Cheaper Medicines for the Public Good

By Peter Maybarduk
The Chronicle of Higher Education
Letters to the Editor

To the Editor:

Sheldon Elliot Steinbach’s “Academe Should Oppose Speedier Approval of Generic Drugs” (The Chronicle, April 25) places universities’ highly uncertain financial interests in technology licensing ahead of their public missions to promote the public good through, for example, ensuring that the fruits of university research are publicly available and affordable. If, as Steinbach recommends, universities support legislation to require long periods of marketing exclusivity for biologic medicines, the result could be a financial windfall for brand-name biologics companies at significant — and, in some cases, deadly — public cost.
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Biologic medicines include key drugs for cancer, diabetes, and heart disease. But biologics routinely cost tens of thousands of dollars per patient per year, sometimes more than $100,000. Those high prices limit access and absorb resources that could be invested in meeting other health-care needs.

The availability of follow-on biologics, or biogenerics, would save consumers and health programs billions of dollars per year. Until now, the Food and Drug Administration has had no efficient mechanism for biogenerics review, and so very few have come to market. But lawmakers are debating several proposals for biogenerics review.

The worst of the proposals, supported by the Biotechnology Industry Organization — and in principle, it seems, by Steinbach — advocates shielding biologics from biogeneric competition for a minimum of 14 years. Every year of exclusivity would cost consumers billions.

Meanwhile, universities’ financial gains from royalties on biologics are not clear. Many university technology-transfer offices operate at a net loss.

Further, the vast bulk of the $45-billion that U.S. academic centers received for research and development in 2006 came not from licensing, but from federal funds. The public deserves, at an embarrassing minimum, that universities not lobby to keep prices high while taking the people’s money.

Peter Maybarduk
Attorney
Access to Medicines Project
Essential Action
Washington

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Here is the full text of the submitted letter:

Chronicle LTE: Biogenerics

May 3, 2008

To the Editor:

Sheldon Elliot Steinbach’s Commentary “Academe Should Oppose Speedier Approval of Generic Drugs” (Issue 33, April 25, 2008) places universities’ highly uncertain financial interests in technology licensing ahead of their public missions to promote the public good through, for example, ensuring fruits of university research are publicly available and affordable. If, as Steinbach suggests, universities support legislation to require long periods of marketing exclusivity for biological medicines, the result could be a financial windfall for brand-name biologics companies at dramatic, and in some cases deadly, public cost.

Biologic medicines include key drugs for cancer, diabetes and heart disease. But biologics routinely cost tens of thousands of dollars per patient per year, and sometimes top one hundred thousand. These high prices limit access, and absorb resources that could be invested in other health care needs.

Availability of follow-on biologics, or biogenerics, would save consumers and health programs many billions of dollars per year. Until now, the FDA has had no efficient mechanism for biogenerics review, and so very few have come to market. But lawmakers broadly agree on the need to introduce an efficient pathway to biogenerics approval, and are debating several proposals.

The worst of these proposals, supported by the Biotechnology Industry Organization (BIO) and in principle, it seems, by Steinbach and the Association of American Universities, advocates 14 years of data exclusivity, during which biogenerics would be effectively excluded from the market, and brand-name companies would enjoy a monopoly. Such a bill would be a tremendous windfall for BIO: conventional drugs receive “only” a maximum eight years exclusivity, and the average patent, if we accept BIO’s figures, lasts an average 11.5 years after first sale. Under BIO’s proposal, new biologics would be shielded from competition a minimum 14 years. Some, through patents and patent extensions, would have even longer monopolies. Every year of exclusivity would cost consumers billions.

Meanwhile, university financial gains from biologics royalty payments are not clear. Many university technology transfer offices – some studies suggest half – operate at a net loss. The top 7% of universities take 60% of total technology licensing revenue, generally from a few blockbuster products, which may or may not offer significant health or other benefits to the public.

Further, the vast bulk of the $45 billion universities received for research and development in 2006 came not from licensing — as some readers of Steinbach’s commentary might be led to believe — but from federal funds. The public deserves, at an embarrassing minimum, that universities not lobby to keep prices high while taking the peoples’ money.

The relentless, and often unfruitful, quest to increase licensing revenues threatens to separate universities from their historic missions to serve the public interest. If the American Association of Universities has its way – and BIO wins in Congress – we will all pay more than necessary, for longer periods of time, for biological medicines. For those lifesaving products with prices in the tens of thousands, this is a dangerous game indeed.

Peter Maybarduk

Attorney
Essential Action
Access to Medicines Project

P.O. Box 19405
Washington, D.C. 20036
[email protected]
http://www.essentialaction.org/access/

WHO: Secretariat’s publications policy questioned at Board meeting

May 29, 2008
by Sangeeta Shashikant
South-North Development Monitor (SUNS) #6485

Geneva, 29 May (Sangeeta Shashikant) — Both developed and developing countries vigorously questioned the WHO Secretariat during the WHO’s Executive Board meeting on 26 May on its publications policy and called for further discussion on the matter.

Among the questions raised at the WHO’s 123rd Executive Board meeting were the need and rationale for the new publications policy, what the present policy is, and what will be the criteria for determining which issues have “policy implications for the Organisation” and which comprise “controversial health related issues” and thus have to go through additional clearance by the Director-General’s Office.

Other concerns raised included how the centralization of the clearance process may remove the clearance authority of the WHO’s Regional Directors, the broad definition of the term “publications” as it covers “materials that are issued by WHO to the public in whatever format and through whatever channel” including advocacy and training materials, and how the policy will affect timely support by WHO to countries.

Concerns about “self-censorship” as a result of the policy and transparency in the process were also raised.

A comment was also made that insisting on “evidence-based” publications was not always possible in the medical field.

Many delegations called for the need to have more discussions and to assess the implications of the policy, before it was implemented.

However, it is not clear whether the policy will be subject to further discussion and what the Secretariat intends to do about the various concerns and clarifications raised, since the meeting “noted” the Secretariat’s report, following what some persons who follow WHO processes closely now call a “trust-me” speech by the WHO Director-General Dr. Margaret Chan.

Some delegations indicated that they intend to follow up on the matter, as they were dissatisfied with the explanations provided. They said that, in particular, the explanation did not specifically address what criteria will be used to determine publications containing issues that have “policy implications for the Organisation” and what constitutes “controversial health related issues” (which require clearance from the Director-General’s office) and why the differential treatment of publications was needed.
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The WHO’s publications policy contained in two Secretariat’s reports, “WHO Publications” (EB 122/20 dated 6 December 2007) and “WHO publications policy: guidance on implementation and evaluation” (EB 123/7 dated 14 April 2008), has become the subject of controversy.

Many believe that the policy is due to pressure from the US. “IP Watch” reported on 28 September 2006 that William Steiger, special assistant to the secretary for international affairs at the US Department of Health and Human Services, wrote to Acting WHO Director-General Anders Nordstrom asking Nordstrom to withdraw a WHO publication on IPRs and public health and calling for a “full review” of the WHO’s publication policy at the Executive Board meeting in January 2007.

[The publication titled “The Use of Flexibilities in TRIPS by Developing Countries” was one of the 22 studies commissioned by the WHO Commission on Intellectual Property Rights, Innovation and Public Health (CIPIH), which was published by the WHO and South Centre in April 2006. The CIPIH secretariat had given the go-ahead to publish the study.]

Prior to the 26 May Board meeting, serious concerns on the new policy were raised by many NGOs as well as a senior member of the US Congress.

Fifty-three NGOs in a letter dated 15 May wrote to the WHO Director-General urging her to reconsider the policy, adding that the policy, if implemented, will result in a tendency towards “self censorship” by WHO and its staff. (See http://www.twnside.org.sg)

The letter also expressed concern that the policy will hamper timely advice and support by WHO headquarters and regional offices to member states over important issues such as the application of intellectual property rights and the use of TRIPS flexibilities, other trade and health matters, reproductive health care and other issues.

