Compulsory Licensing and its lessons for the A2M movement

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Compulsory Licensing and its lessons for the A2M
movement

• Peter Maybarduk
• Essential Action
• maybarduk_at_gmail.com
• Compulsory Licensing in Thailand A Case Study
• Kaye Phillips
• University of Toronto
• kayephillips79_at_gmail.com
• Presented October 19, 2008, at the national
  conference of Universities Allied for Essential
  Medicines in Berkeley, California.

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Compulsory licensing and UAEM

• What happens when we cant get the EAL or another
  voluntary license that we want?
• Beyond lobbying universities, how can students
  get involved in the broader access to medicines
  movement?
• What lessons does a study of compulsory licensing
  offer UAEM?
• What are some of the underreported problems in
  creating generic competition and reducing prices
  of medicines?

3
Map

• What is a compulsory license?
• Case study Thailand
• Current campaigns challenges
• Lessons for UAEM

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Access

• Access to medicines is disparate within and
  between countries (access gap exists within
  nations and between nations).
• Does not correlate perfectly to income disparity.
  
• http//data.unaids.org/pub/Presentation/2006/20061
  128_la.pdf
• AIDS treatment rate in Nicaragua and Dominican
  Republic under 20
• Brazil and Cuba boast AIDS treatment rates well
  over 80 despite relatively low GDP.

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Access

• Government-sponsored universal treatment programs
  provide the drugs, but the real keyand the
  reason poor countries can afford to treat their
  citizensis availability of low-cost generic
  medicines.
• E.g., Five Years After Doha, Drug Prices are on
  the Rise, Doctors Without Borders Access to
  Medicines Campaign news release, Nov. 14, 2006,
  available at
• http//www.accessmed-msf.org/prod/publications.asp
  ?scntid1411200692472contenttypePARA

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Generics

• In the last ten years, generic antiretrovirals
  have fueled a revolution in AIDS treatment,
  providing life-sustaining drug regimens to 2
  million people in developing countries who
  previously could not afford them (MSF/WHO).
• Generic competition drives down the price of
  brand-name drugs, and enables governments and
  international organizations to purchase many more
  drugs for their growing free treatment programs.

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Patents and monopoly power

• May confer monopoly power
• Sometimes generics remain in the market
• Firms intensify global patenting and patent
  enforcement with time
• Unlike other types of monopolies, patents legally
  bar potential competitors from entry.
• Even if firms can afford the startup costs and
  believe a profitable market awaits, they cannot
  enter the market until expiration of the patents
  fixed, but entirely arbitrary, twenty-year term.

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Busting the patent trust

• Traditional economic analysis offers a simple
  solution to failing monopolized markets in
  essential goods with absolute barriers to entry
  bust the trust, and let the market work.
• Fortunately, international law provides the same,
  in the form of a yet underutilized tool called a
  compulsory license.

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Compulsory Licensing

• Governments can authorize generic competition for
  products while they remain on patent.
• Breaks the monopoly, NOT the patent.
• Reduces prices and promotes public access to
  medicines by creating competition in the market
  for a particular drug.
• These products may be produced locally or
  imported, conditioned only on payment of a
  reasonable royalty (roughly 4 percent or less).

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Example Malaysia

• 2003 Malaysia issued government use compulsory
  licenses on three patented AIDS medicines, and
  began importing generic versions of the drugs
  from India.
• Reduced the cost to Malaysian Ministry of Health
  of treating an HIV/AIDS patient by 81 -- from
  315 to 58 per month.
• Savings enabled Malaysia to increase number of
  HIV/AIDS patients treated in government hospitals
  from 1,500 to 4,000.
• Ling, Chee Yoke, Malaysias Experience in
  Increasing Access to Antiretroviral Drugs
  Exercising the Government Use Option, Third World
  Network, at 5.

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Savings

• High-quality generic medicines are routinely
  available at savings between 30 and 98 percent
• imatinib (Glivec by Novartis)
• Open license competition yields further price
  reductions from generics producers

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Ejemplo Brasil

• 2001 Brasil announces it is considering licenses
  for efavirenz and nelfinavir
• March 2001 Merck ofrece descuentas para
  efavirenz
• August 2001 Merck ofrece descuenta de 40 para
  nelfinavir

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Ejemplo Brasil

• 2003 lopinavir, efavirenz, nelfinavir
• 2005
• Kaletra (Abbott) resulta en descuenta de 46
• Viread (Gilead) 50
• imatinib (Glivec, Novartis) - 65

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Ejemplo Brasil

• 2007 75.000 de los pacientes brasileros con SIDA
  estaban tomando Efavirenz
• Merck/BMS 1.59/día en Brasil
• Genéricos cerca de .45 por día
• La competencia genérica puede llevar los precios
  de Efavirenz bajo .25 por día.

