Navneet Tewatia, FORUM OF PARLIAMENTARIANS ON HIV/AIDS

Lead Author: Navneet Tewatia
Additional Authors: Oscar Fernandes, and Dr. D S Ratna Devi
Organization: Forum of Parliamentarians on HIV/AIDS (FPA)
Country: India

Abstract

The availability of generic ARV medicines played a major role in scale up of antiretroviral therapy and reaching 16 million people. Therefore, it is important to ensure the generic availability of new health products to achieve targets set in Sustainable Development Goal (SDG) 3. SDG 3 proposes the use of TRIPS flexibilities and research and development of new health products as a means of implementation to achieve targets. This submission argues that the use of TRIPS flexibilities is challenging due to various reasons. Further, many developing countries are not in position to effectively use the TRIPS flexibilities due to various TRIPS plus obligations accepted and enforced by these countries under various Free Trade Agreements (FTAs) and International Investment Agreements (IIA). Therefore, this submission makes several proposals to reform the current Intellectual Property (IP) obligations of countries to ensure access to achieve SDG 3 targets. It also proposes changes to the current patent based R&D architecture to ensure innovation and access.

Submission

Introduction

Sustainable Development Goal No 3 i.e. Good Health and Well Being sets nine (9) targets. Target no 8 states: “Achieve universal health coverage, including financial risk protection, access to quality essential health-care services and access to safe, effective, quality and affordable essential medicines and vaccines for all”. Further Target 3.3 requires “by 2030, end the epidemics of AIDS, tuberculosis, malaria and neglected tropical diseases and combat hepatitis, water-borne diseases and other Communicable diseases”. Target 3.4 states “by 2030, reduce by one third premature mortality from non-communicable diseases through prevention and treatment and promote mental health and well-being”.

One of the most important conditions for the achievement of the SDG targets, especially those mentioned above is the availability of diagnostics, vaccines, medical devices and medicines (hereafter health technologies). Recognising this important need the means of implementation i.e. SDG 3.b has rightly stated : “Support the research and development of vaccines and medicines for the communicable and noncommunicable diseases that primarily affect developing countries, provide access to affordable essential medicines and vaccines, in accordance with the Doha Declaration on the TRIPS Agreement and Public Health, which affirms the right of developing countries to use to the full the provisions in the Agreement on Trade Related Aspects of Intellectual Property Rights regarding flexibilities to protect public health, and, in particular, provide access to medicines for all”.

The scaling up of antiretroviral therapy is facilitated by the availability of generic medicines at an affordable price. The experience of HIV/AIDS treatment programme clearly shows that if right policies are in place, universal access to treatment can be achieved. The HIV/AIDS experience should be replicated to achieve SDG targets.
We, the parliamentarians, associated with the Forum of Parliamentarians on HIV/AIDS (FPA) have no doubt to state that the important prerequisite to achieve SDG targets is the availability of generic versions of new health products at affordable price. The important step in this regard is the reform of international IP regime especially, the TRIPS Agreement and IP provisions of majority of the Free Trade Agreements.

Thus, this submission covers proposals to reform the current IP obligations of countries to ensure access to achieve targets of SDG 3. Further, it also proposes changes to the current patent based R&D architecture to ensure innovation and access.

Statement of the Problem

The international IP regime imposes stringent obligations on developing countries through the TRIPS Agreement, FTAs and IIAs. These do not address the health R&D needs of developing countries as well as access to new health technologies. Generally speaking these international legal instruments obligate developing countries to provide IP rights over and above the TRIPS Agreement, known as TRIPS plus provisions, such as; product patent protection, data exclusivity and limits the scope of public interest flexibilities. Thus, it compromises the capacity of governments to fulfil its obligations on right to health.