The Chair of the US House of Representatives’ Oversight and Government Reform Committee, Henry Waxman, sent a letter dated 19 May 2008 to Dr Chan, urging the WHO “to minimize the possibility of inappropriate political interference with the publication process”, and expressing hope that WHO’s new publication policy will be “designed in a manner that is not politicized and continues to prioritize scientific and intellectual freedom.”
(See http://www.essentialaction.org/access/index.php?/archives/154-Waxman-letter-on-WHO-Publications-Policy.html)

The new publications policy requires publications “that describe the workings of a particular government or national health service or that have policy implications for the Organization or address controversial health-related issues” to go through “additional clearance by the Director-General’s Office” while the final text of all other publications can be cleared by the “relevant Assistant Director-General or Regional Director before publication.” (paragraph 13 of EB 122/20).

This requirement is also applicable to “any article, book chapter or invited commentary relating to WHO’s work that is to be submitted by a staff member for external publication” (paragraph 9 of EB 122/20).

The policy defines “publication” in footnote 2 of EB 122/20 as “information products, i.e. Materials that are issued by WHO to the public in whatever format and through whatever channel. It excludes materials internal to WHO.”

Paragraph 3 of EB document 123/7 further defines information products as “written or illustrated works that the Organisation makes publicly accessible. Examples include documents on the website and journal, articles, guidelines, reports, training materials and advocacy materials in any format (printed, web, CD-ROM/DVD or audiovisual), whether sold or distributed free of charge”.

The policy documents also mention the aims of having evidence-based publications, reducing costs, publishing fewer titles and reducing hard copies while disseminating WHO’s publications more through electronic means.

A “policy coordination group” (which will report to the DG) is to be set up to oversee implementation of the policy. There will be forms for executive and production clearance, which will be incorporated into the approval process management tool. Those responsible for clearing a product must check for technical accuracy and conformity with the Organisation’s policies, and they must recognize when to refer the products to the DG’s office for additional clearance where it concerns controversial health related issues and policy implications for the Organisation.

According to the new policy, there will be categories of products wherein a specific category will trigger the relevant pathway for content development, production, dissemination and the appropriate criteria for clearance. For example, if a product concerns guidelines, then it must be developed according to the procedures put in place in the Guidelines Review Committee, whereas advocacy materials must be created in accordance with standards set by the Department of Communications in HQ.

A master list of planned publications will also be prepared for executive approval at the beginning of each biennium (EB 122/20).

According to the Secretariat’s report (EB 123/7), the policy will be regularly evaluated. A full report on the implementation of the policy will be submitted to the Executive Board at its 129th session in 2011.

Indonesia, on behalf of members from the South East Asian Regional Office (SEARO), expressed concern that the policy defines “publications” very broadly, adding that it takes away the authority of clearance from the Regional Director and centralizes it to the DG on issues that are controversial and that have policy implications. Indonesia sought clarification as to what issues were considered to be “controversial health related issues” and the issues are controversial to whom?

Indonesia added that the policy would result in difficulties in providing timely information in case there are new controversial issues emerging. It sought clarification as to whether the master list prepared at the beginning of each biennium would hamper the ability to deal with new issues.

Indonesia urged the matter to be discussed thoroughly and for an assessment of the implications before the policy is implemented.

Brazil said that it has doubts on the need for a new publications policy as it was not yet recognized that the present policy is unsuccessful. It had concerns with regards to the criteria that will be applied to determine which topics have policy implications and concern controversial health related issues.

It did not see any reason to implement this policy, which may result in self-censorship. It believed that “controversial health related issues” should be debated openly, as one of the objectives of the WHO is to provide information without any interference or political pressure from member states.

Brazil added that prior to implementing the policy and given its importance, the policy should be subjected to discussion, which should be informed as to the necessity of the policy, how to resolve the issue of what is controversial, how other international organizations deal with this issue, and the difference between the present and proposed policy.

Djibouti, on behalf of the Eastern Mediterranean Regional Office, said that the WHO’s greater stress on electronic publication must not run counter to access to information, as access to electronic information is limited in developing countries. It added that assessing the impact of information products produced is not an easy task as it requires broad research to identify whether WHO’s publication has been used for the development of a policy.

Slovenia, speaking on behalf of the EU, said that implementation and evaluation of WHO’s policy should be in line with WHO’s normative mandate, focused on evidence-based documents. It also called for a wide accessibility to WHO’s documents.

Slovenia stressed the importance of transparent and unbiased publications. It also sought explanation as to what is the criterion for approval of publications, stressing the need to avoid censorship with respect to what may be considered as controversial issues.

Sri Lanka, aligning itself with Indonesia’s statement, expressed hope that regional offices will retain a certain degree of independence in order to respond to countries’ needs. It added that regional offices need to have adequate representation in the policy coordination committee. It wanted further discussion before the policy is implemented.

Afghanistan emphasized the need for scientific documents to be published without censorship and for member states to allocate resources for translating the publications into local languages.

Malawi said that while it appreciated “cost-effectiveness”, this should not be at the expense of access and should take into account capacity constraints. It proposed that further work on the policy be considered.

Oman also expressed a need to study the situation before taking a decision and for the information to be disseminated in other languages besides the official languages.

South Africa requested more information as to what were the Terms of Reference of the policy coordination group mentioned in document EB 123/7, how it would function and its relationship between the production and clearance mechanisms.

Zimbabwe stressed the need for “editorial freedom” and transparency and said that cost- effectiveness should not hamper access and dissemination. South Africa and Zimbabwe also supported the statements made by Malawi and Brazil.

The United States said that the publications policy must be widely understood and implemented nationally, regionally and at the headquarters level. It expected the DG to monitor implementation of the policy, adding that the DG should establish an Executive Secretariat to look through the publications. It added that disclaimers do not obviate the need for the publications policy.

Kenya said that it was necessary for the policy to ensure the independence of the DG, adding that in medicines there may not be evidence on everything and thus there was a need to assess using “evidence” as a criteria. The policy should be flexible in responding to the challenges of global health.

Canada, associating itself with the statement by the EU, stressed the need to balance between excessive centralization and bureaucratization with flexibility. It added that “transparency” was a critical element.

Responding to the concerns and questions raised, Dr. Tim Evans, WHO’s Assistant Director-General for Information, Evidence and Research said that the process approval was intended to develop greater awareness, responsibility and accountability of all those involved in the process, make the approval process faster, avoid duplication and produce materials in line of the Organisation’s strategic objectives and priorities.

He added that the master list will periodically be updated. With regard to executive clearance, he said this is “not a new clearance mechanism”. He added that access to publications will not be “compromised”.

WHO’s legal counsel Gian Luca Burci said that there are some issues with regard to correctness of terminology, expressions and references to political and legal status of states and taking care of the accuracy of these descriptions falls under the corporate responsibility of senior management. He added that there is already a review mechanism but the policy is important to strengthen the programmes.

Dr. Chan said that this is not a “new policy”, adding that WHO has a policy that moved from centralization to decentranlisation but it is important to review the policy, thus the issuing of the new documents.

She said that she guarded her “editorial independency with jealousy” and there is “no question of censorship”, adding that they will base documents on best evidence possible, consistent with the WHO’s core functions. She added that the publications have to be “peer reviewed” but this also has problems, i. e it can be “incestous” depending who is on the peer review committee.

She said that there is no question of favouring vested interests or staff members, and documents were produced to serve the interests of countries. She added that she had to do a balancing act and walk a fine line.

On clearance process she said that it is a means to demonstrate accountability of senior management, and regional directors should have prerogative to decide what documents are important without undue cumbersome process.

She added that in her short stint in WHO, there have been several embarrassments with regard to names, maps and boundaries mentioned in publications, and some publications have to come back to the HQ for her review, so that she does not have “political difficulties.”

