001. Human rights and intellectual property. Statement by the Committee on Economic Social and Cultural Rights. E/C.12/2001/15. Paragraph 12. 2001.

[5] UNITED NATIONS. HUMAN RIGHTS COUNCIL. Report of the Special Rapporteur on the right of everyone to the enjoyment of the highest attainable standard of physical and mental health, Anand Grover. A/HRC/11/12. 2009.

[6] “[I]t would be desirable to develop a close cooperation between, on the one hand, the ministries of health and health regulatory authorities and, on the other, the patent offices, for the examination of pharmaceutical patent applications. Moreover, the intervention of authorities competent in the area of public health can be envisaged. For instance, in Brazil, a provisional measure by the President (December 14, 1999) subsequently converted into Federal Law 10.196 of February 14, 2001, introduced into the Industrial Property Code a requirement of “prior consent” by the National Sanitary Supervision Agency (ANVISA) for the granting of pharmaceutical patents”. Guidelines for the examination of pharmaceutical patents: Developing a public health perspective, WHO-ICTSD UNCTAD, by Carlos Correa, Professor, University of Buenos Aires, January 2007, page 25. Available at:
http://www.ictsd.org/sites/default/files/research/2008/06/correa_patentability20guidelines.pdf.

[7] “A fundamental practical issue is that at the time of patenting, very little may be known about efficacy or other characteristics, particularly incremental, relative to the parent drug. Moreover, given the variability of the current skills set of patent examiners, it is difficult to rely on consistent and appropriate decisions on efficacy claims, particularly when patent applications routinely precede clinical trials, which would, inter alia, determine efficacy and other product characteristics. There is a case for patent authorities to consult health authorities in the examination process, to help determine whether patentability criteria are met”. Final Report of the WHO Commission on Intellectual Property Rights, Innovation and Public Health, CIPIH/2006/1, p. 134. Available at:
http://www.who.int/intellectualproperty/documents/thereport/ENPublicHealthReport.pdf.

[8] Coordenação de Propriedade Intelectual – COOPI/GGMED/ANVISA. NOTA TÉCNICA PROBLEMAS EM PEDIDOS DE PATENTE FARMACÊUTICOS. 2010. apud GTPI. INDIVIDUAL COMPLAINT AGAINST BRAZILIAN STATE. URGENT APPEAL TO UNITED NATIONS SPECIAL RAPPORTEUR ON THE RIGHT OF EVERYONE TO THE ENJOYMENT OF THE HIGHEST ATTAINABLE STANDARD OF PHYSICAL AND MENTAL HEALTH. ANVISA`S PRIOR CONSENT MECHANISM. 2011. Available at: http://www.deolhonaspatentes.org.br/media/file/Urgent%20appeal%20against%20Brazil%20-%20by%20GTPI%20(with%20annexes).pdf

[9] Villardi, Pedro. Status patentário e registro sanitário dos ARVs no Brasil: implicações para o complexo industrial de saúde. ABIA, Rio de Janeiro, 2012. Available at: http://deolhonaspatentes.org.br/media/file/Publica%C3%A7%C3%B5es/Publica%C3%A7%C3%A3o%20Pedro_Final_23OUT.pdf.

[10] See, for example, Report of the Special Rapporteur on the Right of Everyone to the Enjoyment of the Highest Attainable Standard of Physical and Mental Health, A/HRC/11/12, Paragraph 27, (2009); Report of the Special Rapporteur on the Right of Everyone to the Enjoyment of the Highest Attainable Standard of Physical and Mental Health, A/63/263, Paragraph 63, (2008); Human Rights and Intellectual Property, Committee on Economic, Social and Cultural Rights [CESCR], E/C.12/2001/15, Paragraph 12, (2001); Report of the High Commissioner, The Impact of the Agreement on Trade-Related Aspects of Intellectual Property Rights on Human Rights, E/CN.4/Sub.2/2001/13, Paragraphs 27 and 28, (2001).

[11] HASENCLEVER, Lia et al. Pipeline patents and access to drugs: economic and legal aspects deleterious to health economy . Journal of Health Law, Brasil, v. 11, n. 2, p. 164-188, oct. 2010.. Available at: <http://www.revistas.usp.br/rdisan/article/view/13212>.

AMY KAPCZYNSKI, YALE GLOBAL HEALTH JUSTICE PARTNERSHIP

Lead Author:  Amy Kapczynski
Additional Authors: Professor Dr. Brigit Toebes, Ellen ’t Hoen, and Katrina Perehudoff
Organization: Yale Global Health Justice Partnership
Additional Organizations: AIDS and Rights Alliance for Southern Africa (ARASA), Association Marocaine de Lutte contre le Sida, Coalition Internationale SIDA (Coalition Plus), Delhi Network of Positive People (DNP+), Global Justice Clinic, New York University School of Law, Health GAP, HIV i-base, International Treatment Preparedness Coalition, Lawyers Collective, Ndifuna Ukwazi, Public Citizen, Treatment Action Campaign
Country: USA

Abstract

This submission describes the role that the United Nations Secretary-General’s High Level Panel on Access to Medicines can play in clearly articulating several implications for states and international organizations of the right to health in the context of intellectual property and innovation policy. In particular, we urge the High Level Panel to:

1. Recognize that the right to health supersedes intellectual property (IP) rights,
2. Acknowledge that the right to health not only permits but requires states to incorporate IP flexibilities into their laws, and requires states to use them when needed to protect and fulfil the right to health; and
3. Recognize that the right to health also requires states and international organizations to explore and implement research and development (R&D) systems that delink the price of medicines and payment for R&D.

The High Level Panel should also call upon United Nations and other human rights bodies to recognize these legal implications of the right to health, and should disseminate these findings to domestic governments and non-governmental organizations (NGOs).

Submission

Primary Contribution

This submission describes the role that the United Nations Secretary-General’s High Level Panel on Access to Medicines can play in clearly articulating several implications for states and international organizations of the right to health in the context of intellectual property and innovation policy. In particular, we urge the High Level Panel to:
1. Recognize that the right to health supersedes intellectual property (IP) rights,
2. Acknowledge that the right to health not only permits but requires states to incorporate IP flexibilities into their laws, and requires states to use them when needed to protect and fulfil the right to health; and
3. Recognize that the right to health also requires states and international organizations to explore and implement research and development (R&D) systems that delink the price of medicines and payment for R&D.
We proceed by explaining how our proposal (1) remedies policy incoherence, (2) impacts public health and (3) impacts human rights. We conclude by (4) suggesting methods of implementation.

Impact on Remedying Policy Incoherence

A. The Primacy of Duties to the Right to Health

The right to health is recognized in the Universal Declaration of Human Rights (UDHR), and the 164 state signatories to the International Covenant on Economic, Social and Cultural Rights (ICESCR) have recognized a binding right to the “highest attainable standard of physical and mental health.” Importantly, access to medicines has also long been recognized as a core minimum obligation of the right to the highest attainable standard of health. Importantly, nearly 50 countries also incorporate a right to health in their national constitutions.

Human rights law also mandates that states protect the moral and material interests of creators. However, this obligation does not imply that intellectual property rights per se are human rights; rather, IP is merely one among many ways to remunerate creators. Because protection of the right to health is mandatory for states, and IP is but one permissible way to protect the human rights of creators, as the Special Rapporteur in the field of culture rights recently stated, “where patents and human rights are in conflict, human rights must prevail.” Similarly, the Human Rights Council and the Special Rapporteur on the right of everyone to the enjoyment of the highest attainable standard of physical and mental health (the “Special Rapporteur on Health”) have both affirmed that the right to health supersedes IP protections.

B. State Recourse to Protecting and Using IP Flexibilities in the Context of Health

Improving access to medicines is critical to improving overall public health. Exceptions and limitations in IP law play a key role in promoting and protecting access to medicines, because patents and related forms of regulatory exclusivity give pharmaceutical companies the power to raise the price of medicines and restrict their supply. Patent and related exclusive rights, especially as these rights become stronger and broader, create serious barriers to access to medicines. This is true in wealthy as well as resource-poor countries, as has been so dramatically illustrated with respect to the recently approved antiviral drugs to treat Hepatitis C. Unfortunately, patents often generate far too little incentive for innovation to justify their high costs for access. It has long been acknowledged that strengthening patent protection in low- and middle-income countries will generate little innovation because of the relatively small size of their markets. Increasingly, however, there is evidence that strong IP protections can stifle needed innovation – as well as have negative implications for access – in high-income countries as well.

More than two decades of work at the intersection of IP and human rights makes plain that countries must retain “flexibilities” in their IP laws, to ensure that the right to medicines can be respected and protected. Many such flexibilities are permitted under the TRIPS Agreement, although also increasingly undermined by other trade and investment treaties. TRIPS flexibilities with particular public health implications include:
1. Transition periods, which allow countries to delay introduction of restrictive new IP laws;
2. Carefully defined criteria of patentability, which help prevent patents for trivial inventions and “evergreening”;
3. Compulsory licenses and government use, which can be used to address excessive pricing;
4. International exhaustion rules, which facilitate parallel importation;
5. Patent opposition and revocation procedures, which help ensure patent quality;
6. Strong competition law and policy frameworks;
7. Bolar exemptions and other similar exemptions important to research and development.

The Special Rapporteur in the field of cultural rights has concluded that human rights obligations require states to adopt such flexibilities into their national law. The Human Rights Commission, Committee on Economic, Social and Cultural Rights (CESCR) and the Special Rapporteur on Health have suggested the same. Importantly, as other submissions highlight, and as special rapporteurs have acknowledged, the right to health may also require the use of flexibilities that are not currently permissible under international trade law. This is another implication of the primacy of human rights obligations: Where IP flexibilities are needed to protect health, states must meet their obligations to incorporate these into their law.

Incorporating IP flexibilities into national law and rejecting trade agreements that undermine or bar these flexibilities is critical to the protection of the right to health. However, flexibilities that are not used cannot facilitate access to affordable medicines. Logically, nations not only must have but also must use these flexibilities in order to fulfill their obligations protect, respect, and fulfill the right to health.

The point is a simple one: Access to medicines is a core minimum obligation under the right to health. Progressive realization requires that states move as expeditiously as possible toward the full realization of those rights to which it applies. However, ‘progressive realization’ is not the test for the realization of every aspect of rights such as health—some aspects are immediate obligations. If a particular change to IP law will increase access and is possible without the expenditure of resources, it can be seen as an immediate obligation. This is in contrast with the obligation to take actions that could assist in realizing the right to health that are subject to resource constraints. IP flexibilities do not require net expenditure of state resources, but rather, free up such resources. As such, the use of IP flexibilities is not subject to the same limits as steps towards progressive realization that do require state resources.

Importantly, there is a growing international acceptance that states have an obligation to exercise IP flexibilities to protect the right to health. For example, the Special Rapporteur on Health has recommended that states, and particularly least-developed countries, “should” make full use of TRIPS flexibilities, and avoid signing trade and investment agreements that undermine these flexibilities. Other Rapporteurs have noted in recent reports that “states have a positive obligation to provide for a robust and flexible system of patent exclusions, exceptions and flexibilities based on domestic circumstances.” Similarly, states must avoid imposing IP obligations on other countries that interfere with their ability to protect the right to health. At the national level, courts have also recently recognized that the right to health obliges states to adopt certain flexibilities, and forbids IP laws that undermine access to medicines that generate no commensurate benefits in return.

C. Delinking the Price of Medicines and the Cost of R&D

The right to health also requires appropriate frameworks for research and development (R&D), so that (1) medicines and medical technologies are developed to meet global health needs and especially the needs of the poor, and (2) these medicines and medical technologies are affordable. The right to health therefore can be the basis of obligations on states and international bodies to pursue R&D models that meet these needs. Indeed, over the last decade, there has been an increasing focus on developing alternative R&D models.

As noted above, existing IP protections create little incentive for innovation to solve the health challenges of poor or marginalized groups. In addition, reliance on IP generates other challenges, such as the conflicts of interest between profit-motive and the broad dissemination of clinical trial data. It may be difficult, absent a move to delink the profit motive from the funding of clinical trials, to remedy this conflict of interest.

Recognizing such problems with market-led R&D, the Special Rapporteur in the field of cultural rights has called for “incentives and purposive funding” that encourages research to “address societal needs, especially in the areas of health, food and the environment.” This mirrors comments from the Special Rapporteur on the Right to Food that notes that most scientific research “neglect[s] the real needs of the poorest and most marginalized groups.”

Similarly, the Special Rapporteur in the field of cultural rights has stated that “affordability [of medicines] is crucial and may require delinking research and development costs from product prices.” The World Health Organization has endorsed the need to look for alternative models for financing R&D. Doing so will benefit not only those affected by neglected diseases in low-income countries; those in high income countries will also accrue “direct benefits from the products of R&D into new antibiotics and vector-borne diseases.” Alternative financing models and innovation prizes are both mechanisms for encouraging an alternative R&D model that can increase access to medicines.

The right to the “highest attainable standard of physical and mental health” extends to the poor. Therefore, human rights is not silent on whether national and international institutions should pursue R&D models that will help foster the innovation of affordable drugs to fight diseases afflicting the poor. Rather, the right to health suggests that national and international institutions must support models that delink the price of medicines from the funding of R&D. Such delinkage is a means both to direct research to meet pressing global health needs, and to generate medicines that are more affordable for those who need them.

Achieving this delinkage will require more than just incentives at the national level. It will require new norms and solutions at the global level. The High Level Panel can assist on this front by recommending that UN bodies and member states begin an international process to negotiate a global R&D agreement that facilitates access and affordability of new medicines, and that supports innovation that meets the health needs of the poor.

Impact on Public Health

The three principle entailments of the right to health for IP and innovation policy articulated here (supremacy of the right to health, mandatory recourse to IP flexibilities, delinking drug prices and R&D investment for drugs) will help address the underlying policy incoherence between IP law and human rights. By embracing these three implications, the High Level Panel can strengthen the emerging consensus described above. By encouraging other UN bodies to similarly recognize these arguments, and disseminating its report to the local level, the High Level Panel can encourage action at both the international and domestic level to protect and fully employ IP flexibilities. This is particularly important in the face of ongoing trade negotiations that potentially undermine these flexibilities and, by extension, the right to health.

Because IP protections are codified in states’ laws or incorporated treaties, domestic action is also an important tool for managing instances where IP protections conflict with the right to health. For example, states alone have the power to issue compulsory licenses or utilize IP flexibilities, and can play an important role in implementing delinkage in R&D. However, governments may be reluctant to use these tools, and may require both support and a clear sense of their internationally supported human rights obligations, to withstand the pressures arrayed against these health measures. Similarly, courts can draw on an international human rights consensus to support rulings that advance access to medicines. Such favorable rulings can have a snowball effect, where domestic courts cite to favorable international precedent to support a local ruling in favor of access to medicines.

The Panel should therefore encourage local organizations and actors to bring these arguments to their own national human rights bodies, courts, and agencies. For example, organizations concerned with the right to health can bring actions to mandate the issuance of compulsory licenses when this is needed to address the unavailability or unaffordability of particular medicines. Organizations in Colombia and Peru have helped reduce the price of drugs by pursuing such cases. Organizations can also intervene in patent disputes, urging against injunctions in instances where these would exclude generic medicines from the market and undermine the right to health. In February 2016, organizations in India helped people living with HIV to oppose a patent application for essential medicines that the manufacturer has refused to “make available for people . . . who have run out of other treatment options.” Local organizations can also bring direct challenges to ill-conceived IP laws, to invalidate them in the name of the right to health.

In exercising IP flexibilities, countries can and should consider the implications for innovation. However, courts and states should be careful not to accept at face value assertions that IP protections necessarily foster innovation. As discussed above, this is often not the case, in the high income, as well as low- and middle-income context. Therefore, courts and states should require those who argue against the use of IP flexibilities in the name of innovation to carry the burden of production and proof for such claims.

Furthermore, High Level Panel action of the kind advocated in this contribution can hasten the World Health Organization and other international and national bodies’ pursuit of models for de-linking R&D from the cost of medicines. This is a critical, long-term structural shift that is essential to redressing the inaccessibility and unavailability of medicines, particularly in low- and middle-income countries.

Impact on Human Rights

Human rights tools have not, to date, been used as prominently as they should be to redress the policy incoherence between poorly designed IP and innovation policies and the right to health. Our contribution calls on the High Level Panel to recognize that the right to health has clear, actionable implications for IP and innovation policy, and that states are obliged to recognize these implications, and alter their domestic laws, and appropriately shape their international commitments, as a consequence. Full recognition of the three principles above would require substantial changes at the national level, not only in low- and middle-income but also in high-income countries: states would incorporate new IP flexibilities, and deploy them when needed to advance health. They would also alter their priorities in trade negotiations, and prioritize health over agreements that excessively constrain the use of IP flexibilities, where needed.

Implementation

This proposal calls on the High Level Panel to clearly recognize the growing consensus around the three implications of human rights law for IP that are outlined above. The High Level Panel can also actively advance these positions by disseminating its findings to the following sets of actors:

• International bodies, including UN agencies and the WTO: UN agencies like the World Intellectual Property Organization (WIPO) and the World Health Organization (WHO) play a critical role in defining the global agenda and convening resources around it. The High Level Panel can engage these agencies so that the three conclusions outlined above are fully incorporated into their work. WIPO in particular could be an important means of facilitating the use of IP flexibilities locally. WHO could make a critical difference, promoting human rights by promoting the use of IP flexibilities and embracing an ambitious agenda for delinkage in R&D. Dialogue with the WTO should emphasize the implications of IP for the right to health, and the primacy of the latter where the two conflict.

• States and national agencies: The High Level Panel should work to inform states that they are required to use IP flexibilities to fulfil the right to health. This will embolden states that already believe this to be the case. It will also provide extra support to states attempting to fulfil the right to health in the face of pressure from countries or corporations working against health interests in trade negotiations or patent disputes.

• Local NGOs and citizens groups: As detailed above, local organizations play a critical role in advancing the right to health through local courts and institutions. The High Level Panel should disseminate its findings to local NGOs and other citizens’ groups through easily accessible materials available online and in print. This can help provide these groups with legal precedent and international support for arguments to protect the right to health when it comes in conflict with IP protections.

Bibliography and References

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Harlan Krumholz et al. What Have We Learned from Vioxx. 334 BMJ 7585, (2007) http://dx.doi.org/10.1136/bmj.39024.487720.68

Human Rights Council. A/HRC/23/L.10/Rev.1. (June 11, 2013). http://ap.ohchr.org/documents/dpage_e.aspx?si=A/HRC/23/L.10/Rev.1

Human Rights Commission. A/HRC/RES/12/24 (Oct. 12, 2009). http://daccess-dds-ny.un.org/doc/RESOLUTION/GEN/G09/167/45/PDF/G0916745.pdf?OpenElement

Human Rights Commission. A/HRC/RES/12/27 (Oct. 22, 2009). http://www2.ohchr.org/english/issues/hiv/docs/A-HRC-RES-12-27.pdf

Medecins Sans Frontieres. Pharma company Viiv’s attempt to secure patents for key HIV drugs dolutegravir and cabotegravir opposed in India. Feb. 10 2016. http://www.msfaccess.org/about-us/media-room/press-releases/pharma-company-viivs-attempt-secure-patents-key-hiv-drugs-dolute (Last visited Feb. 13 2016)

Olivier de Schutter, The Right of Everyone to Enjoy the benefits of Scientific Progress and the Right to Food: From Conflict to Complementarity, 33 Human Rights Quarterly 2 (2011)

Patricia Asero Ochieng, Maurine Atieno, Joseph Munyi, & AIDS Law Project v. Attorney General, Petition No. 409. (2009) High Court of Kenya (Kenya)

Petra Moser, Patents and Innovation: Evidence from Economic History, 27 Journal of Economic Perspectives 1, (2013)

Public Citizen. About the Atazanavir Campaign. http://www.citizen.org/about-atazanavir-campaign (last visited Feb. 26, 2016)

Public Citizen, How the TPP Endangers Access to Affordable Medicines (Nov 2015). http://www.citizen.org/documents/how-tpp-endangers-access-to-medicines.pdf. (last visited Feb. 26, 2016)

Sadie Regmi et al. Beyond access to medicines: Eliciting high-income country support for a new global health research and development paradigm. 3 Journal of Global Health 2. (Dec 2013). http://www.ncbi.nlm.nih.gov/pmc/articles/PMC3868813/

SARA HEYDARI ET. AL. GLOBAL HEALTH JUSTICE PARTNERSHIP, ENDING AN EPIDEMIC: OVERCOMING THE BARRIERS TO AN HCV-FREE FUTURE. (2015) http://media.wix.com/ugd/148599_3746a108d074493d8fc18ed1f9c262c2.pdf

Sankalp Rehabilitation Trust v. F. Hoffmann-LA Roche AG, (2012) Intellectual Property Appellate Board (India)

Special Rapporteur in the field of cultural rights. The right to enjoy the benefits of scientific progress and its applications. UN Doc. A/HRC/20/26 (May 14, 2012). http://www.ohchr.org/Documents/HRBodies/HRCouncil/RegularSession/Session20/A-HRC-20-26_en.pdf

Special Rapporteur on the right of everyone to the enjoyment of the highest attainable standard of physical and mental health. Promotion and Protection of all Human Rights, Civil, Political, Economic, Social and Cultural Rights, Including the Right to Development. UN Doc. A/HRC/11/12. (Mar. 31, 2009)

STAFFS OF RANKING MEMBER RON WYDEN AND COMMITTEE MEMBER CHARLES E. GRASSLEY, 114TH CONG., REP. ON THE PRICE OF SOVALDI AND ITS IMPACT ON THE U.S. HEALTHCARE SYSTEM (S. Prt. 114-20) http://www.finance.senate.gov/imo/media/doc/1%20The%20Price%20of%20Sovaldi%20and%20Its%20Impact%20on%20the%20U.S.%20Health%20Care%20System%20(Full%20Report).pdf

U.N. GAOR, 70th Sess., 3rd Comm., Item 69 (b and c). Statement by Ms. Farida Shaheed, Special Rapporteur in the Field of Cultural Rights at the 70th session of the General Assembly. (26 Oct. 2015). http://www.ohchr.org/EN/NewsEvents/Pages/DisplayNews.aspx?NewsID=16918&amp;LangID=E

United Nations Treaty Collection. International Covenant on Economic, Social and Cultural Rights. (last visited Feb. 25, 2016) https://treaties.un.org/Pages/ViewDetails.aspx?src=TREATY&mtdsg_no=IV-3&chapter=4&lang=en

World Health Assembly. Establishment of a consultative expert working group on research and development: financing and coordination. WHA63.28. (May 21, 2010). http://apps.who.int/gb/ebwha/pdf_files/WHA63/A63_R28-en.pdf?ua=1&ua=1

