Patents on drugs: Manufacturing scarcity or advancing health?

Journal of Law, Medicine and Ethics

Volumn 30, Issue 4, 2002, Pages 621-631

  Loff, Bebe ^c,d   Heywood, Mark ^a,b  

^a UNIVERSITY OF THE WITWATERSRAND   (South Africa)

^b BALLIOL COLLEGE   (United Kingdom)

^c MONASH UNIVERSITY   (Australia)

^d KING'S COLLEGE LONDON   (United Kingdom)

Author keywords

[No Author keywords available]

Indexed keywords

ANTIRETROVIRUS AGENT; CIPROFLOXACIN; DIDANOSINE; EFAVIRENZ; FLUCONAZOLE; LAMIVUDINE PLUS ZIDOVUDINE; NELFINAVIR; POLIOMYELITIS VACCINE; STAVUDINE; ZIDOVUDINE; ANTI HUMAN IMMUNODEFICIENCY VIRUS AGENT;

ACQUIRED IMMUNE DEFICIENCY SYNDROME; ANTHRAX; BRAZIL; COMMERCIAL PHENOMENA; CONFERENCE PAPER; CULTURAL FACTOR; DIAGNOSTIC PROCEDURE; DRUG COST; DRUG INDUSTRY; DRUG MANUFACTURE; DRUG MARKETING; HEALTH; HEALTH CARE ACCESS; HEALTH CARE DELIVERY; HEALTH CARE ORGANIZATION; HEALTH CARE SYSTEM; HEALTH INSURANCE; HUMAN; HUMAN IMMUNODEFICIENCY VIRUS INFECTION; HUMAN RIGHTS; LAW; MEDICOLEGAL ASPECT; ORGANIZATION; PATENT; POLITICS; PROFIT; SOCIAL ASPECT; SOUTH AFRICA; THAILAND; ARTICLE; HEALTH CARE AND PUBLIC HEALTH; LEGAL APPROACH; LEGAL ASPECT;

HEALTH CARE AND PUBLIC HEALTH; LEGAL APPROACH;

ANTI-HIV AGENTS; DRUG INDUSTRY; HEALTH SERVICES ACCESSIBILITY; HIV INFECTIONS; HUMAN RIGHTS; HUMANS; PATENTS; WORLD HEALTH;

EID: 0036988187     PISSN: 10731105     EISSN: None     Source Type: Journal    
DOI: 10.1111/j.1748-720X.2002.tb00430.x     Document Type: Conference Paper

References (64)