After the Board meeting, Sarah Rimmington of Essential Action (one of the NGOs following the issue) said that several countries, including Brazil, Indonesia on behalf of South-East Asia and Slovenia on behalf of the EU, had raised concerns that the WHO publications policy would lead to censorship of undefined “controversial topics.”

“Several countries also asked that the policy be placed before all member states of the WHO for approval before implementation. Director-General Dr. Margaret Chan and the WHO Secretariat responded by asserting that they would jealously guard WHO’s independence.

“The issue at stake, however, is not the personal integrity of anyone within WHO. What matters is whether the agency will become overly centralized and bureaucratized and, most importantly, how and whether WHO will approach “controversial” topics.

“Centralized review will give corporate and ideological interests an opportunity to protest against WHO publications, with profit or ideological motivations dressed up in the garb of scientific argument. Moreover, the requirement that undefined “controversial” topics require centralized review inevitably will mean that country officers and others will steer away from such issues, no matter their importance.”

Rimmington said that it is worth reflecting on important public health issues that might reasonably be considered controversial.

A partial list would include: alcohol, diet and nutrition, sugar consumption, tobacco, chemical exposure, climate change, family planning and reproductive health issues (for example, birth control, abortion and sex education), health interventions targeting sex workers, intellectual property and medical R&D, traditional medicine, the prices and advertising/marketing of medical products, rational use of medicines, malaria control, treatment of malaria, TB, HIV/AIDS and mental illness, car and traffic safety, disaster relief, air pollution, arsenic, bio-terrorism, baby food marketing, clinical trial conduct, gender-based violence, genetically modified food, pesticide use, health insurance systems, healthcare user fees, wealth inequality and health, and medical waste.

She commented: “Just to see such a list is to understand the need for a re-think. Hopefully, Member States and the Secretariat will agree on such a review – and make appropriate revisions – in the near term.” +

“The Chair of the US House of Representatives’ Oversight and Government Reform Committee, Henry Waxman, sent a letter dated 19 May 2008 to Dr Chan, urging the WHO “to minimize the possibility of inappropriate political interference with the publication process”, and expressing hope that WHO’s new publication policy will be “designed in a manner that is not politicized and continues to prioritize scientific and intellectual freedom.”
(See http://www.essentialaction.org/access/index.php?/archives/154-Waxman-letter-on-WHO-Publications-Policy.html)

The text of the letter follows.

Congress of the United States
House of Representatives
Committee on Oversight and Government Reform
2157 Rayburn House Office Building
Washington, DC 20515-6143

May 19, 2008
Dr. Margaret Chan
Director-General
World Health Organization
Avenue Appia 20
CH – 1211 Geneva
Switzerland

Dear Dr. Chan:

It has come to my attention that the World Health Organization (WHO) may soon be adopting and implementing a new policy regarding publications. I am writing to express my hope that any new policies adopted will be designed in a manner that is not politicized and continues to prioritize scientific and intellectual freedom.

My understanding is that the proposed policy would provide special review for publications that “describe the workings of a particular government” or discuss “controversial” issues. I am concerned about this change because of past demands by the current U.S. Administration that WHO withdraw a publication perceived to be critical of U.S. policy.[1] At the time, U.S. officials also called for “a full review” of WHO’s publication policy.[2] Though the publication in question was not withdrawn, the proposed changes could increase the likelihood of inappropriate interference with the work of ‘WHO in the future.

WHO publications cover a broad range of medical and scientific issues and range from journal articles to reports to technical guidance documents. They are an important resource for policymakers, health care professionals, and public health advocates around the world.

Under current policy, as described in a WHO Secretariat report, documents are reviewed by appropriate WHO offices and by independent experts, under the supervision of assistant directors-general and regional directors.[3] Documents are “expected to reflect the latest scientific and medical research” and those designed to “facilitate debate” are to be “evidence-based. balanced and constructive.”[4]

At recent meetings, the WHO Executive Board has discussed proposals to change the publication process. Stated objectives include minimizing costs, maximizing the availability of documents, and ensuring the reliability and validity of scientific information in WHO documents.[5] These are important objectives.

However, I urge you to oppose additional changes that could increase the risk of politicization of the WHO publication process. For example, extra review of publications that address “the workings of a particular government or national health service” could invite protest and interference from any country that feels it has been criticized, no matter how valid the policy analysis. Similarly, extra review of publications on “controversial health-related issues” could introduce a similar level of protest, obstruction, or delay. Moreover, this kind of scrutiny of publications could produce a chilling effect on researchers and experts, discouraging the exploration of topics that could trigger an extra layer of review.

The WHO is a crucial and trusted source of medical and health information for governments, health professionals, and the public in every corner of the world. I urge the organization to continue to prioritize scientific independence and minimize the possibility of inappropriate political interference with the publication process.

Sincerely,

Henry A. Waxman
Chairman

[1] Letter from Sen. Edward M. Kennedy and Rep. Henry A. Waxman to Secretary Michael Leavitt, U.S. Department of Health and Human Services (Oct. 13, 2006) (online at http://oversight.house.gov/documents/20061013142520-31371.pdf); citing letter from William R. Steiger, HHS Special Assistant for International Affairs, to Acting Director General Anders Nordstrom, World Health Organization (Aug. 18, 2006).

[2] Id.

[3]World Health Organization, Programme Budget and Administration, Committee of the Executive Board, Provisional Agenda Item 3.2, WHO publication policy: Report by the Secretariat (May 3, 2007).

[4] Id.

[5] World Health Organization Executive Board, l23nd Session, Provisional Agenda Item 6.2, WHO Publications Policy: Guidance on implementation and evaluation, Report from the Secretariat (Apr. 14, 2008).

WHO hails pharma R&D “breakthrough”

By Lynne Taylor
PharmaTimes

Delegates at the annual Assembly of the World Health Organisation (WHO) have backed a major new initiative which aims to promote new approaches to pharmaceutical R&D and enhance access to medicines. Their approval of the Global Strategy on Public Health, Innovation and Intellectual Property was described by WHO director-general Dr Margaret Chan as “a major breaktbrough for public health that will benefit many millions of people for many years to come.”

“This is pro-active public health at its very best,” added Dr Chan, as she close the 61st World Health Assembly (WHA) on Saturday (May 24).
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The Strategy approved by the policy-setting Assembly, which was attended by a record 2,704 delegates from 190 nations, aims to provide a framework for enhancing essential R&D which has relevance to diseases impacting developing countries and making it sustainable. Part of the Intergovernmental Working Group on Public Health, Innovation and Intellectual Property (IGWG) on a Global Strategy and Plan of Action, the initiative also calls on Dr Chan to finalise a plan to provide drugmakers with greater incentives to conduct such research, with the setting-up of an expert group to examine proposals for new and innovative sources of funding. However, the Assembly failed to resolve issues relating to significant elements of the initiative such as time-frames, progress indications and estimated funding needs, and delegates urged Dr Chan to finalise these “urgently.”

A provision put forward by delegates from least-developed nations which sought to put the right to health before commercial interests was dropped from the final resolution before the full Assembly vote, after strong opposition from developed nations.

Nevertheless, the initiative has been welcomed, with reservations, by advocacy groups such as Knowledge Ecology International (KEI), which said the WHO had taken “a big step forward to change the way we think about innovation and access to medicines.” It was “unfortunate,” said KEI spokesman James Love, that the Assembly had failed to address the estimation of R&D funding needs or create a framework for sustainable sources of funding, and also that the WHO Secretariat has yet to engage on the issue of new mechanisms that de-link R&D incentives from product prices. However, he added: “these and other issues will be the subject of the next round of negotiations, which will begin very soon.”

