Month: April 2008

Essential Action Comment on the negotiations of the World Health Organization’s Intergovernmental Working Group on Public Health, Innovation and Intellectual Property (IGWG)

April 2008

The great promise of the IGWG exercise is that it will be innovative in its own right — that country negotiators will leave ideological predispositions aside, and advance experiments with new institutional arrangements to promote the complementary public health objectives of innovation and access. The country negotiators have it in their power to realize this promise.

Essential Action encourages IGWG negotiators to support systemic approaches to support R&D that do not rely on patent monopolies or the prospect of charging high drug prices as a reward, and mechanisms to make the fruits of R&D widely accessible. We encourage negotiators to achieve consensus around the Bolivia/Barbados prize fund proposals, and other concrete, common-sense measures to promote innovation and access. These include a global patent database covering medical technology, improved medicine registration systems, patent pools, and mechanisms to spur generic competition for biologics and vaccines.

[Full statement follows on the continuation of this post.]
Medical research and development breakthroughs have made the world a better and healthier place. Vaccines, antibiotics and drugs for HIV/AIDS have kept countless millions alive and reduced untold suffering.

The world — and especially developing countries — needs more innovation. To have public health benefit, however, the fruits of the innovative process must be available to people who need them.

The current patent monopoly-based system of R&D has proven inefficient at advancing a needs-driven public health agenda. This is true for rich countries as well as poor, though the situation is much worse in poor countries.

Whether the system works for rich countries is controversial, although our view is that the evidence is overwhelming that it does not.

But if ideology and industry defensiveness are set aside, there is really no debate about the failure of the patent monopoly-based system of R&D for developing countries. This was a key message of the Commission on Intellectual Property, Innovation and Public Health. The current corporate sector system of R&D is driven by the prize offering of a patent monopoly. That prize is not worth much if it offers a monopoly on sales to a population that — no matter how large — has little buying power. And if the prize incentive is too small, it will not induce R&D, no matter how much it may be needed as a public health matter. This has nothing to do with the ethics of Big Pharma. It is how the system is designed.

The value of the patent monopoly is based on the holder using it to profit maximize as a monopolist. It is therefore no surprise that companies holding patent monopolies charge high prices. This is what the patent enables. High prices are an increasing problem in rich countries, but the brand-name pharmaceutical industry’s current pricing model — which commonly runs into the thousands of dollars a year for a single medicine, and may involve charges of over $100,000 — leaves new medicines completely out of reach of the vast majority in developing countries.

Apart from ignoring these realities, there are two basic alternative responses. One is to rely on charity. Private foundations and companies seeking good will may contribute to R&D for products targeting diseases in developing countries, or modifications to existing treatments designed to meet developing countries’ particular needs. They may offer discounted versions of their drugs, or give some away. Charitable initiatives may accomplish quite a bit, but in general they suffer from being ad hoc, unsustainable, erratic, episodic, short-lived and insufficiently resourced. Charity may be helpful, but it is no solution to meeting public health priorities on a sustained basis.

The second option is to examine systemic approaches to support R&D that do not rely on patent monopolies or the prospect of charging high drug prices as a reward, and mechanisms to make the fruits of R&D widely accessible.

Bolivia and Barbados have put forward a series of concrete proposals for prizes to incentivize R&D, with the resulting fruits of the innovation made available at competitive prices. These are simple and compelling proposals. Will they work in creating innovation where now there is none or much too little? There is no guarantee. The prospect of huge riches for breakthrough cancer or Alzheimer’s treatments, to take just two examples, has with few exceptions not succeeded in generating important innovations. Sometimes the scientific problems cannot easily be overcome even with large investments. But incentives do matter, and the prizes included in the Bolivia/Barbados proposals, if adopted, may lead to life-saving innovations. It is also worth noting that they have an additional advantage over the existing patent monopoly-based system: they would encourage open research and sharing of information.

Apart from the funds involved — which are not especially large in development aid terms, and could make existing aid programs much more efficient, were new products to emerge from the prize systems — what possible reason is there, on the merits, not to adopt these proposals? What conceivable rationale, on the merits, is there for opposing ongoing discussion of these ideas, as Bolivia and Barbados propose? Those with an ideological commitment to maintaining patent monopolies, at the expense of public health, should recuse themselves from participating in the debate.

There is a long list of common-sense proposals on the IGWG agenda. Along with efforts to achieve consensus on broad principles, hopefully the final IGWG negotiation will reach agreement on several specific, concrete measures, or at least resolve to further investigate specific proposals. In addition to the Bolivia/Brazil prize fund proposals, these should include creation of a publicly accessible, global patent database covering medical technology; mechanisms, perhaps building on WHO’s pre-qualification program, for expedited registration of new medicines, taking into account the potential perils of harmonized standards, and seeking to address the problem of firms’ refusing to register drugs out of retaliatory animus; and ongoing discussion of patent pool proposals, including the very attractive Bolivia/Barbados proposal. Attention should also be paid to creating competitive, generic markets for biologics and vaccines, including through the Bolivia/Barbados proposal on cancer treatments.

The great promise of the IGWG exercise is that it will be innovative in its own right — that country negotiators will leave ideological predispositions aside, and advance experiments with new institutional arrangements to promote the complementary public health objectives of innovation and access. The country negotiators have it in their power to realize this promise.

—

For More Information, contact:

Sarah Rimmington, (Geneva, week of April 28, 2008 only) (+41)(0)76-269-2246), [email protected]

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

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

PharmaTimes Daily

Thailand disappointed to be on USTR watchlist yet again
28 April 2008

The Thai government has expressed disappointment at finding itself once again on the USA’s ‘priority watch list,’ a ranking of serial violators of intellectual property, a decision which reflects the country’s policy of compulsory licensing for certain drugs.