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Ejemplo Brasil

• 25 de abril de 2007 el Ministro de Salud José
  Gomes Temporão, firmó el decreto 866, declarando
  que la medicina efavirenz para el SIDA es de
  interés público.
• 4 de mayo de 2007 Brasil otorga la licencia
  obligatoria atraves de un decreto firmado por el
  Ministro y el Presidente Lula

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Additional examples

• In recent years Indonesia, Mozambique, Zimbabwe,
  South Africa, Zambia, Eritrea, and Thailand have
  each issued compulsory licenses to promote access
  to medicines.
• Indeed, governments of many countries, including
  the United States, use compulsory licenses in a
  wide variety of circumstances.

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Example United States

• In 2006 alone, at least four U.S. courts issued
  compulsory licenses on medical, software and
  engineering patents to remedy anticompetitive
  business practices.
• The United States routinely issues compulsory
  licenses for use of patented inventions by the
  government or its contractors, especially, but
  not only, in the defense sector.
• As early as 1952, U.S. Supreme Court granted the
  well-recognized remedy of CLs in antitrust
  actions (US v. Besser Mfg. Co., 343 U.S. 444,
  447).

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Compulsory Licensing of ARVs The Case of
Thailand

• Between October and January 2007, the Thai
  government used lawful flexibility under the
  TRIPS Agreement to issue compulsory licenses for
  four drugs, one including Abbotts ARV, Kaletra.

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• Why Compulsory Licensing of ARVs?

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HIV/AIDS prevalence in Thailand

• In 2004 500,000 people were reported to be living
  with HIV-AIDS in Thailand.
• As of 2006, 78,000 people receiving ARV
  treatment, more than 90 of those who needed it.
• However, estimated that approximately 12,000 HIV
  positive people in the country have developed
  drug resistance to the first line treatment.
• Price of second line ARVs was about 2,200 or
  73,000 baht per person per year.

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Estimated outcomes of accessible second-line
therapy

• Thai government estimated it would save 8,000
  lives per year, by making distribution of
  second-line ARV therapy possible to people who
  could not afford it.
• The World Bank estimated Thailand could reduce
  the cost of second-line therapy by 90 if it
  introduced compulsory licenses for all the drugs
  it needed in second-line therapy, saving itself
  3.2 billion over the next 20 years.

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Thailand the right to medicine

• Under Thailands National Health Security Act
  2001, the Thai government is mandated to achieve
  universal access to essential medicines.
• Since October 2003, the Thai government committed
  to providing universal access to antiretroviral
  (ARV) treatment for all AIDS patients.

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• Responses to Thailands move

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Trade Threats

• Thai govt CL decision stimulated trade threats
  by Abbott, the US government and pharmaceutical
  companies.
• Civil society organizations and Abbott investors
  renounced threats as unethical and morally
  unacceptable.

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Price Cuts - Victory

• In April 2007 Abbott cuts the price of Kaletra to
  3,488 baht per month
• Abbott further lowers the cost to 1,000 per
  patient per year in more than 40 low-and
  middle-income countries including Thailand.

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• Learnings

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learningsPolicy Spectators

• Thailands issuing of CL and successes dispels
  uncertainty about whether CL can be used to
  improve access to medicines.
• Threat of trade sanctions may not always be
  followed through.
• compulsory licensing does not have to be confined
  to HIV/AIDS drugs.

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learnings Med Access Campaigners?

• How to use legal tools to expand access to
  essential medicines
• Demonstrates the influence of transnational civil
  society organizations in public health policy
  decision making.
• Reiterates how generic competition can lower
  prices and make expanded access possible.
• Illustrates the feasibility of widespread
  compulsory licensing focused on a wide range of
  diseases.

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More to Consider?

• Consider need for
• A clear political purpose, as to the use
  compulsory licensing. A purpose that guides
  legislative drafting
• Domestic legislative provisions that allow for
  the effective use of compulsory licensing and
  appropriately offset the burden to the patentee
  and
• Political interest and commitment to using
  available tools despite international pressures.

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More Considerations and Conclusion

• Important gains in building robust drug programs
  can be achieved using compulsory licensing.
• Reconsider compulsory licensing as a stand alone
  or long term solution to medicine access.
• Think about compulsory licensing in context of a
  range of public health responses.