Problem 1 R&D

The predominant model of R&D is based on patent protection. Under this model the pharmaceutical companies are given a temporary monopoly for fixed time period to charge monopoly price over the patented products in return to recoup the R&D investment including the failed R&D investment as well as the disclosure of innovation. This model has three major disadvantages, as explained below:

First, this model does not work in the developing country context because both the governments and people cannot afford to pay high prices for the products. Therefore, the patents based R&D model will not attract investment in diseases predominantly existing in developing countries, thus resulting in a “market failure” with regard to R&D for developing countries.

Second, since the patent system allows the patent holder to set the monopoly prices, access to the outcome of R&D, especially downstream products like vaccines and medicines, is compromised for the majority of people in need.

Third, the patent based R&D system makes people to pay twice. First, the patent system benefits the patent holder without acknowledging the extensive contribution of public funds into the research of the health products research. Second, the patent holder charges exorbitant prices for the price for the health products.

One of the promises of the TRIPS Agreement was that the product patent protection would attract R&D investment to meet health needs of developing countries. However, this has not been materialised even after two decades of the conclusion of the TRIPS Agreement and a decade of compulsory product patent regime in developing countries. A study shows that out of 336 new chemical entities (NCEs) introduced from 2000 to 2011, only 4 NCEs were approved for neglected diseases. Further the study states that out of 148,445 clinical trials registered in December 2011, only 2016 were for neglected diseases. This confirms that compulsory product patent regime results in market failure with regard to R&D for developing countries.

There are several initiatives to address the underfunding of health R&D needs through product development partnerships (PDP). However, PDPs are not a sustainable model and still attracts substantial funding from a single philanthropic foundation i.e. the Bill and Melinda Gates Foundation. There is a need to develop sustainable and predictable funding in this regard.

The market failure on R&D is not limited to health R&D needs of developing countries. There is also market failure with regard to products to meet emerging health emergencies like haemorrhagic fevers like Ebola and new antibiotics.

Efforts to reform the R&D architecture to meet the health needs of developing countries is making a very slow progress at the World Health Organisation (WHO). TheWHO is suggesting setting up a voluntary pool fund under the UNDP, World Bank and WHO joint program on Tropical Disease Research (TDR) programme. However, the proposed pool fund is based on the voluntary funding and may not result in a sustainable financing mechanism.

The demonstration project, which was initiated to test the new R&D model based on the principles recommended by WHO’s Consultative Expert Working Group on Research and Development (CEWG) has so far failed to attract the required finance. “The estimated total financial requirement for implementation of these two activities for four years 2014–2017 is US$ 85 million. Member States were contacted to contribute to this voluntary fund and to date US$ 7.65 million has been contributed”. There is huge gap in the required funding.

This clearly shows the urgent need to put in place a new R&D architecture to address the R&D needs of developing countries, which can address both innovation and access.