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Endnotes

This contribution builds upon GLOBAL HEALTH JUSTICE PARTNERSHIP, A HUMAN RIGHTS APPROACH TO INTELLECTUAL PROPERTY AND ACCESS TO MEDICINES. (September 2013). http://media.wix.com/ugd/148599_c76ed6f7341fa426bc22f5ccf543ea04.pdf
[Hereinafter GHJP Report].
G.A. Res. 217 (III) A, Universal Declaration of Human Rights (Dec. 10, 1948). http://www.un.org/en/universal-declaration-human-rights/.
G.A. Res. 2200A (XXI), International Covenant on Economic, Social and Cultural Rights (Dec. 16, 1966). http://www.ohchr.org/EN/ProfessionalInterest/Pages/CESCR.aspx
[Hereinafter ICESCR]; United Nations Treaty Collection. International Covenant on Economic, Social and Cultural Rights. (last visited Feb. 25, 2016) https://treaties.un.org/Pages/ViewDetails.aspx?src=TREATY&mtdsg_no=IV-3&chapter=4&lang=en. (listing the total number of state signatories). Many other treaties also codify aspects of the right to health, including the Covenant on the Rights of the Child (CRC), the Convention on the Elimination of Discrimination Against Women (CEDAW), the Convention on the Rights of Persons with Disabilities (CRPD), and the International Covenant on Civil and Political Rights (ICCPR).
ICESCR. art. 15(1)(b)-(c). Access to medicines as a core component of the right to health was originally framed within the context of essential medicines. Comm. on Econ, Soc., & Cultural Rights. E/C.12/2000/4. General Comment 14: The right to the highest attainable standard of health. (Aug. 11 2000). [Hereinafter “General Comment 14”] http://tbinternet.ohchr.org/_layouts/treatybodyexternal/Download.aspx?symbolno=E%2fC.12%2f2000%2f4&Lang=en (“providing access to essential drugs, as defined by the WHO Action Programme on Essential Drugs, is a core obligation” of states). The Human Rights Council has subsequently clarified that the right to health encompasses access to all medicines. Human Rights Council. A/HRC/23/L.10/Rev.1. (June 11, 2013). http://ap.ohchr.org/documents/dpage_e.aspx?si=A/HRC/23/L.10/Rev.1 at 3. (“Stresses the responsibility of States to ensure the highest attainable level of health for all, including through access, without discrimination, to medicines, in particular essential medicines, that are affordable, safe, efficacious and of quality”)
GLOBAL HEALTH AND HUMAN RIGHTS LAW DATABASE. O’NEILL INSTITUTE FOR NATIONAL AND GLOBAL HEALTH LAW. (last visited Feb. 13, 2016). http://www.globalhealthrights.org/constitutions/chr/crth/
ICESCR Art 15(1)(c); Comm. on Econ, Soc., & Cultural Rights. U.N. Doc. E/C.12/GC/17. General Comment No. 17: The right of everyone to benefit from the protection of the moral and material interests resulting from any scientific, literary or artistic production of which he or she is the author (Jan. 12, 2006). http://tbinternet.ohchr.org/_layouts/treatybodyexternal/Download.aspx?symbolno=E%2fC.12%2fGC%2f17&Lang=en [hereinafter General Comment 17].
General Comment 17 (“Human rights are fundamental, inalienable and universal entitlements belonging to individuals and, under certain circumstances, groups of individuals and communities… In contrast to human rights, intellectual property rights are generally of a temporary nature, and can be revoked, licensed or assigned to someone else… Moreover, the scope of protection of the moral and material interests of the author provided for by article 15, paragraph 1 (c), does not necessarily coincide with what is referred to as intellectual property rights under national legislation or international agreements.”) In addition, the protection of moral and material interests is limited to individual persons and does not extend to corporations. Id.
U.N. GAOR, 70th Sess., 3rd Comm., Item 69 (b and c). Statement by Ms. Farida Shaheed, Special Rapporteur in the Field of Cultural Rights at the 70th session of the General Assembly. (26 Oct. 2015). http://www.ohchr.org/EN/NewsEvents/Pages/DisplayNews.aspx?NewsID=16918&amp;LangID=E.
[Hereinafter “Culture Rapporteur”].
See Human Rights Commission. A/HRC/RES/12/27 (Oct. 22, 2009). http://www2.ohchr.org/english/issues/hiv/docs/A-HRC-RES-12-27.pdf
(“The Agreement [i.e. TRIPS] can and should be interpreted and implemented in a manner supportive of the right to protect public health and, in particular, to promote access to medicines for all including the production of generic antiretroviral drugs and other essential drugs for AIDS-related infections”); See also; Human Rights Commission. A/HRC/RES/12/24 (Oct. 12, 2009). http://daccess-dds-ny.un.org/doc/RESOLUTION/GEN/G09/167/45/PDF/G0916745.pdf?OpenElement (“Encourages all States to apply measures and procedures for enforcing intellectual property rights in such a manner as to avoid creating barriers to the legitimate trade of medicines, and to provide for safeguards against the abuse of such measures and procedures”).
See e.g. Special Rapporteur on the right of everyone to the enjoyment of the highest attainable standard of physical and mental health, Promotion and Protection of all Human Rights, Civil, Political, Economic, Social and Cultural Rights, Including the Right to Development. UN Doc. A/HRC/11/12. (Mar. 31, 2009). [Hereinafter “Health Rapporteur”] (recommending that in order to protect the right to health, developing countries use IP flexibilities to prevent IP law from being a barrier to access to medicines).
See GLOBAL HEALTH JUSTICE PARTNERSHIP, ENDING AN EPIDEMIC: OVERCOMING THE BARRIERS TO AN HCV-FREE FUTURE. (2015). http://media.wix.com/ugd/148599_3746a108d074493d8fc18ed1f9c262c2.pdf; STAFFS OF RANKING MEMBER RON WYDEN AND COMMITTEE MEMBER CHARLES E. GRASSLEY, 114TH CONG., REP. ON THE PRICE OF SOVALDI AND ITS IMPACT ON THE U.S. HEALTHCARE SYSTEM (S. Prt. 114-20) http://www.finance.senate.gov/imo/media/doc/1%20The%20Price%20of%20Sovaldi%20and%20Its%20Impact%20on%20the%20U.S.%20Health%20Care%20System%20(Full%20Report).pdf (hereinafter “Sovaldi Senate Report”). (describing the rationing of sofosbuvir in the US, in response to its price of $84,000 for a course of treatment).
Comm. on Intellectual Property Rights, Innovation and Public Health. Public Health Innovation and Intellectual Property Rights. World Health Organization. (2006). http://www.who.int/intellectualproperty/documents/thereport/ENPublicHealthReport.pdf?ua=1; Amy Kapczynski, Harmonization and Its Discontents: A Case Study of TRIPS Implementation in India’s Pharmaceutical Sector, 97 CAL. L. REV. 1571, 1580 (2009).
On innovation, in high-income countries see Petra Moser, Patents and Innovation: Evidence from Economic History, 27 Journal of Economic Perspectives 1, 23-44 (2013) (“The findings of this literature…suggest that when patent rights have been too broad or strong, they have actually discouraged innovation.”). For one recent example of access concerns, see Sovaldi Senate Report, supra.
Health Rapporteur at 21 and 69.
Id.
Id.
Id.
Id.
Id.
Frederick Abbott et al. Using Competition Law to Promote Access to Medicines. United Nations Development Program at 5. (May 16, 2014). http://www.undp.org/content/undp/en/home/librarypage/hiv-aids/using-competition-law-to-promote-access-to-medicine.html (“Competition law is one of the least discussed flexibilities within the World Trade Organization’s (WTO) Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement. There remains great untapped opportunity for countries to achieve price reductions for health technologies by instituting competition law and policy frameworks and complimenting them with strong enforcement mechanisms.”)
The use of Bolar exemptions was held consistent with the TRIPS Agreement by the Appellate Body of the World Trade Organization in Canada – Patent Protection of Pharmaceuticals. (E.U. v. Can.) WT/DS114/R. WTO Panel (17 Mar. 2000) https://www.wto.org/english/tratop_e/dispu_e/7428d.pdf.
Culture Rapporteur, supra note viii. (“States have a positive obligation to provide for a robust and flexible system of patent exclusions, exceptions and flexibilities based on domestic circumstances”)
See Health Rapporteur, supra. note x (“The framework of the right to health makes it clear that medicines must be available, accessible, acceptable, and of good quality to reach ailing populations without discrimination throughout the world. As has been evident, TRIPS and FTAs have had an adverse impact on prices and availability of medicines, making it difficult for countries to comply with their obligations to respect, protect, and fulfill the right to health….Developing countries and LDCs need to incorporate in their national patent laws all possible grounds upon which compulsory licences, including government use, may be issued.”); General Comment 14, supra para. 51 (“Violations of the obligation to protect [the right to health] follow from a failure of a State to take all necessary measures to safeguard persons within their jurisdiction from infringements of the right to health by third parties…[This includes] failure to regulate the activities of individuals, groups or corporations so as to prevent them from violating the right to health of others: the failure to protect consumers… from practices detrimental to health, e.g.,… by manufacturers of medicines…”); Human Rights Commission. A/HRC/RES/12/24 supra (“Encourages all States to apply measures and procedures for enforcing intellectual property rights in such a manner as to avoid creating barriers to the legitimate trade of medicines, and to provide for safeguards against the abuse of such measures and procedures.”)
Brook Baker and Peter Maybarduk. SG High Level Panel: Compulsary Licensing Facility/Consortium Submission. (Feb. 2016); Global Health Law Committee of the International Law Association. Submission to the UN High Level Panel on Access to Medicines. (Feb 2016).
Special Rapporteur in the field of cultural rights. The right to enjoy the benefits of scientific progress and its applications. UN Doc. A/HRC/20/26 (May 14, 2012). para. 59. http://www.ohchr.org/Documents/HRBodies/HRCouncil/RegularSession/Session20/A-HRC-20-26_en.pdf (“States must establish “minimum standards of protection,” and that surpassing these may not always be compatible with human rights standards. Furthermore, it is pertinent to assess whether existing minimum standards accord with human rights standards.”)
General Comment 14
This argument quotes from GHJP report, supra.
See e.g., Health Rapporteur at 97. (“The Special Rapporteur therefore recommends that developing countries and LDCs should review their laws and policies and consider whether they have made full use of TRIPS flexibilities or included TRIPS-plus measures, and if necessary consider amending their laws and policies to make full use of the flexibilities.”); Health Rapporteur at 96 (“Flexibilities were included in TRIPS to allow States to take into consideration their economic and development needs. States need to take steps to facilitate the use of TRIPS flexibilities.”); see generally Health Rapporteur at 94-109.
Culture Rapporteur, supra, note viii.
Econ. and Soc. Council. Human rights and intellectual property: Statement by the Committee on Economic, Social and Cultural Rights. UN Doc. E/C.12/2001/15 (Dec. 14, 2001), para 13. http://www2.ohchr.org/english/bodies/cescr/docs/statements/E.C.12.2001.15HRIntel-property.pdf (“It is incumbent upon developed States, and other actors in a position to assist, to develop international intellectual property regimes that enable developing States to fulfill at least their core obligations to individuals and groups within their jurisdictions.”)
F. Hoffmann-LA Roche AG v. Cipla Ltd., (2008) High Court of Delhi (India). (“[T]his Court is of the opinion that as between the two competing public interests, that is, the public interest in granting an injunction to affirm a patent during the pendency of an infringement action, as opposed to the public interest in access for the people to a life saving drug, the balance has to be tilted in favour of the latter.”); Patricia Asero Ochieng, Maurine Atieno, Joseph Munyi, & AIDS Law Project v. Attorney General, Petition No. 409. (2009) High Court of Kenya (Kenya). (Declaring an anti-counterfeiting law that would have prohibited the sale of generics to be unconstitutional and contrary to Kenya’s international treaty obligations). See also GHJP report, supra at 58-62.
There is growing evidence that patent-holding companies have deliberately designed trials and manipulated the published literature to minimize awareness of harmful side-effects of their drugs. The Vioxx case vividly illustrates the problem. Harlan Kumholz et al. What Have We Learned from Vioxx. 334 BMJ 7585, (2007) http://dx.doi.org/10.1136/bmj.39024.487720.68
The Special Rapporteur in the field of cultural rights. A/HRC/20/26, supra at 33. The report focused on the right to benefit from scientific progress, but as noted above, this intersects with and supports the right to health in this context.
Olivier de Schutter, The Right of Everyone to Enjoy the benefits of Scientific Progress and the Right to Food: From Conflict to Complementarity, 33 Human Rights Quarterly 2 (2011) at 304–350.
The Special Rapporteur in the field of cultural rights. A/HRC/20/26. supra at 34.
World Health Assembly. Establishment of a consultative expert working group on research and development: financing and coordination. WHA63.28. (May 21, 2010). http://apps.who.int/gb/ebwha/pdf_files/WHA63/A63_R28-en.pdf?ua=1&ua=1
Sadie Regmi et al. Beyond access to medicines: Eliciting high-income country support for a new global health research and development paradigm. 3 Journal of Global Health 2. (Dec 2013). http://www.ncbi.nlm.nih.gov/pmc/articles/PMC3868813/
The Special Rapporteur in the field of cultural rights. A/HRC/20/26. supra at 34.
See Public Citizen, How the TPP Endangers Access to Affordable Medicines (Nov 2015). http://www.citizen.org/documents/how-tpp-endangers-access-to-medicines.pdf. (last visited Feb. 26, 2016). Investor-State Dispute Settlement chapters can also pose risks to IP flexibilities. See Eli Lilly and Company v. The Government of Canada, UNCT/14/2 (ICSID) (challenging an aspect of Canada’s patent doctrine as a violation of investor protections in NAFTA).
Asociación Red Colombiana de Personas Conviviendo y Viviendo con el VIH y el SIDA, REOLVIH, y Otros v. Ministerio de Salud y Protección Social, (2012) Tribunal Administrativo de Cundinamarca [Administrative Court of Cundinamarca], (Colombia). (holding that the government must enforce price controls and, in the event the price controls are not maintained by the company, that the government must commence parallel importation). See also: Public Citizen. About the Atazanavir Campaign. http://www.citizen.org/about-atazanavir-campaign (last visited Feb. 26, 2016). (detailing Public Citizen’s campaign for compulsory licensing of HIV drugs in Peru).
F. Hoffmann-LA Roche AG v. Cipla Ltd., I.A 642/2008 IN CS (OS) 89/2008 (2008) (India).
Medecins Sans Frontieres. Pharma company Viiv’s attempt to secure patents for key HIV drugs dolutegravir and cabotegravir opposed in India. Feb. 10 2016. https://www.msfaccess.org/about-us/media-room/press-releases/pharma-company-viivs-attempt-secure-patents-key-hiv-drugs-dolute (Last visited Feb. 13, 2016).
Patricia Asero Ochieng, Maurine Atieno, Joseph Munyi, & AIDS Law Project v. Attorney General. supra.

SANYA REID SMITH, Third World Network_A

Lead Author:  Sanya Reid Smith
Additional Author: Mirza Alas Portillo
Organization: Third World Network
Country: Switzerland

Abstract

This submission examines the ways in which trade and investment agreements can restrict access to affordable medicines and thus harm the right to health and the ability to achieve the Sustainable Development Goals (SDGs). It highlights the incoherence between these trade and investment agreement provisions and human rights and the SDGs and makes recommendations to reduce this policy incoherence.

Submission

Impact of trade and investment agreements on access to affordable medicines

(Submission by Third World Network, an international policy research and advocacy organization that focuses on sustainable development with a priority area on the impact of trade and investment agreements on public health in developing countries.)

Intellectual property provisions

The World Trade Organization (WTO) already requires patents on medicines for 20 years for its 162 member countries, except for least developed countries (LDCs) which have transition periods.[1] Since the patented medicines have a monopoly for 20 years via the WTO’s Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), they are much more expensive than their generic equivalents. For example, the patented version of medicines to treat AIDS cost US$15,000 per patient per year, but the generic version only costs US$67 per patient per year.[2]

The United Nations Sub Commission on Human Rights has already stated that: “Since the implementation of the TRIPS Agreement does not adequately reflect the fundamental nature and indivisibility of all human rights, including . . . the right to health, there are apparent conflicts between the intellectual property rights regime embodied in the TRIPS Agreement, on the one hand, and international human rights law, on the other; …”[3]

SDG 3(b) includes the provision of access to affordable essential medicines and vaccines, in accordance with the Doha Declaration on the TRIPS Agreement and Public Health, which affirms the right of developing countries to use to the full the provisions in TRIPS regarding flexibilities to protect public health, and, in particular, provide access to medicines for all.  However the TRIPS flexibilities are undermined by the stronger intellectual property (IP) protection (‘TRIPS+’) in some free trade agreements (FTAs), particularly those involving certain developed countries such as the United States and the European Union (see Table 1). Furthermore as a condition of joining the WTO post-1995 a number of developing countries have had to agree to TRIPS+ provisions on medicines[4] and there are another 21 countries going through this WTO accession process,[4] 8 of which are LDCs[vi].

The main TRIPS+ provisions in FTAs are outlined in Table 1.[6]

Even after the UN Special Rapporteur on the Right to Health clearly said in March 2009 that “Developed countries should not encourage developing countries and LDCs to enter into TRIPS-plus FTAs” and “Developing countries and LDCs should not introduce TRIPS-plus standards in their national laws”, the developed countries in Table 1 still sought TRIPS+ on medicine provisions in their FTAs with developing countries eg:

·      Japan and Korea in their 2014 RCEP proposals above, even though they are both party to the Convention on the Rights of the Child (CRC)[1] which includes the right to health[2].

·      The USA’s proposals for TRIPS+ on medicines in the TPP in 2013 etc[3].

·      The European Union (EU) made TRIPS+ on medicines proposals to India in 2010 (eg for patent term extensions for delays in marketing approval and data/market exclusivity for an unspecified period)[4], even though all EU members[5] are parties to the CRC[6] which includes the right to health.

·      The European Free Trade Association (EFTA)-Hong Kong FTA with TRIPS+ provisions on medicines was concluded in 2011,[7] even though all the EFTA countries[8] are parties to the CRC[9] which includes the right to health.

Effects of TRIPS+ provisions

A ban on pre-grant patent opposition prevents other countries from following India’s successful use of pre-grant oppositions to ensure access to various generic medicines.[10]

The World Health Organization (WHO) has an economic model of the impact of these TRIPS-plus provisions on medicine consumption and a country’s generic medicine manufacturers. When the WHO model was applied to Colombia, whose FTA with the US entered into force in May 2012, it found that the effect of most of these TRIPS-plus provisions is that Colombia would require an extra US$1.5billion to be spent on medicines every year by 2030.[11] If this were not spent, Colombians will have to reduce their medicine consumption by 44% by 2030.[12]

A study of the impact of the TRIPS-plus provisions of the Jordan-USFTA (entered into force December 2001; study period up to 2006) found that: one hospital alone has increased its medicine spending six-fold, medicine prices in Jordan have already increased 20% since 2001 when the FTA began, over 25% of the Ministry of Health’s budget is now spent on buying medicines, data exclusivity has delayed the introduction of cheaper generic versions of 79% of medicines launched by 21 multinational companies between 2002 and mid-2006 and ultimately the higher medicine prices are threatening the financial sustainability of government public health programs.[13]

The extension of patent terms alone (beyond the 20 years required by TRIPS) has been calculated by the Korean National Health Insurance Corporation to cost 504.5 billion won (US$529 million) for having to extend medicine patents for 3 years and 722.5 billion won (US$757 million) if it had to agree to a four year extension in its USFTA negotiations.[14]

It was recently estimated that eight years of data exclusivity alone in Canada would have added $600 million to prescription medicine costs alone in the last five years.[15]

Biologic medicines are expected to be 50% of spending and can cost about $569,000/ patient/year, often for a lifetime at monopoly prices.[16] Since they may often not be patentable, the biologic exclusivity monopoly (eg in the TPP) may be the main obstacle to accessing the cheaper generic (biosimilar) versions.

Many have expressed concerns about the way the intellectual property provisions found in USFTAs make medicines more expensive, including United Nations Special Rapporteurs on the Right to Health,[17] the United Nations Committee on Economic, Social and Cultural Rights,[18] the United Nations Committee on the Rights of the Child,[19] the World Health Assembly,[20] the WHO’s Commission on Intellectual Property Rights, Innovation and Public Health,[21] the Global Fund to Fight AIDS, Tuberculosis and Malaria,[22] Ministers of Health from ten Latin American countries,[23] the Ministers of Health[24] of the African Union, the African Union’s Ministers of Trade[25] and the UK Government’s Commission on Intellectual Property Rights[26].

Other relevant provisions

In addition, to the IP chapter provisions, a number of other chapters in FTAs and investment treaties can restrict access to affordable medicines. These include:

·      Provisions on medicine and medical device reimbursement systems allow manufacturers more influence on whether they are reimbursed and how much they are reimbursed.[27] This can pressure governments to spend more for the same amount of medicines/medical devices which can restrict spending on other medicines if the budget is capped (eg as it is in New Zealand’s PHARMAC system[28]).

·      Investment protection provisions in FTA investment chapters or bilateral investment treaties (BITs). There are 3268 treaties with these provisions, of which 2923 are BITs.[29] These treaties generally:[30]

o   have a broad definition of investment (eg including intellectual property, profits and future/expected profits etc) which is protected by the treaty.

o   Protect investors’ rights in a variety of ways, including:

§  from indirect expropriation (eg government action(s) that reduce the value of the investment broadly defined as above). Even the US government has recently recognised this could be a problem for revocation of patents and compulsory licensing of patents and so has an exception for it in its more recent BITs and FTAs,[31] however the exception was not in its earlier model,[32] so is unlikely to be in older BITs and FTAs[33].

§  Requiring governments to treat foreign investors fairly and equitably. There is a wide range of other interpretations which governments have also found it difficult to comply with.  This can be seen in the statistics for disputes under U.S. trade or investment treaties where: [34]

·      74 per cent of the time when investors win, there has been a violation of fair and equitable treatment (FET)

·      FET has been found to have been violated in 81% of the cases won by investors when they allege a violation of FET.

·      There is no equivalent exception to FET for compulsory licences, patent revocation etc (the way there is for expropriation) in the current US Model BIT[35] or TPP investment chapter[36].

o   Enforce the investment protections via investor-to-state dispute settlement (ISDS) which allows the foreign investor to sue the host government at an international tribunal for unlimited monetary damages (eg for the future profits it could have made if the compulsory licence had not been issued) and compound interest, compounded monthly, which can be at commercial interest rates from the date of the government action[37] (eg issuing the compulsory licence – an important TRIPS flexibility to enable access to affordable medicines[38]).

o   A pharmaceutical company is already using these provisions to sue Canada for revoking its patents on two medicines and it wants US$481million in damages,[39] claiming violations of the expropriation and fair and equitable treatment provisions in the North American Free Trade Agreement (NAFTA) with the USA and Mexico[40].

o   Concern about these investment provisions have already been expressed by UN Special Rapporteurs on human rights, including the right to health[41] and a number of countries are already withdrawing from or adding safeguards to their new BITs/FTA investment chapters[42].

Furthermore, in all USFTAs since the Chile-USFTA, the US uses the ‘certification’ process to extract additional concessions from the other countries in the FTA, before it allows the USFTA to come into force. This has included further TRIPS+ provisions on medicines in addition to the 5 years of data exclusivity for new medicines - eg the US asked Guatemala to provide an extra 3 years of data exclusivity for new uses of an existing medicine, something not required by its USFTA text.[43] Generally, the US has used the certification process in past US free trade agreements to:[44]

·      Extract extra concessions from other FTA countries beyond those in the signed text

·      Ensure the implementing laws in other FTA countries interpret ambiguities in the text in favour of the USA

·      Write a whole implementing law in its favour and require the other country’s parliament to pass it with no changes

·      Force another country’s parliament (Australia) to change its implementing law, after it has passed it, in a way that better suits the USA.[45]

The certification process involves the other countries in the USFTA negotiating the changes to their domestic (eg IP) laws to implement the FTA with the USA. “In order for an agreement to enter into force, the President determines with the advice of USTR whether the FTA partner has met all obligations. A USTR official explained that USTR works with the trading partner to ensure that its IP laws are aligned with the provisions agreed to in the FTA. The USTR official further explained that, at the start of the implementation process, the trading partner provides USTR a comprehensive list of its laws related to each provision in the IP chapter of the FTA. The trading partner also provides USTR a list detailing the intended legal changes necessary to bring its laws into compliance with the agreement. USTR reviews the laws and proposed changes and provides the trading partner with comments regarding their degree of compliance. USTR monitors the changes in the other country, and has numerous exchanges with the trading partner on any legal changes necessary. One USTR official stated that they are careful to ensure that the agreement is implemented exactly as it was negotiated. A USTR official explained that when the legal changes are complete and USTR is comfortable with the new legislation, USTR makes a recommendation to the President for the agreement to enter into force. The administration then makes a determination about the legal compliance before the agreement can officially enter into force.”[46]

This certification process will occur for the Trans Pacific Partnership Agreement (TPP) as it is required by US law to pass the TPP under fast track authority,[47] allowed by the TPP[48] and the US government has already indicated it is considering certification in the TPP.[49] One of the provisions a number of members of the US Congress are unhappy with in the TPP is the duration of biologics exclusivity (they wanted 12 years as in US law, instead of the 5 or 8 year options in the TPP text).[40]  The US government has signaled these kinds of changes could be achieved in the certification process.[51]

Recommendations

To ensure developing countries and LDCs can use the TRIPS flexibilities to protect health as set out in SDG 3(b), as recommended by the UN Special Rapporteur on the Right to Health,[52] developed countries should not ask for TRIPS+ provisions and other provisions that may undermine fulfillment of human rights obligations. Developing countries and LDCs should also not agree to such provisions. This applies whether it is in WTO accession negotiations or in FTAs.

Given the TRIPS+ provisions agreed in the TPP and the evidence of the adverse impacts of these provisions, the governments concerned should not ratify the TPP if they want to ensure access to affordable medicines, the right to health and achievement of SDG3(b).  

Furthermore, bilateral investment treaties/FTA investment chapters, which undermine fulfillment of human rights including the right to health, should not be negotiated.

For existing FTAs and BITs with problematic provisions, countries should withdraw from them or renegotiate them to remove provisions that undermine the fulfillment of human rights including the right to health.

Bibliography and References

[1] https://www.wto.org/english/thewto_e/whatis_e/tif_e/org6_e.htm

[2] http://www.doctorswithoutborders.org/publications/reports/2011/MSF_Access_Report_13th_edition.pdf and http://www.msf.org/msfinternational/invoke.cfm?objectid=63C0C1F1-E018-0C72-093AB3D906C4C469&component=toolkit.article&method=full_html.

[3] UN Sub-Commission on human rights, Resolution 2000/7: Intellectual Property Rights and Human Rights.