The United States Trade Representative (USTR) has issued its annual ‘Special 301’ report, the centrepiece of which is the priority watch list of the worst offenders. Thailand is on there again, along with Argentina, Chile, China, India, Israel, Pakistan, Russia and Venezuela.

The report says that while the USA “recognises the importance of Thailand’s public health challenges”, the issuing of compulsory licences on patented drugs “have contributed to continuing concerns regarding the adequate and effective protection” of IP. The USTR adds that it is “awaiting further information on the new Thai government’s approach in this area”.

In late 2006 and early 2007, compulsory licences were issued by the then-military government to allow generic versions of Merck & Co’s Stocrin (efavirenz) and Abbott Laboratories’ Kaletra (lopinavir/ritonavir), both HIV/AIDS drugs, plus Sanofi-Aventis/Bristol-Myers Squibb’s antiplatelet blockbuster Plavix (clopidogrel). They have since been joined by Sanofi’s Taxotere (docetaxel), Roche/Genentech’s Tarceva (erlotinib) and Novartis’ Femara (letrozole) and Glivec/Gleevec (imatinib), though the latter licence was cancelled after the Swiss firm agreed to supply it free to hundreds of leukemia patients in Thailand.

There were rumours that the new Thai government was thinking of abandoning the programme but it remains in place. Nevertheless, Thailand’s Foreign Minister Noppadon Patama said the government was surprised by the decision, saying that over the past year, charges have been brought against 7,000 IP violators and 6.7 million fake products have been destroyed. However it appears that the USA is more interested in compulsory licensing on drugs than a pile of pirate DVDs.

This would seem to be the view of Washington, DC-based corporate accountability group Essential Action and its director Robert Weissman, said that last year, when USTR placed Thailand on the list, “we labelled the action ‘outrageous, cynical, shameful.’ Unfortunately, nothing has changed”.

Noting that Thailand’s compulsory licensing policy is perfectly legal seeing as the move falls within the World Trade Organisation’s Trade-related Aspects of Intellectual Property Rights (TRIPs) rules, Mr Weissman said that the government is simply lowering the prices of medicines and making important drugs available to people “without regard to income”. However, “instead of congratulating Thailand, the USA denounces and saber-rattles”, he added.

Mr Weissman went on to say that “USTR knows it has no reasonable complaint against Thailand, but that big pharma wants it to say something”. It has said something, but “in such an imprecise way that it is impossible to pinpoint what the agency is concerned about or what it wants”.

By Kevin Grogan

Signers of “Patient Declaration” for WHO talks financially tied to Big Pharma

FOR IMMEDIATE RELEASE
April 28, 2008

Contact:
Sarah Rimmington, (Geneva) (+41)(0)76-269-2246, [email protected]
Robert Weissman, (Washington, DC) (+1) 202-387-8030, [email protected]

GENEVA – Most signers of a “Patient Declaration” being circulated in the context of the World Health Organization’s (WHO’s) talks on R&D for the developing world are financially tied to Big Pharma. That according to a report issued today by Essential Action.

Essential Action’s report, “Patients, Patents and the Pharmaceutical Industry,” shows that the organization circulating the declaration, Patients and Patents, is run by individuals financially entangled with the brand-name pharmaceutical industry. The report also shows that most signers of the “Patient Declaration on Medical Innovation and Access,” which is being circulated by Patients and Patents, are tied to the industry.

The Essential Action report is available here.

“There clearly is a crucial role for patient and public health organizations in the WHO debates over R&D for the developing world,” says Essential Action director Robert Weissman. “But groups that are dependent on Big Pharma, or tied to the industry, should not present themselves as independent voices in the debate.”

“Patients’ interests lie in the twin goals of the WHO Intergovernmental Working Group on Public Health, Innovation and Intellectual Property (IGWG) — to advance innovation and access. Patents are only one, flawed means to advance innovation, and patent monopolies pose serious access barriers. Patient groups should be embracing the IGWG effort to explore different mechanisms to achieve both innovation and access — as indeed many independent patient organizations from around the world are.”

The “Patient Declaration on Medical Innovation and Access” insists on the importance of patient group involvement in IGWG or other WHO processes before “recommending changes to international patent protection (IPP).” The final negotiating session of IGWG commenced this morning in Geneva. The declaration can be found here.

Patients and Patents is governed by a seven-member advisory board. Essential Action’s report documents that six of the seven members of the advisory board are linked to the brand-name pharmaceutical industry, either directly as an individual or through their primary organization, and the seventh member has at least a weak tie to the industry.

The report also finds that 61 of 110 of the signers of the Declaration (as of April 24) have industry ties. The report details those ties. Based on its methodology, the report’s information undoubtedly undercounts and underreports the industry ties of the signers of the declaration.

The Washington, D.C.-based Essential Action is a nonprofit project that focuses on public health and corporate accountability. Essential Action’s work on pharmaceutical issues is funded by the Open Society Institute and the Ford Foundation.

Can the world settle on a medical research and development (R&D) system that develops medicines and other products to meet priority health needs and makes those products available on an affordable basis? Developing a strategy to meet these twin goals is the task of World Health Organization (WHO) negotiations now entering their final phase today in Geneva.

The latest issue of Essential Action’s Global Access to Medicines Bulletin discusses these WHO negotiations, explaining what’s at stake and what’s on the table. The text of the bulletin follows on the continuation of this post.

An .rtf version of the bulletin is available here.

Essential Action’s
Global Access to Medicines Bulletin
Issue No. 4, April 28, 2008

Medical R&D that works for the developing world

Can the world settle on a medical research and development (R&D) system that develops medicines and other products to meet priority health needs and makes those products available on an affordable basis? Developing a strategy to meet these twin goals is the task of World Health Organization (WHO) negotiations[1] that enter their final phase today in Geneva.

