IP and Public Health

1. IP and Public Health William New Intellectual Property Watch Geneva

2. Finding Balance in Costs, Access • Key public policy debate • Various efforts in recent years to ensure wide access while supporting IP rights for innovation • WTO, WHO, WIPO, UNCTAD, etc • Bigger changes seen in FTAs, national courts

3. WHO and IP • WHO has been working on problem for years. Target is neglected diseases, mainly affecting poor populations for which there is no market • Cit. new WTO-WHO-WIPO report • 2006 Commission on IP, Innovation & Public Health (CIPIH) • 2008 Global Strategy & Plan of Action • Several Working Groups (EWG, CEWG) – ongoing

4. WHO R&D cont. • WHO in financial crisis, concern about influence of funding sources on policies (Gates Fdn, US) • CEWG tasked w finding new models for financing neglected disease R&D, proposed an R&D treaty, requiring countries to give .01% of GDP to cause. • But quietly rejected in Nov 2012, now discussion of voluntary contributions

5. WHO R&D cont. • CEWG cont’d – meanwhile initiatives favouring industry and patent system continue to move ahead • Eg, product development partnerships • Companies, foundations taking own initiative to create research facilities • Question of sustainability

6. WHO - Pandemics • May 2011 Pandemic Preparedness Framework – aims at concern from developing countries about sharing their virus strains for research and having the resulting treatments patented and not accessible at affordable prices. • Review of framework this week at WHA • Partnership Contribution - private sector required to pay for use of virus-sharing system

7. Substandard, Fake Medical Products • “substandard/spurious/falsely labelled/ falsified/counterfeit medical products – difficult issue • New Member State Mechanism – collaboration on supply chains, trends • Focus on public health, not IP

8. Noncommunicable Diseases (NCDs) • Soared to top of agenda in 2011 w UN Political Declaration • Focus on 4 NCDs: cancer, diabetes, cardiovascular, chronic respiratory diseases • Actions on WHA agenda – adopt Global Monitoring Framework, endorse Global NCD Action Plan 2013-2020?

9. Vaccines • Focus on vaccines now ramped up since 2010 launch of Decade of Vaccines by WHO, Gates Fdn • Focus on health and delivery systems • WHA to take note of Global Vaccine Action Plan, review Monitoring and Evaluation Framework (provides indicators, targets for Decade of Vaccines)

10. WHO Reform • Biggest reform of WHO ever • WHA to approve program of work 2014-2019 – includes MDGs, NCDs, International Health Regulations, access to medicines, social determinants of health • WHA will approve entire budget for 2014-2015 (not just assessed contributions from member states) • Questions of role of non-state actors

11. World Intellectual Property Organization • Recently moved into “global issues” such as public health, seeking relevance within UN context • Standing Committee on Law of Patents proposals – developing countries out front of issue, proposed study of flexibilities (opposed by dev’d countries) • WIPO Re:Search project – targets LDCs for royalty-free use of patents, not mid-sized developing countries

12. Problems in Developed Countries Too? • Signs that US, EU citizens increasing demand for cheaper drugs • Online pharmacies, Obama 2014 proposed budget • Stories of cancer patients in Greece, AIDS patients in Spain unable to afford treatments • Switzerland recently announced deal with pharma industry to reduce drug prices in return for faster approval

13. India Supreme Court - Novartis • Decision on imanitib, under Art 3(b) against “evergreening” of patents • Harm or Help Innovation? • Most people in India already use generic version, not Novartis’ Glivec • Every one of top 20 most valuable meds in US market is available as generic in India. Only 2 of which originator company brought the drug to India first, some still have not come

14. WTO TRIPS Agreement • Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) • Encouraging trade and investment through IPR protection • Providing certainty and security • Raising levels of IPR protection, innovation, economy for all WTO members

15. TRIPS contains several flexibilities designed to help developing countries, no direct mention of compulsory licencing. Para 8 (Principles): . Members may, in formulating or amending their laws and regulations, adopt measures necessary to protect public health and nutrition, and to promote the public interest in sectors of vital importance to their socio-economic and technological development, provided that such measures are consistent with the provisions of this Agreement. Art 30: “Members may provide limited exceptions to the exclusive rights conferred by a patent, provided that such exceptions do not unreasonably conflict with a normal exploitation of the patent and do not unreasonably prejudice the legitimate interests of the patent owner, taking account of the legitimate interests of third parties.” Flexibilities in the TRIPS Agreement