Advocacy group Essential Action said it particularly welcomed that the Assembly had agreed: – to explore R&D incentives like prizes that do not rely on patent monopolies and the prospect of charging high drug prices as a reward to innovators; – to encourage future discussions of an R&D Treaty, which would involve agreement that all countries should have to contribute to global R&D, or at least participate in the R&D system, but that there should be differential obligations based on degrees of wealth; – that developing countries must be encouraged to adopt and implement legislation that contains measures to prevent and penalize anti-competitive practices regarding pharmaceutical patents; – on the importance of creating a global patent database for pharmaceuticals to promote both innovation and access to medicines; and – that the WHO has a crucial role to play regarding health-related implications of patent and related intellectual property rules.

“What is encouraging is that governments have clearly called for the WHO to play a strategic and central role in intellectual property,” added Tido von Schoen-Angerer, director of the Access to Essential Medicines Campaign at the humanitarian agency Medecins Sans Frontieres (MSF).

“We need more money for R&D, but money is not the only answer – we also need new models for incentivising the R&D and ensuring access to new drugs and diagnostics,” said Dr von Schoen-Angerer, who called on the proposed expert group to take on more ambitious proposals to change the way essential health R&D is financed, “including for example through the creation of a prize fund to boost the development of tuberculosis diagnostics.”

– Other initiatives endorsed by the Assembly included a six-year action plan to tackle noncommunicable diseases, particularly cardiovascular diseases, diabetes, cancers and chronic respiratory diseases, which caused 60% of all deaths in 2005 and are now the leading threats to health.

WHO Plan Will Bridge Dispute Over Patents

By Ed Silverman
Pharmalot

The World Health Organization’s member governments overcame a rift between rich and poor nations this weekend on how to manage intellectual property and endorsed a strategy to help developing countries gain access to more life-saving meds, Reuters reports.

At the agency’s annual policy-setting meeting in Geneva, governments also called for WHO Director-General Margaret Chan to finalize a plan to boost incentives for drugmakers to tackle diseases that mainly afflict the poor. “This is a major breakthrough for public health that will benefit many millions of people for many years to come,” Chan said at the end of the week-long WHO meetings, Reuters writes.

The intellectual property resolution requests that Chan “finalize urgently the outstanding components of the plan of actions, including timeframes, progress indications and estimated funding needs” to be reviewed at the next WHO assembly in May 2009.

The endorsement included agreement on exploring R&D incentives such as prizes; encouraging future talk about an R&D treaty; encouraging developing countries to adopt and implement legislation to prevent and penalize anti-competitive practices regarding patents; and encouraging creation of a global patent database, according to Essential Action, a public health advocacy group.
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Public health activists applauded the hard-fought consensus reached by the 190 countries represented in the talks. “The WHO has taken a big step forward to change the way we think about innovation and access to medicines,” Jamie Love of Knowledge Ecology International, tells Reuters.

“Some important steps in the right direction have been made,” says Tido von Schoen-Angerer, the group’s director for access to essential medicines, says in a statement. He urged the WHO to support new incentives for drug makers, such as a prize fund for creating diagnostic tests for tuberculosis.

“The nations of the world have for the first time acknowledged that innovation and access are complementary public health objectives – that we can have innovation plus access,” according to a statement from Essential Action staff attorney Sarah Rimmington.

The WHO’s membership has been split over about how and whether to revamp the prevailing patent system, which critics argue make drugs unaffordable to many. Two years ago, the WHO’s member states set up a working group to assess R&D shortfalls in health, and ways to ensure more poor people can access meds, diagnostic tests and medical equipment, Reuters writes.

Stark differences in opinion between rich and poor countries on such issues as the the fairness of patents blocked consensus in the working group, whose “draft global strategy on public health, innovation and intellectual property” was ultimately adopted by WHO members on Saturday, Reuters reports.

Developing countries complain that drugmakers invest large sums to create treatments that wealthy consumers will spend money on, such as baldness, while overlooking deadly parasites and tropical diseases that kill, blind and disable millions of impoverished people each year, Reuters writes.

The question of drug access has also been taken up by the World Trade Organization in an accord making allowances for poor nations to create or buy copycat versions of patented drugs. But the WTO’s Trade-Related Aspects of Intellectual Property Rights, or “TRIPS,” agreement is criticized as too limited for the scale of drug access problems developing countries face, according to Reuters.

Wealthy nations have resisted calls to overhaul intellectual property rules, particularly the patents that give companies an exclusive right to sell drugs they develop for a fixed time and for relatively higher prices than generics. The International Federation of Pharmaceutical Manufacturers and Associations has called such protections critical for pharma to operate, Reuters notes.

– To explore R&D incentives like prizes that do not rely on patent monopolies and the prospect of charging high drug prices as a reward to iinnovators;

– To encourage future discussions of an R&D Treaty, which would involve agreement that all countries should have to contribute to global R&D, or at least participate in the R&D system, but that there should be differential obligations based on degrees of wealth;

– Developing countries must be encouraged to adopt and implement legislation that contains measures to prevent and penalize anti-competitive practices regarding pharmaceutical patents;

– The importance of creating a global patent database for drugmakers to promote both innovation and access to medicines;

– The WHO has a crucial role to play regarding health-related implications of patent and related intellectual property rules, and in particular, in proactively providing technical assistance to developing
countries that promotes the use of existing flexibilities in international trade rules, to expand access to new and existing patented treatments where there are price barriers.

News Release: Essential Comment at Completion of WHO R&D Talks

FOR IMMEDIATE RELEASE
May 24, 2008

For More Information Please Contact:
•Sarah Rimmington, Attorney, Essential Action
(Tel) +41 (0)78 847 0562 (in Geneva until May 29, 2008)
(email) [email protected]

** Sarah Rimmington, Essential Action Comment at the Close of the 61st World Health Assembly regarding the Just Completed Negotiations of the World Health Organization’s Intergovernmental Working Group on Public Health, Innovation and Intellectual Property (IGWG)**

The world community has taken a bold step today by agreeing on a way forward to reform a global system of medical research and development that has largely failed to meet the needs of people in developing countries.
—–

After a difficult round of negotiations, countries have finalized a very good global strategy aimed at spurring the development of medicines and other products that will meet priority health needs, and make those products available on an affordable basis. Up until now the current patent-monopoly based system of R&D has treated innovation and access as contradictory objectives that must be counterbalanced to each other. Because of IGWG, the nations of the world have for the first time acknowledged that innovation and access are complementary public health objectives; that we can have “innovation plus access.”

Notably, countries agreed on the following issues:

– To explore R&D incentives like prizes that do not rely on patent monopolies and the prospect of charging high drug prices as a reward to innovators.

– To encourage future discussions of an R&D Treaty, which would involve agreement that all countries should have to contribute to global R&D, or at least participate in the R&D system, but that there should be differential obligations based on degrees of wealth.

– Developing countries must be encouraged to adopt and implement legislation that contains measures to prevent and penalize anti-competitive practices regarding pharmaceutical patents.

– The importance of creating a global patent database for pharmaceuticals to promote both innovation and access to medicines.

– The WHO has a crucial role to play regarding health-related implications of patent and related intellectual property rules, and in particular in proactively providing technical assistance to developing countries that promotes the use of existing flexibilities in international trade rules, to expand access to new and existing patented treatments where there are price barriers.

At the same time there is critical work that remains to be done to promote R&D models that will work for the developing world. Member countries must actually implement the innovative approaches to R&D agreed upon today at the WHA. For the promise of IGWG to be realized, it is crucial that countries take concrete steps to advance experiments with new institutional arrangements for R&D, such as the non-patent prize proposals to address priority health needs of developing countries put forward earlier this month by Bolivia and Barbados. This work will begin very soon when the WHO convenes the R&D financing working group mandated by the WHA.

World Health Assembly Opens On Note Of Global Crises, Hope For IP

Intellectual Property Watch
By William New

The 61st annual World Health Assembly on Monday opened auspiciously with speeches on the world’s biggest political issues, current disasters and looming global threats, but little room for intellectual property issues.

IP issues did arise in a press briefing with US Health and Human Services Secretary Michael Leavitt, however.