[4] Eg China had to agree to 6 years of data exclusivity on medicines, https://www.wto.org/english/thewto_e/acc_e/completeacc_e.htm

[5] https://www.wto.org/english/thewto_e/acc_e/completeacc_e.htm

[6] https://www.wto.org/english/thewto_e/whatis_e/tif_e/org7_e.htm

[7] Explanations of these TRIPS+ provisions are in http://www.unitaid.eu/images/marketdynamics/publications/TPPA-Report_Final.pdf and http://www.un.org/ga/search/view_doc.asp?symbol=A/HRC/11/12

[8] Regional Comprehensive Economic Partnership (RCEP) negotiations are between ASEAN (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, Vietnam) and Australia, China, India, Japan, Republic of Korea and New Zealand, http://dfat.gov.au/trade/agreements/rcep/Pages/regional-comprehensive-economic-partnership.aspx

[9] The US has FTAs in force with the 20 countries listed here: https://ustr.gov/trade-agreements/free-trade-agreements which have most of these TRIPS+ provisions.

[10] The EU has FTAs with many countries: http://trade.ec.europa.eu/doclib/docs/2006/december/tradoc_118238.pdf which have varying IP provisions

[11] EFTA has FTAs with 36 countries, http://www.efta.int/free-trade/free-trade-agreements. These are examples of some of their provisions

[12] http://bilaterals.org/IMG/pdf/rcep_wgip_jp_revised_draft_text_3oct2014.pdf

[13] http://bilaterals.org/?rcep-draft-ip-chapter-2014

[14] https://www.mfat.govt.nz/en/about-us/who-we-are/treaty-making-process/trans-pacific-partnership-tpp/text-of-the-trans-pacific-partnership

[15] https://ustr.gov/sites/default/files/uploads/agreements/fta/singapore/asset_upload_file708_4036.pdf

[16] http://bilaterals.org/?eu-asean-fta-draft-ipr-chapter

[17] According to some analyses

[18] http://www.efta.int/free-trade/free-trade-agreements/korea

[19] http://www.efta.int/media/documents/legal-texts/free-trade-relations/lebanon/annexes-rou-jd/87E615BD9EDD4DD1B59A294E3AFB0333.pdf with compensation option

[20] http://www.efta.int/free-trade/free-trade-agreements/hong-kong with compensation option

[21] http://www.efta.int/free-trade/free-trade-agreements/ukraine

[22] Via injunctions rather than an automatic stop on marketing approval

[23] http://www.efta.int/free-trade/free-trade-agreements/jordan

[24] https://treaties.un.org/Pages/ViewDetails.aspx?src=IND&mtdsg_no=IV-11&chapter=4&lang=en

[25] http://www.un.org/documents/ga/res/44/a44r025.htm

[26] http://keionline.org/sites/default/files/Wikileaks-secret-TPP-treaty-IP-chapter.pdf

[27] http://bilaterals.org/?eu-india-fta-consultation-draft-on

[28] http://europa.eu/about-eu/countries/index_en.htm

[29] https://treaties.un.org/Pages/ViewDetails.aspx?src=IND&mtdsg_no=IV-11&chapter=4&lang=en

[30] http://www.efta.int/free-trade/free-trade-agreements/hong-kong. Although there have not been leaks showing EFTA’s IP proposals in its FTA negotiations that these authors know of (eg at http://bilaterals.org/?-efta-ftas-), given the similarities in various EFTA FTA IP chapters (eg in the type of restriction on compulsory licensing), it is possible to infer that these proposals came from the EFTA side. 

[31] http://www.efta.int/

[32] https://treaties.un.org/Pages/ViewDetails.aspx?src=IND&mtdsg_no=IV-11&chapter=4&lang=en

[33] Eg see Table 2 in http://www.unitaid.eu/images/marketdynamics/publications/TPPA-Report_Final.pdf

[34] http://www.ftamalaysia.org/article.php?aid=153

[35] http://www.ftamalaysia.org/article.php?aid=153

[36] http://apps.who.int/medicinedocs/documents/s20165en/s20165en.pdf

[37] http://english.hani.co.kr/arti/english_edition/e_business/165065.html

[38] http://www.canadiangenerics.ca/en/news/nov_14_06.shtml

[39] http://www.twn.my/title2/health.info/2015/hi150802.htm

[40] Eg Press Release, 5 July 2004, http://www.unhchr.ch/huricane/huricane.nsf/view01/35C240E546171AC1C1256EC800308A37?opendocument and http://www2.ohchr.org/english/bodies/hrcouncil/docs/11session/A.HRC.11.12_en.pdf (which says that ‘Developed countries should not encourage developing countries and LDCs to enter into TRIPS-plus FTAs’ and developing countries and LDCs should not agree to TRIPS-plus.

[41] See for example http://www.3dthree.org/pdf_3D/CostaRicaCAFTA.pdf, http://www.3dthree.org/pdf_3D/3DInformationNote7.pdf, http://www.3dthree.org/pdf_3D/EcuadorPress18May04_en.pdf and http://www.3dthree.org/pdf_3D/3DEmailnote4_Morocco-June06.pdf

[42] See for example http://www.3dthree.org/pdf_3D/ElSalvadorCOPressRelease_en.pdf, http://www.3dthree.org/pdf_3D/TBemailnote2eng-june05.pdf, http://www.3dthree.org/pdf_3D/3DEmailnote3_Thailand-Jan06.pdf, http://www.3dthree.org/pdf_3D/BotswanaCOPressRelease_en.pdf

[43] WHA56.27, May 2003, http://www.who.int/gb/ebwha/pdf_files/WHA56/ea56r27.pdf

[44] ‘Public health, Innovation and Intellectual Property Rights’, World Health Organization, April 2006. For example recommendation 4.21.

[45] http://www.theglobalfund.org/en/mediacenter/pressreleases/2011-05-26_Global_Fund_strategy_aims_to_help_shape_market_and_ensure_sustainability_of_AIDS_treatment/

[46] Declaration of Ministers of South America over Intellectual Property, Access to Medicines and Public Health, Geneva, 23 May 2006. The Ministers of Health were from Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Paraguay, Peru, Uruguay and Venezuela, http://lists.essential.org/pipermail/ip-health/2006-May/009594.html.

[47] Gaborone Declaration, 2nd Ordinary Session of the Conference of African Ministers of Health, Gaborone, Botswana, 10-14 October 2005, CAMH/Decl.1(II), http://lists.essential.org/pipermail/ip-health/2005-October/008440.html.

[48] AU’s Ministerial Declaration on EPA Negotiations, AU Conference of Ministers of Trade, 3rd Ordinary Session, 5-9 June 2005, Cairo, Egypt, AU/TI/MIN//DECL.(III), www.twnside.org.sg/title2/FTAs/General/AFRICAN_UNION.Cairo_Decl.doc.

[49] ‘Integrating Intellectual Property Rights and Development Policy: Report of the Commission on Intellectual Property Rights’, Commission on Intellectual Property Rights, London, 2002. For example, pages 39, 49, 113.

[50] Eg Annex 26A of the TPP, https://www.mfat.govt.nz/assets/_securedfiles/Trans-Pacific-Partnership/Text/26.-Transparency-and-Anti-Corruption-Chapter.pdf and Annex 2-D of the EU-Korea FTA: http://eur-lex.europa.eu/legal-content/EN/ALL/?uri=OJ:L:2011:127:TOC which requires governments to ‘appropriately recognise the value of the patented medicine/medical device in the amount of pricing and reimbursement it provides’ – ie presumably pay close to the monopoly price.

[51] https://www.pharmac.govt.nz/assets/purchasing-medicines-information-sheet.pdf

[52] http://unctad.org/en/PublicationsLibrary/webdiaepcb2015d1_en.pdf

[53] Annex 1 of http://www.twn.my/title2/FTAs/General/TPPHumanRights.pdf.

[54] It was in its Model BITs from 2004: http://investmentpolicyhub.unctad.org/Download/TreatyFile/2872 and 2012: http://www.ustr.gov/sites/default/files/BIT%20text%20for%20ACIEP%20Meeting.pdf and is in the TPP’s investment chapter: https://www.mfat.govt.nz/en/about-us/who-we-are/treaty-making-process/trans-pacific-partnership-tpp/text-of-the-trans-pacific-partnership.

[55] Eg the exception to expropriation for compulsory licences/patent revocation etc was not in the USA’s 1998 Model BIT which is the basis for US BITs and FTA investment chapters of that time, http://investmentpolicyhub.unctad.org/Download/TreatyFile/2868

[56] US BITs signed before 2004 can be seen at http://investmentpolicyhub.unctad.org/IIA/CountryBits/223#iiaInnerMenu.

[57] http://www.citizen.org/documents/MST-Memo.pdf

[58] http://www.ustr.gov/sites/default/files/BIT%20text%20for%20ACIEP%20Meeting.pdf

[59] https://www.mfat.govt.nz/en/about-us/who-we-are/treaty-making-process/trans-pacific-partnership-tpp/text-of-the-trans-pacific-partnership

[60] Annex 1 of http://www.twn.my/title2/FTAs/General/TPPHumanRights.pdf

[61] Eg http://www.twn.my/title2/IPR/pdf/ipr10.pdf, http://www.twn.my/title2/IPR/pdf/ipr09.pdf and http://www.cptech.org/ip/health/cl/recent-examples.html.

[62] http://www.citizen.org/documents/investor-state-chart.pdf

[63] http://www.citizen.org/documents/eli-lilly-investor-state-factsheet.pdf

[64] Eg see http://www.twn.my/title2/FTAs/General/TPPHumanRights.pdf

[65] Eg see http://www.citizen.org/documents/isds-quote-sheet.pdf

[66] http://tppnocertification.org/wp-content/uploads/2014/08/Certification-memorandum.pdf

[67] http://tppnocertification.org/wp-content/uploads/2014/08/Certification-memorandum.pdf

[68] http://tppnocertification.org/australias-experience/

[69] http://applications.emro.who.int/dsaf/dsa1081.pdf

[70] https://www.congress.gov/bill/114th-congress/house-bill/2146/text?q={%22search%22%3A[%22\%22hr2146\%22%22]} : s106a)1)G

[71] Article 30.5 and https://tpplegal.files.wordpress.com/2015/12/ep1-jane-kelsey.pdf

[72] Eg Inside US Trade: Daily News, ‘Vetter Signals TPP Implementation May Be Used To Address Lawmakers' Objections’, January 19, 2016

[73] Eg http://phrma.org/note-media-elected-officials-support-12-years-data-protection-tpp

[74] Eg Inside US Trade: Daily News, ‘Vetter Signals TPP Implementation May Be Used To Address Lawmakers' Objections’, January 19, 2016

[75] http://www.un.org/ga/search/view_doc.asp?symbol=A/HRC/11/12

Shamiso Zinzombe, Erasmus University Rotterdam

Lead Author: Shamiso Zinzombe
Organization: Erasmus University Rotterdam
Country: Netherlands

Abstract

Appropriately the Sustainable Development Agenda prioritises access to medicine and other health technologies for the prevention, treatment and control of communicable and non-communicable illnesses or diseases. Astutely, the United Nations Secretary-General's High Level Panel on Access to Medicines has been timeously convened with the important task of exploring ways of recalibrating the system of innovation into new medicine and other health technologies so as to recommend solutions of ensuring purposeful work toward attainment of the Sustainable Development Goals for millions of people. This submission seeks to contribute to those objectives by addressing the rights of inventors and the duties of pharmaceutical corporations under international human rights and public health law because this could greatly assist in improving law and policy frameworks intended to enhance specifically access to medicine. It does so by examining the entitlement to access medicine in terms of the right to health Article 12 of the International Covenant on Economic Social and Cultural Rights and the right to science Article 15 of the same treaty. In this submission aspects of these rights relevant to the rights of inventors and the duties of pharmaceutical corporations are discussed and policy and law implications outlined. Finally, it makes proposals that could be used to implement the law and policy implications flowing from these rights. Whilst moving toward a public health and international human rights law based framework is the ultimate goal, incremental steps toward this may also be taken using these existing legal human rights and some of these steps are listed in the proposal.

Submission

1. INTRODUCTION

Appropriately the Sustainable Development Agenda prioritises access to medicine and other health technologies for the prevention, treatment and control of communicable and non-communicable illnesses or diseases. Astutely, the United Nations Secretary-General's High Level Panel on Access to Medicines has been timeously convened with the important task of exploring ways of recalibrating the system of innovation into new medicine and other health technologies so as to recommend solutions of ensuring purposeful work toward attainment of the Sustainable Development Goals (SDGs) for millions of people. This submission seeks to contribute to those objectives by addressing the rights of inventors and the duties of pharmaceutical corporations under international human rights and public health law because this could greatly assist in improving law and policy frameworks intended to enhance specifically access to medicine. Purposefully moving toward accomplishment of the SDGs on access to medicine, amongst other things, requires states to develop and implement appropriate legal and policy frameworks domestically, reinforced internationally by human rights based legal principles. Ultimately, this requires recalibration from a legal framework based on an inseparable linkage between innovation and access to one based on public health and international human rights law. However, incremental steps directed at the rights of inventors and duties of pharmaceutical corporations may be taken based on the existing international human rights law and public health framework.

Policy incoherence stems from the current system on which innovation is based which, does not sufficiently reflect neither is it consistent with nor founded on international human rights law. At a minimum nor is the current system fully guided by public health principles grounded within an international human rights law framework. This incoherence is reflected in the current framing of rights of pharmaceutical corporations in terms of international economic law such as the World Trade Organisations (WTO) treaty the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS). Within this framework access to medicine is hindered both by the limitations created by this treaty and the manner in which recipients of its rights, such as patents, exercise those rights. The effects of which are most keenly felt in developing countries.

2. AN ENTITLEMENT TO ACCESS MEDICINE

2.1. One of the sources of the entitlement to access medicine is the right to health Article 12 International Covenant on Economic Social and Cultural Rights (ICESCR). The Committee for the International Covenant on Economic Social and Cultural Rights (CESCR) in General Comment 14 interpreted the right to health as ‘a right to the enjoyment of a variety of facilities, goods, services and conditions necessary for the realisation of the highest standard of health’. Moreover, it affirmed and illustrated how this right contains freedoms and entitlements, corresponding to the central object of the right articulated above.

2.2. Specifically, it identified a series of core listed obligations which empower the entitlement to access medicine. In particular, the core listed obligations are:
"(a) [t]o ensure access to health facilities, goods and services on a non-discriminatory basis, especially for vulnerable and marginalised groups; ....
(b) [t]o ensure access to the minimum essential food…
(d) [t]o provide essential drugs, as from time to time defined under the WHO Action Programme on Essential Drugs;
(e) [t]o ensure equitable distribution of all health…goods…
(f) [t]o adopt and implement a national public health strategy and plan of action, on the basis of epidemiological evidence, addressing the health concerns of the whole population; the strategy and plan of action shall be devised, and periodically reviewed, on the basis of a participatory and transparent process; they shall include methods, such as right to health indicators and benchmarks, by which progress can be closely monitored; the process by which the strategy and plan and action are devised, as well as their consent, shall give particular attention to all vulnerable or marginalised groups ….
(b) [t]o provide immunization against major infectious diseases…
(c) [t]o take measures to prevent, treat and control epidemic and endemic diseases”.

2.3. The entitlement to access medicine flows, among other things, from the states obligations clearly articulated in General Comment 14. These oblige states to develop, among other things, a legal and policy framework for the provision of medicine and other health technologies. Moreover, the framework must be designed to ensure everyone has equal access to medicine. Further, right holders of the right to health are also entitled to participate in the development of this framework.

2.4. In relation to framing a legal system for an entitlement to medicine General Comment 14 points out as principle that the right to health is in a [constant position] of independence and interdependence in relation to other human rights. With regard to its interdependence, it enhances the enjoyment of other rights, whilst itself being enhanced by other rights. Thus, each context where the right to health is invoked would need to take into account the relationship between the right to health and other applicable human rights, if any. Applying this principle in the context of access to medicine, rights that have reinforced this principle include the right to life, as in the noteworthy case of interventions unlocking greater access to HIV/AIDS. However, in terms of framing a legislative system both domestically and internationally it is important to explore other existing rights, such as the right to science in Article 15 ICESCR, which is applicable to scientific inventions like medicine.

2.5. Law and policy implications to empower the right to health Article 12 ICESCR:

2.5.1. Amongst other things, an entitlement to access medicine encompasses equal access to medicine in the event of medical need and it includes an entitlement to a legal and policy framework designed to accomplish this.

2.5.2. To address the policy incoherence in the current framework, it is important to look to the right to health in Article 12 ICESCR and its connections with other human rights, like the right to science Article 15 ICESCR.

2.5.3. In keeping with the right to health Article 12 ICESCR core listed obligation to participate, development of this space should occur in a space free from corporate interest or influence, and one which promotes participation from civil society and non-governmental organisations not affiliated with corporate interests.

3. THE RIGHT TO SCIENCE ARTICLE 15 ICESCR

3.1. The right to science in Article 15 ICESCR provides:

“1. The States Parties to the present Covenant recognize the right of everyone:
(a) To take part in cultural life;
(b) To enjoy the benefits of scientific progress and its applications;
(c) To benefit from the protection of the moral and material interests resulting from any scientific, literary or artistic production of which he is the author.
2. The steps to be taken by the States Parties to the present Covenant to achieve the full realization of this right shall include those necessary for the conservation, the development and the diffusion of science and culture.
3. The States Parties to the present Covenant undertake to respect the freedom indispensable for scientific research and creative activity.
4. The States Parties to the present Covenant recognize the benefits to be derived from the encouragement and development of international contacts and co-operation in the scientific and cultural fields."

3.2. Critical rights outlined in this article include, but are not limited to, the right of the community to enjoy the benefits of scientific progress and application, the right of human scientists to benefit from the protection of the moral and material interests resulting from any scientific, literary or artistic production of which he or she is the author, an obligation on states to take steps to develop science, an obligation on states to apply international cooperation and contacts in scientific fields.

3.3. Crucially these aspects of the right highlight some important existing features for a domestic and international framework on science and in the context of access to medicine for development of medicine. Also, the right clearly identifies the subject and object of the right both of which are critical to addressing the policy incoherence in the current international system on innovation and access.

3.4. In General Comment 17, in relation to inventors the CESCR clarified that this right protects human beings. Thus, corporations are not entitled to human rights protection in the framework of this right. Applying this to the context of access to medicine it only protects scientists engaged in researching or creating new medicines.

3.5. Moral interests the CESCR stated that are protected in Article 15 ICESCR cover the inventor's right to perpetual recognition and a right to protect the authenticity of the work in the event of reproduction.

3.6. Of material interests the CESCR stated, '‘material interests’…reflects the close linkage of this provision with the right to own property, as recognized in article 17 [UDHR] and in regional human rights instrument, as well as with the right of any worker to adequate remuneration’. Elaborating further the CESCR underscored material interests are those that contribute to the inventor’s right to an adequate standard of living. This can be achieved in various ways of paying for the work to the inventor.

3.7. In relation to the phrase benefit from the protection the CESCR articulated in principle states are allowed to determine the modalities of the protection involved. Further, states should ensure, at the minimum, the protections provided protect the moral and material interests as outlined above. In relation to intellectual property, such as in TRIPS, the state is not required to fix the human rights protection of the inventor’s rights to those standards. Whilst states are also permitted to protect the human right of the inventor beyond the minimum; however, in so doing, the state is obliged to ensure this does not impede access or the rights of others to benefit from scientific advancement.

3.8. Intellectual property is not an obligation on states, neither is it a human right in the framework of this right. However, it is a modality which states can regulate to ensure compliance with Article 15 ICESCR. For example, states are obliged to take measures to protect indigenous knowledge, in so doing they have the option, which must be exercised in a manner that takes account of the preferences of indigenous people, to register indigenous knowledge under national intellectual property systems. In relation to intellectual property on medicine states have a,

'duty to prevent unreasonably high costs for access to essential medicines...Moreover, States parties should prevent the use of scientific and technical progress for purposes contrary to human rights and dignity, including the rights to life, health and privacy, e.g. by excluding inventions from patentability whenever their commercialization would jeopardize the full realization of these rights'.

Thus, while states may use intellectual property to give effect to some features of the right, they are obliged to regulate it, including by excluding certain inventions from patentability to avoid jeopardizing the full realisation of rights, such as the right to health. This enables and obliges states to explore various modalities of giving effect to Article 15 ICESCR, including setting restrictions to intellectual property like exclusions to patentability.

3.9. Law and policy implications:

3.9.1. Article 15 ICESCR provides protection for inventors in their moral and material interests, and it protects their freedoms indispensable for scientific research and activity. Also it ensures the communities right to enjoy in the benefits and application of scientific progress. Further, it obliges states to develop modalities in order to give effect to the above rights, and others intended to promote the development and diffusion of science. Thus, some of the rights and obligations critical to a system capable of providing medicine in terms of the right to health already exist in international law.

3.9.2. While states may use intellectual property as a modality, it is not obligatory neither is it a human right, instead it is one of many options to consider. Further, if states elect to use intellectual property, it should be brought in line with the right to science Article 15 ICESCR and the right to health Article 12 ICESCR.

4. PHARMACEUTICAL CORPORATIONS AS A MEANS OF REALISING THE RIGHT TO HEALTH

4.1. The current system of innovation on new medicine and other health technologies relies on private actors such as pharmaceutical corporations. It also relies on intellectual property from TRIPS. Law and policy incoherence stems from the current framing of intellectual property in TRIPs and the manner in which it is exercised by pharmaceutical corporations which together deprive millions of people from accessing much needed medicine.

4.2. According to the CESCR in terms of the tripartite obligation to fulfil, private means may be used to promote, provide and facilitate access to medicine. This indicates that a functional connection exists; wherein, pharmaceutical corporations are one of many private means or tools used to realise the right to health. This nexus is one of the conduits through which duties consistent with their activities and the impact of those activities, on the enjoyment of the right, may be identified and elaborated on. Similarly, the Guidelines on Pharmaceutical Companies recognise such a functional connection stating, ‘[e]nhancing access to medicines, however, has the central place in the societal mission of pharmaceutical companies’. Pharmaceutical corporations, thus, operate in this sector because the state determines that they are a useful means by which to discharge and implement certain right to health obligations related to medicine. This principle can therefore be used to identify duties in concrete situations related to the use of intellectual property. In this way the corporation is a tool because the elements of the right to health, including medicine, may be realised through public or private means.

4.3. State practice already demonstrates that states already make use of private actors as implementing duty bearers in various ways. For example, state reports submitted by India, and the Netherlands each demonstrate that corporate actors are involved in implementing the right to health and the various ways in which this is represented in law. India for example in the 2007 Combined Report discusses the local pharmaceutical manufacturing industry responsible for producing low cost quality medicine for its local population. Furthermore, it discusses various steps taken to ensure the system of intellectual property remains one supportive of its goal to ensure access to medicine to its population. The Netherlands in its reports has demonstrated principles applicable to some corporate health actors within its jurisdiction. For example, health insurers, beginning from the recognition that a 'well-functioning health service is considered a constitutional right'. It also demonstrates that obligations are clearly placed on private actors, for example again with health insurers stating, ‘[t]he Private Medical Insurance Access Act obliges private medical insurers to accept those seeking private medical insurance for the first time and to offer them a standard insurance package at a standard premium, both of which are prescribed by government’. Other legal measures applied by the Netherlands to regulate corporations engaged in health activities include total bans and agreements on self-regulation.

4.4. Law and policy implications:
i. Pharmaceutical corporations are implementing, rather than norm setting duty bearers states can elaborate on their specific duties in relation to access to medicine based on Article 12 ICESCR the right to health and Article 15 ICESCR the right to science could elaborated on more clearly.

ii. States as seen above use various modalities to place duties on these corporate actors, it may be useful to consider various modalities in relation to pharmaceutical corporations and the manner in which they currently exercise intellectual property with a view to promoting access to medicine.

5. Implementation proposals:

5.1. United Nations Level

Over a two to three year period identify, develop or articulate a set of common principles based on or drawn from international human rights law applicable to rights of inventors and duties of pharmaceutical corporations which states may apply along with TRIPS flexibilities and which will also form the basis for discussion on a new treaty on innovation into medicine.

Potential mechanisms to carry out this proposal could be:
i. Committee on the International Covenant on Economic Social and Cultural Rights could be tasked to prepare a General Comment on Access to and Availability of Medicine and Other Health Technologies, or States could themselves in General Assembly outline at most 10 principles; and
ii. Within the Open-ended Intergovernmental Working Group on Transnational Corporations and Other Business Enterprises with respect to Human Rights include a provision in the treaty addressing pharmaceutical corporations and intellectual property to bring pharmaceutical corporations within the jurisdiction of any adjudicating mechanism created in the treaty; and
iii. Lessons from the above could be used to frame a new treaty on innovation and access of medicine and other health technologies.

5.2. World Trade Organisation Level

i. World Trade Organisation should respect the obligations of member states party to ICESCR.

5.3. Domestic Level

i. States should participate in the development of common principles for the promotion of access to medicine based on international human rights law, ensuring public consultation within their territories and they should implement these at the domestic level once the principles are identified.