The WHO Intergovernmental Working Group on Public Health, Innovation and Intellectual Property (IGWG) is finishing talks to create a global strategy and plan of action[2] to spur medical R&D focused on the health needs of developing countries, and to ensure that poor populations get access to important pharmaceuticals and other medical technologies.

WHO member states authorized the creation[3] of the IGWG in 2006. IGWG has held web-based public hearings[4] and two official negotiating sessions[5], involving government representatives from more than 100 countries. Delegates are scheduled to finalize a global strategy and plan of action by May 3 at the conclusion of the final week of negotiations. This plan will be presented to the World Health Assembly, made up of all WHO member states, in mid-May.

Advancing Innovation and Access to Medicines
IGWG’s core mandate[6] challenges participants to come up with a strategy that advances both innovation and access (“I plus A”), rather than treating these two public health imperatives as contradictory objectives that must be counterbalanced to each other.

The shortcomings of the current R&D model are numerous, but two key outcomes have a particularly harmful impact on developing countries, which comprise 80 percent of the world’s population but amount to only 13% of the global market for medical products. New products are frequently priced so high as to deny access to poor people globally, and especially to huge numbers in developing countries who must pay for them out of pocket. Also, too little investment in R&D is directed at products that target the priority health needs of people in developing countries. These countries’ buying power is too limited to induce investments responsive to their particular needs.

Although people in developing countries get sick and die from the same diseases as people in rich countries, they also have some specialized R&D needs. The current R&D system — which rewards innovators with marketing monopolies — does a poor job of generating investment in new treatments for neglected diseases, which are conditions that disproportionately affect developing countries, where buying power is limited. It is also the case that the products that treat diseases that occur in all countries whether rich or poor (such as cancer and heart disease) are often not appropriate for conditions in developing countries. For example, not enough R&D is invested in creating products that do not require refrigeration, an important feature for products to be used in countries with warm climates and unreliable electricity.

An abundance of I plus A proposals
The IGWG is exploring several ideas and proposals focused on advancing both innovation and access. Some ideas could be immediately operational. Others will require more follow-up exploration and negotiation. Proposals under consideration include:

• Establishment of a system to incentivize private R&D priority setting based on identified health needs, rather than market demand for a product.
• Systems to reward innovators financially by means other than patent-based marketing monopolies. Instead of enabling drug companies to charge high drug prices and protection from competition, one promising model would offer prizes to the developers of new medicines, with the prize amount based upon the health impact of the product.[7]
• Special incentives for R&D in diseases specific to poor countries, or open and collaborative approaches, modeled on the Human Genome Project, that involve the widespread sharing of information.
• Management of the fruits of publicly funded R&D to ensure that they are affordable and available in developing countries, and priced reasonably in rich countries.
• 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. In other words, the burden on Guatemala should be less than that on the United States.
• Provision of technical assistance by the WHO 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.

Optimism about negotiations despite challenges
Significant issues remain on the agenda for this week’s discussions. Some developing country delegations and public health experts expect continued resistance from rich countries — home to the major pharmaceutical and biotech companies — to some of the fundamental issues under consideration This includes disagreement over language that encourages taking a pro-public health approach to patent and related rules, resistance to R&D incentive systems designed to replace patent monopolies, as well as a move to limit the scope of diseases for which solutions are being devised to a narrow set of health problems.

Despite the challenges ahead, public health advocates are optimistic. Member state delegates have already agreed on a considerable portion of the framework, and several observers from the public health community are pleased with the overall tone of the discussions to date.

“We are getting a sense that countries are pushing WHO to be more active in resolving the access to medicines crisis, and take a pro-health approach to intellectual property,” said Michel Lotrowska of Doctors Without Borders/Médecins sans Frontières upon the conclusion of the November, 2007 negotiating session. “And governments are taking steps to address the fundamental reasons why investment into innovation for diseases of the poor is lacking.”[8]

Web links:
[1] http://www.who.int/phi/en/ and http://www.keionline.org/index.php?option=com_content&task=view&id=3&Itemid=1
[2] https://salsa.democracyinaction.org/o/1678/images/IGWG2_Strat_POA_07_08.pdf
[3] https://salsa.democracyinaction.org/o/1678/images/wha59-24.pdf
[4] http://www.who.int/phi/public_hearings/en/
[5] http://www.who.int/gb/phi/
[6] http://www.who.int/intellectualproperty/en/
[7] http://www.keionline.org/index.php?option=com_content&task=view&id=4&Itemid=1
[8] http://www.ip-watch.org/weblog/index.php?p=820

Essential Action is a public health and corporate accountability group located in Washington, DC. Essential Action’s Access to Medicines Project has worked on global access to medicines issues for more than a decade.
For more information on our work go to www.essentialaction.org/access/

Published by Essential Action’s Access to Medicines Project
P.O. Box 19405, Washington, DC, 20036, USA
Tel: (1) (202) 387-8030
www.essentialaction.org/access/
Editors: Sarah Rimmington [email protected]
Robert Weissman [email protected]

To subscribe to the Global Access to Medicines Bulletin go to: http://salsa.democracyinaction.org/o/1678/t/5144/signUp.jsp?key=2959

Most signers of a “Patient Declaration” being circulated in the context of the World Health Organization’s (WHO’s) talks on R&D for the developing world are financially tied to Big Pharma. That according to a report issued today by Essential Action.

Essential Action’s report, “Patients, Patents and the Pharmaceutical Industry,” shows that the organization circulating the declaration, Patients and Patents, is run by individuals financially entangled with the brand-name pharmaceutical industry. The report also shows that most signers of the “Patient Declaration on Medical Innovation and Access,” which is being circulated by Patients and Patents, are tied to the industry.

The Essential Action report in .pdf form or as an .rtf document.