Some 2,500 people from around the world are at the UN in Geneva for the 19-24 May assembly, according to the WHO.

WHO Director General Margaret Chan in her afternoon opening speech highlighted the health problems of the natural disasters in Myanmar and China, praising the outpouring of support but cautioning, “We must all brace ourselves for more humanitarian crises in the immediate and near future.”
—–

Chan also warned of the coming negative health effects, especially on the poor, of looming global crises in food security, climate change and pandemic influenza.

She raised IP issues optimistically, as an opportunity for the organisation to make a difference. Chan highlighted a report due out later this year from the Commission on Social Determinants of Health, which she “should help us address the root causes of inequities with greater precision.”

She then commended members for the “tremendous progress” made in meetings of the Intergovernmental Working Group on Public Health, Innovation, and Intellectual Property (IGWG).

“This is one of those rare opportunities when public health can take a proactive role in shaping at least some of the forces that influence equity in health,” she said, noting the reduction from nearly 200 to 18 unresolved paragraphs in the mandated global strategy for stimulating research on neglected diseases predominantly affecting poor countries.

[Note: Updated Tuesday morning] The assembly on Tuesday morning established a working group on the remaining IP paragraphs, however (IPW, WHO, 19 May 2008). The group started immediately to work alongside the larger committee (Assembly Committee A), with periodic updates to the committee during the week.

Chan raised the many other diseases and health matters facing the world, saving perhaps her toughest talk for tobacco. “This industry has long described WHO as its biggest enemy,” she said. “I am pleased by every opportunity to enhance this reputation.”

Leavitt Stresses IP, Trade Issues

Meanwhile, US Health Secretary Leavitt accentuated the IP issues underlying the assembly. He said the US is willing to show flexibility in its positions on the IP provisions of the global strategy.

Asked why the US has stood alone in obstructing the most provisions in the global strategy, Leavitt said, “We obviously have very strong views that intellectual property is the seed or foundation for innovation, and that compromising to the point that innovation is in any way stymied will ultimately cost lives, and that’s not an area where we think compromise should be made.”

But, he said, “We also recognise that we need to come to an agreement,” he said. “As I indicated, we will work hard during the rest of the week to assure we’re able to do that.”

Leavitt said the US is hopeful work on the global strategy can be completed. “We think that within the context of what’s been presented that we could find agreement. So we’ll be pursuing that hard during the balance of this week,” he said.

Asked about US flexibility on the IP issues, he said: “We have a well defined position. We think we are flexible. We want to find a way to resolve this. There are certain principles, of course, that we have to maintain. But we’re committed over the course of the remaining days here to find a solution.”

Separately, Leavitt referred at length to efforts to create an international certification process for verifying the quality and safety of products entering countries like the United States, in part to catch counterfeits. The US imports from 825,000 different sources, coming into more than 300 different ports of entry and valued at nearly two trillion dollars a year, he said. Any shipments that without the certification could be subjected to additional scrutiny at the border, he said.

He said that on a recent visit to India he became aware of how closely integrated the American pharmaceutical industry has become with production facilities in India. “There are 90 to 100 facilities producing drugs for consumption in the United States,” he said. “We need to inspect those facilities on a regular basis.” Similar economies like Canada, Australia and Europe likely also would like to inspect them, so they are discussing a unified approach, he said.

“There is need here for us to begin working together to determine how best to accomplish this type of independent certification,” he said. “We are inventing new tools for the global economy. This is pioneering.” Along that line, the US recently set up a Food and Drug Administration office in China, he said.

Some have raised concern that this new approach could be used to impair imports from competing foreign firms. But Leavitt downplayed concerns, encouraging government collaboration. A government role would be to accredit certifiers, he said. In general, he predicted a greater emphasis on standards related to health products.

Avian Flu Virus Sharing

Another key issue for the United States is the sharing of avian influenza virus samples with the established WHO system for developing vaccines. Some developing countries, led by Indonesia, have raised strong concerns that when they share their virus samples into the system, all the labs are controlled by developed countries and lead to the developed countries lining up sufficient quantities for their own populations while even the hardest hit developing countries have had trouble getting access or sharing the benefits from avian flu treatments even as patent filings rapidly rise. Such developing countries are arguing for a firm arrangement on access and benefit sharing.

Leavitt generally agreed with the characterisation of their concern, but firmly disagreed with connecting sharing with compensation. “We have engaged in and will continue to engage in finding solutions to that dilemma,” he said, but there is “a separate discussion in our mind related to the sharing of samples.”

“We have a desire to be involved in both conversations,” he added. “What we object to is linking them.” Leavitt held a bilateral meeting this week with the Indonesian health minister, a follow-on meeting from one he had earlier with the minister and the Indonesian president, he said. But there has been little change in positions so far.

A WHO meeting on the pandemic flu issue last November did not achieve any breakthroughs, and plans to meet again next November. A meeting is expected on Thursday as part of the multilateral process where governments are working to develop the specifics of how an improved system could work, Leavitt said.

“There are many parts of the sample sharing process that need to be improved. We’re open to that improvement,” Leavitt said. “What we aren’t willing, of course, to do is to engage in any system that would involve compensation for virus samples. This is based on a 60-year tradition [referring to the WHO system]. That’s one of the great public health successes in history. We’re anxious to not see that compromised in any way.”

WHO Publication Policy

A background issue this week is a proposal to increase scrutiny of WHO publications that has stirred concern. The publication topic did not come up on the first day of the assembly, including in the agenda adoption or the Executive Board report, according to sources.

On Monday, US Representative Henry Waxman (Democrat-California), chairman of the House Committee On Oversight and Government Reform, sent a letter, available here, to Chan raising concern about the proposed tightening of the WHO publication policy. Waxman, an influential congressional watchdog, said the new policy of exercising greater central control over publications would politicise WHO’s publications process.

Waxman supported the WHO objectives of minimising costs, maximising availability, and ensuring the reliability and validity of scientific information in WHO documents. But he warned against an extra layer of review for publications naming specific national policies or addressing potentially controversial topics, which Waxman said “could introduce a similar level of protest, obstruction, or delay.” This kind of scrutiny of publications, he said, “could produce a chilling effect on researchers and experts, discouraging the exploration of topics that could trigger an extra layer of review.”

Sarah Rimmington, a staff attorney at public health group Essential Action echoed this concern. “The WHO publications policy discussion is a US power play disguised as a bureaucratic nicety,” she said in a statement. “Over the years, the United States has repeatedly interfered in WHO efforts to advance a public health agenda where it conflicts with commercial or ideological interests.”

The extra layer of review for controversial topics would be an “invitation for further US interference,” Rimmington said, and would “subvert WHO’s ability to issue evidence-based public health materials, undermine the agency’s flexibility, and interfere with country offices’ ability to respond quickly to local circumstances. It should be redrafted.”

The policy change, which appears to have been initiated by a 2006 US government complaint, is not slated for discussion during this week’s assembly but rather for the Executive Board meeting that follows next week.

Side events

Government delegates are being kept busy with a steady stream of bilateral meetings, receptions and information sessions.

One such information session is planned by Médecins Sans Frontières on Wednesday evening entitled, “Putting IGWG into action: Harnessing alternative mechanisms to boost R&D for tuberculosis.”

[Updated Tuesday morning] Industry groups also are holding events, including a pharmaceutical industry event on partnerships Tuesday evening, and a panel and reception on Wednesday evening. The Wednesday panel will focus on developing new medicines for malaria and will include speakers from Novartis, Drugs for Neglected Diseases Initiative, and Medicines for Malaria Ventures.

William New may be reached at [email protected]

WHO Publications Policy Proposal Threatens Technical Quality

The World Health Organization is currently considering a major overhaul of its publications policy. There are serious problems with some of the proposed changes. If adopted, these changes may give commercial or ideological interests leverage to subvert the WHO’s ability to issue evidence-based public health materials, contrary to the constitutional mandate of the Organization. They would also undermine the agency’s flexibility, and interfere with regional and country offices’ ability to respond quickly to local circumstances.