16. TRIPS Flexibilities cont. • Art 31 – use w/o authorization of right holder • Art 31(b) – “such use may only be permitted if, prior to such use, the proposed user has made efforts to obtain authorization from the right holder on reasonable commercial terms and conditions and that such efforts have not been successful within a reasonable period of time. This requirement may be waived by a Member in the case of a national emergency or other circumstances of extreme urgency or in cases of public non-commercial use. In situations of national emergency or other circumstances of extreme urgency, the right holder shall, nevertheless, be notified as soon as reasonably practicable. In the case of public non-commercial use, where the government or contractor, without making a patent search, knows or has demonstrable grounds to know that a valid patent is or will be used by or for the government, the right holder shall be informed promptly;”

17. At 2001 WTO Ministerial in Doha, members’ declaration: « the TRIPS Agreement does not and should not prevent members from taking measures to protect public health. » Agreed that « the 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 5: “In applying the customary rules of interpretation of public international law, each provision of the TRIPS Agreement shall be read in the light of the object and purpose of the Agreement as expressed, in particular, in its objectives and principles. Each member has the right to grant compulsory licences and the freedom to determine the grounds upon which such licences are granted. Each member has the right to determine what constitutes a national emergency or other circumstances of extreme urgency, it being understood that public health crises, including those relating to HIV/AIDS, tuberculosis, malaria and other epidemics, can represent a national emergency or other circumstances of extreme urgency. The effect of the provisions in the TRIPS Agreement that are relevant to the exhaustion of intellectual property rights is to leave each member free to establish its own regime for such exhaustion without challenge, subject to the MFN and national treatment provisions of Articles 3 & 4.” Doha Declaration on TRIPS and Public Health

18. In Doha Declaration, members also agreed « Each member has the right to grant compulsory licenses and the freedom to determine the grounds upon which such licences are granted. » WHO definition of CL: «  Governments may issue a compulsory licence to allow the use of an invention (e.g. a patented drug) without the consent of the patent holder on grounds of public interest.” Compulsory licensing has been used by the public sector to introduce price-lowering competition and to ensure the availability of needed medicines, the WHO says. Expenditure on medicines accounts for a major proportion of health costs in developing countries and access to treatment is heavily dependent on the availability of affordable medicines, WHO says. Most trade in medicines is increasing rapidly, with most of this trade taking place between industrialised countries. Developing countries account for 17 % of imports and 6 % of exports. Compulsory Licensing and TRIPS

19. Prices of genericmedicines are muchlowerthanbrandeddrugs. A story in the Business Standard on 4 April gives a comparisonbetweenbranded and genericdrugs (in IndianRupees, eg R125,000 = CHF 2100) Effect of CLs on Prices

20. According to Médecins Sans Frontières, (in 2011) generic prices on HIV/AIDS medicines were notably cheaper than branded drugs: Compulsory Licensing and Prices

21. In 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 AIDS patients treated in govt hospitals from 1,500 to 4,000 In recent years, Indonesia, Mozambique, Zimbabwe, South Africa, Zambia, Eritrea, and Thailand issued compulsory licenses to promote access to medicines World Bank estimated Thailand could reduce cost of second-line therapy by 90% with CLs for all the drugs it needed in second-line therapy, saving itself $3.2 billion over the next 20 years Example of Savings: Malaysia

22. Brazil CL Issued • Brazil – 2007 on ARV efavirenz under Merck patent, sharp criticism similar to Novartis case • Treated 77,000 patients, 42% of all patients under govt HIV program • Brazil said Merck selling drug cheaper in comparable countries • Indian generic versions brought after patent found lacking technical information • Merck injunction against Indian generics rejected by Brazil courts • CL saved 58% of Brazil govt program resources, 2007-2012

23. Use of CLs cont. • Since TRIPS took effect on 1 Jan 2005, at least 12 developing and least-developed countries have granted CLs • Mostly for HIV/AIDS treatments • Others: cancer (India, Thailand), cardiovascular disorders (Thailand), avian flu (Taiwan) • Others have threatened to use CLs

