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

The global patent system The global patent system &&

access to essential drugsaccess to essential drugs

Prof. dr. Sigrid SterckxProf. dr. Sigrid Sterckx

Ghent UniversityGhent UniversityFree University of BrusselsFree University of Brussels

I.I. IntroductionIntroductionII.II. The magnitude of the problemThe magnitude of the problemIII.III. Lack of access to drugs: some Lack of access to drugs: some

factsfactsIV.IV. Underlying causesUnderlying causesV.V. Potential solutionsPotential solutionsVI.VI. The role of the patent systemThe role of the patent system

II Introduction/1Introduction/1

Progress in health care, but only for a Progress in health care, but only for a minorityminority

Substantial part of health care Substantial part of health care expenses goes to drugsexpenses goes to drugs

Concept ‘essential drugs’ (WHO 1975, Concept ‘essential drugs’ (WHO 1975, 1999)1999)

II Introduction/2Introduction/2

Shortage of drugs Shortage of drugs andand lack of or lack of or insufficient access to drugsinsufficient access to drugs

Wrong usageWrong usage

Unacceptable qualityUnacceptable quality

IIII Magnitude of the Magnitude of the problemproblem

More than 1/3 of the world population has More than 1/3 of the world population has nono access to essential drugs access to essential drugs

More than half of this group in poorest More than half of this group in poorest countries of Africa and Asiacountries of Africa and Asia

18 mio human beings die each year from 18 mio human beings die each year from diseases that can be cured, i.e. 50.000 diseases that can be cured, i.e. 50.000 avoidableavoidable deaths per day, i.e. 1/3 of all deaths per day, i.e. 1/3 of all human deaths!human deaths!

IIIIII Some facts/1Some facts/1

1)1) Hardly any drugs are developed Hardly any drugs are developed against tropical diseasesagainst tropical diseases

Cf. study Pécoul et al. (1999)Cf. study Pécoul et al. (1999) Cf. Survey by Harvard School of Public Cf. Survey by Harvard School of Public

Health and DND group (2001)Health and DND group (2001) Cf. survey PhRMA (2001)Cf. survey PhRMA (2001) Cf. Richards in British Medical Journal Cf. Richards in British Medical Journal

2006: between 1975 and 2004, ONLY 2006: between 1975 and 2004, ONLY 21 of the 1556 marketed new chemical 21 of the 1556 marketed new chemical entities were targeted at tropical entities were targeted at tropical diseasesdiseases


2)2) Existing drugs: problems of toxicity, Existing drugs: problems of toxicity, out-dated, not adapted, resistanceout-dated, not adapted, resistance

E.g: sleeping sickness (melarsoprol)E.g: sleeping sickness (melarsoprol)

3)3) Production is constantly threatenedProduction is constantly threatened E.g. Sleeping sickness (eflornithine)E.g. Sleeping sickness (eflornithine)


4)4) Quality problemsQuality problems

5)5) The existing drugs are often The existing drugs are often notnot accessibleaccessible (E.g. too costly, (E.g. too costly, sometimes due to patent sometimes due to patent protection)protection)

IVIV Underlying causes/1Underlying causes/1

1)1) Market failureMarket failure

a)a) Less than 15%Less than 15% of the world population of the world population represents represents 87%87% of the $602 billion global of the $602 billion global pharmaceutical marketpharmaceutical marketUS: 47% + Europe: 30% + Japan: 10.7% US: 47% + Europe: 30% + Japan: 10.7% Asia (excluding Japan) & Australia & Asia (excluding Japan) & Australia & Africa: Africa: 8.2% 8.2% Latin America: 4,2% Latin America: 4,2% NB Africa: 1% NB Africa: 1%

(Source: IMS)(Source: IMS)


b)b) Focus on ‘me too’ and ‘lifestyle’ Focus on ‘me too’ and ‘lifestyle’ productsproducts

‘‘lifestyle’: cf. PhRMA (2000) – more lifestyle’: cf. PhRMA (2000) – more research focussed on baldness than on research focussed on baldness than on all tropical diseases togetherall tropical diseases together