Essential Action recommends that the policy be revised before approval.

An Essential Action briefing note on this issue is available here as an rtf document: Publicationpolicybriefingnote.rtf

A pdf version of the briefing note is available here: Publicationpolicybriefingnote.pdf

Briefing Note: Recommendations for World Health Assembly Pharmaceutical Counterfeiting Resolution

The nations of the world are considering a resolution on Counterfeiting at this week’s World Health Assembly in Geneva. Essential Action has produced a briefing note urging three specific changes to the resolution as pre-conditions for its adoption.

Essential Action recommends:

1. The Counterfeiting Draft Resolution should cite the role of high medicine prices in promoting pharmaceutical counterfeiting.

2. The Counterfeiting Draft Resolution should emphasize the need for companies to disclose information they have concerning counterfeits.

3. The Counterfeiting Draft Resolution should address counterfeiting as a public health problem. Anti-counterfeiting measures requiring the cooperation of health agencies should focus specifically and exclusively on the dangers and harms posed to the public by counterfeit goods. The WHO’s anti-counterfeiting work should be driven by the need to protect
public health, not intellectual property.

The full text of the briefing note is available following continuation of the post in html, and here as an rtf document: EA_Note_WHA_counterfeit_resn.rtf
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Essential Action Note on WHA Counterfeiting Draft Resolution (A61/A/Conf. Paper No.1)

The Counterfeiting Draft Resolution does not identify an important incentive for pharmaceutical counterfeiting: high medicine prices. According to WHO, “When the prices of medicines become excessively high and unaffordable, patients tend to look for cheaper sources. Such [a] situation encourages counterfeiters to produce cheaper counterfeit drugs. … When price differences exist between identical products, patients and consumers go for the cheaper ones. This creates a greater incentive for counterfeiters to supply cheap counterfeit medicines.”[1] The Counterfeiting Draft Resolution should cite the role of high medicine prices in promoting counterfeiting.

The Draft Resolution should add two paragraphs:
o [Introduction:] Recognizing that when prices of medicines become excessively high and unaffordable, patients tend to look for cheaper sources. This situation gives counterfeiters an incentive to supply cheaper counterfeit drugs;

o [2. REQUESTS the Director General:] (6) To further investigate the role of high medicine prices in promoting counterfeiting and suggest paths of action, to address the issue.

The Counterfeiting Draft Resolution should emphasize the need for companies to disclose information they have concerning counterfeits. Although pharmaceutical companies depend on law enforcement and public resources to locate counterfeits and maintain consumer confidence in their brands, companies do not always disclose what they know about counterfeits in the market.[2] The Counterfeiting Draft Resolution should recommend Member States require private companies to disclose any information they obtain about the existence of potentially dangerous counterfeit products.[3]


The Counterfeiting Draft Resolution should add the following:

o [Introduction] Recognizing that health authorities obtaining timely, complete and comprehensive information about potentially dangerous counterfeits in the market is essential to protecting public health;

o [1. URGES Member States:] (4) to establish appropriate mechanisms enabling international cooperation and exchange of information among relevant authorities involved in detecting and combating counterfeit medical products, including requiring companies to timely disclose any information they obtain concerning the existence of potentially dangerous counterfeits;

o [2. REQUESTS the Director General:] (1) to support Member States in their efforts to develop and implement policies and programmes aimed at combating counterfeit medical products, including facilitating the exchange of information at the international level, for example through establishing guidelines for the mandatory disclosure of information concerning potentially dangerous counterfeit products; and the development of tools, guidelines, training and awareness initiatives,
and methodology for evaluation and monitoring;

The Counterfeiting Draft Resolution should address counterfeiting as a public health problem. Anti-counterfeiting measures requiring the cooperation of health agencies should focus specifically and exclusively on the dangers and harms posed to the public by counterfeit goods. The WHO’s anti-counterfeiting work should be driven by the need to protect public health, not intellectual property. From a public health perspective, medicine counterfeiting is a subset of a larger drug quality problem. The Counterfeiting Draft Resolution should make clear WHO’s interest in combating counterfeiting is to protect public health rather than intellectual property.

The Counterfeiting Draft Resolution should add the following:
o [Introduction:] Cognizant that counterfeit medicines are a subset of a larger drug quality problem, that WHO should address counterfeiting specifically and exclusively as a public health concern, and not as a means to address intellectual property rights controversies;

May 2008
———
For More Information, Contact:
Sarah Rimmington
(Geneva until May 29) +41 (0)78 847 0562
[email protected]

Peter Maybarduk
(Washington, DC) (+1) 202-387-8030
[email protected]

Essential Action
PO Box 19405, Washington, DC USA 20036
www.essentialaction.org/access

[1] “What encourages counterfeiting of drugs?” World Health Organization Counterfeits FAQ, available at:
http://www.who.int/medicines/services/counterfeit/faqs/16/en/index.html.

[2] Reportedly, the Pharmaceutical Security Institute (PSI), formed by fourteen pharmaceutical companies in 2002, recorded 76 cases of counterfeiting in 2004. The FDA only knew of 58. “Counterfeit medicines – What are the problems?” Pharma-Brief Special, BUKO Pharma-Kampagne, a member of Health Action International (2007) at 5. PSI’s counterfeiting
database is considered the world’s best, yet it reportedly “is not accessible to the WHO, health authorities or the public.” “The global threat of counterfeit drugs: why industry and governments must communicate the dangers.” Robert Cockburn, Paul N. Newton, E. Kyeremateng Agyarko, Dora Akunyili, Nicholas J. White, Public Library of Science (PLoS) Medicine, April 2005, Volume 2, Issue 4, at 305.

[3] The Secretariat’s Report cites “ineffective collaboration and exchange of information between public and private sector” as contributing to an environment in which counterfeits can thrive. IMPACT’s Working Group on Legislative and Regulatory Infrastructure recommends the “mandatory reporting of [counterfeiting] information to competent authorities.” by manufacturers. IMPACT Working Group on Legislative and Regulatory Infrastructure, “Principles and Elements for
National Legislation against Counterfeit Medical Products.”

Waxman letter on WHO Publications Policy

House Oversight and Government Reform Chairman Henry Waxman has today sent a letter to World Health Organization Director General Margaret Chan regarding the WHO’s proposed publication policy.

A pdf version of the letter is here: Chan5.19.08WHO.pdf

An html version of the text follows on the continuation of this post.

Congress of the United States
House of Representatives
Committee on Oversight and Government Reform
2157 Rayburn House Office Building
Washington, DC 20515-6143

May 19, 2008

Dr. Margaret Chan
Director-General
World Health Organization
Avenue Appia 20
CH – 1211 Geneva
Switzerland

Dear Dr. Chan:

It has come to my attention that the World Health Organization (WHO) may soon be adopting and implementing a new policy regarding publications. I am writing to express my hope that any new policies adopted will be designed in a manner that is not politicized and continues to prioritize scientific and intellectual freedom.

My understanding is that the proposed policy would provide special review for publications that “describe the workings of a particular government” or discuss “controversial” issues. I am concerned about this change because of past demands by the current U.S. Administration that WHO withdraw a publication perceived to be critical of U.S. policy.[1] At the time, U.S. officials also called for “a full review” of WHO’s publication policy.[2] Though the publication in question was not withdrawn, the proposed changes could increase the likelihood of inappropriate interference with the work of ‘WHO in the future.

WHO publications cover a broad range of medical and scientific issues and range from journal articles to reports to technical guidance documents. They are an important resource for policymakers, health care professionals, and public health advocates around the world.