Bibliography and References

References
UNGA 'Draft outcome document of the United Nations summit for the adoption of the post-2015 development agenda' (12 August 2015) UN Doc A/69/L.85 (UN Doc A/69/L.85) (SDGs) Goal 3.
United Nations Secretary-General’s High-Level Panel on Access to Medicines 'Terms of Reference' <http://www.unsgaccessmeds.org/new-page/> accessed 28 February 2016.
Holger Hestermeyer, Human Rights and the WTO: The Case of Patents and Access to Medicines (OUP 2007) pages 94, 99-102,229-289 points out in the least that World Trade Organisation (WTO) is obliged to respect obligations of WTO member states party to the International Covenant on Economic Social and Cultural Rights (adopted 16 December 1966, entered into force 3 January 1976) 993 UNTS 3 (ICESCR) or human rights obligations that have attained the status of ius cogens.
The notion of public health in the Agreement on Trade Related Aspects of Intellectual Property Rights (15 April 1994)
LT/UR/A-1C/IP/1 is weakened by the fact that it is not linked to human rights where with such a link, the duty bearing role of the state and non-actors engaged by the state in the delivery of health goods would be properly reflected. UN Committee on Economic, Social and Cultural Rights ‘General Comment 14’ (11 August 2000) UN Doc E/C.12/2000/4 (General Comment 14) para 4, 12 (a) indicates that public health is integral to the notion of the right to health, whilst also maintaining that public health does not determine the boundaries of the right to health. This is consistent with academic work which also demonstrates a link between the right to health and public health, see Brigit Toebes, The Right to Health as a Human Right in International Law (School of Human Rights Research 1999) pages 7-8, 10, on the drafting history of the right to health also see UNCHR ‘Report of the Drafting Committee to the Commission on Human Rights’ (1 July 1947) UN Doc E/CN.4/21 page 19 at Article 35, Richard Pierre Claude and Bernardo W. Issel, ‘Health, Medicine and Science in the Universal Declaration of Human Rights’ (1998) 3/2 Health and Human Rights 126 (Claude and Issel) page 130. This matters in relation to the role of the duty bearer as an illustration. Compare public health in the context of Framework Convention on Tobacco Control (FCTC) (adopted 21 May 2003, entered into force 27 February 2005) 2302 UNTS 166 or Codex Alimentarius <http://www.fao.org/fao-who-codexalimentarius/codex-home/en/ >accessed 28 February 2016, International Code of Marketing of Breast-milk Substitutes (adopted 21 May 1981) 34th World Health Assembly – in all these instances the state for example is not placed in a situation where it can experience a conflict of interest because it is only a duty bearer, this contrasts with TRIPS where it is duty bearer and right holder. Also in relation to the role of non-state actors who are duty bearers its ability to regulate is uninhibited and the non-state actors who are duty bearers are clearly identified and their duties specified.
Ellen F.M. t’Hoen, The Global Politics of Pharmaceutical Monopoly Power (AMB 2009) page 87, Heinz Klug, ‘Law, Politics, and Access to Essential Medicine in Developing Countries’[2008] Politics & Society 207 pages 210, 231-232, Mohammed El Said and Amy Kapczynski, 'Access to Medicines: The Role of Intellectual Property Law and Policy' [2011] Working Paper prepared for the Third Meeting of the Technical Advisory Group of the Global Commission on HIV and the Law, 7-9 July 2011 page 1-2, 16-17.
ICESCR Article 12, other sources of the right to health in international treaty law include Article 12 Convention on the Elimination of All Forms of Discrimination against Women (adopted 18 December 1979, entered into force 3 September 1981) 1249 UNTS 13 and Article 24 Convention on the Rights of the Child (adopted 20 November 1989, entered into force 2 September 1990) 1577 UNTS 3.
General Comment 14 para 9.
General Comment 14 para 8.
General Comment 14 para 43.
General Comment 14 para 43.
General Comment 14 para 1, 3.
General Comment 14 para 3.
Noah Novogrodsky,"The Duty of Treatment: Human Rights and the HIV/AIDs pandemic"[2009] Yale Hum. Rts. & Dev. L.J. 1 page 55-56.
UN Committee on Economic, Social and Cultural Rights ‘General Comment No 17’ (12 January 2006) UN Doc E/C.12/GC/17 (General Comment 17) para 35, 39 (e).
ICESCR Article 15, this article was preceded by Article 27 of the Universal Declaration of Human Rights (adopted 10 December 1948) UNGA Res 217 A (III).
ICESCR Article 15 (1) (b).
ICESCR Article 15 (1) (c).
ICESCR Article 15 (2).
ICESCR Article 15 (4).
General Comment 17 para 18, 28, 31, 35.
General Comment 17 para 7-8.
Text para 4.
General Comment 17 para 12-14.
General Comment 17 para 15. It is however, important to point out that in relation to Article 17 UDHR the drafters of the article did not define property, that is to say they did not state that which is or is not recognised as property on a universal level. Rather they left this to the determination of each state party within its jurisdiction. This reflected the diversity of traditions as explained by van Banning see discussion in dissertation Shamiso P. Zinzombe, The Right to Health, Pharmaceutical Corporations and Intellectual Property: Access to Medicine (School of Human Rights Research 2015) page 194-196.
General Comment 17 para 15-16.
General Comment 17 para 10.
General Comment 17 para 11.
General Comment 17 para 32.
General Comment 17 para 35.
Text para 4.
Text para 1.
General Comment 14 para 33, 36-37.
UN Human Rights Council ‘Report to the General Assembly of the UN Rapporteur on the right to the highest attainable standard of health Human Rights Guidelines for Pharmaceutical Companies in relation to Access to Medicine’ (11 August 2008) UN Doc A/63/263 para 1.
General Comment 14 para 36.
UNCHR ‘Periodic reports submitted by State parties under articles 16 and 17 of the Covenant Combined second, third, fourth and fifth report of India’ (1 March 2007) UN Doc E/C.12/IND.5 (India Combined Report 1 March 2007) para 515.
India Combined Report 1 March 2007 para 520.
UNCHR 'Third periodic reports submitted by States parties under articles 16 and 17 of the Covenant The Netherlands' (5 August 2005) UN Doc E/1994/104/Add.30 (Third Report Netherlands) para 407.
Third Report Netherlands para 420 emphasis added, it is important to point out the insurance scheme discussed here occurred prior to the changes which are discussed in subsequent reports; namely, UNCHR ‘Combined fourth and fifth reports submitted by States parties under articles 16 and 17 of the Covenant The Netherlands’ 17 July 2009 UN Doc E/C.12/NLD/4-5 (Fourth and Fifth Report Netherlands 2009).
Fourth and Fifth Report Netherlands 2009 para 114 (a), (b), 257.

Bibliography

Treaties and Other Legal Instruments

Agreement on Trade Related Aspects of Intellectual Property Rights (15 April 1994)
LT/UR/A-1C/IP/1.
Convention on the Elimination of All Forms of Discrimination against Women (adopted 18 December 1979, entered into force 3 September 1981) 1249 UNTS 13.
Convention on the Rights of the Child (adopted 20 November 1989, entered into force 2 September 1990) 1577 UNTS 3.
Framework Convention on Tobacco Control (FCTC) (adopted 21 May 2003, entered into force 27 February 2005) 2302 UNTS 166.
International Code of Marketing of Breast-milk Substitutes (adopted 21 May 1981) 34th World Health Assembly.
International Covenant on Economic Social and Cultural Rights (adopted 16 December 1966, entered into force 3 January 1976) 993 UNTS 3.
UN Committee on Economic, Social and Cultural Rights ‘General Comment 14’ (11 August 2000) UN Doc E/C.12/2000/4.
UN Committee on Economic, Social and Cultural Rights ‘General Comment No 17’ (12 January 2006) UN Doc E/C.12/GC/17.
UNGA 'Draft outcome document of the United Nations summit for the adoption of the post-2015 development agenda' (12 August 2015) UN Doc A/69/L.85.
UN Human Rights Council ‘Report to the General Assembly of the UN Rapporteur on the right to the highest attainable standard of health Human Rights Guidelines for Pharmaceutical Companies in relation to Access to Medicine’ (11 August 2008) UN Doc A/63/263.
Universal Declaration of Human Rights (adopted 10 December 1948) UNGA Res 217 A (III).
UNCHR ‘Report of the Drafting Committee to the Commission on Human Rights’ (1 July 1947) UN Doc E/CN.4/21.

Academic Literature

Claude R.P. and Issel B. W., ‘Health, Medicine and Science in the Universal Declaration of Human Rights’ (1998) 3/2 Health and Human Rights 126.
El Said M. and Kapczynski A., 'Access to Medicines: The Role of Intellectual Property Law and Policy' [2011] Working Paper prepared for the Third Meeting of the Technical Advisory Group of the Global Commission on HIV and the Law, 7-9 July 2011.
Hestermeyer H., Human Rights and the WTO: The Case of Patents and Access to Medicines (OUP 2007).
Klug H., ‘Law, Politics, and Access to Essential Medicine in Developing Countries’[2008] Politics & Society 207.
Novogrodsky N.,"The Duty of Treatment: Human Rights and the HIV/AIDs pandemic"[2009] Yale Hum. Rts. & Dev. L.J. 1.
t’Hoen E.F.M., The Global Politics of Pharmaceutical Monopoly Power (AMB 2009).
Toebes B., The Right to Health as a Human Right in International Law (School of Human Rights Research 1999).
Zinzombe S.P., The Right to Health, Pharmaceutical Corporations and Intellectual Property: Access to Medicine (School of Human Rights Research 2015).

Other

UNCHR ‘Periodic reports submitted by State parties under articles 16 and 17 of the Covenant Combined second, third, fourth and fifth report of India’ (1 March 2007) UN Doc E/C.12/IND.5.
UNCHR ‘Combined fourth and fifth reports submitted by States parties under articles 16 and 17 of the Covenant The Netherlands’ 17 July 2009 UN Doc E/C.12/NLD/4-5.
UNCHR 'Third periodic reports submitted by States parties under articles 16 and 17 of the Covenant The Netherlands' (5 August 2005) UN Doc E/1994/104/Add.30.

Websites

Codex Alimentarius <http://www.fao.org/fao-who-codexalimentarius/codex-home/en/> .
United Nations Secretary-General’s High-Level Panel on Access to Medicines 'Terms of Reference' <http://www.unsgaccessmeds.org/new-page/> .

Mariana Mazzucato, SCIENCE POLICY RESEARCH UNIT, UNIVERSITY OF SUSSEX

Lead Author: Mariana Mazzucato
Organization: Science Policy Research Unit, University of Sussex
Country: UK

Abstract

The current debate about medical innovation is characterized by a poor understanding of, and many myths around, the drivers behind innovation, in particular the respective roles of public and private actors in the innovation process.

This contribution to the UN High-Level Panel on access to medicines aims at laying these myths and showing their connection to the current rules and assumptions that underpin a currently ineffective and wasteful medical innovation system. The aim is to sharpen the Panel’s critical reflection on the connections between the organization of an innovation system (including the narrative that is used to describe it), and the following key areas: the pace of innovation, the direction of innovation, and the accessibility of the resulting medical products.

INTRODUCTION:
Our current innovation system drives medical R&D priority setting in the direction of greatest profit but not of greatest need nor of true medical benefit, and allows pharmaceutical companies to charge high prices that have no relation to the actual cost of developing and manufacturing the medicines. Current economic and regulatory incentives have resulted in a highly financialized pharmaceutical sector that fails to deliver the medical innovation we need, despite major public and private investments and rhetoric of unprecedented medical progress. Over two thirds of new medicines reaching the market do not represent any therapeutic advance for the patients, while many health needs remain unmet. In combination with high medicines prices for the relatively few drugs that are medical breakthroughs, our medical innovation system needs a radical transformation in order to respond to social justice imperatives that should govern health and human rights.

Innovation is a collective process, requiring different public and private actors to be willing and able to take large risks throughout the entire innovation chain. Indeed, most attempts at innovation fail. Better understanding how the different public and private actors interact along the innovation chain, from basic research to applied research and early stage funding for new startups, as well as how innovation is paid for and the way in which the risk taking is distributed between actors, and how this effects not only the rate of innovation but also its direction is the key to this statement. The statement is guided by the conviction that the question, in particular, about directionality, is very important because medical innovation is not simply about new products to be marketed but about concrete advances that can over time improve health outcomes. Thus bringing together our understanding of how innovation in the medical field—and the division of innovative labor in particular— is/not achieving this goal is extremely important.
Key to the problem is that fact that while public sector investments, through organizations like the National Institutes of Health (NIH) in the USA or the Medical Research Council (MRC) in the UK, have been fundamental to advances in the industry, the ‘narrative’ continues to be one where it’s the large private companies that are the most important (the biggest ‘value creators’ and ‘risk takers’), and this has justified their power in determining the prices that are set (to recoup R&D costs, as well as more recent ‘value based pricing’ arguments), as well as the direction of innovation (Mazzucato, 2013) . It is my belief that precisely because this is a science base industry (Pavitt, 1984) (and one that generates products that are key to public health objectives), we must fundamentally rethink the current way in which the medical innovation cycle operates.

(1) THE NARRATIVE OF RISK (and REWARDS)
Despite a narrative of relentless medical progress thanks to biomedical innovation, and an increased attention to ‘life-sciences’ in various countries’ revived industrial policies (EC 2020) , there is increasing recognition that the current private profit and patent-driven model for pharmaceutical innovation is deficient (Light & Lexchin, 2012) . While critical medical needs remain unmet (e.g. multidrug-resistant bacterial infections ), the large majority of new medicines developed have no added therapeutic value . The few new drugs that do represent breakthroughs are priced out of reach for most, except the wealthy and well-insured . While previously mostly an issue for people in low- and middle-income countries, there are growing concerns that the steady increase in medicines prices is threatening equitable access to health care in wealthy countries too . The myth of ever increasing R&D costs (now into the $1-2 Bn range) to justify high medicines prices does not hold up to data scrutiny, and is toppled by much higher marketing expenditures. Instead, it points to massive inefficiencies in the R&D process that are being sanctioned in the current model in which a highly monopolized and subsidized market will pay any price for a new medicine.

The problematic narrative of who the risk-takers are underlies the justification for absurdly high prices in the industry. The longstanding excuse is that the large companies must recoup R&D costs, even if research has shown it to be heavily absorbed by the tax payer (Angell, 2005) . More recently, the doctrine of value based pricing is put forward, which suggests that the value and therefore price of a medicine can be equated to what it would cost to the health system to not have that medicine. For instance the $84,000 price for a 12-weeks hepatitis C treatment costing <$200 to manufacture is justified as “cheaper than a liver transplant”, the ultimate resort for people dying from chronic hepatitis C infection. While clearly this is an absurd reasoning, the question remains: what is a fair price for any given medicine, and who gets to determine that?
Key to rethinking the risk narrative is to also rethink its influence on pricing policies. There are key lessons here from the way that the defense industry has organized innovation, with upstream public input being met by downstream public purchase of products (via procurement) at prices that reflect the public contribution. Indeed, while the Bayh-Dole act in theory gives marching rights to government for publicly financed drugs, it’s is curious that the US government has never exercised this right (Kleinman, D., & Biscotti , 2011) .

(2) THE RATE OF INNOVATION
While pharmaceutical companies continue to be amongst the most profitable in the Fortune 500 list, there is a recognition that the productivity of the industry has fallen in recent years (measured in terms of the relationship between R&D as an input, and new drugs as an output).. This problem is often interpreted as being related to patent cliffs , and statements about the ‘low hanging’ fruit having been picked, resulting in current innovation proceeding at much more incremental rates than in the past due to the fewer opportunities remaining. What this discussion ignores is the changing behavior of the actors in the industry. The industry has slowly been moving downstream, dis-investing from the upstream research in the R&D process, focusing a higher percentage on development, and marketing (indeed many marketing budgets are larger than R&D budgets), and also increasingly, since the late 1980s, on financialized practices like share buybacks. Lazonick has shown that many large pharmaceutical and biotechnology companies are spending record levels on share buybacks, with the proportion to R&D spending escalating in recent years (Lazonick, 2014) : Pfizer, a company that benefits immensely from government spending on life sciences research and subsidies of drug development, spent $56bn on buybacks, equivalent to 59% of its profits, with another 64% going to dividend payouts – a total payout to shareholders of 123% of net income (Mazzucato, 2013b) .

This is a problem because the industry requires not only high government spending but also an equally high commitment from the private sector. Instead, trends seem to suggest that the more the public sector spends on R&D (e.g. $32billion/year by NIH), the more the private sector is able to free ride, and concentrate on easier downstream areas (D, ‘me too’ R, marketing). While traditional analysis might interpret government spending on R&D as fixing a ‘market failure’ (basic research is a public good), the breadth and depth of public spending has had to increase above what it should using this perspective, due to emergence of a dysfunctional public-private eco-system of innovation. It is essential to not only throw money at the ‘life-sciences’ but to fundamentally ‘de-financialize’ big pharma, and insist that profits that are generated from a public-private eco-system of financing, also be reinvested back into innovation. In essence, this means bringing innovation policy and issues of corporate governance. In particular, if health care, supported by medical innovation, is considered not only a ‘public good’ but also a human right, society must question whether the shareholder model of corporate governance is the right one to structure the health care industry by. The high percentage of public financing of medical R&D, as well as the massive subsidies the industry receives (through different types of tax credits), requires paying more attention to the ‘direction’ of medical innovation—steering it more towards areas that are in the public interest.

(3) THE DIRECTION OF INNOVATION
The relationship between finance and innovation is a non-linear one. It is not just that innovation must be financed, but the type of finance that is received affects the type of innovation that emerges Research, for example has shown how the short-term, exit-driven venture capital model has created large problems for the biotechnology industry, full of product-less IPOs (companies that go public on the stock market but produce no products) (Lazonick and Tulum, 2011) . In particular for medicines addressing important public health needs (e.g., antibiotics, hepatitis C drugs, certain cancer medicines), there is growing consensus among experts around the need to adopt alternative models for (financing) R&D in which critical health needs are prioritized, and medicines are considered public or social goods (or essential utilities like water and electricity) or even human rights. Furthermore, there is the increasing realization that the cost and risks of such R&D don’t need to be commercialized in the market place and recouped via high medicines prices . However the public at large, including policy makers, is not sufficiently aware that the current model is failing, even for wealthy countries, by being highly expensive while delivering little health value, and excluding the majority of the population from accessing the products of innovation.

In order to gain momentum to transform the current trillion-dollar economic model that has sidelined health needs and affordability towards a health and public interest-focused system, it will be essential to change the dominant narrative that maintains that the current model is the only or best possible. One element to is to document and expose the economic reality and cost-inefficiency of the current model in which “the public” pays multiple times (funding and infrastructure for early research as well as clinical trials, various tax and other incentives to de-risk pharmaceutical companies’ R&D investments, price monopolies with limited to no price regulation and acceptance to pay high prices) without demanding outputs, accountability nor transparency. In fact, the current incentive structure for medical innovation favors ever-increasing costs for R&D that can be recouped through totally elastic prices (prescribed and paid by third parties, not consumers), me-too medicines that provide no or little therapeutic benefit, expensive niche medicines instead of affordable medicines addressing major public health needs, etc.

KEY ISSUES TO BE ADDRESSED
In re-thinking medical innovation for the public interest, a number of key questions need to be asked:
• What is the current distribution of public and private assets (money, infrastructure, knowledge) going into the pharmaceutical R&D process, and are they being used efficiently? Fairly? This requires a careful mapping of different types of R and different types of D across the entire innovation chain, and how this is evolving with the trend towards ‘open innovation’, as well as the trend towards increasing ‘financialization’ of Big Pharma (Lazonick and Mazzucato, 2012) ;
• Is ‘open innovation’ an excuse for a reduction in Big Pharma R? if so, what are the implications for ‘fair’ pricing (to avoid tax payer paying twice)?
• Does the current model produce the desired result? What could be an alternative that is much more cost-effective? How can we define medical “innovation” to include ‘access’ issues (including who pays for it)? There is no medical innovation if people don’t have access to it.
• How could medical innovation be valued in ways that recognize the desired health impact, instead of the current model in which only economic value (including pharma jobs) and market creation is measured and valued? This should include addressing people’s health needs and also recognizing that in the field of medicines, more (consumption) is not necessarily better or desirable. For instance in the case of antibiotics, the rational use (including rationing) of existing antibiotics is at least as important as developing new ones. What does that mean in terms of incentives and rewards? Or, what are “we” (society) ready to invest in the development and/or use of a new cancer medicine that only extends the average lifespan with a couple of weeks? Or do we choose to invest in the R&D for another cholesterol-lowering drug that will unlikely add value to the current therapeutic arsenal that already contains multiple such drugs?
• How to ensure that not all medical innovation is geared to profitable products? There are many more health interventions and innovations that could have major impact, but are being ignored or sidelined because not a sellable product (eg 1h of exercise/week may be as effective in lowering risk for cardiovascular events as daily statins). How to make sure that public and third sector activity is focused on opening up the pharma landscape rather than working within the privately defined one: less emphasis on drugs, more emphasis on diagnostics, life-style, surgical treatments (see great work of John Abrahams on this (Abraham, 2010) .
• How to build more symbiotic, less parasitic, public-private partnerships in pharmaceutical research, so that the rewards from innovation are socialized as much as the risks? How can pricing policies reflect the tax-payer contribution so that the tax payer does not pay twice.
• Relatedly, what can be learned by the Department of Health, from the way in which the Department of Defense has structured the innovation division of labor so that upstream public investment is reflected in the prices that are determined (via procurement).
• What is the value of a life-saving medicine? And how is that expressed in a market price, especially in the pharma market which is not an ordinary consumer market but a complex global market with many rules and regulations (intellectual property laws, prescription vs over-the-counter rules, quality-safety-efficacy regulations, price rules, health insurance systems in some countries, etc ) as well as high emotional value. How to balance the notions of “if a medicine or vaccine is truly valuable, it should be for free or cheap and accessible to all?” versus: “no price is too high to save a life”. That of course all depends on who is expected to pay…
• How would transformational change that provides better outputs in a more cost-efficient way look like? How could governments be catalytic towards such transformational change? To what degree does this require abandoning the ‘market failure’ framework for a market shaping/creating one (Mazzucato, 2015) ? Are there other (industrial / utility) sectors that can be looked at as examples?

CONCLUSION
It is proposed to redesign our medical innovation ecosystem such that it catalyzes to right type of innovation, i.e. effectively addresses global health needs and delivering improved health outcomes. To that end, this statement suggests that the way in which we define innovation (so to include issues of ‘access’, and addressing unmet health needs), and organize the division of innovative labor across the medical innovation chain is of utmost importance. This requires considering how the change in the actors’ behavior, and the relationships between actors, can affect not only the pace of innovation but also its direction. In particular, we believe that we must question the way in which changes in corporate governance have increased the short-termism and speculative nature of the industry, and how public actors should, due to the high spending, have more of a say on both the direction of innovation, as well as on the prices. This is especially important given not only the ‘public good’ status of essential medicines but what could (and perhaps should) be their status as a human right (Orsenigo, Dosi and Mazzucato, 2006) .