Bangkok Post
April 27, 2008

US pressures Thailand on its CL stance
Kingdom one of nine countries on watch list

By Post reporters

The United States’ decision to keep Thailand as one of nine countries on its watch list due to concerns over intellectual property rights problems has angered activists, who say Washington is protecting pharmaceutical makers at the expense of better health for the Thai public. The Office of the US Trade Representative is keeping the kingdom on its Priority Watch List because it is worried about its continuing policy on compulsory licensing, initiated by the previous government.

The situation remains unchanged under the present administration.

”While the United States recognises the importance of Thailand’s public health challenges, Thailand’s recent policies and actions regarding the compulsory licensing of patented medicines have contributed to concerns regarding the adequate and effective protection of IPR in Thailand,” the USTR said in a report released in Washington on Friday.

”The United States is awaiting further information on the new Thai government’s approach in this area and hopes to work constructively on this and other IPR issues in order to strengthen Thailand’s IPR regime,” it added.

The US said it wanted more action from Thai authorities to crack down on piracy.

Last year when the US put Thailand on the list, the US administration denied the decision was linked to the compulsory licensing policy.

But this year, its statement makes clear that the CL policy is one factor keeping it on the list.

There are eight other countries on the Priority Watch List, including China and Russia, the two countries which cause the US most concern over intellectual rights violations.

Nimit Tienudom, director of the Aids Access Foundation, said Washington ”wants to protect its own trade benefits without respecting the desire of other middle-income countries like Thailand to extend medical access at all”.

Thailand and its supporters have cited World Trade Organisation rules which allow for compulsory licensing in national emergencies or justified non-commercial cases.

They allow Thailand to produce or import generic versions of medicines for local use. Patent holders can receive some royalties but they complain the scheme violates their intellectual property rights.

Aat Pisanwanich, director of the Centre for International Trade Studies at the Thai Chamber of Commerce University, said other countries should not use the policy to threaten Thailand’s stance on healthcare.

The government should allocate sufficient funds to improve the universal healthcare regime, he said.

Essential Action, a non-profit organisation in the US which monitors the issue, said Washington was favouring medicine producers.

”USTR knows it has no reasonable complaint against Thailand, but Big Pharma wants it to say something,” director Robert Weissman said.

Deputy director-general of the Intellectual Property Department Wiboonlasana Ruamraksa said Thailand worked closely with the US in clamping down on all forms of counterfeit products, but Washington was still of the view that its efforts were not adequate, especially legal action taken against pirates and counterfeiters.

The issue will be taken up in talks tomorrow between USTR officials and Commerce Minister Mingkwan Sangsuwan.

Foreign Minister Noppadon Pattama declined to comment on the USTR move until he had studied the report.

The minister lobbied US Secretary of State Condoleezza Rice during his visit to the US in March to remove Thailand from the Priority Watch List.

In the report, the US said it was looking forward to working with the elected government on better enforcement and intellectual rights protection.

It is in line with the stance by US Trade Representative Susan Schwab.

”The administration will continue to defend vigorously American innovation. US leadership remains critical to improving the global IPR climate,” she said

Intellectual Property Watch

25 April 2008
Rise Of Enforcement Priorities Reflected In Annual USTR IP Report

By William New

The annual United States government report aimed at boosting global protection of US intellectual property rights and discouraging investment in errant nations this year again took sharpest aim at China and Russia, but also raised the alert on Thailand in part for its use of permitted compulsory licensing for public health, on health and safety risks of counterfeit products such as medicines, on internet piracy, and on a global treaty against counterfeiting.

The report shows the “expanding importance from year to year” of IP rights, and the “growing significance” of IP rights infringement, to the US economy, Stan McCoy, assistant US trade representative for intellectual property and innovation, told reporters on 25 April. He said it also shows the increased importance for developing economies as well.

Other areas of greater emphasis this year include internet piracy and piracy on emerging technologies such as mobile telephones, palm devices, flash drives, and other mobile technologies, the report said.

In the US Trade Representative’s annual Special 301 report (pdf) mandated by the US Congress, nine countries are on this year’s priority watch list, the worst ranking in the report before possible trade sanctions including loss of unilateral benefits for shipping to the US market. In addition to China and Russia, they include Argentina, Chile, India, Israel, Pakistan, Thailand, and Venezuela.

A total of 78 nations were reviewed this year, and 46 landed on one or another type of watch list, which mainly leads to bilateral discussions and attempted discouragement of investment. Another 36 nations were placed on the watch list. Russia was subjected to an “out-of-cycle” review which resulted in its placement on the priority watch list. Out of cycle reviews were called for this year for Israel and Taiwan.

Several countries improved in USTR’s eyes. Egypt, Lebanon, Turkey, and Ukraine moved from the priority watch list to the watch list, which USTR said reflected improvements in each country’s IPR regime. Belize and Lithuania were removed from the Special 301 report altogether.

Mentioned for the first time in a Special 301 context was the Anti-Counterfeiting Trade Agreement (ACTA) under negotiation by leading developed nations (who also are the holders the vast majority of the world’s IP rights). USTR, in its news release, called ACTA a “new and dynamic effort to combat the challenges of counterfeiting and piracy today.” It added that “the ACTA is envisioned as a leadership effort among trading partners that will raise the international standard for IPR enforcement.” Announced last October, ACTA will not be concluded by the time of the next summit of the Group of Eight industrialised nations in Japan in July, McCoy said.

USTR also took up the industry call and heightened its focus this year on trade in counterfeit pharmaceuticals, which it said “continues to be a particularly grave concern in light of the risks to human health and safety.” The United States “continues to be actively engaged in addressing this serious problem,” it said. In an extensive section on the issue in the report, USTR reinforces support for the existing patent-based R&D model for innovation of new drugs and medical devices, and describes its engagement with other governments to promote this view.

USTR also stressed the importance of preventing the export of infringing products, which may reflect the continued increase attention paid by developed countries to customs and border activities related to piracy and counterfeiting.