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Strategic value of CLs

• Each license
• Saves lives and improves public health
• Sets a precedent easier for next country to do
  same
• Important toward creating political will for our
  transformational ideas (UNITAID pool etc.)
• Pushes international norms toward protecting
  public health before IP.
• Mere threat of a CL can improve bargaining
  position.
• If we can make CLs common, it will provide a
  powerful incentive for companies to negotiate
  more equitable license terms at the outset

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Compulsory licensing is a right

• WTOs Agreement on Trade Related Aspects of
  Intellectual Property (TRIPS) guarantees Members
  rights to issue compulsory licenses for the
  importation, manufacture and sale of medicines.
• Countries are free to issue compulsory licenses
  on whatever grounds they choose
• Article 31, Other Use Without Authorization of
  the Patent Holder.

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The Doha Declaration

• 2001 Doha Declaration on the TRIPS Agreement and
  Public Health
• Unanimously adopted by all WTO member states.
• Each Member has the right to grant compulsory
  licenses and the freedom to determine grounds
  upon which such licenses are granted.
• Paragraph 5(b)

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The Doha Declaration

• The TRIPS 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.
• Paragraph 4.

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Myths

• On its Frequently Asked Questions page, the WTO
  calls the idea of an emergency requirement a
  common misunderstanding.
• http//www.wto.org/English/tratop_e/trips_e/public
  _health_faq_e.htm

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Compulsory licensing is a right

• Article 31(b) requires governments to negotiate
  for an adequate voluntary license before deciding
  to issue a compulsory one, but creates broad
  exceptions.
• emergency or extreme urgency, which governments
  have the right to define
• non-commercial (government) use. Can manufacture,
  or authorize companies to manufacture, medicines
  to be distributed to the public through
  government agencies
• anticompetitive practice (31(k)).

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Compulsory licensing is a right

• TRIPS Article 31(f) initially limited countries
  capacity to export drugs manufactured under CL
• Waived by August 30, 2003 order of WTO General
  Council.
• WTOs solution is too complicated
• Canada-Rwanda
• We need better implementing legislation
• But the paragraph 6 problem does not restrict
  CLs for products not on patent in their country
  of origin

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Ecuador

• Patent uncertainty
• Show search process
• Link to Ec patent list
• Hold on Bolivia work
• Generics unregistered
• Clinton Foundation partnership
• Nicaragua
• Brand-name relationships/pressure
• SOLCA Guayaquil
• Interagency relations

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Colombia

• Highly organized
• Strong civil society push
• Show solicitud
• Skeptical government
• IAC http//iac.e-alliance.ch/2008/08/august-6-200
  8-photos/

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When public health suggests a CL might help

• Identify needed / problem products
• Identify patented products
• We need better patent disclosure systems
• Not that we need precise patent
• Drug registration / prequalification
• Economies of scale
• regional registration systems could help
• Regulations / enabling political action
• Political will / agencies each play their role

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Further uses for CLs

• Pending patents
• Prospective license
• Entire classes of drugs
• TRIPS 31(a), (g), (h)
• Resolve patent uncertainty
• Data exclusivity
• Implicit (govt created, emergency, CL)
• Democrats say yes, OTR USTR admission

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What can students do?

• Press for better university licensing agreements
• License to patent pools
• Licenses that require patent disclosure?
• Patents claimed must be listed and tied to end
  product on company website
• Monitor university product developments engage
  before licensing agreements are made

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What can students do?

• Combat myths
• Support countries that exercise their
  flexibilities
• Colombia
• Collaborate with NGOs conduct research and
  support advocacy efforts

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Competition vs. voluntary commitments

• Competition is better.
• Generally better for price.
• Better for potential global application
• Even if you successfully negotiate a better price
  - might it only be extended to those negotiating?
• Better politics
• Better precedent
• Sometimes better for supply quality
• Nelfinavir

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Lessons

• Were nowhere near too far
• Companies wont necessarily go willingly into our
  grand ideas
• Issuing CLs today is very important to bigger
  plans tomorrow
• If compulsory licenses needed for patent pool,
  will still have to go country-by-country
• Patents arent the only access problem, nor are
  they the sole obstacle to lower prices.

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A few interventions

• The trouble with calling distinct private rights
  intellectual property
• Counterfeiting
• Biogenerics assistance
• AAU advocacy
• Research
• Public advocacy

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• Peter Maybarduk
• Essential Action
• [phone]
• maybarduk_at_gmail.com
• essentialaction.org/access
• petermaybarduk.com/
• Kaye Phillips
• Leslie Dan faculty of Pharmacy
• University of Toronto
• kayephillips79_at_gmail.com

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Contributions/Thank Yous

• Jillian Clare Kohler, Leslie Dan Faculty of
  Pharmacy, University of Toronto
• Vicky Kuek, Leslie Dan Faculty of Pharmacy,
  University of Toronto