Backgrounder about Ecuador’s Presidential Declaration on Access to Medicines and Compulsory Licensing

On October 26, 2009 Ecuador’s President Rafael Correa declared access to priority medicines affecting the health of the Ecuadorean population to be a matter of public interest. Under Andean Community law, the declaration opens the door to competition of generic medicines with patented brand-name drugs, through use of an internationally recognized legal mechanism called compulsory licensing. The declaration could lead to government policies that expand access to medicines.

Download a .pdf version of the Essential Action backgrounder on Ecuador’s Presidential Declaration on compulsory licensing here: EcuadorPresidentialdeclarationbackgrounder.pdf

Download a .doc version of the backgrounder here: EcuadorPresidentialdeclarationbackgrounder.doc

You can read a text version of the backgrounder in the continuation of this post.
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Ecuador’s Presidential Declaration on Access to Medicines and Compulsory Licensing

– Backgrounder –

On October 26, 2009 Ecuador’s President Rafael Correa declared access to priority medicines affecting the health of the Ecuadorean population to be a matter of public interest.[1] Under Andean Community law, the declaration opens the door to competition of generic medicines with patented brand-name drugs, through use of an internationally recognized legal mechanism called compulsory licensing. The declaration could lead to government policies that expand access to medicines.

Globally, competition has consistently proven the most effective method to reduce medicine prices, and ensure prices continue to fall over time. Over the last ten years, generic competition has produced a revolution in HIV/AIDS treatment, reducing prices for first-line antiretrovirals from around $10,000 to around $100 per year, and enabling over four million people worldwide to access treatment.

By issuing a compulsory license, a government can authorize competition with patented products, including the importation, domestic production, distribution and/or sale of generic medicines. In exchange, licensees pay reasonable royalties to the patent holder, set by the government according to the circumstances of each case. Compulsory licenses do not “eliminate” or “override” patents. Instead, they authorize the use of patented technology under enumerated conditions.[2]

Countries’ right to issue compulsory licenses “on grounds of their choosing” is enshrined in the World Trade Organization’s TRIPS Agreement (1995) and unanimous Doha Declaration (2001) on intellectual property and public health. The WTO’s Doha Declaration also states, “the [TRIPS] Agreement can and should be interpreted and implemented in a manner supportive of WTO Members’ right to protect public health and, in particular, to promote access to medicines for all.”

Ecuador’s Presidential declaration does not on its own issue a compulsory license. Rather, it authorizes procedures by which the government can subsequently decide, case-by-case, to issue compulsory licenses for priority medicines (as determined by the Ministry of Public Health), based in public interests such as reducing treatment costs and enabling greater access to treatment. The declaration follows public pronouncements by President Correa articulating a vision of intellectual property as “a mechanism for development for the people,” and is an important step toward access to medicines for all.

Many countries have used compulsory licenses to promote public interests and remedy anti-competitive practices in a variety of sectors. Today, the United States is perhaps the most frequent user of compulsory licensing; including the government use of defense technologies, and judicially-issued licenses to remedy anti-competitive practices in information technology and biotechnology, among others. Canada routinely issued compulsory licenses during the 1960s and 70s to develop its national pharmaceutical industry. In recent years, a number of countries have issued compulsory licenses to improve access to medicines, including Thailand, Malaysia, Eritrea, Mozambique and Indonesia, among others.

In 2007, Brazil issued a compulsory license for the HIV/AIDS medicine efavirenz. Brazil has provided treatment to hundreds of thousands of people living with HIV/AIDS and saved well over US$1 billion through its combined medicines strategy of domestic production, importation, negotiation and compulsory licensing.

President Correa signed the declaration Friday October 23, but his office released it on the 26th. The declaration enables Ecuador’s government officials to consider introducing generic competition with some of the country’s expensive patented drugs, including second-line HIV/AIDS treatments that cost more than double the current competitive price, and lifesaving cancer treatments that exceed $35,000 per person, per year, and which some hospitals cannot afford. The UNAIDS 2008 report estimated 42% of Ecuadoreans needing antiretroviral therapy received it. Resource constraints in Ecuador limit availability of treatment.