1. M. Robinson, The Impact of the Agreement on Trade-Related Aspects of Intellectual Property Rights on Human Rights, Report of the United Nations High Commissioner for Human Rights, E/CN.4/Sub.2/2001/13 (June 27, 2001): para. 42, available at 〈http://www.unhchr.ch/huridocda/huridoca.nsf/AllSymbols/ 590516104E92E87BC1256AA8004A8191/$File/G0114345.doc?OpenElement〉.
2. A. Attaran and L. Gillespie-White, "Do Patents for Antiretroviral Drugs Constrain Access to AIDS Treatments in Africa?," JAMA, 286, no. 15 (2001): 1886-992. For replies, see M. Boelaert et al., Letters, JAMA, 287 (2002): 7; E. Goemaere, Letters, JAMA, 287 (2002): 7; M.J. Selgelid et al., Letters, JAMA, 287 (2002): 7.
3. A. Attaran and L. Gillespie-White, "Do Patents for Antiretroviral Drugs Constrain Access to AIDS Treatments in Africa?," JAMA, 286, no. 15 (2001): 1886-992. For replies, see M. Boelaert et al., Letters, JAMA, 287 (2002): 7; E. Goemaere, Letters, JAMA, 287 (2002): 7; M.J. Selgelid et al., Letters, JAMA, 287 (2002): 7.
4. A. Attaran and L. Gillespie-White, "Do Patents for Antiretroviral Drugs Constrain Access to AIDS Treatments in Africa?," JAMA, 286, no. 15 (2001): 1886-992. For replies, see M. Boelaert et al., Letters, JAMA, 287 (2002): 7; E. Goemaere, Letters, JAMA, 287 (2002): 7; M.J. Selgelid et al., Letters, JAMA, 287 (2002): 7.
5. A. Attaran and L. Gillespie-White, "Do Patents for Antiretroviral Drugs Constrain Access to AIDS Treatments in Africa?," JAMA, 286, no. 15 (2001): 1886-992. For replies, see M. Boelaert et al., Letters, JAMA, 287 (2002): 7; E. Goemaere, Letters, JAMA, 287 (2002): 7; M.J. Selgelid et al., Letters, JAMA, 287 (2002): 7.
6. The term "essential medicines" is used here to connote the necessity of particular medicines to the survival of a large proportion of people in the developing world. It is not intended in the specialized way that "essential drugs and medicines" are defined for purposes of the list generated by the World Health Organization (WHO). A broader definition, with the Essential Drugs List criteria based on health need rather than current prices, is advocated. This is in keeping with the recommendation of the WHO Expert Committee on Essential Drugs in November 1999, which stated, "Essential drugs are those drugs that satisfy the health care needs of the majority of the population; they should therefore be available at all times in adequate amounts and in the appropriate dosage forms, and at a price that individuals and the community can afford."
7. Expert Committee on the Selection and Use of Essential Medicines, Summary of Recommendations, 12th Expert Committee on the Selection and Use of Essential Medicines Meeting, Geneva, April 15-19, 2002, available at 〈http://www. who.int/medicines/organization/par/edl/expertrecommend.shtml〉.
8. Commissioner of Patents v. The Wellcome Foundation [1983] N.Z.L.R. 385, at 398.
9. Committee on Economic, Social and Cultural Rights, United Nations Economic and Social Council, Human Rights and Intellectual Property, Statement by the Committee on Economic, Social and Cultural Rights, E/C.12/2001/15 (December 14, 2001): paras. 4 and 6.
10. Bristol-Myers Squibb Co. v. FH Faulding & Co. Ltd [2000] FCA 316, available at 〈http://www.ipcr.gov.au/SUBMIS/docs2/Sub11AttA.pdf〉.
11. I b i d.
12. In an affidavit filed in support of the Treatment Action Campaign in Pharmaceutical Manufacturers Association of South Africa v. President of the Republic of South Africa, No. 4183/98 (High Court of South Africa, Transvaal Provincial Division February 18, 1998), Professor Colleen Flood of the University of Toronto mapped how patent law in Canada evolved since 1923 with the "expressly stated goal of making food and medicine affordable to the public" (at para. 4). To facilitate this, various legal devices, including compulsory licensing and administrative mechanisms (a Patented Medicines Prices Review Board), were established. However, in common with developing countries, Canada has been pressured to strengthen intellectual property protection. In Australia, the government negotiates with industry as a monopsonist purchaser and is thus able to provide drugs to the community at greatly reduced prices under a Pharmaceutical Benefits Scheme.
13. J. Bermudez et al., Access to Drugs, the WTO TRIPS Agreement, and Patent Protection in Brazil: Trends, Perspectives, and Recommendations to Help Find Our Way, paper prepared for the Médicins Sans Frontières Drugs for Neglected Diseases Working Group (February 20, 2002): at 2 (citation omitted).
14. J.O. Lanjouw, "The Introduction of Pharmaceutical Product Patents in India: 'Heartless Exploitation of the Poor and Suffering'?," Oxford Intellectual Property Research Centre, Electronic Journal of Intellectual Property Rights, WP 07/99 (originally published August 10, 1999), available at
