The global politics of pharmaceutical monopoly power
Drug patents, access, innovation and the application of the WTO Doha Declaration on TRIPS and Public Health
Ellen F. M. ‘t Hoen, LL.M.
AMB Diemen 2009
(ISBN 97890 79700 06 6, xx + 136 pp., illustrated, paperback, € 35.-)
In The Global Politics of Pharmaceutical Monopoly Power,Ellen ’t Hoen explains how the new global rules for pharmaceutical patenting are affecting access to medicines in the developing world. The book gives an account of the current debates on intellectual property, access to medicines and medical innovation, and provides historical context that explains how the current system emerged.
’t Hoen assesses the sometimes courageous, sometimes inexcusable measures the international community and governments have taken in response to the high prices of medicines. She explains not only the events that led to dramatically improved access to AIDS treatment in developing countries, an issue that has long been in the media spotlight, but also considers how the system affects access to all new medicines. Her book supports major policy changes in the management of pharmaceutical patents and the way medical innovation is financed in order to protect public health and, in particular, promote access to essential medicines for all.
Ellen F.M. ’t Hoen is a lawyer and an expert in intellectual property and medicines policy. From 1999 until 2009 she was Director of Policy and Advocacy of the Campaign for Access to Essential Medicines of Médecins sans Frontières (MSF). She is a research fellow at the IS HIV/AIDS Academy of the University of Amsterdam.
’‘Ellen ‘t Hoen is one of the greatest authorities on the role of intellectual property in access to medicines, and here she provides an insider’s account of the history and current state of the area. This invaluable source book of the facts behind the political rhetoric will be essential and inspiring reading for every student of the subject.”
Sir John Sulston, 2002 Nobel Prize for Physiology or Medicine
The author has made an on-line version of this work available under a Creative Commons Attribution-Noncommercial-Share Alike 3.0 license. It can be accessed at www.msfaccess.org
or requested at firstname.lastname@example.org
Table of Contents
List of abbreviations and acronyms
Timeline of events
2. Key IP-related issues in access to new essential medicines
3. History of the debate on intellectual property protection and pharmaceuticals
4. The Doha Declaration on TRIPS and Public Health
5. Practical implementation of the Doha Declaration on TRIPS and Public Health
6. Attempts to limit the scope and use of the Doha Declaration
7. Rationale for the pharmaceutical patent system
8. Conclusions and recommendations
- Annex 1: Declaration on the TRIPS Agreement and Public Health
- Annex 2: Selected Articles from TRIPS
- Annex 3: 2005 Indian Patents (Amendment) Act, Section 3(d)
- Annex 4: 2003 WTO ‘August 30th’ Decision
- Annex 5: Negotiating history of the ‘August 30th Decision’
The Global Politics of Pharmaceutical Monopoly Power
Introduction to access to medicines & the Doha Declaration The magnitude of the AIDS crisis has drawn attention to the fact that millions of people in the developing world do not have access to the medicines they need to treat disease or alleviate suffering. The high cost of AIDS medicines has focused attention on the relationship between patent protection and high drug prices. The difficulties developing countries experience in paying for new essential medicines has raised concerns about the effects of the 1994 World Trade Organization (WTO) Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), which mandates global minimum standards for the protection of intellectual property (IP).
Most significantly, the TRIPS Agreement harmonized patent terms for a minimum of 20 years and mandated the granting of patents in all fields of technology; this requirement made it no longer possible to exclude medicines and food from patenting. The full implications of the TRIPS Agreement for health are just beginning to emerge, but will only become fully apparent in the years to come. All new health products, including drugs, vaccines and diagnostics, are likely to be affected by the new TRIPS-based patent regime.
The Fourth WTO Ministerial Conference, held in 2001 in Doha, Qatar, responded to these concerns by adopting the Declaration on TRIPS and Public Health. The Doha Declaration, as it is widely known, affirmed the sovereign right of governments to take measures to protect public health, including the use of compulsory licensing and parallel importation. It also allowed least developed countries (LDCs) not to grant or enforce pharmaceutical product patents until at least 2016. These measures have become known as the ‘TRIPS flexibilities.’
A key issue that remained unresolved in Doha was how to ensure that products manufactured under a compulsory license could be exported to countries without domestic production capacity. It took two years of difficult negotiations at the WTO to arrive at the ‘August 30th’ decision, which established a cumbersome process to allow such export (See Section 4.5); to date, it has been used by only one country. The Doha Declaration also did not address the as-yet-unfulfilled promises of increased R&D in exchange for higher levels of IP protection, an expectation that was part of the bargain when countries were negotiating the TRIPS Agreement.
Nevertheless, the Doha Declaration is one of the most significant developments of the last decade in trade and health. It signalled a sea change in thinking about patents and medicines, and is at the root of a cascade of activities aimed at reformulating IP protection as a social policy tool for the benefit of society as a whole, rather than a mechanism to protect only limited commercial interests.
Implementation of the Doha Declaration
The Doha Declaration has had an important impact on national and international policies. Between 2001 and end 2007, 52 developing and least-developed countries have issued post-Doha compulsory licenses for production or import of generic versions of patented medicines, given effect to government use provisions, and/or implemented the non-enforcement of patents. Many countries have also used the flexibilities as leverage in price negotiations with patent-holding pharmaceutical companies.
The use of TRIPS flexibilities has been applied primarily to AIDS-related drugs, particularly antiretrovirals (ARVs). However, Thailand has recently issued government use orders for treatments for cardiovascular disease and cancers. The Thai example is important because chronic (non-communicable or Type I) diseases account for half of the disease burden in the developing world, and is rapidly increasing. The World Bank estimates that by 2015, chronic diseases will be the leading cause of death in the developing world (Adeyi et al. 2007). These diseases may not mobilize advocates and campaigns for access to medicines in the same way as HIV/AIDS. Medicines to treat chronic diseases exist but many are far beyond the means of developing country governments and populations.
