Compulsory Licensing and its lessons for the A2M movement

Peter Maybarduk Essential Action

maybarduk@gmail.com

Compulsory Licensing in Thailand: A Case Study

Kaye Phillips University of Toronto
kayephillips79@gmail.com
Presented October 19, 2008, at the national conference of Universities Allied for Essential Medicines in Berkeley, California.

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?

Map
What is a compulsory license? Case study: Thailand Current campaigns & challenges Lessons for UAEM

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/2006/20061128_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.

Access
Government-sponsored universal treatment programs provide the drugs, but the real key and 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.accessmedmsf.org/prod/publications.asp?scntid=1411200692472&contenttype=PARA&

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.

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.

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.

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).

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.

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

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

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

Ejemplo: Brasil
2007: 75.000 de los pacientes brasileros con SIDA estaban tomando Efavirenz Merck/BMS: $1.59/da en Brasil Genricos: cerca de $.45 por da La competencia genrica puede llevar los precios de Efavirenz bajo $.25 por da.

Ejemplo: Brasil
25 de abril de 2007: el Ministro de Salud Jos Gomes Temporo, firm el decreto 866, declarando que la medicina efavirenz para el SIDA es de inters pblico.
4 de mayo de 2007: Brasil otorga la licencia obligatoria atraves de un decreto firmado por el Ministro y el Presidente Lula

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.

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).

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.

Why Compulsory Licensing of ARVs?

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.

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.

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.

Responses to Thailands move

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.

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.

Learnings

Policy 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.

learnings:

compulsory licensing does not have to be confined to HIV/AIDS drugs.

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.

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.

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.

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

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.

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)

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.

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

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)).

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

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

Colombia
Highly organized Strong civil society push
Show solicitud

Skeptical government IAC: http://iac.e-alliance.ch/2008/08/august-6-2008-photos/

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

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

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

What can students do?

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

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

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.

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

Peter Maybarduk
Essential Action
(202) 390-5375 maybarduk@gmail.com essentialaction.org/access petermaybarduk.com/

Kaye Phillips
Leslie Dan faculty of Pharmacy University of Toronto
kayephillips79@gmail.com

Contributions/Thank Yous
Jillian Clare Kohler, Leslie Dan Faculty of Pharmacy, University of Toronto
Vicky Kuek, Leslie Dan Faculty of Pharmacy, University of Toronto