Problem 2: Access

The main concern with the TRIPS Agreement is that access to new health technologies are being hindered by patent protection or data exclusivity. The main strategy to address this concern is through using the TRIPS flexibilities. There is no doubt about that the use of TRIPS flexibilities can enhance access to health technologies as its utilization does reduce the cost rather drastically. . For instance, the introduction of generic ARV has brought down the price from USD 10000-12000 to USD 80 for first line ARV treatment. To facilitate free ARV treatment some developing countries have issued compulsory license at several occasions.
Availability of ARVs at an affordable price has helped to realize ARV treatment coverage of 16 million, a millennium development goal target. Similarly, the issuance of compulsory license to an Indian generic company enabled introduction of generic versions of Sorafenib at INR 8,880 (about US$176) for a pack of 120 tablets against Bayer’s price of INR 288000 (USD 5600). It is important to note that the National Institute for Health Care Excellence (NICE) has refused the inclusion of Sorafenib in the public health system due to disproportionate cost compared with the marginal benefit to the patience. However, the circumstances are changing and the use of TRIPS flexibilities is getting increasingly difficult. In this regard the following facts should be noted.
First, the scaling up of first line ARV was possible due to the absence of product patent protection in India, one of the main producers of generic medicines. In 2005, India introduced product patent protection and in the 10 years, following the introduction, generic pipeline appears as drying up. The use of flexibilities in the Patents Act on the scope of patentability has played a major role in preventing patent protection for second line ARV drugs because the second line ARVs were invented prior to 1995. Section 3 (d) of the Indian Patents Act prevents patenting of known substances unless the patentee proves an enhanced efficacy over the known efficacy of the known substance. These safeguards have prevented ever-greening or seeking patents on known molecules. However, molecules invented post-1995 are now being introduced into the market. Most of these molecules are patent protected and access to these molecules will not be possible without using flexibilities like compulsory license. However, the use of TRIPS flexibilities faces many constraints even in India, which has robust pharmaceutical manufacturing capability.
Second, the use of flexibilities such as requesting of compulsory licenses by private companies is a “business decision” for generic pharmaceutical companies. Many factors affect their decisions. Legal uncertainties often prevent generic companies from using this option. Patent holders have immense resources and can complicate use of Compulsory Licenses (CLs) by threatening or engaging in litigation. This has happened to an Indian generic company that obtained a compulsory license. The patent holder initiated multiple litigation processes including appeals against the decision of granting compulsory license. These types of strategies deter generic companies from seeking CLs in future. Further, issuance of CL requires certain procedure requirements such as hearing of the patentee etc. which delays the issuance of CL.
Third, the propaganda by pharmaceutical transnational companies and the political pressure from developed countries has created a chilling effect on the use of TRIPS flexibilities. The Special 301 report of the Office of US Trade Representatives is a case in point as it is tool to exert political pressure on developing countries aimed at deterring the use of flexibilities such as government use.
Fourth, trade and investment agreements containing TRIPS Plus flexibilities compromises the ability of many UN Member states to use the TRIPS flexibilities.
Fifth, the alternative option of voluntary license (VL) has inherent limitations. It is an adhoc approach to promoting access to affordable health technologies, does not facilitate universal access, and may not result in optimal competition due to restrictions imposed on the licensee. It incapacitates government in realizing human rights obligations as the decision of whether or not there is access in a country depends on the terms of the VL. Further, VL can be used by the companies to legitimize frivolous patents and to control competition by carving out middle-income markets.
Sixth, the use of flexibilities also involves institutional capabilities and financial and human resources. A robust patent administration is important to make use of flexibilities related to the scope of patent protection, patent opposition etc. This is lacking many developing countries. Further, investment in human resources is also important to maintain the resource capabilities.
Seventh, most of the developing countries cannot use the TRIPS flexibilities due to the lack of manufacturing capability in the pharmaceutical sector. The waiver of Article 31 (f) does not offer a user-friendly solution because of the cumbersome procedures involved in utilizing the waiver. As a result the whole mechanism has only been invoked once.
The achievement of SDG 3 targets needs a massive scaling up of treatment. This requires the availability of IP protected health products (medicines, vaccines, diagnostics and health devices) at an affordable price through generic production. Therefore, there is a need to reexamine the strategy of TRIPS flexibilities and introduce a way of facilitating the availability of new health technologies that is coherent with States’ human rights obligations especially the right to health. This will facilitate achievement of SDG3
Against the above background we make the following proposals.
Proposal 1
As shown above there are many hurdles and constraints for the effective use of TRIPS flexibilities. These constraints prevent the effective and sustained use of TRIPS flexibilities, which is recognised as a means of implementation i.e SDG 3.b. Therefore, WTO Member States, especially developing countries, should be freed from the international obligation of TRIPS patent regime. Article 27 of the TRIPS Agreement should be amended to provide explicit exclusion of health technologies from the patent protection. In the absence of patent protection, generic companies in the developing countries would be able to produce the new health products without any legal barriers as in the case of patents. This will give the generic companies an automatic non-exclusive right to produce affordable versions of the health product.

