Background and follow-up of the drug court case in South Africa

1. Background and follow-up of the drug court case in South Africa Dr Wilbert Bannenberg WHO Technical Adviser Pharmaceuticals

2. “The goal of the National Drug Policy is to ensure an adequate and reliable supply of safe, cost-effective drugs of acceptable quality to all citizens of South Africa and the rational use by prescribers, dispensers and consumers”

3. 1996: NDP implementation strategy • Technical support (WHO/SADAP) • Legislation (Act 90 of 1997) • Standard Treatment Guidelines, Essential Drug Lists • Training, capacity building programmes • Transformation of Medicines Control Council

4. 1. Rational selection 3. Sustainable financing ACCESS 4. Reliable health and supply systems 2. Affordable prices WHO access framework

5. What Act 90 was to achieve... • Parallel import (15C) • Generic substitution • Preventing perverse incentives (bonusing, sampling) • Licensing dispensing doctors • Pricing Committee

6. Why did Industry block Act 90? • South Africa sets dangerous precedent: 1st TRIPS compliant developing country • “TRIPS does not allow parallel import” • “Unfettered powers of the Minister are unconstitutional” • Perverse incentives = marketing tool • Delay generic substitution (R 2m / day)

7. 1. Rational selection ACCESS 1. Selection

8. Good selection practices • priority for essential drugs • evidence based standard treatment guidelines • provide objective information • accompanying training systems • consult widely • mostly accepted by industry

9. New drugs needed! • big needs: • growing resistance problems (MDR-TB) • new diseases (HIV/AIDS) • limited progress: • R&D geared towards developed countries • few drugs for diseases of poverty • if invented, drugs are patented, and often unaffordable

10. ACCESS 2. Affordable prices 2. Affordable prices

11. 1998: Affordable prices? • HAART: R 70,000 / year • Cryptococcus: R 13,500 pp / year • MDR-TB: R 25,000 pp / year • CMV retinitis: R 12,000 / 2 weeks • 1998 data

12. Discount for public sector?

13. Patents keep drugs expensive!

14. What can the public sector afford? • Preventive care: yes • Testing, counselling: yes • Opportunistic infections: almost all • Palliative care: yes • Needlestick injuries: yes • MTCT: yes • Antiretrovirals for AIDS: needs further price reductions (generics) and additional drug budget < Trevor Manual

15. Can the private sector afford ARVs? • up to 37% of health expenditure already spent on drugs & medical supplies • 14,000 AIDS patients receive ARVs from “Aid for AIDS” project in SA • After recent price reductions, ARVs are affordable (USD 900 pp/yr) and cost-effective.

16. Politics of competition: d4T pricing BMS: $274 Brazil: $197 BMS: $55 Cipla: $69 Hetero: $47

17. Other price reduction strategies • Information service - UNICEF/WHO/UNAIDS • negotiation: equity pricing for poorer countries: based on need and ability to pay - tiered vaccine prices a model? • reduction of taxes and duties • application of TRIPS “health safeguards”: • early working / Bolar, • compulsory licenses, • parallel imports

18. Impact of TRIPS on drugs • Higher prices for new drugs • Generics competition delayed • Weaker local pharmaceutical industry in developing countries • Drug production concentrated in a few rich countries (17 countries 84%)

19. Parallel import • World-wide shopping for same drug • Cause: differential pricing by industry • Principle not (yet) enabled in Patent Act • Act 90, 15C allows parallel import • Private sector: 5% savings (R400m?) • Public sector: modest saving (R 20m?)

20. Compulsory licenses • Limits to exclusive rights in case of: • public health emergency • non-commercial government/public use • excessively high prices (abuse) • Savings 10-97% (depends on pricing) • Was always legal under SA Patent Law • Bilateral trade pressures prevented its use; court case reversed this!

21. Early working (Bolar provision) • Testing, registering generics (before patent expiry) currently illegal in SA • but not outside SA (competitive advantage foreign companies!) • Unnecessary delay 1-2 years • Early working provision agreed by DTI and DOH (amendment Patent Act?)