‘‘me too’: cf. FDA: last 6 years: 20% me too’: cf. FDA: last 6 years: 20% ‘priority drugs’ vs. 80% ‘standard drugs’‘priority drugs’ vs. 80% ‘standard drugs’


Approval FDA 1989-2000: 1035:Approval FDA 1989-2000: 1035:

2/3 modified versions of or identical 2/3 modified versions of or identical to already existing drugsto already existing drugs

1/3 ‘new chemical entities’ (of these, 1/3 ‘new chemical entities’ (of these, less than half significant less than half significant improvement)improvement)

Tendency towards larger share of Tendency towards larger share of standard drugsstandard drugs


c)c) R&D costs: myths and realitiesR&D costs: myths and realities

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

Compare:Compare:

GATB (2001): new TB drug can be GATB (2001): new TB drug can be developed with $115-240 mio. developed with $115-240 mio. (including cost of failure)(including cost of failure)

Public Citizen (2000): $240 mio.Public Citizen (2000): $240 mio.



Worldwide pharmaceutical Worldwide pharmaceutical R&D R&D investmentsinvestments are immense: are immense:

2005: $51.3 billion, of which more 2005: $51.3 billion, of which more than half coming from the private than half coming from the private sector in the US alone! sector in the US alone! (source: PhRMA)(source: PhRMA)

Shift public – private sector: Shift public – private sector: influence on research influence on research prioritiespriorities


ProfitsProfits: increase even faster than R&D : increase even faster than R&D investmentsinvestments

2005: pharmaceutical industry 5th in the Fortune 2005: pharmaceutical industry 5th in the Fortune 500 list of the 50 most profitable industries500 list of the 50 most profitable industries

2005: 94 blockbuster products2005: 94 blockbuster productsE.g. Lipitor: $12.9 billion sales in 2005E.g. Lipitor: $12.9 billion sales in 2005

Revenues: Revenues: Profits?? 15,7% (Fortune 500) Profits?? 15,7% (Fortune 500) R&D?? 8.5% of global sales (see R&D?? 8.5% of global sales (see

PhRMA: PhRMA: global industry global industry investment in R&D = investment in R&D = $51.3 billion)$51.3 billion)

Marketing & admin?? More than 1/3Marketing & admin?? More than 1/3


d)d) Comparison with generic drugsComparison with generic drugs

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


Comparison with generic drugsComparison with generic drugs

Attempts to force countries to Attempts to force countries to introduce data exclusivity provisions introduce data exclusivity provisions that go beyond TRIPs requirementsthat go beyond TRIPs requirements

→ → either prohibits generic competition either prohibits generic competition oror

→ → requires manufacturers of generics requires manufacturers of generics to repeat clinical trials, which is to repeat clinical trials, which is unethicalunethical


Comparison with generic drugsComparison 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 2000Prices 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!)


2)2) Public policy failsPublic policy fails

Ultimate responsibility for garanteeing Ultimate responsibility for garanteeing the satisfaction of peoples’ basic needs the satisfaction of peoples’ basic needs lies with governments -- they don’t live lies with governments -- they don’t live up to their responsibilitiesup to their responsibilities

VV Potential solutions/1Potential solutions/1

‘‘Push’ mechanismsPush’ mechanisms: aim to decrease R&D risk: aim to decrease R&D risk

E.g. encouragement of development of E.g. encouragement of development of ‘orphan drugs’‘orphan drugs’

E.g. tax benefitsE.g. tax benefits

E.g. patentsE.g. patents

‘‘Pull’ mechanismsPull’ mechanisms: try to create a paying market: try to create a paying market

E.g. E.g. Global Fund Global Fund (set up by the UN in 2002)(set up by the UN in 2002)

VV Potential solutions/2Potential solutions/2

Existing programs (usually PPPs):Existing programs (usually PPPs):• Accelerating Access initiativeAccelerating Access initiative• TDRTDR• GATBGATB• GAVIGAVI• IAVIIAVI• IVIIVI• MMVMMV

Price reductionsPrice reductions

VIVI The role of patents/1The role of patents/1

Why patents?Why patents?