Under current policy, as described in a WHO Secretariat report, documents are reviewed by appropriate WHO offices and by independent experts, under the supervision of assistant directors-general and regional directors.[3] Documents are “expected to reflect the latest scientific and medical research” and those designed to “facilitate debate” are to be “evidence-based. balanced and constructive.”[4]

At recent meetings, the WHO Executive Board has discussed proposals to change the publication process. Stated objectives include minimizing costs, maximizing the availability of documents, and ensuring the reliability and validity of scientific information in WHO documents.[5] These are important objectives.

However, I urge you to oppose additional changes that could increase the risk of politicization of the WHO publication process. For example, extra review of publications that address “the workings of a particular government or national health service” could invite protest and interference from any country that feels it has been criticized, no matter how valid the policy analysis. Similarly, extra review of publications on “controversial health-related issues” could introduce a similar level of protest, obstruction, or delay. Moreover, this kind of scrutiny of publications could produce a chilling effect on researchers and experts, discouraging the exploration of topics that could trigger an extra layer of review.

The WHO is a crucial and trusted source of medical and health information for governments, health professionals, and the public in every corner of the world. I urge the organization to continue to prioritize scientific independence and minimize the possibility of inappropriate political interference with the publication process.

Sincerely,

Henry A. Waxman
Chairman

[1] Letter from Sen. Edward M. Kennedy and Rep. Henry A. Waxman to Secretary Michael Leavitt, U.S. Department of Health and Human Services (Oct. 13, 2006) (online at http://oversight.house.gov/documents/20061013142520-31371.pdf); citing letter from William R. Steiger, HHS Special Assistant for International Affairs, to Acting Director General Anders Nordstrom, World Health Organization (Aug. 18, 2006).
[2] Id.
[3]World Health Organization, Programme Budget and Administration, Committee of the Executive Board, Provisional Agenda Item 3.2, WHO publication policy: Report by the Secretariat (May 3, 2007).
[4] Id.
[5] World Health Organization Executive Board, l23nd Session, Provisional Agenda Item 6.2, WHO Publications Policy: Guidance on implementation and evaluation, Report from the Secretariat (Apr. 14, 2008).

U.S. Competition Policy and Pharmaceutical Patents

ESSENTIAL ACTION BRIEFING NOTE FOR WHO IGWG
U.S. COMPETITION POLICY FREQUENTLY DEPLOYED TO REMEDY ANTI-COMPETITIVE PRACTICES RELATED TO PHARMACEUTICAL PATENTS

Following is an Excerpt of this briefing note. The entire document is available at html on the continuation of this note, or an rtf document here: USCompetitionPolicyBriefingMay18.rtf

During the 2008 World Health Assembly, the World Health Organization’s Intergovernmental Working Group on Public Health, Innovation and Intellectual Property (IGWG) is considering various proposals for WHO to assist developing countries in adopting and implementing competition policies to prevent or remedy anti-competitive practices related to the use of medicinal patents.

Reportedly, some rich country delegations are objecting to these proposals, which is why the relevant text remains bracketed (reflecting a lack of consensus) in the most recent version of the IGWG Draft Global Strategy[1]. This is surprising, because rich countries themselves commonly make aggressive use of competition policy to remedy abuses related to medicinal patents.

For a short overview of U.S. practice in this area, refer to the attached briefing note, or go to www.essentialaction.org/access/

Reference:
[1] See Elements 5.3 (c), 5.3(e) and 6.3(f) of World Health Organization (WHO), “The White Paper (Advance copy in English only) of the IGWG “Outcome Document at 14.00 hours, Saturday 3 May 2008, Draft global strategy on public health, innovation and intellectual property,” available at, http://www.who.int/phi/documents/IGWG_Outcome_document03Maypm.pdf
———

For More Information, Contact:

Sarah Rimmington, (Geneva, week of May 29, 2008) +41 (0)78 847 0562, [email protected]

Robert Weissman, (Washington, DC) (+1) 202-387-8030, [email protected]

Essential Action
PO Box 19405, Washington, DC USA 20036
www.essentialaction.org/access
—————-

Here is the full text of the briefing note:

Essential Action
P.O. Box 19405, Washington, DC 20036, USA
Tel: 1-202-387-8030 • Fax: 1-202-234-5176 www.essentialaction.org/access

BRIEFING NOTE FOR WHO IGWG

U.S. COMPETITION POLICY
FREQUENTLY DEPLOYED TO REMEDY
ANTI-COMPETITIVE PRACTICES RELATED TO PHARMACEUTICAL PATENTS

During the during the 2008 World Health Assembly, the World Health Organization’s Intergovernmental Working Group on Public Health, Innovation and Intellectual Property (IGWG) is considering various proposals for WHO to assist developing countries in adopting and implementing competition policies to prevent or remedy anti-competitive practices related to the use of medicinal patents.

Reportedly, some rich country delegations are objecting to these proposals, which is why the relevant text remains bracketed (reflecting a lack of consensus) in the most recent version of the IGWG Draft Global Strategy . This is surprising, because rich countries themselves commonly make aggressive use of competition policy to remedy abuses related to medicinal patents.

This briefing note provides a short overview of U.S. practice in this area.

U.S. competition authorities often issue compulsory licenses in conjunction with merger approval decisions, as a means to ensure competition in particular markets is maintained post-merger. Competition authorities have repeatedly prosecuted cases to prohibit collusive arrangements between patent holders and generic firms that are designed to delay generic competition. Private parties have repeatedly filed successful lawsuits under competition law principles to win redress for excessive pricing and patent-related abuses. Additionally, the government and private parties have invoked a statute aimed at curtailing fraud against the government to remedy anti-competitive practices.

Merger Approval

In the United States, merging firms of substantial size must file papers with the antitrust authorities and give them an opportunity to review the merger for potential anticompetitive impact. The antitrust authorities may raise concerns about the potential impact on competition. These concerns typically focus on precise geographical markets and/or product markets. If the authorities raise concerns, negotiations follow, with the government and merging firms discussing whether modifications can be made to the merger to alleviate the government’s concerns. They may discuss the merging firms selling certain operations (for example, if two merging oil companies own the only gas stations in a particular neighborhood, they may sell one to a competitor). They may also negotiate compulsory licenses, so that other firms are empowered to compete with the merged firms. In these cases, compulsory licenses are typically a less harsh remedy than the alternative of forcing the merged enterprise to divest its patent claims in a technology altogether.

Sometimes compulsory licenses are ordered to be issued to a specific firm. Sometimes they are ordered to be made available on a non-exclusive basis, so that they can be used by any potential competitor.

Recent cases illustrate how common these licenses are:

Johnson & Johnson (2005): Johnson & Johnson sought to acquire Guidant, a medical device maker. Johnson & Johnson was required to grant to a third party a fully paid-up, non-exclusive, irrevocable license, enabling that third party to make and sell drug-eluting stents used in treating coronary artery disease. Only two companies sold these devices (Johnson & Johnson and Boston Scientific) and only three companies — one of them being Guidant — were positioned to enter the market. Of those three, only Guidant had the rights to use a patented delivery system employed by Johnson & Johnson and Boston Scientific. The merger fell apart for unrelated reasons. (By way of example, the agreement with the Federal Trade Commission also required J&J to sell off one product line (endoscopic vessel harvesting products) and end its agreement to distribute Novare Surgical System, Inc.’s proximal anastomotic assist device.

Novartis AG (2005): To resolve overlaps for three generic pharmaceuticals that arose from Novartis AG’s acquisition of Eon Labs, Inc., Novartis was required to divest all the assets necessary to manufacture and market generic versions of the three drugs (desipramine hydrochloride tablets, orphenadrine citrate extended release (ER) tablets, and rifampin oral capsules) in the United States to a competitor, Amide. Novartis was required to provide supplies of two of the three drugs to Amide, until Amide obtained Food and Drug Administration (FDA) approval to manufacture the products itself.

Cephalon, Inc. (2004): Cephalon’s proposed to acquire Cima Labs, Inc, a company that like Cephalon held patents on drugs that eliminate or reduce severe pain for chronic cancer patients. To gain approval for the merger, Cephalon was required to grant Barr Laboratories, Inc. a fully paid, irrevocable license to make and sell a generic version of Cephalon’s breakthrough cancer pain drug, Actiq, in the United States.