Bibliography and References

1 Mazzucato, M. (2013), The Entrepreneurial State: debunking public vs. private sector myths, Anthem Press: London, UK, ISBN 9780857282521, US edition (Public Affairs, 2015).
 2 Pavitt, K. (1984). Sectoral patterns of technical change: towards a taxonomy and a theory. Research policy, 13(6), 343-373. 
3 The EC has signaled the central role of the pharmaceutical industry in achieving the health related challenges in Horizon 2020 https://ec.europa.eu/programmes/horizon2020/en/h2020-section/societalchallenges
4 Light & Lexchin, Pharmaceutical research and development: what do we get for all that money? BMJ 2012; 344:e4348 doi: 10.1136/bmj.e4348
 5 http://www.nytimes.com/2014/07/23/business/a-dearth-of-investment-in-much-neededdrugs.html?smid=tw-share&_r=0
6 A look back at pharmaceuticals in 2006: Aggressive advertising cannot hide the absence of therapeutic advances. Prescrire International 2007; 16: 80–86; 
7 E.g. http://nymag.com/news/features/cancer-drugs-2013-10/ and http://www.npr.org/blogs/health/2013/12/30/256885858/-1-000-pill-for-hepatitis-c-spurs-debate-over-drugprices
8 E.g. http://www.washingtonpost.com/blogs/wonkblog/wp/2014/07/24/the-drug-thats-forcing-americasmost-important-and-uncomfortable-health-care-debate/ and http://www.fiercepharma.com/story/francehealth-minister-says-eu-will-fight-price-gileads-sovaldi/2014-07-11
9 Angell, M. (2005). The truth about the drug companies: How they deceive us and what to do about it. New York: Random House Trade Paperbacks. 
10 “A new pharmaceutical that brings in more than $1 billion per year in revenue is a drug marketed by Genzyme. It is a drug for a rare disease that was initially developed by scientists at the National Institutes of Health. The firm set the price for a year’s dosage at upward of $350,000. While legislation gives the government the right to sell such governmentdeveloped drugs at ‘reasonable’ prices, policymakers have not exercised this right. The result is an extreme instance where the costs of developing this drug were socialized, while the profits were privatized. Moreover, some of the taxpayers who financed the development of the drug cannot obtain it for their family members because they cannot afford it.” From Vallas, S. P., Kleinman, D., & Biscotti, D. (2011). Political structures and the making of US biotechnology. F. Block and M. Keller (eds). 
11 http://blogs.wsj.com/pharmalot/2015/02/09/big-pharma-faces-some-big-patent-losses-but-pipelines-areimproving
12 Lazonick, W. (2014). Profits without prosperity. Harvard Business Review, 92(9), 46-55. 
13 Lazonick, W. and Mazzucato, M. The Guardian, Nov. 29, 2012 http://www.theguardian.com/commentisfree/2012/nov/29/innovation-good-risk-takers-reward
14 Mazzucato, M. (2013b), “Financing innovation: creative destruction vs. destructive creation,” in special issue of Industrial and Corporate Change, M. Mazzucato (ed.), 22(4): 851-867
15 Lazonick, W., & Tulum, Ö. (2011). US biopharmaceutical finance and the sustainability of the biotech business model. Research Policy, 40(9), 1170-1187. 
16 E.g http://www.bbc.co.uk/news/health-21834442 and http://www.who.int/phi/cewg/en/ 
17 Lazonick, W. and Mazzucato, M. (2013), “The risk-reward nexus in the innovation-inequality relationship: Who takes the risks? Who gets the rewards?,” Industrial and Corporate Change, 22(4):1093- 1128
18 Abraham, J. (2010). Pharmaceuticalization of society in context: theoretical, empirical and health dimensions. Sociology, 44(4), 603-622. 
19 Mazzucato M. (2015) "From Market Fixing to Market-Creating: A new framework for innovation policy", Forthcoming in Special Issue of Industry and Innovation: “Innovation Policy – can it make a difference?” DOI 10.1080/13662716.1146124
20 Orsenigo, L., Dosi, G., & Mazzucato, M. (2006). The dynamics of knowledge accumulation, regulation and appropriability in the pharma-biotech sector. In Mazzucato, M., & Dosi, G. (2006). Knowledge accumulation and industry evolution: The case of Pharma-Biotech. Cambridge University Press.
 

SHEKOUFEH NIKFAR, Iran Food and Drug Organization

Lead Author: Shekoufeh Nikfar
Organization: Iran Food and Drug Organization
Country: Iran

Abstract

The Islamic Republic of Iran’s Food and Drug Administration (IFDA) as the executive authority has a mission to regulate the registration process of the new medicines. According to the Law on the Organization and Duties of the Ministry of Health and Medical Education (MOHME), Iran Drug Selection Committee (IDSC), as a key component of IFDA, has the responsibility of investigation and approval of new medicines for registration in the Iran Drug List (IDL). The Iran Drug Selection Committee has adapted a generic-based list of medicines The mission of this decision-making committee is to evaluate the new medicines based on their efficacy, safety and cost-effectiveness.

All members of the committee, medical forums, research centers and pharmaceutical companies can make suggestions for new molecules to enter the IDL. Based on the indication and administration, the new medicines are proposed in one or more clinical subcommittees and expert opinions will be drawn. Upon completion of the process, the new medicine is presented in the IDSC and in case of approval; it will be registered in the IDL. 

Currently, there are more than 2900 numbers of drugs in the IDL, including a variety of molecules with different dosage forms and strength. The investigations show that more than 90% of the population of Iran have access to the affordable essential medicines during the last decades. Day by day application of new medicines for non curable diseases and high-tech medicines are invented with support of costly R&D expenditure that is necessary to payback by providing high prices for such medicine. Policy makers should hardly work to find a way to make new medicines accessible despite of their lack of affordability.

Submission

The Islamic Republic of Iran’s Food and Drug Administration (IFDA) as the executive authority has a mission to regulate the registration process of the new medicines. According to the Law on the Organization and Duties of the Ministry of Health and Medical Education (MOHME), Iran Drug Selection Committee (IDSC), as a key component of IFDA, has the responsibility of investigation and approval of new medicines for registration in the Iran Drug List (IDL). The Iran Drug Selection Committee has adapted a generic-based list of medicines The mission of this decision-making committee is to evaluate the new medicines based on their efficacy, safety and cost-effectiveness. 

All members of the committee, medical forums, research centers and pharmaceutical companies can make suggestions for new molecules to enter the IDL. Based on the indication and administration, the new medicines are proposed in one or more clinical subcommittees and expert opinions will be drawn. Upon completion of the process, the new medicine is presented in the IDSC and in case of approval; it will be registered in the IDL.

Currently, there are more than 2900 numbers of drugs in the IDL, including a variety of molecules with different dosage forms and strength. The investigations show that more than 90% of the population of Iran have access to the affordable essential medicines during the last decades. Day by day application of new medicines for non curable diseases and high-tech medicines are invented with support of costly R&D expenditure that is necessary to payback by providing high prices for such medicine. Policy makers should hardly work to find a way to make new medicines accessible despite of their lack of affordability.

Unlimited and mostly competing demands in health care systems, even in rich societies always force decision makers to choose among the priorities for the allocation of resources. Therefore recent developments in Health Technology Assessment (HTA) created a fuller opportunity for allocation of limited resources available in rural areas, health care systems. Although this tool has been used more frequently by developed countries which have substantially more resources available in their health sector, there are increasing efforts in developing countries for using this tool in order to prioritize demands in their national health sector. The fact that HTA evaluate both short and long term impacts of medical interventions for their health outcomes and resource use could provide a clear picture for the real value of the health technologies. This obviously could help for better availability and distribution of resources and improve health care system performance and equity in the society. Therefore this function provides the opportunity to compare the value of different interventions from the society or health care payers’ perspective.
Iran is a Middle Eastern country with more than 78 million mostly young population. Iran GDP per capita which mainly depends on the oil revenue in 2014 reported to be about 4200 USD. In Iran Ministry of Health and Medical Education (MOH) is the main stewardship of the health care system. According to the Iran constitutional law, Iran government has the mandate to provide the highest attainable level of the health care for all Iranian. Therefore, Iran government in past decades has invested heavily in national health care system and created an opportunity for all Iranian to have fairly equitable access to the health care system. The government believes that this investment will bring a valuable return to the society in the long term.

In 2014 Iran pharmaceutical market valued about 4.2 billion USD. Despite the fact that promoting of national pharmaceutical industry is one of the main objectives of the Iran national medicine policy, share of national pharmaceutical industry in Iran pharmaceutical market is about 60%. All aspects of medicines regulation, including production, importation, distributions, and sale of medicines in Iran are fully regulated by Iran Food and Drug Administration (IFDA). All medicines should receive registration and marketing authorization before entering the Iranian market. Traditionally Iran Drug Selection Committee, responsible body for developing and revising the Iran Medicine List, used to request acceptable safety, quality and efficacy data for including new medicines to the List. Recently, in the shadow of pressures from limited available resources in a national health care system, Iran policy makers use pharmacoeconomics considerations to evaluate the benefits of medicines in comparison with the extra costs they impose to the health care system. Therefore, the committee now requires pharmacoeconomics evaluation of any submission for new medicine application (4). 

In order to evaluate the budget impact of the use of new medications on the country's national health budget, the applicant should also provide data about the impact of using the new medicine. A budget impact which deals with the ability to pay for the new intervention and its sustainability will help decision makers in regards to the overall impact of the intended intervention on the national health care budget. The model designed for the budget impact analysis must be transparent, and be investigated based on local population data or the scenario which can be generalized to Iran. In these studies, attention must be paid to the population, market share, growth rate, and costs in two scenarios with new drugs and current situation. 
Iran national health system is facing with growing demand for new and mostly expensive medicines. However, due to limited resources available to this sector, Iran health system decision makers decided to implement cost effectiveness analysis for all candidate medicines to be included in Iran Medicine list. Therefore since 2014 all pharmaceutical companies requested to submit pharmacoeconomics analysis for their proposed medicines.

Iran national pharmacoeconomics evaluation committee is part of IFDA and director of the committee is appointed by the minister of Health. Following approval of the committee for cost effectiveness of the candidate medicine the application will be forwarded to the Iran Drug Selection Committee for final decision. In fact the pharmacoeconomics evaluation committee provide positive list for the drug selection committee. In 2014 pharmacoeconomics evaluation committee has published its guideline for submission of files and its criteria for decision making. Although Iran pharmacoeconomics evaluation committee accepts transfer of certain HTA elements from other countries, local data especially in cost section is absolutely necessary.

Iran decision makers believe local production of pharmaceuticals will improve their accessibility and affordability. Therefore, supporting the national pharmaceutical industry is one of the fundamental objectives of Iran national health policy. IFDA considers all locally manufactured medicines as "cost effective". However, local pharmaceutical companies should submit pharmacoeconomics evaluation dossier for their candidate medicine in order to set a baseline price for the medicine. The base price will be set based on ICER and cost/QALY whenever feasible. It should be emphasized that pharmacoeconomics evaluation of medicines in Iran is still in early stage and lack of high quality data both in economic and clinical outcome parts could be considered as a major hurdle to this new field. However, decision makers of Iran health system at its topest level determined to implement HTA in the country health sector and hope in near future the quality of pharmacoeconomics evaluation of medicines will be improved.

In measuring health, economic evaluations, the threshold is an important concept. It signifies the value of health gain and a new intervention is considered satisfactory if its price falls below a certain threshold. Results are usually reported in an incremental costeffectiveness ratio (ICER). The ICER stands for the additional costs per additional health unit produced by one intervention in comparison to another. A common tool for measurement is the quality-adjusted life-year (QALY). QALY encompasses both length and quality of life, which is based on utility. Likewise, various organizations and governmental bodies such as the National Institute for Health and Clinical Excellence (NICE) in the UK, Swedish Pricing and Reimbursement Board, the Pharmaceutical Benefits Advisory Committee in Australia, Dutch Health Care Insurance Board (CVZ) in The Netherlands have adopted certain threshold values. This adoption of threshold optimizes the process of allocation of health care resources. Reimbursement decisions and allocation of health care resources is evolving in developing nations. Though cost-effectiveness analysis is increasingly being used for reimbursement mechanisms in developing countries, however, there is no consistent defined threshold. Most developing countries have adopted one to three times of their local gross domestic product (GDP) per capita as a threshold. This is also recommended by the World Health Organization (WHO). However, it is argued that the range of 1 to 3 folds is a wide range and hence it is imperative to evaluate the exact QALY threshold especially with regards to public preferences. Another tool for estimating threshold is to conduct willingness to pay (WTP) studies. However, WTP for a QALY is inconsistent and dependent on the size, duration, and type of the health gain. Therefore, it is considered that WTP is directly correlated with the nature and burden of disease. For example, WTP would increase if the patient suffers more of a certain disease. Nowadays, most of the new medicines to treat cancer, asthma, arthritis rheumatoid, central nervous system diseases and inflammatory bowel disease are more expensive. Economic burden of these diseases is very high because of direct medical costs as well as disabilities resulting in indirect cost. Cost of illness increases especially when patients have to make out of pocket payment for medicines. 

This is compounded by the fact that newer biotechnology medicines are very expensive and even their generic versions are not affordable. In this context, consistent threshold would pose a problem, equity will be affected and as for most of expensive drugs they will be rejected from the reimbursable list of medicines. This would defy the access as newer medicines are necessary for patients with more complicated illnesses. The role of government is to implement a policy for equal opportunities that is healthy aligning with the equity in health. Considering this approach, WTP may be a better solution for decision making while calculating a threshold. WTP rationally expresses the health state of patients while taking into consideration patients’ views about the health. Though the calculation of WTP is time consuming and sometime it’s feasibility questioned too. Evaluation of strengths and limitations of differing estimations of thresholds is vital. This helps to find appropriate monetary values for QALY. More pragmatic researches are needed in this area and work toward a higher level of reliability in decision-making is required.

Efficiency and allocations in healthcare are emerging concerns in the field of pharmacoeconomics and pharmaceutical policy. New ideas, methods, and findings of applied pharmacoeconomics in implementation of pharmaceutical policies is needed to be developed by international cooperation to improve equity and access to medicines in order to increase health for all the world.

Bibliography and References

1-Nikfar et al. Monitoring of National Drug Policy (NDP) and its standardized indicators; conformity to decisions of the national drug selecting committee in Iran. BMC Int Health Hum Rights. 2005 May 10;5(1):5. PubMed PMID: 15885139; PubMed Central PMCID: PMC1145184.
2- Nikfar S., Abdollahi M., Cheraghali A. A drug and poison information centre. Essential Drug Monitor 2000 (28&29): 30-31.
3- Cheraghali AM, Nikfar S, Behmanesh Y, Rahimi V, Habibipour F, Tirdad R, Asadi A, Bahrami A. Evaluation of availability, accessibility and prescribing pattern of medicines in the Islamic Republic of Iran. East Mediterr Health J. 2004 May;10(3):406-15.
4- Cheraghali A.M., Solemani F., Behmanesh Y., Habibipour F., Ismaeilzadeh A., Nikfar S., Rahimi W. Physicians attitude toward injectable medicines. Journal of Pharmacology and Toxicology 2006, 1(1): 33-39.
5- Hashemi-Meshkini A, Varmaghani M, Yousefi M, Yaghoubifard S, Zekri HS, Nikfar S, Kebriaeezadeh A. From generic scheme to brand-generic scheme: Have new policy influenced the efficiency of Iranian pharmaceutical companies?
6- Abdollahiasl A, Kebriaeezadeh A, Dinarvand R, Abdollahi M, Cheraghali AM, Jaberidoost M, Nikfar S.A system dynamics model for national drug policy. Daru. 2014 Apr 1;22(1):34.
7- Jaberidoost M, Nikfar S, Abdollahiasl A, Dinarvand R. Pharmaceutical supply chain risks: A systematic review. DARU, Journal of Pharmaceutical Sciences, 2013; 21(1): 69.
8- Salari P, Namazi H, Abdollahi M, KhansariF, Nikfar S, Larijani B, Araminia B. Code of ethics for the national pharmaceutical system: Codifying and compilation. J Res Med Sci. 2013 May;18(5):442-448.
9- Kebriaeezadeh A, Koopaei NN, Abdollahiasl A, Nikfar S, MohamadiN. Trend analysis of the pharmaceutical market in Iran; 1997--2010; policy implications for developing countries. Daru. 2013 Jun 28;21(1):52.
10- Hashemi Meshkini A., Kebriaeezadeh A., Dinarvand R., Nikfar S., Habibzadeh M., Vazirian I. Assessment of the vaccine industry in Iran in context of accession to WTO: A survey study. DARU, Journal of Pharmaceutical Sciences 2012; 20(1):19.
11- Abdollahiasl A, Nikfar S, Abdollahi M. Pharmaceutical market and health system in the Middle Eastern and Central Asian countries: Time for innovations and changes in policies and actions. Archives of Medical Science 2011; 7(3): 365-367.
12- Abdollahiasl A, Nikfar S, Kebriaeezadeh A, Dinarvand R, Abdollahi M. A model for developing a decision support system to simulate national drug policy indicators. Archives of Medical Science 2011; 7(5):744-746.
13- Abdollahiasl A, Kebriaeezadeh A, Nikfar S, Farshchi A, Ghiasi G, Abdollahi M. Patterns of antibiotic consumption in Iran during 2000-2009. Int J Antimicrob Agents. 2011 May;37(5):489-90.

Lotti Rutter, TREATMENT ACTION CAMPAIGN_A

Lead Author: Lotti Rutter
Organization: Treatment Action Campaign
Supporting Organizations: AIDS Access Foundation; Thai Network of People Living with HIV/AIDS; FTA Watch; Delhi Network of Positive People (DNP+); ITPC-South Asia; SECTION27
Country: South Africa; Thailand; India

Abstract

The 2001 Doha Declaration affirmed that the provisions of the TRIPS agreement do not prevent governments from taking the necessary policy and legal measures to achieve the right to health. The Doha Declaration explicitly states that the TRIPS agreement should be interpreted in a way that promotes access to medicines for all, and that countries are within their rights to take certain measures to limit intellectual property rights (TRIPS flexibilities) when public health interests demand it to enable access to affordable medicines.

In reality though, many countries have yet to implement such measures effectively, fully or at all. The balance between commercial and public health interests (as intended by TRIPS and the subsequent Doha Declaration) has not been redressed. Some national patent laws have only been moderately amended since the adoption of TRIPS to comply with the 20-year patent requirement and still hark back to pre-independence laws.

This submission calls for developing countries to fully utilise all safeguards available within the TRIPS agreement and Doha Declaration to ensure that public health is protected. Using South Africa and other countries as examples, it will outline in detail the following:

1. The social and public health impact of patents;
2. The economic impact of patents;
3. Key legislative reforms allowed under the TRIPS Agreement (implementation).

Submission

Introduction:

In 2001, WTO members adopted the Doha Declaration reiterating the flexibilities in TRIPS, stating that "the TRIPS Agreement does not and should not prevent Members from taking measures to protect public health"[1]. In reality, many countries have yet to implement such measures effectively, fully or at all. The balance between commercial and public health interests as intended, has not been redressed.

This contribution calls on WTO members to make urgent legislative changes to incorporate all TRIPS flexibilities into national law. Using South Africa and other countries as examples, it outlines:

1. The social and public health impact of patents;
2. The economic impact of patents;
3. Key legislative reforms allowed under the TRIPS Agreement (implementation).

WTO members who are LDCs should make full use of their transition periods [2].

1. Social and public health impact:

Significant evidence exists that highlights how high medicine prices prohibit access to medicines across the world. The lack of a competitive market during the years of patent exclusivity allow pharmaceutical companies to charge unaffordable prices to maximise profits – meaning medicines remain inaccessible for lengthy periods of time.

The success of the antiretroviral scale-up in South Africa was only possible because of major price drops achieved through generic competition. The cost of first-line HIV drug regimens dropped from US$10,000 per person per year (pppy) in the 1990s [3] to around ZAR 1343(US $125) [4] pppy today. As a result, over 3.5 million people have been initiated onto treatment. However, these price drops were largely the result of individual cases of litigation or Competition Commission complaints [5]; rather than the effective use of TRIPS flexibilities.

Costs will significantly increase as people shift to second or third-line regimens that remain under patent protection at ZAR 2932 (US $273) pppy and ZAR 19,369 (US $1803) pppy respectively [6], and as more people are initiated onto treatment in line with changing treatment guidelines [7].Newer antiretrovirals could offer significant clinical benefits–e.g.raltegravir [8] could replace efavirenz in first-line treatment with a better side effect profile and rapid reduction of viral load – but remain only available as third-line due to cost [9].

Furthermore, medicines for other disease areas remain costly. In 2015, the WHO added trastuzumab for breast cancer to its essential medicines list [10], yet access is restricted in South Africa, and elsewhere [11]. Patents have expired, been overturned or withdrawn in India, South Korea and the UK and will expire in the US in 2019. However, in South Africa, secondary (ever-greened) patents could block use of biosimilar products until 2033 [12]. A12 month course of treatment is approximately ZAR 485,800 compared to ZAR 151,520 for a biosimilar in India. This high cost means that despite the additional survival benefits, it is only available in the public sector in limited cases [13] and is not available through medical aids [14].

Hepatitis C (HCV) is a significant public health issue. Sofosbuvir is an important treatment advance that reduces treatment duration by half, has fewer side effects, and higher cure rates than existing treatments. However high prices mean it is inaccessible, leaving people at risk of liver cancer or liver failure. US $84,000 for a 12-week course leaves many US patients excluded [15]. The UK delayed introduction due to £35,000 price-tag [16]. Even in high-burden countries like Egypt, the lowest price is US $900 in the public sector [15]. Research showed it can be profitably produced for US $102 per course [17]. Oppositions have been filed in several countries on grounds that the technologies comprising these patent applications are known and therefore undeserving of a patent grant [18]–stricter patentability criteria may have prevented patents being granted initially.

Despite being curable and preventable, TB is the leading cause of death globally. Drug resistant (DR) TB is growing rapidly. New medicines like delamanid offer important advances in treatment. Currently less than half of DR-TB patients put on treatment are cured, yet delamanid remains out of reach at US$1,700 (ZAR 26,000) per course [19].

TB highlights a second failure of the system –patents fail to incentivise innovation in areas of greatest unmet medical need. Under the existing patent system, research and development (R&D) is motivated by the reward of high profits attained through patents. Inevitably, little incentive exists to develop medicines that will be consumed primarily by the poor. The dire state of DR-TB treatment highlights this. Treatment involves taking 14,600 pills over a two-year period - and a painful daily injection for the first six months [20]. Side effects include nausea, vomiting, hallucinations, diarrhoea, suicidal feelings, schizophrenia, and deafness. Yet despite great need, only three new medicines have come to market in the last 50 years.

Despite promises, increased IP protection has not increased the rate of R&D [21]. Rather it has led to greater investment by industry into ever-greening - developing new formulations, new uses and new forms of existing medicines – that blocks access to medicines for longer. While industry continues to profit from making minor modifications to existing medicines, little incentive exists to invest in riskier, more expensive R&D. A French study found that 68% of new products ‘approved in France between 1981 and 2004 offered “nothing new” over previously available medicines’ [22]. A US analysis showed that more than 75% of medicines approved between 1989 and 2000 ‘have no therapeutic benefits over existing medicines’ [23] [24].

There are many further examples: aripiprazole (depression) [25], entecavir (hepatitis B) [26], sorafenib (cancer) [27], Yasmin (oral contraceptive) [28].

2. Economic impact

2.1. There is no conclusive evidence that IP stimulates the economy, particularly in developing countries [29]. India’s experience of economic growth during the period when it did not uphold IP protection is not unique. Many developed countries provided weak IP protection during their transition into highly industrialised, developed economies. For instance, Japan, Taiwan and South Korea [30][31].

Many of today’s developed countries borrowed and copied technology from wealthier countries to develop local industries and are now accused of “kicking away the ladder” that would allow developing countries to catch-up by pressuring them to adopt strong IP protection [32].

Developed countries themselves utilise TRIPS flexibilities while arguing against their use in the developing world - even pushing for worse TRIPS-plus terms in trade and investment agreements. The US is perhaps the world’s most frequent user of compulsory licensing. Since 2006, six compulsory licenses on medical technologies were granted–notably, the US PEPFAR programme almost exclusively sources generic medicines and is the world's largest consumer of generic products manufactured under compulsory licenses [33].

2.2. Developed countries promised that the implementation and expansion of IP protection would result in greater foreign direct investment to stimulate economic growth. Yet, in South Africa the opposite is true. After adopting TRIPS, South Africa witnessed a massive decline in pharmaceutical production and investment by international multinational companies (MNCs). Between 1994 and 2007, 35 pharmaceutical manufacturing plants, belonging mainly to MNCs, were shut down [34]. The MNCs instead consolidated their operations in regions with skilled labour, low costs of labour and production, and other economic incentives [35]. India by contrast realised US$1 billion foreign direct investment from April-June 2013 in their pharmaceutical industry, despite proactive adoption of flexibilities [36]. One study found countries who attracted foreign investment, while simultaneously retaining ‘lax’ levels of IP protection achieved higher growth rates [37].

2.3. Strong IP protection not only impedes the growth of local industry, but can contribute to a negative balance of trade in developing countries. In South Africa, pharmaceuticals are the 5th largest contributor to the trade deficit [38].By volume, the majority of its medicines are generic. Yet in terms of expenditure, the main driver are patented medicines. It is reasonable to conclude that granting fewer patents of poor quality will reduce the pharmaceutical trade deficit – both by reducing prices and enabling an increase in local production of generics [39].


3. Key legislative reforms

3.1. Substantive patent examination:
In order to ensure a patent system that serves public interest and advances local developmental needs substantive examination of patent applications is necessary. Without substantive examination a patent office has no filter to ensure that patents are granted only when they are deserved.

In South Africa a depository system is in place [40]. The patent office works on the assumption that once an application has been filed, what is claimed to be an invention deserves a patent. Without a filter at their disposal, South Africa is unable to weed out the growing number of applications that claim patent protection but are not in fact worth patent status. With no checks in place, abusive practices abound; South Africa grants 40% more pharmaceutical patents than the US and EU on identical applications [41].

In contrast, the Indian Patent Office examines all applications and has a fee structure ensuring sustainability and revenue generation [42]. In Brazil, the national drug regulatory authority, ANVISA, has a right to review pharmaceutical patent applications for medicines relevant to public health prior to examination by the patent office [43]. This system plays a critical role in curbing ever-greening by MNCs, and has resulted in previously-granted patents on key medicines being overturned on review.

In 2008 alone South Africa granted 2,442 pharmaceutical patents (almost exclusively to foreign companies), while in contrast Brazil granted 278 between 2003 and 2008 [44]. The University of Pretoria found that 80% of patents upheld in South Africa do not meet its patentability standards [45].