Natural rightsNatural rights Distributive justiceDistributive justice Consequentialist argumentsConsequentialist arguments

• Incentive-to-discloseIncentive-to-disclose• Incentive-to-invent-and-innovateIncentive-to-invent-and-innovate

CritiquesCritiques


Rights granted by a patentRights granted by a patent

Product patentsProduct patents

Process patentsProcess patents


Patents in the ‘real world’: The WTO-Patents in the ‘real world’: The WTO-TRIPs AgreementTRIPs Agreement

““IPP is not a ‘trade’ issue; the WTO should IPP is not a ‘trade’ issue; the WTO should be about lowering trade barriers and be about lowering trade barriers and tackling market access problems. The tackling market access problems. The inclusion of IPP has turned the organization inclusion of IPP has turned the organization into a royalty collection agency”.into a royalty collection agency”.

(Jagdish Bhagwati, FT, 16/9/2002)(Jagdish Bhagwati, FT, 16/9/2002)


History of the WTO-TRIPs Agreement:History of the WTO-TRIPs Agreement:

Attempts to revise the Paris Convention Attempts to revise the Paris Convention - conflicting goals- conflicting goals

Forum shift: WIPO-GATTForum shift: WIPO-GATT 1986-1994: GATT Urugay Round1986-1994: GATT Urugay Round 1994: TRIPs: significant ‘expansion’ of 1994: TRIPs: significant ‘expansion’ of

the concept of patentabilitythe concept of patentability


Patenting in developing countries pre Patenting in developing countries pre TRIPS:TRIPS:

Less protection and enforcementLess protection and enforcement Aiming to stimulate local industriesAiming to stimulate local industries

e.g. usually only process patents in e.g. usually only process patents in the field the field of drugsof drugs

e.g. compulsory licensinge.g. compulsory licensing


Arguments for a quasi-worldwide Arguments for a quasi-worldwide strengthening of patents:strengthening of patents:

““[T]he higher the protection [of intellectual [T]he higher the protection [of intellectual property rights], the more I think it benefits property rights], the more I think it benefits developing countries, who thereby then attract developing countries, who thereby then attract the transfer of technology, investment, and the transfer of technology, investment, and creative endeavor. And, of course, the more you creative endeavor. And, of course, the more you protect intellectual property, those established protect intellectual property, those established firms are willing to pour more into research and firms are willing to pour more into research and development to try to address mankind’s development to try to address mankind’s problems, whether they be disease or problems, whether they be disease or constructive building of agricultural crops or constructive building of agricultural crops or what have you, all for the betterment of peoples what have you, all for the betterment of peoples wherever they may be located.”wherever they may be located.”(Carla Hills, USTR Bush sr.)(Carla Hills, USTR Bush sr.)


Applied to case of drugs:Applied to case of drugs:

More local R&D of drugs??More local R&D of drugs??

More transfer of technology??More transfer of technology??

More foreign investment in the More foreign investment in the pharmaceutical sector??pharmaceutical sector??


Doha DeclarationDoha Declaration§1 We recognize the gravity of the public §1 We recognize the gravity of the public

health problems afflicting many developing health problems afflicting many developing and least-developed countries, especially and least-developed countries, especially those resulting those resulting from HIV/AIDS, from HIV/AIDS, tuberculosis, malaria and other epidemics.tuberculosis, malaria and other epidemics.

§2 We stress the need for the WTO §2 We stress the need for the WTO Agreement on Trade-Related Aspects of Agreement on Trade-Related Aspects of Intellectual Property Intellectual Property Rights … to be part of Rights … to be part of the wider national and international action the wider national and international action to address these problems.to address these problems.


Doha DeclarationDoha Declaration§3 We recognize that intellectual property §3 We recognize that intellectual property

protection is important for the development of protection is important for the development of new medicines. We also recognize the concerns new medicines. We also recognize the concerns about its effects on prices.about its effects on prices.