USTR also highlighted the benefit to protection of US intellectual property in the recently concluded bilateral agreements such as Colombia, Panama and Korea. US bilateral agreements typically extend a country’s commitments beyond those of the 1994 World Trade Organization Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), which is the global IP policy standard for protection.

On Thailand, McCoy said there was concern about an “overall deterioration” in Thailand on IP rights protection, including of optical media such as CDs and DVDs, but also involving the use of compulsory licenses, which are permitted at the discretion of any government under the TRIPS agreement to produce cheaper versions of patented medicines. Compulsory licences are common in the United States for other types of products, but USTR is reflecting developed-nation pharmaceutical industry concerns that the spread of the use of such licences in mid-sized economies such as Thailand could inflict economic harm on the industry and its ability to carry out research and development. The report urges Thailand to respect the viability of the existing patent system, McCoy said.

Essential Action, a Washington-based nongovernmental organisation monitoring trade policy, reacted strongly to the announcement on Thailand, calling it for the second year in a row, “outrageous, cynical, shameful.”

“Thailand has led the way in using TRIPS flexibilities – reaffirmed in the Doha Declaration on the TRIPS Agreement and Public Health, a declaration to which the United States is a party – to lower the prices of medicines and make important drugs available to people without regard to income,” said Robert Weissman, director of Essential Action. “Instead of congratulating Thailand, the United States denounces and sabre-rattles.”

On China, McCoy highlighted that the two WTO cases brought by the United States against China for IP-related matters shows that the US is willing to exercise its rights at that multilateral body when problems remain after extended bilateral discussions. He said a decision could come by next autumn on the copyright case against China.

Of the 51 total pages of the report, 14 pages specifically detail the situation in China (more than 27 percent).

On Russia, McCoy said “the ball is in Russia’s court” to deliver improvements on TRIPS compliance, as well as with the 2006 US bilateral agreement with Russia. Both Russia and China were also cited for progress made in the past year.

Nations mentioned in the report are given an opportunity to provide their views in the public comment process, McCoy said. Much of the information appears to come from US industry and government sources (such as the increasing presence of IP specialists at embassies around the world), though McCoy also cited foreign governments and foreign business.

The report did not appear to mention the emerging issue of “cross-retaliation,” in which nations who win a WTO case may choose to retaliate under a different WTO agreement than the one in which the violation occurred. This phenomenon, permitted under WTO rules, became known in the recent decision involving gambling services brought by the Caribbean nation of Antigua, which found the United States in violation for failing to allow gambling services. Antigua was permitted to seek retaliation under the TRIPS agreement instead of the WTO agreement on services.

The International Intellectual Property Alliance (IIPA), which represents the leading US trade associations across all of the copyright industries, echoed USTR by calling China and Russia the biggest problem countries. IIPA also praised USTR for including Spain and Greece on the watch list. But it showed dissatisfaction with the choice not to elevate Canada to the priority watch list for its alleged copyright violations, as IIPA had urged. But USTR said it looks forward to the implementation of new policies by Canada to address concerns in the coming months.

William New may be reached at [email protected]

For Immediate Release, April 25, 2008
For More Information, contact Robert Weissman, 202-387-8030

Statement of Robert Weissman, director, Essential Action, in response to USTR’s placement of Thailand on the “priority watch” list in its annual Special 301 Report:

USTR has today issued its 2008 Special 301 report. It is available here.

The report again includes Thailand on the Priority Watch list, again citing Thailand’s compulsory licenses as a reason for appearing on the list. The relevant text of the report says:

While the United States recognizes the importance of Thailand’s public health challenges, Thailand’s recent policies and actions regarding the compulsory licensing of patented medicines have contributed to continuing concerns regarding the adequate and effective protection of IPR in Thailand. The United States is awaiting further information on the new Thai government’s approach in this area and hopes to work constructively on this and other IPR issues in order to strengthen Thailand’s IPR regime.

Last year, when USTR placed Thailand on the Priority Watch list, we labeled the action “outrageous, cynical, shameful.” Unfortunately, nothing has changed.
Thailand has led the way in using the TRIPS flexibilities — reaffirmed in the Doha Declaration on the TRIPS Agreement and Public Health, a declaration to which the United States is a party — to lower the prices of medicines and make important drugs available to people without regard to income. Instead of congratulating Thailand, the United States denounces and saber-rattles.

How is Thailand — and the rest of the world — supposed to interpret the statement that “Thailand’s recent policies and actions regarding the compulsory licensing of patented medicines have contributed to continuing concerns regarding the adequate and effective protection of IPR in Thailand”? Which policies and actions? And, most importantly, whose continuing concerns?

There are two ways to interpret the statement: The first option is that it is gibberish. USTR knows it has no reasonable complaint against Thailand, but that Big Pharma wants it to say something. So, USTR did, though in such an imprecise way that it is impossible to pinpoint what the agency is concerned about or what it wants. It is possible that this is USTR’s intended purpose.

But the words will be understood via a second, more straightforward interpretation: USTR will complain about lawful compulsory licenses, at least for middle-income countries and non-HIV/AIDS drugs. Proper procedures may be followed, special efforts may be made to reach accommodations with patent holders, public health benefits may be apparent — but USTR will complain about compulsory licenses anyway.

The honest and right thing for USTR to do would have been to remove Thailand from the Priority Watch list, and remove any negative reference to the Thai compulsory licenses from the Special 301 report.

The good news is that U.S. policy on access to medicines issues is changing for the better, and will continue to do so. This is evident in the improved access-to-medicines terms that the House Ways & Means Committee negotiated in recent trade agreement texts, and in the positive signals from all of the major presidential contenders.

Hopefully, 2008 will be the last time a country is cited negatively in the Special 301 report for a lawful compulsory license aimed at improving public health.