Ecuador’s declaration cites Constitutional principles as well as provisions of the National Development Plan and international agreements, including the WTO TRIPS Agreement and the World Health Assembly Global Strategy and Plan of Action on Public Health, Innovation and Intellectual Property. The declaration charges the Intellectual Property Institute of Ecuador (IEPI) with establishing royalties and the terms of licenses, in compliance with all applicable national legislation and international rules. The Presidential declaration incorporates requirements of the WTO’s TRIPS Agreement and Andean Community legislation, including excerpting some passages word-for-word. IEPI has published an administrative guide to compulsory licensing for the use of Ecuador’s government agencies.

For more information, please contact:
Peter Maybarduk
Attorney
Essential Action
Access to Medicines Project
[email protected]

In Quito until November 3, 2009:
Hotel Reína Isabel: +593-2-254-5156; 255-5156; 254-4454
Skype: petesystem
IEPI (Ecuador’s patent office): +593-2-250-8000; 8001; 8002; 8003 (Oficina de Andrés Ycaza)

[1] The declaration is available online, in Spanish, at: http://www.sigob.gov.ec/decretos/.

[2] There are several common misunderstandings about the TRIPS Agreement’s provisions and compulsory licensing for medicines. Three of the most commonly perpetuated myths are that compulsory licenses “eliminate” or “override” patents, that they can only be issued in an emergency, or that negotiations with pharmaceutical companies are always required before issuing compulsory licenses. For more information on these and other common misunderstandings, please see the World Trade Organization document “TRIPS and Health: Frequently asked questions Compulsory licensing of pharmaceuticals and TRIPS,” available at http://www.wto.org/english/tratop_e/TRIPs_e/public_health_faq_e.htm

Ecuador issues Presidential Declaration on Access to Priority Medicines

On October 26, 2009 Ecuador’s President Rafael Correa declared access to priority medicines affecting the health of the Ecuadorean population to be a matter of public interest. Under Andean Community law, the declaration opens the door to competition of generic medicines with patented brand-name drugs, through use of an internationally recognized legal mechanism called compulsory licensing. The declaration could lead to government policies that expand access to medicines.

You can download a .doc version of an unofficial English translation of the declaration here: Decree_CorreaEnglishunofficialtranslation.doc

Sign-on to support access to medicines in Ecuador

Dear Colleagues,

On Monday October 5 I wrote you about Ecuador’s plans to expand access to medicines by issuing compulsory licenses, and about President Correa’s vision for intellectual property “as a mechanism for development for the people” (see my post at the bottom of this email for a reminder and an excerpt of President Correa’s comments). Compulsory licenses authorize generic competition with patented medicines, reducing costs and enabling more people to access treatment. Discussions on a compulsory licensing administrative framework are advancing in Quito. This is a critical moment in the discussion, and we would like to show President Correa he has the support of the access to medicines movement.

Essential Action is collecting signatures in support of President Correa’s vision, and reiterating the benefits of TRIPS-compliant compulsory licenses. See our letter below. If you would like to sign on, please send your organization’s name (or your name and organizational affiliation, if any, if you would like to sign on as an individual), your mailing address and email address to . For organizations and individuals able to arrive at a decision quickly, we would appreciate your signature right away – by this Sunday October 11th if possible. The outside deadline for sign-ons is Wednesday, October 21. Please feel free to send me any questions you may have.

Thank you,
Peter Maybarduk
Essential Action

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Economista Rafael Correa Delgado
Presidente de la República

Dear President Correa,

We, organizations of civil society, treatment advocates, development advocates, people living with HIV, and access to medicines movements the world over, congratulate Ecuador on its courageous plans to grant compulsory licenses for medical patents.

Over the last ten years, competition of generic medicines with branded medicines has fueled a revolution in HIV/AIDS treatment. Competition has reduced costs of first-line antiretroviral therapy by over 98%, from $10,000 per person, per year to near $100 today. As a result, four million people worldwide now have access to life-saving drugs.

But monopoly drug pricing problems in developing countries extend far beyond first-line HIV/AIDS treatments. Many people living with HIV and AIDS are graduating to second and third-line treatments, many of which are patented and sold at high cost. Heart medicines, cancer medicines, medicines against opportunistic infections and more are also often sold at prices far beyond peoples’ ability to pay. High costs constrain the essential services public health programs could otherwise provide. Today, multinational pharmaceutical companies are intensifying their global registration of patents. We confront the deadly prospect of monopolized drug markets.

