The global patent system

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The global patent system access to essential
drugs

• Prof. dr. Sigrid Sterckx
• Ghent University
• Free University of Brussels

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1. Introduction
2. The magnitude of the problem
3. Lack of access to drugs some facts
4. Underlying causes
5. Potential solutions
6. The role of the patent system

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I Introduction/1

• Progress in health care, but only for a minority
• Substantial part of health care expenses goes to
  drugs
• Concept essential drugs (WHO 1975, 1999)

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I Introduction/2

• Shortage of drugs and lack of or insufficient
  access to drugs
• Wrong usage
• Unacceptable quality

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II Magnitude of the problem

• More than 1/3 of the world population has no
  access to essential drugs
• More than half of this group in poorest countries
  of Africa and Asia
• 18 mio human beings die each year from diseases
  that can be cured, i.e. 50.000 avoidable deaths
  per day, i.e. 1/3 of all human deaths!

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III Some facts/1

• Hardly any drugs are developed against tropical
  diseases
• Cf. study Pécoul et al. (1999)
• Cf. Survey by Harvard School of Public Health and
  DND group (2001)
• Cf. survey PhRMA (2001)
• Cf. Richards in British Medical Journal 2006
  between 1975 and 2004, ONLY 21 of the 1556
  marketed new chemical entities were targeted at
  tropical diseases

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III Some facts/2

• Existing drugs problems of toxicity, out-dated,
  not adapted, resistance
• E.g sleeping sickness (melarsoprol)
• Production is constantly threatened
• E.g. Sleeping sickness (eflornithine)

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III Some facts/3

• Quality problems
• The existing drugs are often not accessible (E.g.
  too costly, sometimes due to patent protection)

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IV Underlying causes/1

• Market failure
• Less than 15 of the world population represents
  87 of the 602 billion global pharmaceutical
  market
• US 47 Europe 30 Japan 10.7
• Asia (excluding Japan) Australia Africa
  8.2
• Latin America 4,2
• NB Africa 1
• (Source IMS)

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IV Underlying causes/2

• Focus on me too and lifestyle products
• lifestyle cf. PhRMA (2000) more research
  focussed on baldness than on all tropical
  diseases together
• me too cf. FDA last 6 years 20 priority
  drugs vs. 80 standard drugs

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IV Underlying causes/3

• Approval FDA 1989-2000 1035
• 2/3 modified versions of or identical to already
  existing drugs
• 1/3 new chemical entities (of these, less than
  half significant improvement)
• Tendency towards larger share of standard drugs

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IV Underlying causes/4

• RD costs myths and realities
• 1991 study Di Masi et al. 231 mio.
• 2000 473 mio.
• 2002 801 mio.!!
• 2003 868 mio.!!!!
• Methodological problems (e.g. assessment costs
  of clinical trials, opportunity cost,
  representativeness)

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IV Underlying causes/5

• Compare
• GATB (2001) new TB drug can be developed with
  115-240 mio. (including cost of failure)
• Public Citizen (2000) 240 mio.

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IV Underlying causes/6

• Worldwide pharmaceutical RD investments are
  immense
• 2005 51.3 billion, of which more than half
  coming from the private sector in the US alone!
  (source PhRMA)
• Shift public private sector influence on
  research priorities

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IV Underlying causes/7

• Profits increase even faster than RD
  investments
• 2005 pharmaceutical industry 5th in the Fortune
  500 list of the 50 most profitable industries
• 2005 94 blockbuster products
• E.g. Lipitor 12.9 billion sales in 2005
• Revenues Profits?? 15,7 (Fortune 500)
• RD?? 8.5 of global sales (see PhRMA
  global industry investment in RD 51.3
  billion)
• Marketing admin?? More than 1/3

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IV Underlying causes/8

• Comparison with generic drugs
• Usually at least half cheaper
• E.g. South Africa tritherapy for HIV/AIDS with
  generic products 4 times cheaper
• E.g. US generic products on average 3,4 times
  cheaper
• However obstruction by brand manufacturers
  (pressure on various countries to implement
  TRIPs-plus provisions mainly via PhRMA lobbying
  of the USTR)

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IV Underlying causes/8

• Comparison with generic drugs
• Attempts to force countries to introduce data
  exclusivity provisions that go beyond TRIPs
  requirements
• ? either prohibits generic competition or
• ? requires manufacturers of generics to repeat
  clinical trials, which is unethical

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IV Underlying causes/9

• Comparison with generic drugs
• Intense generic competition has helped prices
  for first-line AIDS drugs to fall by 99 from
  10,000 to roughly 130 per patient per year
  since 2000
• Prices for second-line drugs (which patients
  need as resistance develops naturally) remain
  high
• E.g. South Africa according to MSF, treating
  58 patients on second-line drugs costs the same
  as treating over 550 patients on first-line! 
  Newer HIV medicines that are recommended by WHO
  can cost up to 50 times more (if they are
  available at all!)