In return, generic companies would need to pay a reasonable royalty to the originator companies for a reasonable period of time from the marketing approval of the health product. Details of the royalty mechanism can be developed through further expert consultations.

As an interim measure, a decision to waive the obligation of WTO Member States especially developing countries to grant patent protection to health technologies could be taken.

The above mentioned proposals would provide sufficient policy space for WTO Member States to shape their IP policies including suspension of product patent protection for medicines to facilitate generic production. Departure from the patent obligations of TRIPS Agreement is the most cost effective way to facilitate access to health technologies for massive scale up of treatment compared to use of flexibilities, which suffers from the above-mentioned constraints. This proposal will create a favourable condition for the advancement of human rights.


Proposal 2

Without prejudice to our first proposal, as an alternative we propose an automatic license system whereby UN Member States would amend their patents laws to introduce the automatic licensing of patents for the protection of public health. This is compatible with the TRIPS Agreement as Article 31 waives the requirement of seeking a voluntary license from the patent holder in the case of a national emergency or other circumstance of extreme urgency or in cases of public non-commercial use.

SDG 3.7 targets “By 2030, ensure universal access to sexual and reproductive health-care services, including for family planning, information and education, and the integration of reproductive health into national strategies and programmes”. Therefore all health products required to meet SDG targets including those required for universal health coverage should be treated as non-commercial use with a government administered price and automatic license to be issued to facilitate the generic availability. Under this automatic license generic companies would get a right to use the patented invention against a payment of royalty, which should not exceed 5% of the price of the product.

Proposal 3

In addition, developed country as UN Members should adopt a decision to waive the TRIPS plus IP obligations of developing countries related to health technologies in various free trade agreements (FTA) and international investment protection agreements in order to achieve targets of SDG 3. This is important because TRIPS plus provisions in various free trade agreements would be valid even in the absence of a TRIPS obligation on patenting of health technologies. Further, most of the IP provisions in FTAs also obligate developing countries to implement data exclusivity provisions.

UN member States having data exclusivity provisions in their domestic legislation should waive such requirement for health technologies required for meeting the SDG targets. This is important because in the absence of patents, data exclusivity can prevent the introduction of generic health technologies in the market.

Proposal No. 4

UN Member Sates should begin negotiations to draft a global R&D agreement based on the recommendations of WHO’s Consultative Expert Working Group on Research and Development Finance and Coordination. This agreement should be based on the principle of delinking of cost of R&D from the price of the product.

Bibliography and References

Belen Pedrique et al., The Drug and Vaccine Landscape for Neglected Diseases (2000-11): A Systematic Assessment, 1 (6) The Lancet Global Health (2013) e371 - e379 < http://download.thelancet.com/pdfs/journals/langlo/PIIS2214109X13700780.pdf?id=aaaffLf4nsPBKf-yg8rwu>.
Ibid
See WHO, Follow -up of the report of the Consultative Expert Working Group on Research and Development: Financing and Coordination, EB 138/39
< http://apps.who.int/gb/ebwha/pdf_files/EB138/B138_39-en.pdf >

Ibid
Martin Khor, Compulsory License and “Government Use” to Promote Access to Medicines: Some Examples, TWN, 2014

Matthew Dennis, NICE Rejects Bayer's Nexavar for Advanced Liver Cancer Following Appeal < http://www.firstwordpharma.com/node/653986?tsid=17#axzz30LDJsLRm>.
Report of UNGA, Report of the Special Rapporteur in the field of cultural rights, A/70/279, p. 19, <http://daccess-dds-ny.un.org/doc/UNDOC/GEN/N15/243/83/PDF/N1524383.pdf?OpenElement >. Also see UNITAID, The Trans–Pacific Partnership Agreement: Implications for Access to Medicines and public Health, (March 2014) <http://www.unitaid.eu/images/marketdynamics/publications/TPPA-Report_Final.pdf >