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Note: This comment is an immediate response to the Special 301 report, focused on Thailand. There is much else worrisome in the report, including the insistence that countries should adopt pharmaceutical test data exclusivity rules.

The latest issue of Essential Action’s Global Access to Medicines Bulletin discusses how Thailand’s generic medicines policy stands as a model for developing countries of how to use legal tools — issuing compulsory licenses on patents — to expand access to essential medicines. The Thai experience shows that generic competition lowers drug prices and makes expanded access possible. It also illustrates the benefit of widespread compulsory licensing focusing on a wide range of diseases.

Despite its success, the Thai medicines policy is in danger of being canceled. Big Pharma, the U.S. and E.U. continue to pressure Thailand to cease the legal use of compulsory licenses to expand access to medicines. Moreover, it remains unclear whether the new Thai government will continue to actively implement the policy.

Click here to subscribe to the Global Access to Medicines Bulletin.

Click here to download an rtf version of Issue #3.

A text version of the bulletin appears after the continuation of this post.
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Essential Action’s Global Access to Medicines Bulletin
Issue No. 3, April 14, 2008

Special In-Depth Issue:
Thailand Lowers Medicine Prices; Faces U.S./E.U. Pressure

Over the last year and a half, Thailand has shown the way forward to ensure that artificially high drug prices do not deny medicines to people who need them.

In November 2006 and January 2007, the country issued three “compulsory licenses” — authorizations of generic competition for products that remain on patent — for two key, newer AIDS drugs and a heart disease medicine [1]. In January 2008, it issued an additional four compulsory licenses on cancer medications.

Legal under national law and international trade rules [2], the compulsory licenses have led to sharp price reductions, with more to follow. The lower prices have enabled Thailand to expand the number of people receiving important drugs. And Thailand’s actions have spurred brand-name companies to lower their prices globally.

Unfortunately, instead of congratulating the country for its public health leadership, the United States and European Union have pressured Thailand to rescind the compulsory licenses. And, Thailand’s new government — elected in late January — has expressed considerable unease with the compulsory licenses, agreeing so far to implement the cancer drug licenses only under pressure from Thai consumer and health groups.

Thai compulsory licenses a breakthrough

Many other developing countries have previously issued compulsory licenses, including Eritrea, Ghana, Indonesia, Malaysia, Mozambique, South Africa and Zambia. Brazil issued a compulsory license after the first round of Thai licenses [3].

Industrialized countries, including the United States, routinely issue compulsory licenses [4]. In March 2007, Italy issued a compulsory license on finasteride, the active ingredient in the male-pattern baldness drug sold by Merck under the brand name Propecia [5]. Brand-name drug companies also frequently seek compulsory licenses. Roche is presently seeking a compulsory license for the right to an Amgen-controlled anemia drug, for example [6].

Despite the frequency with which compulsory licenses have been issued, both public health advocates and Big Pharma viewed the Thai actions as a breakthrough.

First, the government issued licenses on second-generation HIV/AIDS drugs — efavirenz (brand name Stocrin, sold by Merck) and lopinavir/ritonavir (Kaletra, sold by Abbott). These were the first compulsory licenses on the second generation of AIDS drugs, which remain much more expensive than the older medicines for which generic competition is now robust. Second, the licenses were the first issued by a middle-income country with substantial market size — large enough to start the process of reducing the costs on the raw materials markets. Third, the January 2007 Thai license on clopidogrel (Plavix, sold by Sanofi-Aventis) signaled a refusal to let compulsory licensing be confined to AIDS drugs. The licenses in January 2008 covering cancer drugs further expanded the compulsory licensing initiative outside of the realm of HIV/AIDS drugs.

Health-driven policy

Thailand issued a very detailed rationale for its compulsory license policy, including two lengthy white papers [7].

Thailand adopted a universal health system in 2001, under which all Thais have a right to medicines on the national drug list. Compulsory licenses would be issued, the government explained, for drugs meeting important public health objectives, where “the price of these drugs and medical supplies [is] too high to be affordable by the government to
supply to the beneficiaries of the national health insurance schemes to achieve the universal access policy.”

Regarding AIDS drugs, the government estimated that 50,000 Thais will need second-line treatment in the near future. The cost of providing lopinavir/ritonavir at Abbott’s price to this population would be more than the entire current budget for ARVs, according to the government. The immediate price discounts from the compulsory license would eventually enable the government to provide an additional 8,000 people with the medicine, with that number expected to grow as generic costs fall over time.

The government also maneuvered to preserve meaningful markets for the companies whose products were compulsory licensed. The compulsory licenses applied only to the public health system. The brand-name companies’ monopolies still apply in the private sector, which serves richer Thais and a considerable population of medical tourists who go to Thailand for cheaper treatment options.

The generic competition introduced by compulsory licenses brings dramatic price reductions. For clopidogrel, the price has fallen by 98 percent. For the cancer drug compulsory licenses, the government reports:
– The generic price for the lung/breast cancer drug docetexel (Taxotere, sold by Sanofi-Aventis) is 16 percent of Sanofi-Aventis’s price.
– The generic price for the breast cancer drug letrozole (Femara, sold by Novartis) is 3 percent of the Novartis price.
– Roche’s price for the lung cancer drug erlotinib (Tarceva) is roughly four times the generic price.
– Novartis’s price for imatinib (Glivec) is 18 times more expensive than generic versions. (Novartis agreed to donate supplies of imatinib, and Thailand is not planning on implementing the imatinib license.)

As of January 2008, Thailand has been able to roughly triple the number of people receiving the HIV/AIDS drugs efavirenz and lopinavir/ritonavir, thanks to the lower prices achieved with generic competition [8].

The price reductions obtained by Thailand have also benefited people in other developing countries. After Thailand issued its compulsory license on Kaletra, for example, Abbott lowered its middle-income-country price from $2,200 a year per person to $1,000 [9].