15. See, for example, Article 28 of the Paris Convention for the Protection of Industrial Property (March 20, 1883, as amended on September 28, 1979), available at 〈http://www.wipo.int/clea/docs/en/wo/wo020en.htm〉.
16. According to Audrey Chapman, Brazil, Ecuador, India, Pakistan, South Africa, and Thailand were among the countries subject to trade threats. A.R. Chapman, Approaching Intellectual Property as a Human Right: Obligations Related to Article 15(1)(c), E/C.12/2000/12 (November 27, 2000): at para. 33, cited in Robinson, supra note 1.
17. S. Markandya, Timeline of Trade Disputes Involving Thailand and Access to Medicines, Version 1.0, Consumer Project on Technology (July 23, 2001), at 〈http://www.cptech.org/ip/health/c/thailand/thailand.html〉.
18. M. Ryan, Knowledge Diplomacy, Global Competition and the Politics of Intellectual Property (Washington D.C.: Brookings Institution Press, 1998): at 12.
19. J. Braithwaite and P. Drahos, Global Business Regulation (Cambridge, England: Cambridge University Press, 2000): at 83.
20. Final Act Embodying the Results of the Uruguay Round of the Multilateral Trade Negotiations, April 15, 1994, available at 〈http://www.wto.org/ english/docs_e/legal_e/03-fa.pdf〉.
21. Agreement on Trade-Related Aspects of Intellectual Property (April 15, 1994), available at 〈http://www.wto.org/english/tratop_e/trips_e/t_agm0_e. htm〉.
22. Id. at Article 7.
23. One such measure might be the use of parallel importation, a legal mechanism on which TRIPS allows countries to determine their own law. Parallel importation means that once the patent holder has sold its product, it has exhausted its rights over the product and the new owner may sell it to others. As pharmaceuticals vary dramatically in price internationally, this is a useful provision that is widely used in the European Union. It has also been exploited successfully by the Philippines government to buy patented medicines from India at prices lower than they were being sold in the Philippines. However, in 2016, when all countries are to become members of the WTO, there will be limited benefit to parallel importation as there will be less variation in the price of patented medicines between countries as a result of the elimination of generic competition.
24. Compulsory licensing involves the licensing of companies that are not the inventors (patent holders) of a medicine to produce and sell that medicine. It means a deprivation of certain rights ordinarily granted to patent holders. Its benefit in the context of medicine is drastically lower prices. Compulsory licensing is of no effect when there is no domestic industry, as TRIPS does not allow the export of medicines produced under compulsory license. This leaves poor countries without their own industry at the mercy of donor agencies and multilateral organizations. Contractual agreements sometimes suggested as an alternative legal route for obtaining pharmaceuticals would be subject to the contingences created by unequal bargaining power.
25. Robinson, supra note 1, at para. 22.
26. Jagdesh Bhagwati, interview by Geraldine Doogue, Life Matters, Australian Broadcasting Corporation (March 12, 2002).
27. M. Weisbrot, Center for Economic and Policy Research, Rich Country Protectionism Puts WTO on the Slow Track (November 16, 2001), at 〈http://www.cepr.net/columns/weisbrot/rich_country_protectionism.htm〉. James Love, director of the Consumer Project on Technology, states simply, "market incentives for health care R&D are not efficient." See J. Love, Paying for Health Care R&D: Carrot and Sticks, paper prepared for the Médicins Sans Frontières Drugs for Neglected Diseases Working Group (January 2001): at 1.
28. M. Weisbrot, Center for Economic and Policy Research, Rich Country Protectionism Puts WTO on the Slow Track (November 16, 2001), at 〈http://www.cepr.net/columns/weisbrot/rich_country_protectionism.htm〉. James Love, director of the Consumer Project on Technology, states simply, "market incentives for health care R&D are not efficient." See J. Love, Paying for Health Care R&D: Carrot and Sticks, paper prepared for the Médicins Sans Frontières Drugs for Neglected Diseases Working Group (January 2001): at 1.
29. World Health Organization, Removing Obstacles to Healthy Development, Report on Infectious Diseases, WHO/CDS/99.1 (Geneva: World Health Organization, 1999): at § 1.1, available at 〈http://www.who.int/infectious-disease- report/pages/textonly.html〉.