Recommendations:
3.1.1. Legislation and regulations establishing and implementing substantive patent examination systems should be enacted including:

3.1.1.1. Developing legislation and guidelines;

3.1.1.2. Recruiting patent examiners with the necessary skills and/or conducting training of examiners where the skills do not exist;

3.1.1.3. Developing appropriate IT systems to ensure transparency and access to information (including simple and consistent classification of patents);

3.1.1.4. Budgetary allocations to achieve this.


3.2. Higher patentability criteria:
To protect public interest, a substantive examination system must be aligned with high standards of patentability recognised in national law [46]. Article 27.1 of TRIPS affords countries significant flexibility when setting patentability criteria. It requires that patents be granted for inventions that are new, involve an inventive step and are capable of industrial application [47].

Countries have adopted widely varying patentability criteria [48]. In India, the bar for patentability is set high [49]; new use patents are not granted and new forms of known substances are patentable only if they “result in the enhancement of the known efficacy of that substance”. The strict interpretation of section 3(d) was upheld by India’s Supreme Court in 2012 in Novartis AG v Union of India[50] which held that the provision has been drafted "in order to leave the door open for true and genuine inventions but, at the same time, to check any attempt at repetitive patenting or extension of the patent term on spurious grounds." This decision is an important example of the implementation of patent law in a manner that considers public health [51].

Similarly, strict standards exist in the Philippines [52] and Argentina, which has excluded from patentability polymorphs and salt forms of drugs, as the various chemical attributes and benefits of these and other forms are common knowledge within the pharmaceutical industry [53]. Other countries, such as Brazil [54], are contemplating a move in this direction.

Coupled with examination, such high standards can reduce the number of secondary patents granted on medicines. Setting higher patentability criteria should create incentives for pharmaceutical companies – whether originator or generic - to invest in new molecular entities and new classes of medicines. By contrast, low patentability criteria simply encourages ever-greening through successive secondary patents. From a developmental perspective, an approach that seeks to reward significant innovation is clearly preferable.

Recommendations
3.2.1. Higher patentability criteria should be set in national patent laws that reject methods of treatment, new uses and new forms including formulation/dosage patents, as well as known processes for making medicines and medical products.


3.3. Patent searches:
Lack of information on patent status and specifications may lead to sub-optimal decisions by a variety of players from health departments to generic companies [55]. Online search databases ensure countries can take advantage of TRIPS flexibilities such as patent oppositions, and allow the public to ensure examination is conducted in line with patentability criteria thus limiting the granting of abusive patents.

Recommendations
3.3.1. Online functional patent search databases should facilitate access to accurate information on patents for ordinary users of the system.

3.3.1.1. Patents should be searchable by the international non-proprietary name (INN), either when known at the time of the filing of a patent application, or when available following the grant of a patent.

3.3.1.2. Complete documents and specifications of a patent application or granted patent should be available, including the abstract and full disclosure of claims [56], as well as any transactions, including the terms and status of any licensing agreements [57].

3.3.1.3. The legal status of patents and patent applications—i.e. pending, granted, rejected, opposed, withdrawn, abandoned, expired or not renewed— should be current and available.


3.4. Opposition proceedings:
In conjunction with examination, countries must establish pre- and post-grant opposition proceedings. These provide additional checks to ensure that only inventions that meet statutory requirements for patentability are granted patents. Third-party interventions are important because, given the volume of applications, examiners often miss information.

Recommendations:
3.4.1. Provisions for meaningful pre- and post grant opposition mechanisms that recognise broad standing inclusive of civil society should be enacted, and the provision of adequate access to information to facilitate such interventions.

3.4.1.1. First, for pre-grant oppositions, it must be decided at which stage opposition procedures should be introduced – whether before, at the time or after substantive examination begins [58].

3.4.1.2. Second, procedures must be in place to ensure adequate time for filing an opposition, and take into consideration the state of access to timely information on patent applications [59].

3.4.1.3. Third, the cost of filing an opposition should not be prohibitive, nor initially subject to court proceedings [60].

3.4.1.4. Finally, standing to file a pre-post grant opposition should be as broad as possible, and include not only generic competitors, but also civil society, academics, and patients. While pharmaceutical companies have challenged the right of patient groups in other countries to file pre- and post-grant oppositions, a court case in Thailand clearly determined the right of such groups to file oppositions, as “interested parties to the granting of a patent” [61].


3.5. Compulsory licensing:
Article 31 of TRIPS [62] recognises WTO members' right to legislate “other use of the subject matter of a patent without the authorization of the right holder”. This use of a patent, without the patentee’s consent, may be “by the government or third parties authorized by the government”. In other words, the state may issue compulsory licenses – either to third parties or itself [63].

Many countries have used compulsory licenses to promote public interest objectives and remedy anti-competitive practices in a variety of technology sectors. In recent years, a number of countries have issued licenses to improve access to medicines, including India, Thailand, Brazil, Malaysia, Zambia and Ecuador [64]. Indonesia recently authorised government use of patents for seven HIV/AIDS and hepatitis medicines which could introduce widespread generic competition, local production and generate potentially massive cost savings in the world's fourth most populous country [65].

Although compulsory licensing and government use are legitimate under international law, their application has faced considerable resistance from developed countries’ governments and retaliations from industry.

Recommendations:
3.5.1. A simple and expeditious administrative procedure should be enacted that is subject only to review proceedings in Court. Government use licenses should not require any review proceedings in Court [66];

3.5.2. Pending any review of the grant of a compulsory license, interim relief should only be available – upon application – in exceptional circumstances and should not be available for the exercise of government use licenses;

3.5.3. Default positions regarding license conditions (including but not limited to royalty rates) and negotiation timelines should expressly be included.

3.5.4. Countries should incorporate into legislation the allowance for compulsory licenses on a range of grounds [67].


3.6. Parallel importation:
TRIPS Article 6 allows for parallel importation; given that patented products are sold at different prices in different markets, this measure enables the import of patented products from countries in which they are sold at lower prices into countries where the same patented product is being sold at a higher price.

Parallel importation gives effect to the principle of exhaustion of rights, that once patentees or other authorised parties have sold a patented product, they cannot prohibit the subsequent resale of that product (since their rights in respect of that market have already been exhausted). Once a product has been sold, the exclusive rights holder has no further right over the sold product – the patentee’s rights are therefore “exhausted”. This principle should apply to international, branded or generic products as well as those manufactured under a compulsory license [68].

Both Kenya and the Philippines have amended their patent law to allow international exhaustion that does not limit the possible source of import from a third country to products put on the domestic market by the original patent holder, but opened it up to equivalent products placed on the market by anybody who was authorised to do so [69] [70].

In order to facilitate the easy use of parallel importation both IP and regulatory issues must be addressed to ensure that products acquired through parallel importation do not encounter undue delays.

Recommendations:
3.6.1. National patent laws should be amended to include international exhaustion;

3.6.1. Parallel importation measures should apply to both branded and legitimately produced generic medicines (including through a compulsory license);

3.6.2. Licensing practices should be regulated to ensure that products acquired through parallel importation do not encounter undue regulatory delays.


3.7. Exceptions to patent infringement:
Article 30 of TRIPS allows countries to legislate limited exceptions to the exclusive rights conferred by a patent. This provision is to be read together with Article 8.1, which permits the adoption of measures necessary to protect public health and promote the public interest in sectors of vital importance to a country’s socio-economic and technological development. Countries may provide exceptions for regulatory purposes (such as medicines registration), as well as for broader research and education purposes [71] [72]. Brazil’s patent law provides for “acts carried out by unauthorised third parties for experimental purposes, in connection with scientific or technological studies or researches” [73]

Additionally, countries should adopt a broad educational use exception to patent rights [74]. Academics and researchers, tertiary institutions, and even secondary institutions must be able to train the next generation of inventors and scientists on research and product development methods and freely use patented products/ processes for the purpose of instruction. Precedents exist in Brazil, India, and Argentina [75].

Recommendations:
3.7.1. National patent laws should incorporate patent limitations and exceptions including for scientific research, educational use and regulatory purposes.

3.8. On TRIPS plus provisions:
Calls for TRIPS plus provisions (including data exclusivity; patent term extensions; patent linkage; patenting of medical methods; lowering the bar of patentability; and new forms of IP enforcement) should be rejected on the basis that they unreasonably and unjustifiably limit access to medicines [76].

Conclusion:
This submission is of the view that countries cannot rely on individual cases of litigation and competition law to ensure access to medicines. Instead there must be effective and undisputed utilisation of TRIPS flexibilities to improve access to medicines systemically. This will require the incorporation into national legislation the full range of TRIPS flexibilities including all recommendations above [77].

We note that developing countries are regularly subjected to outside pressure, whether multilaterally from WTO and WIPO or bilaterally from developed countries. The impetus for policy change over patent regimes thus typically comes from abroad, for example through trade agreements, investment agreements, or international initiatives to harmonise IP rules, rather than from domestic policy objectives. It is principally for this reason that a number of developing countries have failed to take advantage of TRIPS flexibilities. This leads to unnecessary and avoidable barriers to access to medicines.

Recommendations:
1. The UN should recommend that countries fully implement TRIPS flexibilities – and utilise these to promote access to healthcare;

2. The UN should provide assistance to countries to implement TRIPS flexibilities into national law and utilise provisions moving forward;

3. The UN should establish a UN Special 301 Report to keep track of bilateral and multilateral pressure against utilisation of TRIPS flexibilities, and of pressure to adopt TRIPS-plus measures. The report should contain a "Priority Watch List" outlining countries/institutions whose actions are deemed of concern. Third parties (including government/civil society) should be able to submit complaints to be addressed. Warnings should be issued to “Priority Watch List” countries/institutions.

Bibliography and References

1.<In response to evidence that strict intellectual property (IP) protection negatively impacts upon access to affordable medicines, the Doha Declaration re-affirmed the right of WTO members to protect public health through the full use of the safeguards outlined in TRIPS (TRIPS flexibilities).> Doha Declaration, 2001. Available here: http://www.who.int/medicines/areas/policy/doha_declaration/en/

2. <The Doha Declaration also extended the transition period for LDCs for implementation of the TRIPS obligations.>Doha Declaration, 2001. Available here: http://www.who.int/medicines/areas/policy/doha_declaration/en/ and Article 66.1 of the TRIPS agreement. Available here: https://www.wto.org/english/tratop_e/trips_e/art66_1_e.htm

3. Sonenklar, C (2011). "Chapter 6: Treatment for HIV and AIDS". AIDS. USA Today Health Reports: Diseases and Disorders. Minneapolis, MN: Twenty-First Century Books. pp. 90–101.ISBN 9780822585817.

4. NSP Review, June 2015. “Weak rand means South Africa pays more for ARVs in latest tender”. Available at: http://www.nspreview.org/2015/06/10/weak-rand-means-south-africa-pays-more-for-arvs-in-latest-tender/

6. a. <In 2002 TAC lodged a complaint with the Competition Commission regarding the excessive pricing of three antiretroviral medicines - AZT, lamivudine and nevirapine – in a case known as the Hazel Tau case. At the time the price of antiretroviral treatment was over R2 000 per person per month. In 2003 the Commission found evidence supporting Tau’s allegations and the matter was referred to the Competition Tribunal. As a result the companies settled and provided licenses for competitors to make cheaper generics to South Africa and other countries in Sub Saharan Africa.>TAC submission to Competition Commission, 2002. Available at: http://www.section27.org.za/wp-content/uploads/2010/10/TauvGSKevidenceAndLegalSubmissions.pdf

b. <In 2002 TAC approached the Competition Commission regarding the excessive pricing of antiretroviral efavirenzas well as MSD’s refusal to license efavirenz for the manufacture of fixed dose combinations that would simplify treatment, helping people to adhere better. This case was dropped in 2008, when four generic companies were licensed to produce it – this lead to an 80% drop in the cost of efavirenz.>TAC submission to Competition Commission, 2002. Available at: http://www.section27.org.za/wp-content/uploads/2010/10/TACvMSDstatementOfComplaint.pdf

c. <In 2009 the Competition Commission invited input from TAC when it considered a merger between GlaxoSmithKline and Aspen Pharmacare. TAC’s complaint identified that competition for the antiretroviral medicine abacavir would be impacted by the merger. Abacavir is commonly used in the treatment of infants and children with HIV. Based on the input of TAC the Competition Commission ruled that, as a condition of the merger, GSK was required to grant licenses for the generic production of abacavir. The price of abacavir halved in government’s 2011 ARV tender from the 2008 tender price.>
http://www.compcom.co.za/wp-content/uploads/2014/09/02-Sept-09-Competition-Commission-approves-pharma-merger-on-condition-that-Abacavir-is.pdf

6. NSP Review, June 2015. “Weak rand means South Africa pays more for ARVs in latest tender”. Available at: http://www.nspreview.org/2015/06/10/weak-rand-means-south-africa-pays-more-for-arvs-in-latest-tender/

7. WHO, September 2015. Guideline on when to start antiretroviral therapy and on pre-exposure prophylaxis for HIV
http://www.who.int/hiv/pub/guidelines/earlyrelease-arv/en/

8. HIV i-base, 2012. Available at: http://i-base.info/guides/3567

9. NSP Review, June 2015. “Weak rand means South Africa pays more for ARVs in latest tender”. Available at: http://www.nspreview.org/2015/06/10/weak-rand-means-south-africa-pays-more-for-arvs-in-latest-tender/

10. WHO, May 2015. Available at: http://www.who.int/mediacentre/news/releases/2015/new-essential-medicines-list/en/

11. t’Hoen, 2014. Access to Cancer Treatment. Available at: http://apps.who.int/medicinedocs/documents/s21758en/s21758en.pdf

12. Moja, Lorenzo, Ludovica Tagliabue, Sara Balduzzi, Elena Parmelli, VannaPistotti, Valentina Guarneri, and Roberto D’Amico. Trastuzumab Containing Regimens for Early Breast Cancer. In Cochrane Database of Systematic Reviews. John Wiley & Sons, Ltd, 1996. Available at: http://onlinelibrary.wiley.com/doi/10.1002/14651858.CD006243.pub2/abstract

13. Vorobiof, D. A., F. Sitas, and G. Vorobiof. “Breast Cancer Incidence in South Africa.” Journal of Clinical Oncology: Official Journal of the American Society of Clinical Oncology 19, no. 18 Suppl (September 15, 2001): 125S – 127S.

14. Fix the Patent Laws, February 2016. “Problematic patent laws block access to critical breast cancer medicine”. Available at: http://www.fixthepatentlaws.org/?p=1061

15. <While experts estimate that the production cost of sofosbuvir is USD68-136 (per person for 12 weeks), in HICs, sofosbuvir is sold USD1,000 per pill or USD84,000 per person for 12 weeks in the United States - where it is estimated that 5,367,834 persons are infected with HCV. As a comparison, the median household income in the country is USD51,017 per year, and while it is estimated that 48 million of Americans do not have any health insurance. In France, the cost of sofosbuvir is set at USD913 per pill (USD76,720 per person for 12 weeks).In MICs, Gilead plans to sell sofosbuvir for at least USD2,000 (for a 12-week course). In Egypt, at a minimum price of USD2,000, the cost of sofosbuvir alone for 100% of people with HCV would represent five times the country’s total 2011 public health expenditures. In Indonesia, it would be a little bit more than the total annual health budget in 2011. More generally, at the prices set by pharmaceutical companies, universal access would be practically unachievable, even in countries who have strongly committed to access to HCV care, such as Georgia, Thailand and Egypt.> Londeix, New Treatments for Hepatitis C Virus. March 2014. Available at: http://hepcoalition.org/IMG/pdf/web_daas_strategies_for_achieving_universal_access_en.pdf

16. Boseley, S. “Hepatitis C drug Sofosbuvir delayed by NHS due to high cost”.January 2015. Available at: http://www.theguardian.com/society/2015/jan/16/sofosbuvir-hepatitis-c-drug-nhs

17. <Research conducted by Dr Andrew Hill at the University of Liverpool suggests that sofosbuvir can be profitably produced for as little as $102 per 12-week course.>Hill, A et al. Minimum Costs for Producing Hepatitis C Direct-Acting Antivirals for Use in Large-Scale Treatment Access Programs in Developing Countries. Available at: http://cid.oxfordjournals.org/content/early/2014/02/13/cid.ciu012.full

18. <Patent oppositions have been filed in India, United States, Russian Federation, Brazil, Republic of Korea, Brazil and at the European Patent Office>. Patent Opposition Database. Available at: http://patentoppositions.org/en/drugs/51dfee9097961f0002000020

19. Treatment Action Group, February 2016. “TAG Welcomes Delamanid’s Inclusion in the Stop TB Partnership’s Global Drug Facility”. Available at: http://www.treatmentactiongroup.org/tb/press/2016/tag-welcomes-delamanid-inclusion-in-GDF

20. Test Me, Treat Me: A Drug-Resistant TB Manifesto. Available at: https://www.msfaccess.org/TBmanifesto/

21. T’Hoen E, Berger J, Calmy A & Moon S. Drivinga decade of change: HIV/AIDS, patents and access to medicines for all. Journal of the International AIDS Society 2011, 14:15

22. Ibid.

23. MSF. (2012). Q&A: Patents in India and the Novartis Case

24. <Furthermore, in comparison to global yearly medicine (and other medical tool) sales of US $856 billion in 2010 – the pharmaceutical industry only spent 7.9% of this on R&D efforts (Love, 2011). Expenditure by pharmaceutical companies on R&D pales in comparison to expenditure on marketing and profits. Pharmaceutical companies spend almost twice as much on marketing as they do on R&D (Gagnon, 2008) while simultaneously recouping massive profits. The pharmaceutical industry commonly takes home more in profit each year than it spends on R&D costs. From 1995 – 2002, the pharmaceutical industry was ranked the most profitable industry in the United States. In 2008 and 2009, the industry continued to feature amongst the country’s most profitable business sectors, claiming the third spot in both years (Fortune 500 Rankings). On top of this, even GlaxoSmithKline’s CEO Andrew Witty has publicly stated that the huge price tag of US$1 billion associated with pharmaceutical R&D is "one of the great myths of the industry" (Reuters). Based on the over generous claims made on R&D costs (as detailed below) we can assume that the 7.9% figure is in itself higher than the actual cost>. Rutter & Tomlinson, 2014. The Economic & Social Case of Patent Law Reform in South Africa. Available at:http://www.tac.org.za/sites/default/files/The%20Economic%20and%20Social%20Case%20for%20Patent%20Law%20Reform%20in%20South%20Africa.pdf

25. <The price per mg in South Africa is almost 20% more than in Japan (¥340.70 or R35 per 12mg tablet), where Otsuka holds a sales monopoly. Aripiprazole in South Africa is 35 times more expensive than the average price of a generic in India.> Fix the Patent Laws briefing, October 2014. Available at: http://www.fixthepatentlaws.org/wp-content/uploads/2014/10/Aripiprazole_Finale1_LD.pdf

26. <Only the original manufacturer of entecavir, BristolMyers Squibb (BMS), is registered to market its product in South Africa. Entecavir is not procured by the National Dept. Of Health, and because of the high price, is only available for public sector patients in special circumstances, following approval from a Pharmacy Committee. Medical aid schemes do not provide coverage for entecavir for cost reasons, and HBV patients who need it must purchase the brand name drug through the private sector, which costs R4,775 or R5,500 per month, depending upon the dosage. In India, by contrast, where generics are available through the private sector, the costs of treating a HBV patient with entecavir are much lower—the equivalent of around R400 or R650 per month for generic products, based on the dosage.>Fix the Patent Laws briefing, October 2014. Available at: http://www.fixthepatentlaws.org/wp-content/uploads/2014/10/Entecavir_Final1LD1.pdf

27. <There are no generic versions of sorafenib available in South Africa because the manufacturer, Bayer, holds multiple patents that give it a market monopoly. Sorafenib is a relatively new drug, and Bayer’s global patenting strategy has assisted the company in earning over €771 million (over R10.8 billion) on sales of sorafenib in 2013.>Fix the Patent Laws briefing, October 2014. Available at:http://www.fixthepatentlaws.org/wp-content/uploads/2014/10/Sorafenib-FINAL.pdf

28. <A generic version of a popular birth control pill has been blocked from entering the South African market for the past three years, due to a series of court cases concerning a patent on the original product. United States and European courts have both rejected the validity of the patent, which is held by multinational pharmaceutical company Bayer. A South African court, however, has upheld the patent, preventing marketing of a 30% cheaper product.>Fix the Patent Laws briefing, October 2014. Available at:http://www.fixthepatentlaws.org/wp-content/uploads/2014/10/YasminFinal_3.pdf

29. a. Maskus, 2000. Intellectual Property Rights in the Global Economy.

b. Qian, Y. (2007). Do Additional National Patent Laws Stimulate Domestic Innovation in an International Patenting Environment? Review of Economics and Statistics.

30. Odagiri H, Goto A, Sunami A & Nelson R. Intellectual Property Rights, Development and Catch-up. An International Comparative Study, Oxford Oxford University Press, (2011), pp. 451, ISBN:978-0-19-957475-9

31. <“Japan, Korea and Taiwan have absorbed substantial amounts of technological learning under weak IPR protection regimes during the early phases [of development]”.>Kumar, 2011. Intellectual Property Rights versus Competition Law. See http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2735771
.
32. <A number of academics have argued that, rather than adopting the same level of intellectual property protection upheld in developed countries, developing countries should adopt standards that are more in line with their development goals.> Ha-Joon Chang. (2002). Kicking away the ladder: Development Strategy in Historical Perspective

33. <The United States is perhaps the world’s most frequent user of compulsory licensing, including the government use of defence technologies, and judicially issued licenses to remedy anti-competitive practices in information technology and biotechnology, among other instances.>Love. J. (2012a). “Open Letter to Patent Office, on Its War Against the Global Poor”. Available at: http://www.huffingtonpost.com/james-love/open-letter-to-patent-off_b_1545232.html

34. Maloney C & Segal N. (2007). The Growth Potential of the Pharmaceuticals Sector in South Africa. Genesis Analytics 29 May 2007

35. Naude C & Luiz J. (2013). An Industry Analysis of Pharmaceutical Production in South Africa. s. Afr. J.Bus.Manage.2013,44 (1)

36. The Economic Times. (2013). India receives highest FDI worth $1 billion in Pharma in April-June. Published 1 Septemeber 2013. Available at: http://articles.economictimes.indiatimes.com/2013-09-01/news/41663407_1_pharmaceuticals-sector-highest-fdi-fdi-policy

37. <A recently published study that investigated the relationship between intellectual property protection and foreign direct investment in 103 countries between 1970 and 2009 found that strict intellectual property protection can actually negatively impact on growth associated with foreign investment. The study found that countries that are able to attract foreign investment, while simultaneously retaining ‘lax’ levels of intellectual property protection were able to achieve a higher growth rate The study found that countries that are able to attract foreign investment, while simultaneously retaining ‘lax’ levels of intellectual property protection were able to achieve a higher growth rate .>Kascheeva M. (2013). The role of foreign direct investment in the relation between intellectual property rights and growth. Oxford Economic Papers (2013), doi:10.1093/oep/gpt015

38. DTI. (2011). The South African Pharmaceutical Sector Profile for the Consideration of Designation of Pharmaceutical Products in Terms of the PPFFA. Final Version, 9 November 2011

39. <By volume, South Africa imports the majority of its medicines from India, and the majority of its active pharmaceutical ingredients from China. However, the top 5 countries from which South Africa imports medicines in terms of expenditure are, in order: Germany, the USA, France, India and the UK. These figures strongly suggest that the importation of branded medicines is a significant, if not the main, driver of the deficit.>

40. Section 25(9) of the South African Patents Act.

41. Sampat B, Kapczynski A & Chan P. (2012). South African Pharmaceutical Patenting: An Empirical Analysis. Presentation at TAC/MSF 23 October 2012 meeting. Available at http://www.fixthepatentlaws.org/?p=459

42. Briefing by TAC, MSF and RIC, ‘Why South Africa Should Examine Pharmaceutical Patents’ (January
2013) <http://www.msfaccess.org/sites/default/files/MSF_assets/Access/Docs/Access_Brief_SApharmapatents_ENG_2013_final.pdf> accessed September 15, 2013.

43.One recent example from Brazil is the breast and ovarian cancer drug, docetaxel; in 2006 the drug had its patent revoked after a review by ANVISA, and local production of an affordable generic alternative was allowed. Please see: Rede Brasileira pela Integração dos Povos (REBRIP) and Grupo De Trabalho Sobre Propriedade Intelectual (GTPI), ‘INDIVIDUAL COMPLAINT AGAINST BRAZILIAN STATE URGENT APPEAL’ <http://www.deolhonaspatentes.org.br/media/file/Urgent%20appeal%20against%20Brazil%20%20by%20GTPI%20%28with%20annexes%29.pdf>, page 4, accessed September 15, 2013

44. Vawda, Y, (2011). ‘Pharmaceutical Innovation, Incremental Patenting and Compulsory Licensing Country Case Study: South Africa; Research paper 41, South Centre.