In many cases, countries were able to use the TRIPS flexibilities to access lower-priced generic drugs because these drugs could still be produced in countries such as India where product patent protection was not introduced until 2005. However, as pharmaceutical product patents start to be granted in producing countries, this situation will change. The patent law in India, which has long served as the ‘pharmacy of the developing world’, is particularly influential. The Doha Declaration and the general awareness of the need for more health-sensitive patent policies has enabled India to implement a patent law containing a number of very significant safeguards, including: strict patentability criteria to limit the number of patented products, automatic compulsory licensing for generic drugs brought to market between 1995 and 2005, and the possibility for anyone to oppose the granting of a patent. While this law was challenged – most significantly by Novartis after it was denied a patent on its cancer drug imatinib mesylate – thus far, it has been upheld and has set an important example for other countries wishing to build more flexibilities into their national patent laws.
Nevertheless, the future supply of generics from India will not be easy. In principle, India could make use of the August 30th mechanism to allow its industry to continue to produce and export generic versions of medicines that do become patented. However, since this authorization can only be done drug order by drug order, and only upon request by another country, it is highly unlikely that this system will provide sufficient economic incentive to keep the generic medicines sector in business. Rather, it is to be expected that the Indian generic medicines sector will shift its business orientation away from supplying new medicines to the developing world, and towards the export of off-patent generics to more affluent markets. Trends in that direction are already visible (Sampath 2005).
Reactions to Implementation of the Doha Flexibilities
There is no denying that the pharmaceutical industry has responded harshly to the Doha Declaration and to some uses of compulsory licensing.
Developing countries that make use of the flexibilities tend to receive much stricter scrutiny than past compulsory licensing practices by Western European countries, Canada and the US.
The reaction has been particularly harsh when TRIPS flexibilities are used in countries with emerging economies. The growth opportunities for the industry lie in these emerging markets, since sales in Western markets are stagnating, partly due to saturation and stagnating innovation (PricewaterhouseCoopers 2007). In addition, TRIPS-plus provisions in free trade agreements, trade retaliation and political pressures all have seriously impeded the full use of the Doha Declaration.
However, in contrast to the past, these trade and political pressures no longer remain unseen or unheard. The change in international thinking about IP, coupled with legal opportunities in developing countries, enabled civil society groups and individuals to challenge weak patents and to successfully campaign for policy changes to blunt the sharpest edges of the new global IP regime.
However, the developments over the last 7 years do not take away from the fact that the TRIPS Agreement, which forced countries to give up the diversity and flexibility in IP law that had existed before, is highly detrimental to access to medicines. While the Doha Declaration can offer relief in dealing with access problems and high drug prices, full implementation is still far from a reality. Over time, the effectiveness of compulsory licensing will wear off unless a more satisfactory solution is found to encourage competition, and in particular, to ease countries’ ability to export medicines produced under a compulsory license (MSF 2006).
Towards Access and Innovation
While the Doha Declaration was important for drawing attention to and offering policy options for the access problems related to IP, until recently there has been little attention to the question of innovation. Many of the pro-access measures described in this book resulted from an ad hoc case-by-case approach that was often highly dependent on an active civil society. A sustainable policy that tackles the fundamental problem of a monopoly-based innovation and access system is still far away.
The current pharmaceutical innovation system largely depends on patent protection for financing and priority-setting. Patent protection in the pharmaceutical field has increased over the last 20 years, but the rate of innovation has fallen while the number of ‘me-too drugs’ of little or no therapeutic gain has increased. This global trend in R&D has had a disproportionately heavy impact on the needs of people in developing countries.
The voices calling for a reassessment of the current R&D incentive system are growing stronger. Recent studies have demonstrated the drawbacks of relying on patents as the main financing mechanism for innovation. Most notable is the 2006 report of the WHO Commission on Intellectual Property Rights, Innovation and Public Health (CIPIH). As a result, international talks have commenced to examine alternative models for innovation and financing of essential health R&D under the auspices of the WHO Intergovernmental Working Group on Public Health, Innovation and Intellectual Property (IGWG).
In May 2008, the IGWG concluded its work with the World Health Assembly’s (WHA) adoption of the Global Strategy and Plan of Action on Public Health Innovation and Intellectual Property (WHA Resolution 61.21).
Conclusions & Recommendations
A policy agenda for access and innovation is sorely needed and should address both immediate steps to be taken, as well as tackle the fundamental question of how to create incentives for R&D that do not create access barriers.
Ensuring lower prices for medicines and other health care products requires the full implementation and use of the provisions of the Doha Declaration. Furthermore, the WTO should extend the 2016 deadline for LDCs to comply with obligations in the TRIPS Agreement to provide pharmaceutical product patents and protect undisclosed test data; it should also review the August 30th decision on production for export under a compulsory license. Finally, the international community, including patent-holding and generic pharmaceutical companies, should consider supporting patent pools as a tool for improving the management of IP for access and innovation.
In the longer term, medical research should be targeted in the direction of greatest need. Some alternatives currently being tested and/or debated include: a not-for-profit drug development model, prize funds that reward innovation based on health impact; and an R&D treaty that focuses on equitable contributions to the cost of R&D through multiple means – not exclusively through the granting of patent monopoly rights.
Since globalisation accounts for a major part of the problem of high drug prices in the developing world, perhaps the solution will also be found at the global level, in a new agreement on sharing the costs and benefits of medical R&D for the sake of humankind