Compulsory licensing is, has been, and will be an essential safeguard of competition. Each country that uses this safeguard – enshrined in the World Trade Organizations’ TRIPS Agreement –makes it simpler for the next. As compulsory licenses open markets to competition, they also help generate the necessary economies of scale to further reduce costs, and incentivize the broader reach of generic medicines. While advancing access to medicines imperatives, compulsory licensing is compatible with ensuring reasonable compensation for patent holders and supporting medical innovation.

The example of Brazil is telling. Since 2001, Brazil has provided hundreds of thousands of people with HIV/AIDS treatment and saved more than US$1 billion through a combined approach of national production of medicines, imports of generics, negotiation and compulsory licensing.

As so eloquently stated in the Political Constitution of Ecuador, Article 363, in access to medicines, the interests of public health prevail over those of mere profit. Your recent remarks position Ecuador to advance the politics and principle of access to medicines for all, in Latin America and around the world.

We stand with you. Please count on our support as you pursue your vision of intellectual property as “a mechanism for development for the people.”

Sincerely,

[the undersigned]
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Ecuador’s compulsory licensing plan and alternate vision for IP

In July of this year, Ecuador’s President Rafael Correa articulated a vision of intellectual property as “a mechanism for development for the people.” His speech before a live audience on the nationally televised program “Enlace Ciudadano” (“Citizen Connection”) announced a new state policy of using compulsory licenses to improve access to medicines.

I’ve translated an excerpt below. The clip is available (in Spanish and sign language) on YouTube here, as well as the homepage of the Ecuadorean Intellectual Property Institute (IEPI, Ecuador’s patent office), here.

Last week, President Correa announced plans to use compulsory licenses to facilitate the domestic production of medicines. Here is the story in El Universo, courtesy of Judit Rius Sanjuan.

Correa, an economist recently elected to a second term (with a simple majority and a twenty-three point lead over his closest competitor), has charged high-ranking officials in his administration to implement the policy.

Nevertheless, we have heard reports of multinational pharmaceutical companies organizing behind the scenes to disrupt the licensing policy before it can take effect. To realize President Correa’s vision, Ecuador needs the support of the global access to medicines movement.

To show your support and find out how you can help, write:

Essential Action, [email protected] and

Health Action International Ecuador, [email protected]

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From “Enlace Ciudadano,” July 16, 2009:

“Therefore, the subject of intellectual property is tremendously important. What is our vision? When something has been invented or discovered, the more people that use it, the better. For example, a medicine. We’re talking about human rights. Do you think it’s ethically sustainable that if a cure for cancer is invented, people could continue to die because they don’t have the resources to pay? That because the medicine has a registered property right, and because I, Laboratory X, invested in its development, you have to pay me $2,000 for each pill?

This cannot be. When making the [gestures to indicate a “single”] pill costs far less. And it’s to save lives. Especially in these situations, we have to change our conception of property; the traditional conception, the neoliberal conception. Compañeros, we are discussing all of this.

There is, in our legislation, what they call compulsory licensing. I, as President, can order that we issue a compulsory license for Brand X, so they can copy this medicine and make generics, and the people have access to this medicine, to health, to a cure for their illness. [Applause.] And this is exactly what we are going to begin to do, with respect to medicines, with respect to agrochemicals, with respect to everything possible.”

. . . [Correa addresses non-profit motives that also drive innovation (“vocation” and “dedication”), and cites universities as key centers of research and innovation in the public interest.] . . .

“Intellectual property is a mechanism for development for the people. This is our vision of intellectual property. It’s not a mechanism to enrich the pharmaceutical or agrochemical companies. It’s a mechanism for development for the people.”

Consumer groups battle Eshoo’s health care amendment

San Mateo County Times/ Bay Area News Group
The Insider

Consumer groups are still hoping to persuade Congress during this month’s health care reform negotiations to make it easier to create generic versions of drugs known as biologics.

Biologic drugs are created through biological, as opposed to chemical, processes — researchers use plant and animal cells to grow new molecules. They are far more complex than most chemically produced drugs and much harder to duplicate. The top-selling biologics include cancer drugs such as Avastin and several drugs used to treat rheumatoid arthritis and anemia.

Rep. Anna Eshoo, D-Palo Alto, authored an amendment, which was added to the House version of the health care reform bill in July, that would grant biotech firms a 12-year period of market exclusivity on biologics, more than twice the 5-year period that other drugs receive. A similar measure is in the works in the Senate.