30. Id. In this context, it is often argued that the difference between (a) the cost of producing the developed drug and (b) the cumulative costs of research and development that go into bringing a successful new medicine to the market make downward pressures on drug prices (by whatever means) unsustainable - and ultimately counterproductive to the future development of new drugs. However, this argument is difficult to dissect because of the dearth of transparency regarding the actual costs of research and development, marketing and the costs of providing the developed drug alone. Typical of the rhetoric on the cost of development is a recent claim by PhRMA that $800 million is required to bring a drug to market, where only one product results from a pool of more than 5,000 new chemical entities. See PhRMA Special 301 Submission, Priority List Watch Countries, 2002. These claims by pharmaceutical companies are, to put it mildly, contested. Actual costs are difficult to obtain. James Love, for example, has pointed out how these claims originate from a 1991 study by Joseph DiMasi, which estimated the cost of new drug development at $231 million. But Love points to "several misunderstandings" regarding subsequent estimates based on DiMasi's work, including the fact that these figures were: estimates of the costs of doing both the early discovery and pre-clinical work, the clinical trials and FDA regulatory approval. For many drugs, the U.S. government paid for either the pre-clinical or clinical work. In those cases the companies' costs were lower. In addition, these figures were largely based upon adjustments for both risk and huge cost of capital assumptions, and not on actual expenditures on R&D. James Packard Love, Affidavit (April 9, 2001): at paras. 37-38, filed in support of the Treatment Action Campaign in Pharmaceutical Manufacturers Association of South Africa v. President of the Republic of South Africa, No. 4183/98 (High Court of South Africa, Transvaal Provincial Division February 18, 1998).
31. Pharmaceutical Manufacturers Association of South Africa v. President of the Republic of South Africa, No. 4183/98 (High Court of South Africa, Transvaal Provincial Division February 18, 1998).
32. R. Stern, AIDS Treatment Access in Latin America: The Year in Review, Consumer Project on Technology (January 7, 2002), at 〈http://www.cptech. org/ip/health/aids/stern01072002.html〉.
33. S. Laverack, presentation on the Aid for AIDS program, Cape Town, June 2001. "Significant sustained cost savings have been achieved primarily by reduced expenditure on hospitalisation." Id.
34. See Attaran and Gillespie-White, supra note 2, at 1892, who make the strange assertion that "the data suggest that patents in Africa have generally not been a factor in either pharmaceutical economics and anti-retroviral drug treatmentaccess (South Africa, with its larger affluent market, is an exception.)." In addition to its "affluent market," where 22 million people live below the poverty line (?), South Africa has one tenth of the global total of people living with HIV.
35. United Nations Development Programme, "Human Development Indicators," Human Development Report 2001 (New York: Oxford University Press, 2001): at 159.
36. National AIDS Drug Policy, Ministry of Health, Secretariat of Health Policies (2001), Also according to the National AIDS Drug Policy of the Brazilian Ministry of Health, "Congres sional Bill 9113, of 13 November 1996, guarantees every patient access, free of direct costs, to all the medication required for his/her treatment, including protease inhibitors."
37. UNAIDS, Report of the Global HIV/AIDS Epidemic, UNAIDS/00.13E (June 2000): at 102, available at 〈http://www.unaids.org/epidemic_update/report/ Epi_report.htm〉.
38. Robinson, supra note 1, at para. 52.
39. See E. 't Hoen and S. Moon, Médicins Sans Frontières, Pills and Pocketbooks (July 18, 2001), at 〈http://www.msf.org/content/page.cfm? articleid=1A25BDD8-64D1-4B40-BA2C06C23BEAFFCE〉. 't Hoen and Moon write, "Lessons can be learned from Brazil where the price of AIDS drugs fell by 82% over five years as a result of generic competition. The prices of drugs that had no generic competitor remained stable, falling only 9% over the same period." See also World Health Organization, World Trade Organization, Norwegian Foreign Affairs Ministry, and Global Health Council, Report of the Workshop on Differential Pricing and Financing of Essential Drugs (April 2001): at 7, available at 〈http://www.who.int/medicines/library/edm_general/who- wto-hosbjor/wholereporthosbjorworkshopfin-eng.doc〉: "It was noted that within the year prior to the workshop, a combination of corporate responsiveness, domestic production, and competition have led to substantial reductions in the price of HIV/AIDS drugs."