22. 1997: TRIPS-plus pressures • TRIPS = minimum agreement • USA: 301 Watch list; bilateral pressure for more patent protection • patent extensions (USA: 23 years) • no compulsory licensing • no parallel import • EU: trade pressure • no Bolar

23. 1999: International opinion shifts • AIDS activists follow Al Gore • Clinton “allows” parallel import for AIDS crisis in Africa (if TRIPS compliant) • USA stops bilateral trade pressures • EU also reverses trade pressures

24. 2000: Accelerating access (?) • 10 May 2000 UNAIDS announcement • Few hard data - bilateral negotiations • Senegal, Uganda, Kenya, Rwanda: less than 2000 HIV+ people benefit from 75-90% price reductions • SA: industry offers, but politicians not interested in ARVs • SA: private sector prices down (USD 900 pp/year)

25. 2001: Why drop the court case? • AIDS is a crisis beyond proportion • Moral outrage on profits drug companies • Parallel import accepted by WTO • USA, EU changed position • Legal arguments are weak • Bad PR: “stop case whatever it takes” • Multinationals press local PMA

26. Donations • Pfizer: fluconazole for cryptococcal meningitis, oesophageal candidiasis (2 years) • Boehringer Ingelheim: nevirapine for MTCT (5 years) • prevent loss of control at any cost (compulsory licensing) • more profitable to donate than to sell cheap!

27. Compulsory License Patents Act SA controls non-exclusive allows generics clear procedure prices cheaper? Conditions, royalties Reduced price offer voluntary offer international control exclusive brandname only terms not yet clear prices higher? Conditions? Compulsory license or price reduction?

28. Current Patent Acts in Africa? • Many African countries have no pre-TRIPS patent Act • <2006: free import of all generics • >2006: free import of all drugs patented before 1995 • Is the drug patented? (e.g., ddI in SA) • Namibia, Mozambique: ARVs not patented (bus trips, Internet pharmacy?)

29. 3. Sustainable financing ACCESS 3. Financing

30. Sustainable financing?

31. Health spending in Africa 1977-1997 (% of GDP)

32. Financing: sustainable? • Declining total public health funding in Africa, changing public and private shares. • Substantial out of pocket spending • Four principal sources of finance for health: out of pocket, tax-funding, insurance contributions, external support (donations, loans (debt?)). • National “pooling” strategies recommended by WHR2000. Public finance offers greatest pooling potential in LDCs; rarely achieved

33. ARVs for SA’s public sector? • Prices have dropped 90%, but... • Big farma USD 600/yr • Generics USD 250/yr • 500,000 AIDS cases needing ARVs • cost >>USD 125m / year (and increasing!) • need additional drug budget! • Botswana example?

34. ACCESS 4. Reliable health and supply systems 4. Health infrastructure

35. Infrastructure, supply, training • new ARV drugs need more than $$: • more, better trained doctors • dedicated infectious disease nurses? • VCT, laboratory services (CD4, VL?) • informed patients • COTS, FOTS, NOTS? • controlled distribution • 95% adherence needed… • pilot projects, then scale up?

36. Court case follow-up • Act 90 Regulations to be gazetted (December?) • Sections of Act 90 to be promulgated by President • Pricing Committee? • Political climate more conducive for voluntary (and compulsory?) licensing

37. Pricing Committee • Minister to appoint members • Committee’s tasks: • draft Regulations • study Pricing Systems (public+private) • monitor prices • recommend action where needed (PI, CL, negotiations, etc) • Pharmaco-economic evaluation

38. Licensing Dispensing Doctors • NDP objectives: • Separate prescribing / dispensing • Remove financial incentives for Rx • Licenses for services in rural areas and where there is no pharmacy • License requires training, inspection • Emergency administration allowed

39. So what? • The TRIPS compliance debate is over • Doha to review health issues TRIPS • Country support needed to include public health safeguards into law • Drug prices will drop to prevent CL • Access to ARVs = next debate • private sector (SA): cost-effective • public sector: Botswana test case?

40. Thank you!