45. Pouris A, Pouris A. Patents and economic development in South Africa: Managing intellectual property rights. S Afr J Sci. 2011;107(11/12), Art. #355, 10 pages. http://www.dx.doi.org/10.4102/sajs.v107i11/12.355

46. This idea is reinforced by TRIPS Article 7: “The protection and enforcement of intellectual property rights should contribute ... to the mutual advantage of producers and users of technological knowledge and in a manner conducive to social and economic welfare, and to a balance of rights and obligations.” Available at https://www.wto.org/english/docs_e/legal_e/27-trips_03_e.htm

47. TRIPS does not set out what is meant by these three requirements. Instead, the footnote to Article 27.1 provides as follows:
“For the purposes of this Article, the terms ‘inventive step’ and ‘capable of industrial application may be deemed by a WTO member to be synonymous with the terms ‘non-obvious and ‘useful’ respectively.” Furthermore, in the context of Article 27.3 (a), new uses and methods of treatment should expressly be precluded from being granted patent protection; new forms of known substances should not be patentable to the extent that they fail to demonstrate the required degree of inventive step.

48. See Lionel Bently et al, “Exclusions from Patentability and Exceptions and Limitations to Patentees’ Rights”, WIPO Standing Committee on the Law of Patents, SCP/15/3 Annex I (2010), available at http://www.wipo.int/edocs/mdocs/scp/en/scp_15/scp_15_3-annex1.pdf.

49. Ever-greening is the practice of obtaining, in the case of pharmaceuticals, multiple patents on the same medicine for minor incremental changes, in order to extend monopoly protections and thus higher prices. Section 3(d) of the Patents Act, 1970 states that the following are not inventions for purposes of that Act: “the mere discovery of a new form of a known substance which does not result in the enhancement of the known efficacy of that substance or the mere discovery of any new property or new use for a known substance or of the mere use of a known process, machine or apparatus unless such known process results in a new product or employs at least one new reactant.”

50. Civil Appeal Nos. 2706-2716 of 2013, available at http://www.indiankanoon.org/doc/165776436/

51. Civil Appellate Jurisdiction of the The Supreme Court of India, Novartis AG v Union of India & Others, Page 38 <http://judis.nic.in/supremecourt/imgs1.aspx?filename=40212>.

52. See Philippines IP Code § 26.2.

53. Argentina has adopted the Guidelines for Patentability Examination of Patent Applications for Chemical and Pharmaceutical Inventions. See Joint Resolution 118/2012, 546/2012 and 107/2012 (Ministry of Industry, Ministry of Health and National Industrial Property Institute), available athttp://www.moellerip.com/index.php?PN=news_detail&FX=1&DX=139&EX=1

54. See “Open Letter from Global Academics in Support of Proposal to Amend Brazil’s Patent Law to Take Advantage of TRIPS-Compliant Flexibilities”, available at http://infojustice.org/support-brazil

55. In 2003 MSF published ‘Patents Under the Spotlight’ with a view to increasing knowledge about the patent barriers for HIV medicines and included information on relevant patents covering formulations, combinations and new medical uses. This allowed a number of governments and PLHIV networks to search for local patents, leading to informed decisions about addressing the barriers to procuring affordable generic medicines from India. See: MSF Access Campaign. MSF Drug Patents under the Spotlight: Sharing practical knowledge about pharmaceutical patents, May 2003 Available from: http://apps.who.int/medicinedocs/pdf/s4913e/s4913e.pdf

56. Singapore offers complete specifications on all patents in a convenient, user-friendly “results formatter”. See: http://www.epatents.gov.sg/PE/

57. See s. 33(3) of the UK Patents Act 1977 which lists the following as able to be registered: assignment of a patent or application, mortgage or grant of a security of a patent or application, grant or assignment of a license, any direction of the court.

58. In India, a third party can file an opposition once the patent application has been published. Accessed September 15, 2013 at: http://www.patentoppositions.org/how_to_build_an_oppositionPatient groups in India have already filed a number of pre-grant oppositions against the granting of the patent applications on HIV drugs on certain technical grounds such as obviousness of the invention. These include several key HIV first and second-line drugs, such as heat-stable lopinavir/ritonavir tablet; tenofovir (TDF) and TDF-based fixed-dose atazanavir.

59. In Thailand, there is only a three-month window to file a pre-grant opposition, meaning that, even before patient groups have found the relevant patent application relating to a drug, the deadline for filing the opposition has usually expired. Accessed September 15, 2013 at: http://www.patentoppositions.org/how_to_build_an_opposition

60. In Argentina, for example, documents must be officially translated in order to file an opposition; this in itself can cost $10,000, making it prohibitively expensive for patient groups. Accessed September 15, 2013 at: http://www.patentoppositions.org/how_to_build_an_opposition

61. In October 2002, civil society won its first major battle in opposing a patent when Thailand struck down Bristol-Myers Squibb’s monopoly on the HIV drug didanosine, after a challenge led by the Thai AIDS Foundation. See:
http://patentoppositions.org/case_studies/500e9b8c7718ea0002000018

62. The footnote to Article 31 defines “other use” as “use other than that allowed under Article 30.”

63.A compulsory license issued by the state to itself, for public non-commercial use, is often referred to as a government-use license. In contrast to compulsory licenses, government-use licenses (as well as emergency and urgent need licenses) do not require prior notice or negotiation with the patent holder, though notification and payment of adequate compensation is required after-the-fact. Countries must clearly define government use as distinct from compulsory licensing in that it does not require prior efforts to obtain voluntary licenses from rights holders on commercially reasonable terms.

64. Beall. R, Kuhn. R (2012). Trends in Compulsory Licensing of Pharmaceuticals Since the Doha Declaration: A Database Analysis. PLoS Med 9(1): e1001154. doi:10.1371/journal.pmed.1001154 Available at: http://www.plosmedicine.org/article/info%3Adoi%2F10.1371%2Fjournal.pmed.1001154

65. Public Citizen. (2012). “Indonesia Licenses Patents for Seven HIV & Hepatitis B Medicines”.
Available at: http://www.citizen.org/PC-statement-on-compulsory-licensing-in-Indonesia

66. TRIPS Article 1 allows member countries the freedom to determine the appropriate method of implementing the provisions and hence to adopt a simpler procedure that does not act as a barrier to issuing compulsory licenses. National patent laws should set up a simple, expeditious administrative (rather than judicial) procedure for hearing applications for compulsory licenses, with opportunity for the patent holder to be heard. National patent laws should also clarify presumptive royalty rates and set time periods for negotiations. Finally, patent holders should not be entitled to stay the operation of a compulsory license should the right holder seek review of the issuance of a compulsory license.

67. Grounds should include where: medicine prices prohibit access, supply is inadequate to need, there is a need for multiple suppliers to avoid stock-outs and shortages, the patent holder has refused to grant a voluntary license on reasonable terms, the medicine is an “essential facility,” there is a need for a novel fixed dose combination medicine comprising ingredients patented by multiple right holders, and the medicine is not being adequately worked in a country. In addition to these specific grounds, there should be specific allowance of compulsory licenses to remedy anti-competitive behaviour (authorised by Article 31(k)) and a more general, “public interest” ground for compulsory licenses.

68. 100 Existing Kenyan legislation (Article 58.2 of the Kenyan Industrial Property Bill) has not been challenged to date by the WTO and allows for the parallel importation of international products, either branded or generic, including those manufactured under a compulsory license: “The rights under the patent shall not be enforceable against any person who imports or in any way deals in the patented product, or a product obtained by the patented process, once the said product has been lawfully placed on the market in any country with the consent of the owner, a licensee or any other authorised person”. For more information on parallel importation in Kenya please see: Munyi. P, Lewis-Lettington. R. (September 2004). “Willingness and Ability to Use TRIPs Flexibilities: Kenya case study” DFID Health Systems Research Centre, Issue Paper – Access to Medicines accessible at http://www.hlsp.org/LinkClick.aspx?fileticket=rB0enzg20-I%3d&tabid=1643

69. The Philippines’ wording of the provision allows for the importation into the country if they have been placed on the market anywhere in the world by “the patent owner, or by any party authorized to use the invention.”

70. In Clause 37 of Kenya’s Intellectual Property Regulations (2002) the international exhaustion regime outlined in the country’s IP Act specifically allows for the importation of “…articles that are imported from a country where the articles were legitimately put on the market”.

71. Such research may be carried out for the following activities: experimentation; scientific research; technological research, which may be done with the intent of advancing commercial or for-profit objectives; non-commercial purposes; registration purposes; activities with a commercial intent that, for example, may be aimed at improving on patented technology insofar as the activity can be classified as experimentation or technological research—this could for example require a compulsory license on a dependent patent to conduct research for follow-on innovations, or be based on independent innovation where a third party develops a new technology which does not infringe upon the patents on which the research was based.

72. Phoebe H Li ‘Rights and responsibilities in patents: a precautionary patent framework in WTO law’ European Intellectual Property Review 2013. See especially page 4-5; Carlos Correa ‘the international dimension of the research exception (January 2005) available from http://sippi.aaas.org/Pubs/Correa_International%20Exception.pdf

73. Article 43, Paragraph II, Law n. 9.279 of 14 May 1996, available at
http://www.jpo.go.jp/shiryou_e/s_sonota_e/fips_e/pdf/brazil/industrial_property_law.pdf

74. For suggested wording of educational use exceptions, see Section 1.b of: www.twnside.org.sg/title2/chapter6.doc

75. Christopher Garrison, Exceptions to Patent Rights in Developing Countries, ICTSD Issue Paper No. 17, p. 66 (2006) available at http://unctad.org/en/Docs/iteipc200612_en.pdf

76. TRIPS does not require data exclusivity or any of the following provisions: patent term extensions, new forms of IP enforcement measures such as detaining shipments suspected of non- criminal trademark infringement, the inclusion of investment provisions whereby foreign investors are able to challenge any action that led to the ‘expropriation’ of their investment in private arbitration proceedings. These provisions are widely acknowledged as TRIPS-plus provisions and would severely restrict access to medicines. As such, countries should reject the inclusion of such measures. At a Workshop on IP and Public Health held by the South African Department of Trade and Industry in Pretoria on 7/8 August 2013, representatives of the WTO and WIPO affirmed that Article 39.3 does not refer to data exclusivity.

77. <In 2012 TAC was admitted as amici curiae in a legal dispute between the brand name drug company Aventis Pharma and the generic company Cipla, over a claim of patent infringement on a drug that treats cancer called Docetaxel. TAC’s intervention aimed to establish as a principle something the Court had not considered before, and that is that Constitutional rights must be factored into the adjudication process when deciding patent infringements>
Available at: http://www.fixthepatentlaws.org/wp-content/uploads/2012/05/TAC-SCA-AVENTIS-CIPLA-HEADS-1.pdf

Mwelecele N. Malecela, National Institute for Medical Research (NIMR) Tanzania

Lead Author: Mwelecele N. Malecela
Organization: National Institute for Medical Research (NIMR) Tanzania
Country: Tanzania

Abstract

Recent changes in the global health and development context – in particular the transition of low-income countries to middle-income status, declining levels of development assistance, and the adoption of the SDGs – are defining a ‘new context’ for access to medicines, vaccines and diagnostics. Developing countries need to allocate more domestic resources for public health, but also to exert greater control and ownership over health interventions.

There should also be a corresponding demand for donors and developed country governments to align their own policies, so that these do not act to prevent or hamper the achievement of national goals and global commitments. Global policy coherence will be of significance, particularly at the intersections of trade, health and human rights.

The consolidation of decision-making capacity, particularly in terms of effective priority-setting and policy coherence, should take place at the country level and in a bottom-up direction, in order that the determinants of access to medicines, diagnostics and vaccines are effectively and sustainably addressed. The Access and Delivery Partnership (ADP) has identified six ‘pathways’ towards an integrated approach for policy coherence that can have the most impact on access and delivery.

The implementation of an integrated approach towards access and delivery at the country level will provide an evidential basis of the key determinants of access and delivery, which should be taken into account in the efforts for policy coherence at the global level. On the basis of ADP’s implementation work, it may be said that the key determinants of access and delivery relate to the following: factors that ensure availability, affordability and accessibility of essential new health technologies, namely medicines, vaccines and diagnostics, as well as those that affect the effective introduction and integration of these technologies within the health system for use by target communities.

Submission

This contribution from the National Institute for Medical Research, Tanzania, highlights recent paradigm shifts in the global health and development arena, and argues for integrated approaches at the country and global levels to effectively address the major determinants of access to medicines, diagnostics and vaccines.

During the first 15 years of the 21st century – the MDGs era – the public health field was characterized by global forces that drove improvements in access and delivery of medicines, diagnostics and vaccines. These comprised supply-driven prioritization, global mechanisms for resource mobilization and bulk procurement, as well as price-setting determined by a combination of the open market and global activism.

A number of developments are now influencing changes in the global health arena. First, the adoption and commitment to the recently agreed Sustainable Development Goals (SDGs) have specified health targets that are influenced by the ideals of universal health access and equity, and which require comprehensive national measures by governments.

Secondly, the number of low-income countries has roughly halved in the past 15 years, through the emergence of mainly mineral exporting and transition economies. Although average incomes have increased in these countries, poverty has not fallen in absolute numbers, leaving three quarters of the world’s poorest people now living in middle-income countries. While many countries have experienced a shift in economic standing, this has occurred before their health systems have had the opportunity to undergo a similar process of graduation. The use of income thresholds to determine aid allocations will consequently leave many countries ineligible for continued support under global health funding and delivery mechanisms, including the GAVI Alliance, the Global Fund to Fight AIDS, Tuberculosis and Malaria, and the United States President's Emergency Plan for AIDS Relief/Malaria Initiative. These initiatives have played important roles in supporting the public health financing and delivery mechanisms in developing countries. In addition, the levels of development assistance have also leveled off, which will also have consequences for the level and degree of health funding and delivery for low-income countries.

These developments define a ‘new context’ for ensuring access to medicines, vaccines and diagnostics. It raises at least two urgent prerequisites for developing countries: the need for greater control and ownership over public health interventions; and the need to allocate a greater portion of domestic resources for public health spending. Due to the preliminary stage of institutionalized national responses to this new context, national capacities are lagging.

Policy coherence and the decision-making capacities to achieve such coherence at the national level remain critical requirements. In summary, it implies the need for country-level action to do the following:

• re-define national health priorities, based on country-specific needs, available evidence and resources, as well as to meet increasing demands for universal access to health;
• address the weaknesses or gaps at the country level, particularly with regard to capacities for multi-sectoral decision-making, sustainable resource allocation and efficient delivery systems; and
• identify alternative or new mechanisms for financing and delivery of public health needs, including effective South–South or regional collaboration between countries with similar national challenges and opportunities.

It is argued that a consolidation of decision-making, priority-setting and policy coherence will need to take place at the country level and in a bottom-up direction, in order that the key determinants of access to medicines, diagnostics and vaccines can be sustainably addressed. Policy coherence must be designed to address the intersections of public health with other sectors. This entails balancing and integrating the range of public health, trade, fiscal and other priorities within a country’s framework of laws and policies – at best, a medium- to long-term prospect. While comprehensive policy coherence may not be achieved immediately, it is very much a need and aspiration.

The Access and Delivery Partnership (ADP), a UNDP-led collaboration with TDR and PATH, has begun implementing an integrated approach in four countries: Ghana, Indonesia, Tanzania and Thailand. The ADP, in its implementation of an integrated approach to access and delivery, has identified six ‘pathways’ towards policy coherence that can have the most impact on equitable access and sustainable delivery, namely:

• an enabling national policy and legal framework;
• country-specific implementation research agenda for health;
• safety monitoring and pharmacovigilance system;
• evidence-based national resource allocation;
• effective delivery and supply chain systems; and
• strategic information and evidential base for decision-making.

The ADP approach is predicated on the belief that strengthening the country’s decision-making capacities and processes in these six pathways will result in positive health impacts. The focus on strengthening decision-making processes is based on two important judgments: First, building and strengthening mechanisms for effective decision-making is most amenable to long-term improvements to access and delivery; second, this approach allows lessons and best practices to be captured from the focus countries, which can then benefit other countries, enabling strategic South–South collaboration and learning. In our experience, the delineation of the ADP project activities into the six strategic, interrelated ‘pathways’ indeed helps strengthen capacity in decision-making processes along the entire value chain of access to and delivery of new health technologies.

These six pathways are further described in the accompanying illustration, and the case study of Tanzania below, provides a demonstration of how the integrated approach may be effected, in a country-specific manner.

With middle-income countries’ increased investment of domestic resources and ownership of national health priorities, there should be corresponding increased demand to ensure that donors align their own policies, such that they do not prevent or hamper developing countries’ efforts to meet national objectives, in line with agreed global health commitments, such as those of the SDGs.

It is argued here that as countries consolidate priority-setting and decision-making, this will create the demand for the existing global architecture to ensure better alignment with national priorities and aspirations. The components of the global health architecture, such as international procurement mechanisms, regulatory harmonization initiatives and normative policy guidance, will be in critical focus.

The World Trade Organization (WTO) Doha Declaration on the TRIPS Agreement and Public Health, adopted in 2001, may be regarded as one of few early examples of the demand and need for policy coherence at the global level. The Doha Declaration was the initiative of developing country members in the WTO to reach common understanding on the interpretation and implementation of the TRIPS Agreement; that “the Agreement can and should be interpreted and implemented in a manner supportive of WTO Members’ right to protect public health and, in particular, to promote access to medicines for all”.

Such global ‘policy coherence’ at the intersections of trade, health and human rights, which directly influence the access to, and delivery of, medicines, vaccines and diagnostics, is necessary to address the determinants of access and delivery of medicines, vaccines and diagnostics.

The implementation of an integrated approach towards access and delivery at the country level will provide an evidential basis of the key determinants of access and delivery, which should be taken into account in the efforts for policy coherence at the global level. On the basis of ADP’s implementation work at the country level in its focus countries, it may be said that the key determinants of access and delivery relate to the following:

·      factors promoting research and development, and innovation that will ensure the availability of needed and new health technologies.

·      factors related to the affordability and accessibility of the new health technologies.

·      processes for effective introduction and integration of new technologies within the health system for use by target communities.

Efforts to enable such coherence must however, take account of these three inter-linked elements. It is further argued that efforts to align global and national policy coherence must necessarily take account of how these public health objectives can be integrated within international human rights law and trade rules.

Implementing an integrated approach in Tanzania

The particularly adverse impacts of tuberculosis (TB), malaria, HIV and neglected tropical diseases (NTDs) on development outcomes has already resulted in the initiation of new approaches and partnerships to tackle the global deficiencies in research and development, as well as access to treatments.

One instructive example is Tanzania’s efforts to reduce the human and economic burden of TB, malaria and NTDs. While Tanzania has seen significant improvements in health outcomes, including reaching the MDG target related to child mortality, greater progress in other areas is needed. For instance, the annual NTDs incidence of around 5 million cases – in a country of 43 million people – exacts a huge social and economic toll. The annual spending of approximately US$183 million for NTD-related medicines alone also raises the issue of sustainability. To achieve the SDGs, an approach that combines smart policy development and improvement of health delivery systems will be needed. National strategic plans, including the Tanzania Development Vision 2025 and the Health Sector Strategic Plans (HSSP), have identified the need for a sustainable health delivery system as a national development priority. The Health Sector Strategic Plan (HSSP) III (2009-2015) has identified as a challenge, the “affordability of medicines and medical supplies, especially to the poor and vulnerable groups”. Accordingly, the HSSP III identified the need for strategies to ensure access; strengthen control of safety; enhance harmonization and coordination of procurement, stocking and distribution; as well as promote domestic production of pharmaceuticals.

In this context, the ADP is working with country stakeholders to design capacity-building interventions across six pathways towards an integrated approach for access and delivery, as noted above. The six pathways are the key components within the continuum of a health delivery system, and capacity-building efforts are focused on each key component to promote multisectoral decision-making processes to ensure an integrated approach for addressing access to, and delivery of, needed medicines, vaccines and diagnostics in the country.

Thus, in Tanzania, ADP focuses on building capacities for a national reform agenda to develop an enabling policy and legal framework. This framework will guide the implementation towards the policy goals of access and delivery, and addresses and minimizes the conflicts at the intersections of public health with other sectors. The policy and legal framework in Tanzania also operates within a broader context of the African continental and sub-regional initiatives and priorities. The policy focus on promoting local pharmaceutical production for greater access and security of supply is in line with the promotion of African-led solutions to respond to the changing global context of economic crises and shrinking development aid. African leaders have adopted Pharmaceutical Manufacturing Plan for Africa (PMPA) and a model law on medical product regulations that envisions African peoples’ access to essential, quality, safe and effective medical products and technologies, while facilitating the development of a competitive pharmaceutical industry in Africa to ensure self-reliance. These continental frameworks adapted at national and regional economic community (EAC) levels, thus provide strategic and policy guidance to policy-makers in Tanzania, on a range of cross-cutting issues from R&D,[i] intellectual property,[ii] drug regulation[iii] and local pharmaceutical production.[iv]

Secondly, there is a need for countries to identify the key barriers to the effective delivery and use of medicines, vaccines and diagnostics for priority diseases. In this regard, the role of implementation research in health is crucial, in pinpointing the country- and community-specific issues to be addressed. The development of the national agenda for health systems research will contribute to the priority-setting for the research questions and proposals (and the mobilization of funding) in order to address the major impediments, gaps and bottlenecks in the delivery and use of health technologies in the country.

In Tanzania, the “national agenda for health system research for tuberculosis, malaria and neglected tropical diseases”[v] has been spearheaded by the National Institute for Medical Research (NIMR) with the support of ADP through a series of consultations with a broad range of stakeholders. The agenda is in line with the fourth iteration of the National Health Research Priorities, 2015–2018.[vi] Consolidating inputs from the national control programmes for TB and leprosy, malaria control and neglected tropical diseases, scientists and researchers, as well as evidence from studies conducted among different groups, including marginalized and vulnerable populations and community-, district- and national-level stakeholders, the report sets out a list of key implementation research questions for Tanzania. As noted in the report, if the identified research questions are innovatively addressed, the health system shall be strengthened through improved implementation, policies and practice.

With the introduction of new health technologies, there should be corollary surveillance and safety monitoring systems. Hence, the ADP works on developing and building capacities of relevant health personnel. Efforts have focused on strengthening capacity for monitoring and responding to safety issues of newly introduced health technologies. This has been done in collaboration with the Tanzania Food and Drug Administration, including through national level training of appropriate personnel on pharmacovigilance, as well as through active engagement within regional and global pharmacovigilance networks, including collaborations with WHO Collaborating Centres and the WHO EMP Safety and Vigilance Group.

In order to ensure efficient allocation of national resources and improve access to new health technologies, ADP works with the government to develop capacities for priority-setting through the implementation of a health technology assessment (HTA) mechanism, and a national strategy for local production. The focus is on the use of the HTA approach to inform the revision of the National Essential Medicines List. In addition, the Pharmaceutical Services Section (PSS) of the Tanzania Ministry of Health is conducting research on the local and regional market competition of the pharmaceutical sector, to identify competitiveness issues for the pharmaceutical industry at both the national and regional levels, as well as issues related to further expansion capacity, future diversification, and quality of products. The focus is on the East African region, with a view to evaluate capacities, quality, strengths and weaknesses in the region. The findings will inform implementation planning and strategy development of Government of Tanzania’s Pharmaceutical Sector Action Plan 2014–2020, as well as the plan for the roll out of the African Union Pharmaceutical Manufacturing Plan for Africa (PMPA).

Finally, the supply chain and delivery systems are also addressed. As new health technologies come onto the market, more choices are created and additional decisions need to be made across supply chain disciplines. The key steps required within a functional supply chain fall under the areas of planning, procurement and distribution. In Tanzania, efforts have focused on developing training and guidance materials for key actors in the procurement and distribution of medicines – including central-level decision makers (PSS, the Medical Stores Department, Neglected Disease Control Programme, MOHSW) and health professionals from the district, facility and community level (pharmacists and frontline community-based health workers and drug distributors). These guidelines will help to reduce wastage and increase efficiency of the supply chain management of NTD medicines for mass drug administration (MDA).

The strategic integrated approach adopted in Tanzania across the access and delivery value chain is predicated on the assumption that strengthening country’s decision-making process and structures will improve the uptake and sustainable use of health technologies. Building and strengthening processes and structures for effective decision-making ensures sustainable change and impact.

The strength of an integrated approach lies within the inter-linkages between the different pathways, and the implementation of each pathway supports the others. In many ways, the implementation and capacity-building process across each pathway is an illustration of how an implementation research agenda is affected: through the identification and prioritizing of the gaps and/or bottlenecks that can mitigate efforts for access and delivery of medicines, vaccines and diagnostics. The integrated approach thus provides a means of enhancing the capacity for the range of stakeholders, from policy-makers, technical experts and other actors or implementers of various health interventions to be able to identify implementation gaps that limit access and delivery of health interventions and to be able to develop strategies to address them.