Critics charge Eshoo with selling out the public on behalf of the biotech industry, a powerful special interest on the Peninsula and a major contributor to Eshoo’s campaigns. Eshoo claims she’s trying to balance the interests of consumers and biotech companies, which spend billions developing these drugs.

Sarah Rimmington, an attorney for consumer group Essential Action, called Eshoo’s amendment an “unjustified price gouge of the American public.” She said 12 years of market exclusivity is far too long and called into question the pharmaceutical industry’s claim that biologics are far more expensive to produce than other kinds of drugs.

Rimmington also blasted a clause in the amendment that critics claim would allow biotech companies to restart their 12-year window every time they make minor adjustments to their drugs — combining two types of drugs, for instance, or providing them in different doses — a process known as “evergreening.”

Consumer groups were recently joined in the biologics fight by student groups, including the American Medical Student Association and Universities Allied for Essential Medicines. In a statement issued by the student groups on Monday, Yale University medical student Sara Crager said that, as a future biomedical researcher, “I want the fruits of my research to be available as widely as possible as soon as possible.”

Eshoo’s office disputes the notion that biologics are no more expensive to produce than other drugs. The 12-year window is based on the average amount of time a biologic stays on the market before its patent expires, staffers say.

If biotech companies sink billions into biologics research, only to see generic versions, or biosimilars, appear on the market too quickly, they will lose their incentive to do that research, slowing down the development of potentially lifesaving drugs, proponents of the amendment argue.

US Congress urged to act on biosimilars

Pharma Times
By Lynne Taylor

US campaigners yesterday urged Congress to create a “real” regulatory pathway for generic versions of biologic drugs, but researchers warn that it may take until 2011 to implement any such policies.

Current proposals for a regulatory pathway for generic biologics – also known as biosimilars, biogenerics or follow-on biologics – in Senate and House healthcare reform bills will actually block production of most generic biologics, but if these are improved in critical ways they could save $71 billion or more in the first decade alone, say the consumer and medical student groups which are leading the campaign.

The proposals, originating from Representative Anna Eshoo House bill HS 1548 and past bills in the Senate, would provide 12 years’ market exclusivity for biosimilars compared to five years for other drugs. However, the campaigners point out, the Pharmaceutical Research and Manufacturers of America (PhRMA) puts development costs for biologics at $1.2 billion, close to that for conventional drugs at $1.318 billion, and that the Federal Trade Commission (FTC) recommends zero years market or data exclusivity for biologics, given that biosimilars will cost more to bring to market for generic manufacturers than conventional generics, leaving originator companies with 70%-90% of the market.

These proposals will also allow “evergreening,” whereby pharmaceutical companies will be allowed additional 12-year periods of exclusivity for “relatively inexpensive minor tweaks” which, they say, could block price-lowering generic competition indefinitely.

The language in these bills creates biologic drug monopolies, which discourage innovation and raise costs for the US health system, say the campaigners. However, they add that these problems can be addressed by adopted the relevant sections of bills introduced by Representative Henry Waxman (HR 1427) and Senator Charles Schumer (S 726), which would allow five years’ exclusivity and block evergreening.

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Biologics are the fastest-growing segment of the drug market, are predicted to be 50% of new drug approvals soon and include most vaccines and treatments for cancer, multiple sclerosis and rheumatoid arthritis. Already, the top six biologics make up over 40% of expenditures for the Medicare prescription drug programme, the campaigners add.

Meantime, researchers in the current issue of the British Medical Journal (BMJ, September 19, vol 339) warn that “unless biological therapies can be made more affordable, western health care systems face a financial crisis.”

Demand for biologic therapies is enormous, clinicians are prescribing them at increasing rates and pressure is growing to use them earlier in disease progression, say the authors, consultant physician Fraz Mir and student Christopher Kelly of Addenbrooke’s Hospital in Cambridge, UK. However, they add that potential generic manufacturers face a number of major hurdles, not least the fact that development of a biosimilar costs about £120 million compared to £1-£2.5 million for a small-molecule generic. Moreover, while US President Barack Obama’s first budget in February included proposals for an abbreviated regulatory pathway for biosimilars, it may take until 2011 for the Food and Drug Administration (FDA) to implement any new policies, they suggest.

The global market for biosimilars is expected to be worth US$19.4 billion by 2014, increasing at an average annual rate of 89.1% from 2009, according to a new report from Marketsandmarkets.