Big Pharma, U.S., E.U. pressure Thailand to revoke medicines policy

Big Pharma has reacted very negatively to the Thai compulsory licenses. In a striking move in March 2007, Abbott Laboratories withdrew applications to market seven new medicines in Thailand. Public health advocates labeled the withdrawal as an attempt at “blackmail.” Médecins Sans Frontières/ Doctors Without Borders said it was “unethical and
utterly unacceptable [10].”

The U.S. government quickly registered protests with Thailand after the first compulsory license was announced, but then retreated somewhat in the face of protests from Members of the U.S. Congress. The U.S. Trade Representative (USTR) implicitly acknowledged that Thailand’s actions were permissible under the terms of the World Trade Organization’s
Agreement on Trade-Related Aspects of Intellectual Property (TRIPS) [11].

In April 2007, however, USTR placed Thailand on the “Priority Watch” list in the annual Special 301 Report, a listing of countries the United States claims are engaging in allegedly egregious violations of patent, copyright and related policies preferred by the United States. Countries so listed “are the focus of increased bilateral attention concerning the problem areas,” and face the distant threat of trade sanctions if the United States concludes issues worsen [12].

The United States continues to complain about Thailand’s compulsory licensing policy, although the United States has not imposed any actual penalties, and almost certainly will not [13].

The European Commission has followed suit, asking that Thailand review its compulsory licensing policy [14].

Meanwhile, the compulsory licensing policy has been on shaky ground in Thailand. The compulsory licenses were a hallmark of the Public Health Minister who served under the military government that ruled Thailand from September 2006 to January 2008. The new government’s Public Health Minister was openly skeptical of maintaining the cancer drug compulsory licenses issued by the previous minister in the last month of his tenure. Health and consumer groups launched a major campaign to defend the compulsory licenses, and the new minister announced a decision in March to implement the licenses [15]. They are still subject to review by the full government, however, and it remains unclear whether they will ultimately be implemented or not.

For public health campaigners, the Thai compulsory licensing experience stands as a model of how to use legal tools to expand access to essential medicines. The Thai case reiterates how generic competition can lower prices and make expanded access possible. It also illustrates the benefit of widespread compulsory licensing focusing on a wide range of diseases.

Web links:
[1] http://www.cptech.org/ip/health/c/thailand/
[2] http://www.wcl.american.edu/pijip/documents/pijip04262007.doc
[3] http://www.cptech.org/ip/health/cl/recent-examples.html and
http://www.keionline.org/index.php?option=com_content&task=view&id=41
[4] http://www.essentialaction.org/access/uploads/Weissman.ICCL.rtf and
http://www.keionline.org/index.php?option=com_content&task=view&id=41
[5] http://www.agcm.it/agcm_eng/COSTAMPA/E_PRESS.NSF/
92e82eb9012a8bc6c125652a00287fbd/28653b373e56772ac12572ab003a4d68
[6] http://www.reuters.com/article/marketsNews/idUSN2642636620080326
[7] http://www.essentialaction.org/access/uploads/thai-cl-white-paper.pdf and http://www.essentialaction.org/access/uploads/2d.Thai.CL.whitepaper.pdf
[8] http://www.essentialaction.org/access/index.php?/archives/124-Data-on-Thai-Compulsory-License-Benefits.html
[9] http://www.abbott.com/global/url/pressRelease/en_US/60.5:5/Press_Release_0442.htm
[10]http://www.accessmed-msf.org/media-room/press-releases/press-release-detail/article/msf-abbott-should-reconsider-its-unacceptable-decision-to-not-sell-new-medicines-in-thailand/
[11] See http://www.cptech.org/ip/health/c/thailand/congressional-schwabletter-thailand-10jan06.pdf and http://www.cptech.org/ip/health/c/thailand/letter.pdf
[12] http://www.ustr.gov/Document_Library/Press_Releases/2007/April/SPECIAL_301_Report.html
[13]http://www.ustr.gov/assets/Document_Library/Reports_Publications/2008/2008_NTE_Report/asset_upload_file823_14611.pdf
[14] http://www.actupparis.org/IMG/pdf/CAB24_0222100119_001.pdf
[15] See http://ipsnews.net/news.asp?idnews=41286 and www.reuters.com/article/latestCrisis/idUSBKK147647

Published by Essential Action’s Access to Medicines Project
P.O. Box 19405, Washington, DC, 20036, USA
Tel: (1) (202) 387-8030
www.essentialaction.org/access/
Editors: Sarah Rimmington [email protected]
Robert Weissman [email protected]

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Thailand’s ill see benefits from ‘compulsory licensing’
Robert Weissman
McClatchy-Tribune News Service
April 4, 2008

The rationale for Sally Pipes’ fanciful opinion piece (“Thailand’s misuse of `compulsory licensing’ allowed corrupt officials to steal millions,” March 21) would have been a lot clearer to readers if she had revealed that her think tank is funded by the pharmaceutical industry. Her organization, the Pacific Research Institute, has received more than $1 million from Eli Lilly since 2000. Several members of its board are tied to the industry through investment funds or lobby shops.

Pipes derides Thailand for issuing compulsory licenses on several AIDS, heart disease and cancer drugs. A compulsory license is a lawful government authorization of generic competition for products while they remain on patent.

Untruthfully, Pipes says Thai patients have not seen benefits as a result. In fact, the Thai compulsory licenses have lowered the price of an important HIV/AIDS drug (brand name: Kaletra) by about three-quarters, enabling the government to triple the number of people receiving this life-saving treatment. More will go on the treatment as need grows and generic competition continues to reduce prices. The generic version of a heart-disease drug (brand-name: Plavix) is one-seventieth the cost of the brand-name product, which will enable the government to offer the drug in the public health system. Previously, it has been unavailable.
The price reductions obtained by Thailand have also benefited people in other developing countries. After Thailand issued its compulsory license on Kaletra, for example, the maker of the brand-name version, Chicago-based Abbott Laboratories, lowered its middle-income-country price from $2,200 a year per person to $1,000.