In Tanzania, the integrated approach should also ideally lead to the establishment or creation of a platform to institutionalize the linkages between the different actors, within and beyond the health system, so as to create the longitudinal interaction among programmes, agencies and institutions that will help speed up the processes of access and delivery of new health technologies across the country. Furthermore, this will also provide the evidential basis on the key determinants of access and delivery: What are the specific issues and factors that will have impact on the availability, affordability and accessibility of needed medicines, vaccines and diagnostics, as well as those that affect the effective introduction and integration of these technologies within the health system for use by target communities?

This evidential and empirical foundation should provide the basis for efforts to achieve policy coherence at the global level.

Bibliography and References

Global poverty, middle income countries and the future of development aid
http://recom.wider.unu.edu/sites/default/files/Research%20brief%20-%20Global%20poverty%2C%20middle-income%20countries%20and%20the%20future%20of%20development%20aid_0.pdf

COHRED-NEPAD Strengthening Pharmaceutical Innovation in Africa, 2010 (COHRED-NEPAD Pharmaceutical Innovation)

The EAC Regional Intellectual Property Policy on Utilization of Public Health-Related WTO-TRIPS Flexibilities and the Approximation of National Intellectual Property Legislation, 2013

African Medicines Regulatory Harmonization Programme (AMRH). The East African Community Regional PMPA 2012-2016 (EAC RPMPA); the Pharmaceutical Manufacturing Plan of Action, 2007, and Business Plan, 2012.

Setting a national agenda for health systems research for tuberculosis, malaria and
neglected tropical diseases in the United Republic of Tanzania, National Institute of Medical Research (NIMR), 2015
http://adphealth.org/upload/resource/1744_TDR_rev5_230715_FINAL.pdf

Fourth National Health Research Priorities 2013-2018.
http://www.nimr.or.tz/national-health-research-priorities/

MIHIR MANKAD, Save the Children UK

Lead Author: Mihir Mankad
Organization: Save the Children UK
Country: UK

Abstract

There have been very significant improvements in maternal and child health over the last 20 years but many medicines and vaccines still do not exist for health conditions that are common in the poorer parts of the world. There is a desperate need to both develop new health technologies and ensure that they are accessible to those that need them. This is more true for children in low- and middle-income countries (LMICs), who suffer both from a lack of health technologies for conditions that primarily affect these parts of the world and health technologies that are suitable for their age, than any other group.

While the international community has repeatedly attempted to address this problem over the last decade, efforts have mostly been piecemeal and have left unaddressed the structural factors driving the policy incoherence between human rights, international trade, intellectual property, innovation and access to medicines. International human rights and public health goals, however, require that creative and concerted action be taken by all stakeholders – governments, the private sector and donors – to systematically address the lack of health technologies for children and resolve these problems.

Doing so will require a combination of new solutions which are human rights compliant. First, it must ensure an increased and more stable source of public funding to make up for the current absolute deficit in R&D funding for neglected conditions and adaptation of products. Second, it must allow for greater and better coordination of this funding, so that areas of greatest need can be adequately addressed. Third, it must ensure that all R&D ultimately results in access, so therefore must make use of the three key principles - delinkage, open innovation and licensing for access.

Submission

Introduction

There have been very significant improvements in maternal and child health over the last 20 years but many medicines and vaccines still do not exist for health conditions that are common in the poorer parts of the world. Millions people a year die from preventable infectious diseases and other conditions and these numbers do not include the lifelong disability and suffering caused by illnesses gone untreated. There is a desperate need to both develop new health technologies and ensure that they are accessible to those that need them. This is more true for children in low- and middle-income countries (LMICs), who suffer both from a lack of health technologies for conditions that primarily affect these parts of the world and health technologies that are suitable for their age, than any other group.

Currently, there is a failure on the part of the whole global community to represent and protect the needs of the world’s most vulnerable and marginalised people in this area. While the international community has repeatedly attempted to address this problem over the last decade, efforts have mostly been piecemeal and have left unaddressed the structural factors driving the policy incoherence between human rights, international trade, intellectual property, innovation and access to medicines. International human rights and public health goals, however, require that creative and concerted action be taken by all stakeholders – governments, the private sector and donors – to systematically address the lack of health technologies for children and resolve these problems.

Doing so will require a combination of new solutions which are human rights compliant. First, it must ensure an increased and more stable source of public funding to make up for the current absolute deficit in R&D funding for neglected conditions and adaptation of products. Second, it must allow for greater and better coordination of this funding, so that areas of greatest need can be adequately addressed. Third, it must ensure that all R&D ultimately results in access, so therefore must make use of the three key principles - delinkage, open innovation and licensing for access.

This submission will first briefly discuss the human rights obligations incumbent upon governments when it comes to R&D and related private sector responsibilities. It will then describe the core problem of R&D for health technologies for LMICs, including the lack of financing and structural problems with the existing incentive model. It will then examine potential solutions that focus adequate and sustainable financing, improved coordination and design based the three principles listed above.

Human rights and research and development

Governments and the private sector both have responsibilities to address this issue, albeit different ones, under international human rights law. Nearly all of the major international human rights agreements and treaties recognise the right to health, including the Universal Declaration of Human Rights, the International Covenant on Economic, Social and Cultural Rights (ICESCR), the Convention on the Rights of the Child and the WHO Constitution. Access to medicines is a core component of this right, which requires that special attention be paid to vulnerable and marginalised groups, communities, and individuals, including mothers and children. The right to enjoy the benefits of scientific progress and its applications is also widely recognized and found both in article 27 of the Universal Declaration of Human Rights and, in slightly different terms, in article 15 (1)(b) of the International Covenant on Economic, Social and Cultural Rights.

Taken together, these two point to a number of government obligations with regards to R&D of new drugs and access to these medicines:
• As a minimum, governments must ensure that essential medicines and health technologies are available, accessible, acceptable and of good quality;
• Governments, must do all that they can to ensure the development of new medicines and access to those medicines without discrimination;
• Where the private sector is not meeting the demands of the rights, governments must provide greater support for R&D into conditions that affect vulnerable and marginalised groups and develop an enabling environment fostering the conservation, development and diffusion of science and technology;
• Where government resources are limited, the international community has a responsibility to provide support to ensure that the requirements of the right to health are met and;
• Other countries and key stakeholders, including private companies, must also refrain from actions that interfere with another government’s ability to realise the right, such as through expanding intellectual property (IP) protections in free trade or similar agreements.

As stated, governments are obligated by international human rights law to ensure that the rights to the most vulnerable and marginalised are protected and fulfilled. Although international human rights prescribes no specific system through which this is accomplished where the government has ceded responsibility to the private sector and the needs of the most excluded are not met, governments must step in.

This may be accomplished in a number of ways, but there seem to be two primary methods. The first will be through increased used of or modifications of existing laws and policies and creating new ones which meet the governments’ obligation to protect human rights. The second will be through appropriate methods of public support, financial or otherwise, and changes in the overall policy environment, which meet the governments’ obligation to fulfil human rights. In terms of the latter this may mean modifications of IP law to ensure it does not present a barrier to access, the mandatory use of TRIPs flexibilities and other such issues, In terms of the former much will involve potentially mandatory increased public financing for R&D for neglected conditions, international support and cooperation in these areas, changes in regulatory regimes or the creation of new laws that give priority to human rights and R&D of the appropriate kinds over existing IP where it is a barrier to development or access.

The private sector, based on the UN Guiding Principles on Business and Human Rights, bears a responsibility to respect and remedy human rights. This means that businesses should take active steps to avoid infringing rights and remedy violations where they occur. In the case of the R&D this means that companies should endeavour to increase research into and development of medicines, vaccines and other health technologies that will be used by or are necessary to ensure realisation of the rights of vulnerable and marginalised populations, which will generally mean for neglected conditions.

How R&D is meant to work, but fails in for so many people in LMICs

As the Panel knows, developing new products, is a costly and time-intensive process – from identifying the problem, finding potential compounds, testing and trialling products, determining appropriate formulations, manufacturing a product and finally bringing it to market. Over the course of this process many different stakeholders – governments, the private sector, health care workers, academics, patients and others – are involved.

Most early research – determining how biological pathways work or looking at the nature of a particular pathogen – research for which there is not yet any clear commercial application – tends to be publically funded and conducted by public research entities and academic institutions. As basic scientific research progresses towards commercial application, and specifically drug development – bringing the drugs to market, including going through various regulatory processes such as conducting clinical trials – more and more work, and most of the financing, is done by private companies.

Successful production of new medicines and vaccines under this model is predicated on the existence of a market that affords private companies a sufficient return on sizeable financial investment made in the development of a product. Estimates of the costs of R&D of a medicine vary significantly, ranging from civil society estimates of $500m up to the $2.5bn indicated in a study by Tufts University. Exact figures are difficult to determine because there is very limited transparency related to costs and investments in medicines and vaccines. Regardless of the precise figure, which will vary greatly depending on the kind of medicine, drug R&D is clearly costly. More importantly, however, these costs along with projected returns play a key part in decisions about whether to move forward with the development of a drug.

In order to ensure companies can both recoup investment costs and generate profit, under the current global model they are granted a period of market exclusivity in the form of intellectual property rights, specifically patents, by countries. This exclusivity allows innovator companies to be the only producer of the medicine on the market and thereby theoretically able to set the highest price possible. In some countries, factors such as price controls or reimbursement schemes may have an impact on the price, but the point remains the same. The impact of this can be seen, for example, in the pricing of Gilead’s new Hepatitis C treatment, sofosbuvir, was priced at $84,000 for a 12-week course, even though MSF and the Liverpool School of Hygiene and Tropical Medicine reported that the medicine could actually be produced for $100 dollars per course.

In High-Income Countries – where populations are relatively wealthy (or there are functioning medicines reimbursement schemes through insurance or otherwise) and a greater degree of income equality – companies can charge more for their medicines because either the household or some other entity can generally afford higher prices. Being able to pay means both that people will be able to access these medicines, but more importantly for the purposes of this paper, that shifting investment in R&D to medicines for these conditions because significant profits can be generated from doing so or at least more of a profit than for conditions that largely affect the poor.

LMICs are poorer, with greater income inequality and less reimbursement or public support for the purchase of medicines. In these markets, companies have been more focused on selling medicines for the small percentage of people who are able to pay higher prices. This was the model that was being followed with antiretrovirals for HIV until campaigns by human rights activists challenged this.

So for LMIC, the consequence of the existing system is two interrelated and simultaneous problems:

• New medicines and vaccines that are produced are often too expensive for most people, including the most excluded children, to afford. There has been limited uptake of these medicines and vaccines in MICs, where 75% of the world’s poor now live.
• The right medicines and vaccines, based on public health need, particularly in LMICs, are not the medicines and vaccines that are researched and developed.

Shortfalls in financing R&D for neglected conditions

The numbers bear this contention out. In 2014, the private sector spent $534m, 16% of total funding, to neglected conditions R&D. Although this was a $98m increase over the previous year, almost $33m of that increase was funding toward Ebola. Of total private sector funding, multinational companies contributed the lion’s share, about 62%, or $279m, and small and medium pharmaceutical and vaccine businesses contributed $86m or 16% of the total. This stands in stark contrast to the 137 billion spent by the industry on pharmaceutical R&D in 2012.

Public funding currently constitutes the majority of all funding directed towards neglected conditions. In 2014, the public sector (both governments and multilaterals) provided two-thirds (64%) of all investments. The bulk of public R&D funding is directed towards basic research. For example, from 2007 to 2014, nearly half (49%) of all public funding to malaria was allocated to basic research. The US National Institute of Health (NIH) is one of the biggest public funders of R&D. Between 2007 and 2012, it accounted for nearly two-thirds (61%) of global governments funding to R&D.

In recent years, philanthropic support has been increasingly important for R&D into neglected conditions, reproductive health and other conditions that affect women and children in LMICs. In 2014, it constituted 20% ($688m) of total R&D for these conditions. Of this, the Bill and Melinda Gates Foundation made up 78% ($531m) and Wellcome Trust 19% ($128m). Although they are an important source of funding and can provide ad hoc flexible support when needs are identified, philanthropic funders cannot be the primary means of financing a solution to this problem.

As the figures above demonstrate, under the existing model, investment from all sources for R&D into medicines and vaccines that primarily affect the developing world is far too low, both compared to need and as a proportion to all R&D spending.

The way forward: financing plus delinkage, open innovation and licensing for access

Most models for increasing the scope and effectiveness of R&D for these conditions depend on increases in public investment to make up for the lack of market incentives. In order for countries to meet their human rights obligations, they must commit both to increasing public funding for R&D in relevant areas and this should ensure that all products developed from publically funded research carry strong conditions related to ensuring access to medicines.

Save the Children believes what this may mean is that countries agree to the CEWG’s recommendation that there be a global framework convention on heath and innovation housed at WHO, which would both demonstrate commitment to R&D for diseases of LMICs and also provide sustainable sources of financing to back up this commitment. The CEWG has suggested a suite of potential tools to generate additional financing for neglected conditions, including financing through various (direct) and indirect taxes, different international commitments and increased and innovation forms of voluntary contributions from business and consumers and others. To meet their obligations countries must also hold private sector partners to account, particular with respect to affordability of medicines, and especially when they make use of research funded by the public sector or public sector funding to develop products.

As stated, the private sector has a human rights responsibility to demonstrate a greater commitment in this area. The private sector can meet this responsibility, by in part, investing significantly more money, participating in innovative models of R&D for medicines which are needed in LMICs, sharing patented compounds where necessary to further drug development for children and ensuring that price is not a barrier to access. Voluntary action by the private sector may be a first step, but where voluntary action is insufficient more coercive mechanisms should be used. For example, the Brazilian government has proposed an increased tax on pharmaceutical company profits that would be earmarked towards neglected conditions. The CEWG found this to be “particularly attractive”, though the idea has yet to be explored further.

A coordinated global financing and coordination mechanism for health R&D would allow for a number of existing problems to be address if appropriately designed. First, it would ensure an increased and more stable source of public funding to make up for the current absolute deficit in R&D funding for neglected conditions and adaptation of existing products. Second, it would allow for greater and better coordination of such funding, allowing funding to be driven more efficiently towards areas of human rights and public health need. However, this will all only be effective in addressing the problem of access to medicines if it also makes use of the three R&D design features – delinkage, open innovation and licensing for access – that will ensure affordability.
Save the Children’s proposals

Based on this analysis, alongside supporting the CEWG’s recommendation to proceed towards a binding global framework convention on biomedical R&D, Save the Children makes three recommendations.

1. At a minimum a new R&D mechanism for the sustainable development of health technologies needed for the RMNCH continuum of care and other conditions that affect significant numbers of children should be established based on the principles – delinkage, open innovation and licensing for access – described above. Such a mechanism would therefore make use of alternative incentive models that delink R&D investments from the ultimate cost of the medicine, endeavour to allow for the sharing of relevant information across the world, and enable pooling of patents where they exist for the production of new formulations and fixed dose combinations for paediatric use.

2. Ensure that the development of any new health technology within existing systems of R&D require companies commit to developing all necessary paediatric formulations and combinations where there is demonstrable need or paediatric products are currently unavailable on the market.

3. Increase transparency and accountability for products made with public investments. Where public investments have contributed to private drug development, these investments should be made known and publically available. Public investments made into products that ultimately result in private development of health technologies must also be conditioned upon access terms. This may take various forms including conditions on government grants, on the grant of marketing approval or other such points.

Bibliography and References

References are listed in order of use in the submission:

UN Human Rights Council, ‘Access to medicine in the context of the right of everyone to the enjoyment of the highest attainable standard of physical and mental health’ A/HRC/RES/12/24, 2009.

UN Committee on Economic, Social and Cultural Rights, General Comment No. 14: The Right to the Highest Attainable Standard of Health (Art. 12 of the Covenant), 11 August 2000, E/C.12/2000/4.

UN General Assembly, International Covenant on Economic, Social and Cultural Rights, 16 December 1966, United Nations, Treaty Series, vol. 993, p. 3.

UN, UN Guiding Principles on Business and Human Rights, 2012. Available at http://www.ohchr.org/Documents/Publications/GuidingPrinciplesBusinessHR_EN.pdf

Tufts University, Backgrounder: Costs of Drug Development, 2013. Available at http://csdd.tufts.edu/files/uploads/cost_study_backgrounder.pdf.

Public Citizen, Rx R&D Myths: The Case Against the Drug Industry’s R&D “Scare Card”, 2001. Available at http://www.citizen.org/documents/ACFDC.PDF.

Reuters, U.S. lawmakers want Gilead to explain Sovaldi's hefty price, March 2014 Available at http://www.reuters.com/article/2014/03/21/gilead-sovaldi-idUSL2N0MI0UP20140321

MSF, MSF Access Campaign response to Gilead’s deal with generic companies for sofosbuvir and ledipasvir, September 2014. Available at http://www.msfaccess.org/content/msf-access-campaign-response-gilead%E2%80%99s-deal-generic-companies-sofosbuvir-and-ledipasvir

S Flynn, A Hollis & M Palmedo, An Economic Justification for Open Access to Essential Medicine Patents in Developing Countries, 2009, 37 J.L. Med. & Ethics 184.

Policy Cures, Neglected Disease Research and Development: The Ebola Effect, GFinder 2015 annual report, 2015. Available at http://www.policycures.org/downloads/Y8%20GFINDER%20full%20report%20web.pdf

International Federation of Pharmaceutical Manufacturers and Associations, The Pharmaceutical Industry and Global Health: Facts and Figures 2014. 2014. Available at http://www.ifpma.org/fileadmin/content/Publication/2014/IFPMA_-_Facts_And_Figures_2014.pdf

WHO, Research and Development to Meet Health Needs in Developing Countries:
Strengthening global financing and coordination, Report of the Consultative Expert Working Group on Research and Development: Financing and Coordination, WHO, Geneva, 2012.

Fifa Rahman, MALAYSIAN AIDS COUNCIL

Lead Author: Fifa Rahman
Additional Author: Kajal Bhardwaj
Organization: Malaysian AIDS Council
Country: Malaysia

Abstract

The contribution describes concerns with TRIPS+ provisions contained in the TPP, contextualised to Malaysia. The document provides key facts about the Malaysian healthcare system, and refutes the innovation excuse for increased IP protection. It asks the UNSG, to urge governments against ratification of the TPP, and denounce and discourage the adoption of TRIPS+ provisions, among other recommendations.

Submission

‘Maximalist IP on a false premise: the Trans-Pacific Partnership (TPP) and threat to access to medicines in Malaysia’

Introduction
For four years now, the Malaysian AIDS Council has been leading the campaign for access to affordable medicines in regard to the TPP. We have attended four rounds of negotiations as a stakeholder, during which we made presentations to negotiators regarding the ineffectual public health exceptions and the impact of extended exclusivities on Malaysian health. The intellectual property (IP) chapter of the TPP, while less maximalist than it was at the beginning of the negotiation process, incorporates market exclusivity for biologics, patent term adjustments if there is an ‘unreasonable curtailment’ or ‘unreasonable delay’ of registration, patent terms for new indications, and grants corporations rights to sue for unlimited damages if decisions are made to invalidate patents, or other actions taken by the government. Provisions similar to these have been shown to delay access to generic medicines in Guatemala , Canada , Thailand , and Jordan , among others.

Key facts about Malaysia and Malaysian public health
• In 2016, RM4.6 billion (USD$1.04 billion) was allocated for the supply of medicines, consumables, vaccines and reagents to all Government hospitals and clinics. This equates to 1.51% of GDP.
• The median monthly household income in Malaysia is RM4585.00.
• Malaysia relies heavily on generic medicines with data showing that pharmacists recommend generic substitution for 84.7% of all brand name requests of medicines in Malaysia.
• The George Institute study ASEAN Costs in Oncology longitudinal mapping project involving 10,000 cancer patients states about 45% of Malaysian cancer patients suffer from ‘financial catastrophe’ where medical costs exceed 30% of household income 12 months after diagnosis.
• Data from Andrew Hill et al. indicate that Malaysia pays up to 8 times more for the HIV drug lopinavir-ritonavir when compared to countries in the same income bracket, and while the TPP is not responsible for these prices, access to generic version would bring these prices down.

• Malaysia, as a middle-income country, is not included in the Gilead voluntary licence for Sofosbuvir. Sofosbuvir is priced at RM357000 (USD$84,000) for 12 weeks treatment . It has been shown that it treatment with generic versions can be provided at US$171-360 for 12 weeks treatment without genotyping.Given that there are several patents already granted in Malaysia, patients are not able to access the generics.

IP provisions in the TPP
Exclusivity for Test (or other) Data
The TPP contains exclusivity ‘for at least five years from the date of marketing approval of the new pharmaceutical product in the territory of the Party.’ While Malaysia already has 5 years data exclusivity (DE), there are several concerns, notably that Malaysia did not grant DE for all products under its own law. This would change after the TPP. Secondly, while negotiators have assured that data exclusivity, market exclusivity, and the 20-year patent term would run concurrently rather than consecutively, pharmaceutical industry litigation elsewhere have shown that similar provisions have been used consecutively, especially where there is a new indication.

Market Exclusivity for Biologics
Market exclusivity for biologic medicines was first proposed in the U.S. with proposals ranging from 5 to 15 years, with the Obama administration advocating for 7 years. In 2009 a 12-year period was ultimately agreed on. Financial modeling to determine the amount of exclusivity needed to provide a typical pioneer biologic a return on investment was utilised by supporters of the provision. Supporters posit a range of 13 to 16 years as a breakeven period for typical pioneer biologics and cite innovation as the key justification for biologics exclusivity. Lybecker (2014) elaborates: ‘the intellectual property rights protection is of particular importance to biopharmaceutical innovators, given that without these measures innovators would have little incentive to invest in new technologies that suffer from several market failures’.

Senator Orrin Hatch (R-Utah) has been particularly vocal in pushing for biologics exclusivity in the TPP. In a speech at the American Enterprise Institute on 30 January 2015, he stated that he fully expected the TPP to reflect high intellectual property standards as per U.S. law, including twelve years of exclusivity for biologics. Academics have cited value of biologics exports as justification for twelve-year exclusivity in the TPP.

On 5 November 2015, the final texts of the TPP were released, and therein the finalised language for biologics exclusivity, including a loose definition of what constitutes a biologic (‘… at a minimum, a product that is, or alternatively contains, a protein…’) and either 5 or 8 years market exclusivity, depending on whether there is ‘effective market protection’.

From the public health perspective, there have been numerous concerns, including from Nobel prizewinning humanitarian organization Medécins Sans Frontières that it would delay access to lifesaving medications. In addition, there is no definition in the text of what constitutes ‘effective market protection’, and there is a fear that this could be decided later via the investor-state dispute settlement system (ISDS) where a pro-investor international tribunal would decide. Additionally, this would provide a window for Congress during the TPP certification process to state that Malaysia does not have ‘effective market protection’, and thus have to agree to the longer term of 8 years market exclusivity for biologics. Studies are gradually emerging on market exclusivity.

Wang et al. (2015), in a study on market exclusivity in the U.S. found that ‘a uniform increase in the minimum period of regulatory exclusivity would disproportionately benefit drugs that are likely to be of less clinical importance’. At present, it is unclear whether Malaysian implementing agencies had access to these data and/or whether they had similar concerns.

Given that the TPP is considered to be the new norm in trade agreements, that this is the first time that biologics market exclusivity has been explicitly included in a US free trade agreement, and that we know via Special 301 submissions that the Pharmaceutical Research and Manufacturers of America (PhRMA) have been actively campaigning for biologics exclusivity , there is a real need for the UNSG High-Level Panel on Access to Medicines urgently consider the impacts on access to biologics in the future, and caution against its inclusion in future trade agreements.

Debunking the Innovation argument as a false premise

There are a number of studies that debunk the innovation argument of IP maximalists. Ho (2015) points out that manufacturers are confronted with an ‘innovation crisis’ and increasingly are patenting minor modifications of existing products. In addition, studies have found that some innovation is actually hampered by stronger intellectual property or that IP does not stimulate innovation. By way of illustration, Italy increased intellectual property rights and this has had little or no impact in its rate of invention. A second example is the European Union, which is the most protected pharmaceutical market in the world, but has become less innovative than other regions. In August 2015, it was noted in The Economist that ‘When changes in the rate of innovation do occur, they seem to have little to do with patents… Patents were a result of successful innovation; its cause was competition.’

Recommendations to the UNSG High-Level Panel on Access to Medicines

• To urge nations against ratification of the TPP
• To urge the US not to seek stronger IP protection during the free trade agreement certification process, including in the TPP.
• To denounce the advancement of maximalist IP through trade as based on a false premise – that IP is necessary to promote innovation when the evidence is to the contrary.
• To commence an in-depth analysis and restructuring of current R&D models.
• To monitor closely the PhRMA-driven biologics exclusivity campaign in trade.
• To denounce and discourage adoption of TRIPS+ provisions generally.

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