1. The global patent system & access to essential drugs Prof. dr. Sigrid Sterckx Ghent University Free University of Brussels

2. I. Introduction II. The magnitude of the problem III. Lack of access to drugs: some facts IV. Underlying causes V. Potential solutions VI. The role of the patent system

3. IIntroduction/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)

4. IIntroduction/2 Shortage of drugs and lack of or insufficient access to drugs Wrong usage Unacceptable quality

5. IIMagnitude 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!

6. IIISome facts/1 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

7. IIISome facts/2 2) Existing drugs: problems of toxicity, out- dated, not adapted, resistance  E.g: sleeping sickness (melarsoprol) 3) Production is constantly threatened  E.g. Sleeping sickness (eflornithine)

8. IIISome facts/3 4) Quality problems 5) The existing drugs are often not accessible (E.g. too costly, sometimes due to patent protection)

9. IVUnderlying causes/1 1) Market failure a) 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)

10. IVUnderlying causes/2 b) 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’

11. IVUnderlying 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

12. IVUnderlying causes/4 c) R&D 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)

13. Compare: GATB (2001): new TB drug can be developed with $115-240 mio. (including cost of failure) Public Citizen (2000): $240 mio. IVUnderlying causes/5

14. IVUnderlying causes/6 Worldwide pharmaceutical R&D 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

15. IVUnderlying causes/7 Profits: increase even faster than R&D 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) R&D?? 8.5% of global sales (see PhRMA: global industry investment in R&D = $51.3 billion) Marketing & admin?? More than 1/3

16. IVUnderlying causes/8 d) 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)

17. IVUnderlying 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

18. IVUnderlying 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!)

19. IVUnderlying causes/10 2) Public policy fails Ultimate responsibility for garanteeing the satisfaction of peoples’ basic needs lies with governments -- they don’t live up to their responsibilities

20. VPotential solutions/1 ‘Push’ mechanisms: aim to decrease R&D 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)

21. VPotential solutions/2 Existing programs (usually PPPs): Accelerating Access initiative Accelerating Access initiative TDR TDR GATB GATB GAVI GAVI IAVI IAVI IVI IVI MMV MMV Price reductions

22. VIThe role of patents/1 Why patents?  Natural rights  Distributive justice  Consequentialist arguments Incentive-to-disclose Incentive-to-disclose Incentive-to-invent-and-innovate Incentive-to-invent-and-innovateCritiques

23. VIThe role of patents/2 Rights granted by a patent Product patents Process patents

24. VIThe 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)

25. VIThe 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

26. VIThe 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

27. VIThe role of patents/8 Arguments for a quasi-worldwide strengthening of patents: “[T]he 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 mankind’s 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.)

28. VIThe role of patents/9 Applied to case of drugs: More local R&D of drugs?? More transfer of technology?? More foreign investment in the pharmaceutical sector??

29. VIThe 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.

30. VIThe 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 …

31. VIThe 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]

32. VIThe 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

33. VIThe 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 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 This agreement was made permanent on 6 December 2006

34. VIThe 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 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” 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!! So far, not a single country has used the waiver!!

35. VIThe role of patents/17 Médecins Sans Frontières: 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. 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. The pharmaceutical industry has welcomed the amendment.

36. VIThe 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 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 The pharmaceutical industry has welcomed the amendment