Pfizer (2000): Pfizer sought to acquire Warner-Lambert, another major drug firm. The merger was approved conditioned on several actions by the merging parties. Both firms were developing EGFr-tk inhibitors, drugs designed to treat solid cancerous tumors such as head and neck, non-small-cell lung, breast, ovarian, pancreas and colorectal cancers. Pfizer was required to turn over its technology and know-how to a development partner, OSI, so OSI would become a competitor. OSI gained worldwide rights to use Pfizer’s technology. Pfizer was even required to pay the costs of OSI finishing clinical trials of an EGFr-tk inhibitor.

Novartis (1996): Ciba-Geigy and Santos — two companies based outside of the United States — sought approval to merge into the company now known as Novartis. Both of the merging companies held important patents on emerging gene therapies. As a condition of merger approval, the merged enterprise was required to license gene technologies to Rhone Poulenc, on a worldwide basis. It was also required to issue a non-exclusive worldwide license to an exceedingly broad-based patented invention, the Anderson patent, which covers the entire category of gene therapy treatment involving cell modification that takes place outside the body. Royalty rates ranged from 1 to 3 percent.

Wesley-Jessen Corporation (1996): Wesley-Jessen Corporation, the leading maker of opaque contact lenses — corrective or solely-cosmetic lenses that change the apparent eye color of the wearer — sought to acquire its main rival, Pilkington Barnes Hind International. Wesley-Jessen was required to divest Pilkington Barnes Hind International’s opaque lens business. It was required to license certain intellectual property rights to the acquirer of Pilkington Barnes Hind International’s opaque lens business.

The Wesley-Jessen case is interesting for the useful language it contains in ordering the compulsory license. Wesley-Jessen was required to issue to the company acquiring Pilkington Barnes Hind International’s opaque lens business “a non-transferable, irrevocable, non-exclusive, royalty-free license under the patents listed in Appendix B of this Order to manufacture, import, offer for sale, use and sell Opaque Contact Lenses in the Licensed Territory.”

Remedying Collusion to Block Generic Competition

One prominent area of competition policy litigation involves non-compete agreements between brand-name and generic firms, in which the brand-name firm pays the generic company not to enter the market.

In a recently filed case, the Federal Trade Commission has filed suit against Cephalon, the manufacturer of Provigil (generic name: modafinil), a drug approved to treat excessive sleepiness in patients with sleep apnea, narcolepsy, and shift-work sleep disorder. Provigil sales in the United States exceeded $800 million in 2007. The lawsuit alleges that Cephalon entered into agreements with four generic drug manufacturers that each planned to sell a generic version of Provigil. Each of these companies had challenged the only remaining patent covering Provigil, one relating to the size of particles used in the product. The complaint charges that Cephalon was able to induce each of the generic companies to abandon its patent challenge and agree to refrain from selling a generic version of Provigil until 2012 by agreeing to pay the companies a total amount in excess of $200 million. Absent the agreement, the suit contends, generic competition would have commenced in 2005 or 2006. Under U.S. regulatory rules, no other generic firm can enter the market, so long as the four generic companies alleged to have taken illegitimate payments decline to do so.

A similar fact pattern was alleged in a case involving Galen Chemicals Ltd. (now known as Warner Chilcott) and Barr Laboratories (2005). The Federal Trade Commission alleged a payment to Barr to prevent generic competition for the ethinyl estradiol and norethindrone (Ovcon) oral contraceptive. Under the terms of a settlement, Warner Chilcott was required to waive the exclusive terms in its agreement with Barr — enabling immediate generic competition.

Another case alleging similar facts involved Abbott and Geneva Pharmaceuticals, and a drug, Terazosin Hydrochloride (Hytrin), used to treat hypertension and enlarged prostates (2000). Under U.S. law related to generic entry, Geneva had a right to 180 days to be the first and only generic competitor on the market. To resolve the case, the Federal Trade Commission ordered that all generic firms be permitted to enter the market immediately — this was effectively a compulsory license of Geneva’s 6-month exclusivity period.

These cases are part of a broader problem of evergreening — the abuse of patents, regulatory rules and competition law principles to maintain exclusivity beyond the period legitimately awarded by patents and related regulatory rules. Addressing evergreening has been a high policy priority on a bipartisan basis. In 2003, the Bush administration ushered through regulatory changes designed to restrain evergreening. These should properly be understood as deployments of competition law.

Private Competition Law Litigation to Remedy Patent and Drug Pricing Abuses

U.S. competition policy enables private parties to file lawsuits against other parties alleged to violate competition rules. U.S. law provides a strong incentive for such suits, by providing for treble damages for many violations of competition rules.

Private insurers, consumers and consumer organizations, as well as many state governments, have in recent years filed a wide range of lawsuits against pharmaceutical companies for alleged competition policy abuses.

One area of private litigation involves cases that shadow (or, often, foreshadow) lawsuits filed by federal authorities. Consumers, state agencies and consumer organizations filed a lawsuit against Cephalon and the four generic firms with which it allegedly engaged in collusive deals in 2006 — a year and a half before the federal government brought suit alleging similar facts.

Other cases allege quite varied abuses of patents and competition law. For example:

* A lawsuit against Abbott alleges it has illegally bundled together HIV/AIDS drugs. Abbott raised the price of a booster drug (Norvir/ritonavir) by 400 percent for competitors, but did not raise the price for the drug when used in conjunction with another Abbott product. The effect was to make competitor’s combination products uncompetitive.

* A lawsuit alleges that there is a pharmaceutical industry-wide scheme to defraud U.S. consumers by charging inflated prices for medicines. The suit alleges that the industry price manipulation enables pharmaceutical companies to bill federal government programs at inflated rates. Consumers, private insurers and state governments pay a portion of these allegedly inflated rates. Settling companies have agreed to pay more than $200 million in connection with this litigation, which is ongoing against most defendants.

The False Claims Act

The False Claims Act is a specialized statute that permits the government or private parties to bring suit against persons or companies alleged to have defrauded the government. In recent years, there have been a considerable number of False Claims Act cases involving the pharmaceutical industry, many involving competition policy principles.

Companies are required to sell drugs under certain U.S. government prescription drug coverage programs at the lowest price offered to any other party. Many cases under the False Claims Act allege that drug companies illegally offer lower prices to other parties, thereby denying the federal government its legally mandated best price. Commonly, these cases allege that drug companies offer disguised discounts or kickbacks to purchasers. From 2001 to 2006, the federal government had recovered $3.5 billion in False Claims Act settlements and judgments (some involving improper marketing rather than competition policy allegations).

A few of many recent examples involving competition policy include:

* Bristol Myers Squibb agreed to pay $515 million to resolve claims that its subsidiary “knowingly and willfully paid illegal remuneration such as stocking allowances, price protection payments, prebates, market share payments, and free goods in order to induce its retail pharmacy and wholesaler customers to purchase its products,” as well as other claims involving improper marketing.

* Aventis (now sanofi-aventis) agreed to pay $190 million to resolve allegations concerning its pricing and marketing of Anzemet, an antiemetic drug used primarily in conjunction with oncology and radiation treatment to prevent nausea and vomiting.

* The federal government has joined a lawsuit alleging a Boehringer Ingelheim subsidiary reported prices to the government that, in some instances, were more than 1,000 percent the actual sales prices on certain of the drugs it manufactures. It is seeking $500 million in compensation.

May 2008

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For More Information, Contact:

Sarah Rimmington, (Geneva, week of May 29, 2008) +41 (0) 78 847 0562, [email protected]

Robert Weissman, (Washington, DC) +1 (202) 387-8030, [email protected]

Essential Action
PO Box 19405, Washington, DC USA 20036
www.essentialaction.org/access