§4 We agree that the TRIPS Agreement does not §4 We agree that the TRIPS Agreement does not and should not prevent Members from taking and should not prevent Members from taking measures to protect public health. Accordingly, … measures to protect public health. Accordingly, … we affirm that the Agreement can and should be we affirm that the Agreement can and should be interpreted and implemented in a manner interpreted and implemented in a manner supportive of WTO Members’ right to protect supportive of WTO Members’ right to protect public health and, in particular, to promote public health and, in particular, to promote access to medicines for all …access to medicines for all …


Doha DeclarationDoha Declaration§5 … we recognize that [the] flexibilities [in the §5 … we recognize that [the] flexibilities [in the

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


Doha DeclarationDoha Declaration§6 We recognize that WTO Members with insufficient §6 We recognize that WTO Members with insufficient

or no manufacturing capacities in the or no manufacturing capacities in the pharmaceutical sector could face difficulties in pharmaceutical sector could face difficulties in making effective use of compulsory licensing making effective use of compulsory licensing under the TRIPS Agreement. We instruct the under the TRIPS Agreement. We instruct the Council for TRIPS to find an expeditious solution to Council for TRIPS to find an expeditious solution to this problem and to report to the General Council this problem and to report to the General Council before the end of 2002.before the end of 2002.

Cf. art.31(f) TRIPs: compulsory licences to be used Cf. art.31(f) TRIPs: compulsory licences to be used predominantly to provide the domestic market predominantly to provide the domestic market what about export?? what about export?? problem for countries problem for countries with insufficient manufacturing capacitywith insufficient manufacturing capacity


Amendment of TRIPsAmendment of TRIPs August 30, 2003: agreement on the August 30, 2003: agreement on the

implementation of para 6 of the Doha implementation of para 6 of the Doha Declaration was adopted by the WTO Declaration was adopted by the WTO General Council General Council

= a temporary waiver from the = a temporary waiver from the obligation laid down in art. 31(f) obligation laid down in art. 31(f) TRIPsTRIPs

This agreement was made This agreement was made permanent on 6 December 2006permanent on 6 December 2006


Amendment of TRIPsAmendment of TRIPs allows countries producing patented allows countries producing patented

pharmaceutical products under pharmaceutical products under compulsory licence to compulsory licence to exportexport those those products to eligible importing countries, products to eligible importing countries, provided that numerous conditions are provided that numerous conditions are met met

BUT as those conditions are particularly BUT as those conditions are particularly onerous, the agreement can hardly be onerous, the agreement can hardly be called an “expeditious solution”called an “expeditious solution”

So far, not a single country has used the So far, not a single country has used the waiver!!waiver!!


Médecins Sans FrontièresMédecins Sans Frontières::To date there is no experience using the mechanism – To date there is no experience using the mechanism – not one patient has benefited from its use – despite the not one patient has benefited from its use – despite the fact that newer medicines, such as second-line AIDS fact that newer medicines, such as second-line AIDS drugs, are priced out of reach of poor patients. Delaying drugs, are priced out of reach of poor patients. Delaying the amendment would have been a far better option, as the amendment would have been a far better option, as it would have ensured the possibility of testing and it would have ensured the possibility of testing and improving the mechanism in practice. improving the mechanism in practice. The amendment The amendment has made permanent a burdensome drug-by-drug, has made permanent a burdensome drug-by-drug, country-by-country decision-making process, which does country-by-country decision-making process, which does not take into account the fact that economies of scale not take into account the fact that economies of scale are needed to attract interest from manufacturers of are needed to attract interest from manufacturers of medicines.medicines.

Ellen 't Hoen, Director of Policy Advocacy for the Ellen 't Hoen, Director of Policy Advocacy for the MSFMSF Access to Essential Medicines Campaign: Access to Essential Medicines Campaign: Since 2003 we Since 2003 we have tried to place drug orders under the ‘August 30’ have tried to place drug orders under the ‘August 30’ decision. But these attempts have not yet been decision. But these attempts have not yet been successfulsuccessful..

The The pharmaceutical industrypharmaceutical industry has welcomed the has welcomed the amendment.amendment.


The The European Generics European Generics AssociationAssociation has stated that they has stated that they cannot use a procedure as cannot use a procedure as constraining and as legally risky constraining and as legally risky as this procedure – hence they as this procedure – hence they will not be able to export generic will not be able to export generic medicines to poor countries as medicines to poor countries as planned (position paper March planned (position paper March 2005)2005)

The The pharmaceutical industrypharmaceutical industry has has welcomed the amendmentwelcomed the amendment

Documents

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