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IV Underlying causes/10

• Public policy fails
• Ultimate responsibility for garanteeing the
  satisfaction of peoples basic needs lies with
  governments -- they dont live up to their
  responsibilities

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V Potential solutions/1

• Push mechanisms aim to decrease RD risk
• E.g. encouragement of development of orphan
  drugs
• E.g. tax benefits
• E.g. patents
• Pull mechanisms try to create a paying market
• E.g. Global Fund (set up by the UN in 2002)

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V Potential solutions/2

• Existing programs (usually PPPs)
• Accelerating Access initiative
• TDR
• GATB
• GAVI
• IAVI
• IVI
• MMV
• Price reductions

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VI The role of patents/1

• Why patents?
• Natural rights
• Distributive justice
• Consequentialist arguments
• Incentive-to-disclose
• Incentive-to-invent-and-innovate
• Critiques

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VI The role of patents/2

• Rights granted by a patent
• Product patents
• Process patents

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VI The role of patents/5

• Patents in the real world The WTO-TRIPs
  Agreement
• IPP is not a trade issue the WTO should be
  about lowering trade barriers and tackling market
  access problems. The inclusion of IPP has turned
  the organization into a royalty collection
  agency.
• (Jagdish Bhagwati, FT, 16/9/2002)

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VI The role of patents/6

• History of the WTO-TRIPs Agreement
• Attempts to revise the Paris Convention -
  conflicting goals
• Forum shift WIPO-GATT
• 1986-1994 GATT Urugay Round
• 1994 TRIPs significant expansion of the
  concept of patentability

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VI The role of patents/7

• Patenting in developing countries pre TRIPS
• Less protection and enforcement
• Aiming to stimulate local industries
• e.g. usually only process patents in the field
  of drugs
• e.g. compulsory licensing

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VI The role of patents/8

• Arguments for a quasi-worldwide strengthening of
  patents
• The higher the protection of intellectual
  property rights, the more I think it benefits
  developing countries, who thereby then attract
  the transfer of technology, investment, and
  creative endeavor. And, of course, the more you
  protect intellectual property, those established
  firms are willing to pour more into research and
  development to try to address mankinds problems,
  whether they be disease or constructive building
  of agricultural crops or what have you, all for
  the betterment of peoples wherever they may be
  located.
• (Carla Hills, USTR Bush sr.)

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VI The role of patents/9

• Applied to case of drugs
• More local RD of drugs??
• More transfer of technology??
• More foreign investment in the pharmaceutical
  sector??

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VI The role of patents/11

• Doha Declaration
• 1 We recognize the gravity of the public health
  problems afflicting many developing and
  least-developed countries, especially those
  resulting from HIV/AIDS, tuberculosis, malaria
  and other epidemics.
• 2 We stress the need for the WTO Agreement on
  Trade-Related Aspects of Intellectual Property
  Rights to be part of the wider national and
  international action to address these problems.

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VI The role of patents/12

• Doha Declaration
• 3 We recognize that intellectual property
  protection is important for the development of
  new medicines. We also recognize the concerns
  about its effects on prices.
• 4 We agree that the TRIPS Agreement does not and
  should not prevent Members from taking measures
  to protect public health. Accordingly, 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 medicines for all

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VI The role of patents/13

• Doha Declaration
• 5 we recognize that the flexibilities in
  the Agreement include
• Each Member has the right to grant compulsory
  licenses and the freedom to determine the grounds
  upon which such licenses are granted.
• Each Member has the right to determine what
  constitutes a national emergency public health
  crises, inclusing those relating to HIV/AIDS,
  tuberculosis, malaria and other epidemics, can
  represent a national emergency
• each Member is free to establish its own
  regime for the exhaustion of intellectual
  property rights

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VI The role of patents/14

• Doha Declaration
• 6 We recognize that WTO Members with
  insufficient or no manufacturing capacities in
  the pharmaceutical sector could face difficulties
  in making effective use of compulsory licensing
  under the TRIPS Agreement. We instruct the
  Council for TRIPS to find an expeditious solution
  to this problem and to report to the General
  Council before the end of 2002.
• Cf. art.31(f) TRIPs compulsory licences to be
  used predominantly to provide the domestic market
  
• ? what about export?? ? problem for countries
  with insufficient manufacturing capacity

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VI The role of patents/15

• Amendment of TRIPs
• August 30, 2003 agreement on the implementation
  of para 6 of the Doha Declaration was adopted by
  the WTO General Council
• a temporary waiver from the obligation laid
  down in art. 31(f) TRIPs
• This agreement was made permanent on 6 December
  2006

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VI The role of patents/16

• Amendment of TRIPs
• allows countries producing patented
  pharmaceutical products under compulsory licence
  to export those products to eligible importing
  countries, provided that numerous conditions are
  met
• BUT as those conditions are particularly onerous,
  the agreement can hardly be called an
  expeditious solution
• So far, not a single country has used the waiver!!

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VI The role of patents/17

• Médecins Sans Frontières
• To date there is no experience using the
  mechanism not one patient has benefited from
  its use despite the fact that newer medicines,
  such as second-line AIDS drugs, are priced out of
  reach of poor patients. Delaying the amendment
  would have been a far better option, as it would
  have ensured the possibility of testing and
  improving the mechanism in practice. The
  amendment has made permanent a burdensome
  drug-by-drug, country-by-country decision-making
  process, which does not take into account the
  fact that economies of scale are needed to
  attract interest from manufacturers of medicines.
• Ellen 't Hoen, Director of Policy Advocacy for
  the MSF Access to Essential Medicines Campaign
  Since 2003 we have tried to place drug orders
  under the August 30 decision. But these
  attempts have not yet been successful.
• The pharmaceutical industry has welcomed the
  amendment.

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VI The role of patents/17

• The European Generics Association has stated that
  they cannot use a procedure as constraining and
  as legally risky as this procedure hence they
  will not be able to export generic medicines to
  poor countries as planned (position paper March
  2005)
• The pharmaceutical industry has welcomed the
  amendment