40. See E. 't Hoen and S. Moon, Médicins Sans Frontières, Pills and Pocketbooks (July 18, 2001), at 〈http://www.msf.org/content/page.cfm? articleid=1A25BDD8-64D1-4B40-BA2C06C23BEAFFCE〉. 't Hoen and Moon write, "Lessons can be learned from Brazil where the price of AIDS drugs fell by 82% over five years as a result of generic competition. The prices of drugs that had no generic competitor remained stable, falling only 9% over the same period." See also World Health Organization, World Trade Organization, Norwegian Foreign Affairs Ministry, and Global Health Council, Report of the Workshop on Differential Pricing and Financing of Essential Drugs (April 2001): at 7, available at 〈http://www.who.int/medicines/library/edm_general/who- wto-hosbjor/wholereporthosbjorworkshopfin-eng.doc〉: "It was noted that within the year prior to the workshop, a combination of corporate responsiveness, domestic production, and competition have led to substantial reductions in the price of HIV/AIDS drugs."
41. Law No. 9.279 of May 14, 1996, to Regulate Rights and Obligations Relating to Industrial Property, Article 71 states: "In cases of national emergency or of public interest, declared in a decision of the Federal Executive Power, and where the patent owner or his licensee do not satisfy such need, a temporary non-exclusive compulsory license to exploit the patent may be granted ex officio, without prejudice to the rights of the owner of the patent."
42. On August 22, 2001, the Brazilian Ministry of Health announced its intention to "break the patent of the drug Nelfinavir"; it was pointed out that a Brazilian government laboratory "has succeeded in producing the drug at a saving of 40% over that charged by Roche. This will mean a saving of 88 million reais per year." Brazilian Ministry of Health, Official Note (August 22, 2001), available at 〈http://lists.essential.org/pipermail/ pharm-policy/2001-August/001410.html〉.
43. Robinson, supra note 1, at para. 58.
44. See United Nations Development Programme, supra note 31, at 159. It is also significant that Thailand occupies a relatively high position (99 out of 191) in terms of general health system attainment and performance. See World Health Organization, World Health Report 2000 (Geneva: World Health Organization, 2000): at Annex Table 1, "Health System Attainment and Performance in all Member States," at 152-55.
45. Oxfam, The Impact of Patent Rules on the Treatment of HIV/AIDS in Thailand, Thailand Country Profile (March 2001): at 1.
46. Id. at 2.
47. Id. at 5.
48. Id. at 3.
49. See Attaran and Gillespie-White, supra note 2.
50. Robinson, supra note 1, at para. 25, citing World Bank, World Development Indicators 2000 (Washington, D.C.: World Bank, 2000): at Table 5.12.
51. J.P. Garnier, presentation at the Lehman Brothers 5th Annual Global Healthcare Conference, Orlando, Florida, February 26, 2002, available at 〈http://corp.gsk.com/financial/lehbrothers_26feb2002.htm〉.
52. World Health Assembly, Revised Drug Strategy, WHA52.19 (May 24, 1999), available at 〈http://www.who.int/gb/EB_WHA/PDF/WHA52/ResWHA52/e19. pdf〉.
53. The Ministerial Conference is the highest decision-making body of the WTO and it can make decisions on all matters under any of the WTO agreements, including the TRIPS agreement.
54. World Trade Organization, Declaration on the TRIPS Agreement and Public Health, WT/MIN(01)/DEC/2 (adopted November 14, 2001): at para. 5, available at 〈http://www.wto.org/english/thewto_e/minist_e/min01_e/mindecl_ trips_e.htm〉.
55. Inside U.S. Trade, "EU and U.S. Split over Scope of TRIPS Exceptions for Public Health" (March 8 2002), available at 〈http://lists. essential.org/pipermail/ip-health/2002-March/002756.html〉.
56. World Health Organization, supra note 39, at 4.
57. Id. at 4.
58. Reference has already been made to the Medicines and Related Substances Control Amendment Act, 1997, in South Africa. In 2001, the government of Kenya passed a new Industrial Property Bill which, according to Médicins Sans Frontières, represented a landmark victory, includes rights concerning parallel importation, compulsory licensing, and a Bolar provision. Médicins Sans Frontières, Press Release (May 10, 2001), at 〈http://www.msf.org/content/page.cfm?articleid=D2BCAC7D-8881-4391- 83ACD5D23BDBED2A〉.
59. General Assembly, United Nations, International Covenant on Economic, Social and Cultural Rights (adopted December 16, 1966): at Article 15.
60. See Robinson, supra note 1.
61. Audrey Chapman, American Association for the Advancement of Science, "New Projects Focus on Intellectual Property and Human Rights," Report on Science & Human Rights, XXII, no. 1 (Winter 2002), available at 〈http://shr.aaas.org/report/xxii/ip.htm〉.
62. Washington File USIS, "United States Abstains from Vote on AIDS Drugs Resolution: Measure to Increase Access Is 'Flawed,' Ambassador Says," April 23, 2001, available at 〈http://www.aegis.com/default.asp?req=http:// www.aegis.com/news/usis/2001/US010405.html〉.
63. Committee on Economic, Social and Cultural Rights, supra note 6, at para. 12.
64. Robinson, supra note 1, at para. 22.