Pipes refers to the billions of dollars in aid now being devoted to providing AIDS drugs to people in Africa and other poor countries. She fails to acknowledge that it was compulsory licensing, the threat of compulsory licenses and generic competition that made it possible for aid programs to save the lives of millions of people with HIV/AIDS.

Ten years ago, AIDS medicines for developing countries were priced the same as in rich countries – more than $10,000 a year per person, making an AIDS diagnosis a death sentence for almost everyone in poor countries. Now, thanks to generic competition, those same drugs can cost less than $100 a year. The lower prices from generic competition made it possible for aid donors to invest in saving the lives of those with HIV/AIDS.

Pipes at least acknowledges that Thailand’s compulsory licenses are permissible under international law, though she wrongfully asserts that the right to undertake compulsory licensing is limited to poor countries and public health crises. In fact, the United States (and other rich countries) routinely issue compulsory licenses, including in the pharmaceutical sector.

The small grain of truth in Pipes’ misleading diatribe is that it is expensive to develop new drugs, and that we do need incentives to promote needs-driven medical research and development.

International discussions are under way under the auspices of the World Health Organization to investigate models to spur R&D and promote access to essential medicines, and the United States should continue to engage in these conversations in good faith. One promising idea being discussed is prize funds, which would offer rich rewards for those who make important medical discoveries, but not require patients to pay high prices.

There is growing interest in the U.S. Congress in searching for such win-win arrangements. Senate Resolution 241/House Resolution 525, for example, proposes a U.S. trade policy aiming to promote pharmaceutical innovation and access alike.

We do need fair-share contributions to R&D by middle-income countries like Thailand (whose per-capita income is about one-sixteenth that of the United States). But we can and must find ways to support R&D that do not result in the rationing of life-saving medicines in developing countries, and denial of life-saving treatment to people simply because they are poor.

Robert Weissman is director of Essential Action, a public health advocacy and corporate accountability group based in Washington. Funding for Essential Action’s Access to Medicines campaign comes from the Ford Foundation and the Open Society Institute.

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Note: In the commentary above, Weissman is responding to the following article by Sally Pipes of the pharmaceutical industry-funded Pacific Research Institute.

SALLY PIPES: Thailand’s misuse of ‘compulsory licensing’ allowed corrupt officials to steal millions
McClatchy-Tribune News Service
March 24, 2008

SAN FRANCISCO — When it comes to public health, Thailand’s former government leaders would like the world to think that they’re a collection of 21st-century Robin Hoods.

Last year, the unelected military-backed government gave Thailand’s state-run pharmaceutical firm, the Government Pharmaceutical Organization (GPO), permission to manufacture generic versions of drugs that fight heart disease and AIDS, even though the medicines were still patented by Western firms.

Robbing the rich to give to the poor, right?

Not really. Sick Thai citizens have yet to see any benefits and the move has set a dangerous precedent that will stifle medical innovation and endanger the health of millions.

Thai officials broke the patents by using “compulsory licenses,” a legal maneuver afforded to poor countries by the World Trade Organization (WTO) in the event of a public health crisis. If a local government can’t afford a pertinent patented drug, it can issue a compulsory license to produce it before the patent has expired.

But these provisions were never intended to be used by countries that could afford the medicines but are simply choosing to pay less in order to make other purchases – like tanks for example.

Last year, for instance, Bangkok spent $9 million on pay raises for military leaders. Since 2006, the nation has increased its defense budget by over 30 percent.

The reality is that the former military government officials used compulsory licenses to pursue their own economic development. Their scheme is just protectionism by a different name – and world governments and trade bodies should see it for what it is.

Giving the GPO permission to manufacture patented drugs is part of the Thai government’s plan to establish itself as a globally competitive producer of generics. Of course, there is nothing wrong with the government wanting to encourage its own industry – but not when that’s done at the expense of patients and other countries who abide by both the letter and the spirit of the law.

So far, the gambit has proven quite lucrative. In 2005, Thailand’s GPO reaped $35 million in profits by copying medicines. Only 2 percent of that went toward research and development.

The literally billions of dollars in free medicines and development projects pouring into sub-Saharan Africa don’t come for free. Those must be funded by sales from the developed world and, at least in part, from countries like Thailand that can afford to pay some small part of the cost of innovation – even if not at the same scale countries in the U.S. and Europe can afford.

Activists justify compulsory licenses by claiming that drug makers focus on diseases affecting only rich countries.

But that’s simply not true. Over 100 drug-development projects that specifically target diseases plaguing the Third World are currently underway. Western pharmaceutical firms have already devised life-saving treatments for HIV/AIDS, tuberculosis, and malaria. And they often offer patented drugs to poor countries for free or at a steep discount.

In fact, even in Thailand, the affected companies were all offering their products at steep discounts to the Thai government. When one looks at the potential savings to the Thai government between those prices and potential generic prices the distinctions are insignificant to a national budget – less than the price of one tank.

Compulsory licenses can have a use in rare instances. But using them as a deceptive tool for building up one’s own industry perverts the spirit of the trade agreement and will ultimately prove harmful to patients.

The newly elected Thai government is wisely examining this issue and appears more interested in pursuing a thoughtful, long-term policy of economic development that will serve its citizens far better than quick-fix political schemes that result in Thailand becoming a hero to anti-capitalist activists, but a pariah to the world economic community.

Sally C. Pipes is president & CEO of the Pacific Research Institute, (www.pacificresearch.org), a nonprofit, nonpartisan think-tank that champions free market policy solutions.