24. WTO Disputes vs National CL Laws • Brazil 2001, Argentina 2000, both by US • Said Brazil’s CL authorization inconsistent w TRIPS, for failure to work the patent • US withdrew, possibly concerned about setting negative precedent on TRIPS interpretation • Argentina= reached settlement confirming must show abuse of dominant position

25. Use of Threat of CL • Lowers prices if company responds • Brazil - used threat for two ARVs for AIDS, 2001, lowered price 40% and 70% • Colombia – 2008 on ARVs, govt declined CL, but filed a class action lawsuit that Abbott violated govt pricing order. Govt ordered reductions of 54-68%.

26. Doha Declaration Paragraph 6 :“We recognize that WTO members with insufficient or no manufacturing capacities in the pharmaceutical sector could face difficulties in making effective use of compulsory licensing under the TRIPS Agreement. We instruct the Council for TRIPS to find an expeditious solution to this problem and to report to the General Council before the end of 2002.” WTO members on 30 August 2003 agreed to waive some restrictions from the TRIPS agreement by making it easier for countries to export drugs made under compulsory licensing to countries unable to manufacture the medicines themselves. Dec 2005 agreed to first TRIPS amendment - need two-thirds of members to ratify. For remaining members, the waiver will continue to apply until that member accepts the amendment and it takes effect. 45 member states (including the EU) have agreed to the amendment. But waiver only used once since 2003. The amendment will become Article 31bis, after Article 31 and an annex will be added to the TRIPS agreement after Article 73 Doha Declaration: Paragraph 6

27. Here is what the «Paragraph 6» waiver says in particular: The decision waives countries’ obligations under TRIPS Art 31(f) which says production under compulsory licensing must be predominantly for the domestic market. This effectively limited the ability of countries that cannot make pharmaceutical products from importing cheaper generics from other countries.In the decision, WTO member governments agreed that the temporary waiver will last until the TRIPS article is amended. TRIPS Council review of Paragraph 6 solution leads nowhere 2003 TRIPS Waiver

28. According to an MSF paper published by the BBC: Sorafenib tosylate is a drug for liver cancer patented by German pharmaceutical company Bayer and marketed as Nexavar. Bayer priced the drug at nearly £3,500 per month India granted a compulsory license on the drug which slashed the price of the drug by 97% - generic versions of sorafenib in India cost to around £84 per month. In the UK, where an affordable generic version isn't available, the price is around £3,000 per month, which drug regulators say is "simply too high" to justify making it available on the NHS. The National Institute for Health and Clinical Excellence rejected Nexavar for NHS use based on its cost-benefit calculation According to MSF: « We need to move to a system where new drugs are priced as close to the cost of production as possible - and where innovation is paid for and rewarded separately. We need innovation and affordable access.” Branded Drugs Too Expensive For Developed Countries?

29. According to the International Federation of Pharmaceutical Manufacturers & Associations: The research-based pharmaceutical industry undertakes different access initiatives to facilitate access to medicines for those who cannot afford them. Given the different mechanisms currently available for developing countries, the use of “TRIPS flexibilities” would not improve access to medicines and could act as negative incentive for the R&D and marketing of new drugs CLs Seen Hindering Innovation by Pharma Companies

30. According to FiercePharma, a report from the market research firm GlobalData found that a convergence of intellectual property worries, price controls and budget cuts eroded earlier forecasts for emerging-market sales growth. Among causes are China and Russia using European prices as benchmarks for their drug spending as those prices have been slashed, and « the threat of compulsory licensing » According to the story, « while governments may not actually force generic licenses on many companies, just a few could induce drugmakers to cut their own prices as a defensive move. » « This isn't to say that emerging markets aren't worth the effort. They are still the fastest-growing on the planet. But profiting from them promises to be a much more complicated effort than drugmakers may have expected. » Pharma worried about eroding earlier forecasts for emerging-market sales growth

31. More CLs Issued

32. Other Health Issues at WTO • WTO Disputes over Australia plain-packaging of tobacco products: • - Said to violate TRIPS on trademarks, et al • - Raises bigger questions about interplay of health and trade