Patents, prices and patients - Pharmaceuticals

UN Chronicle, June-August, 2003 by Ellen 't Hoen

Infectious diseases kill aver 10 million people each year more than 90 per cent of whom are in the developing world. (1) The leading causes of illness and death in Africa Asia and South America--regions which account for four fifths of world population--are HIV/AIDS, respiratory infections, malaria and tuberculosis.

In particular, the magnitude of the AIDS crisis has drawn attention to the fact that millions of people in the developing world do not have access to medicines that are needed to treat disease or alleviate suffering. Over 3 million died of AIDS in 2002, including over 600,000 children, and an estimated 5 million became infected, bringing the total to 42 million.(2) However, 95 per cent of people affected by AIDS are the poor living in developing countries, and only 300,000 of the 6 million people in immediate need of life-sustaining medicines are receiving them.(3)

The reasons for the lack of access to essential medicines are manifold, but in many cases the high prices of drugs are a barrier to needed treatments. Prohibitive prices are often the result of strong intellectual property protection. A producer who has a market monopoly is free from market competition and, unless strong pricing policies are in place, can charge whatever price the market will bear. Patents give their owners a monopoly to use, manufacture, sell and import the patented product and therefore to sell it at the most profitable price, which may not be the most equitable in most developing countries. Generic competition is crucial to ensuring downward pressure on drug prices. Medecins Sans Frontieres (MSF) has witnessed this in many developing countries where we work, particularly in the case of antiretroviral medicines for the treatment of HIV/AIDS.

Just two years ago, the average cost of a triple combination of antiretrovirals was between $10,000 and $15,000 per patient per year; today, it is available for as little as $300. These price reductions were the direct result of international public pressure and generic competition, particularly from Indian and Brazilian manufacturers. Generic competition was possible because of the absence of patent protection in those countries.

The World Trade Organization's (WTO) Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement, which sets out the minimum standards for the protection of intellectual property, contains flexibility designed to balance public and private interests. Under the Agreement, countries can overcome the high price of a patented medicine by either making or importing generic versions of pharmaceuticals (by issuing a compulsory license) or importing a more affordable version from another country (through parallel importation).

Recently, the United States Government turned to compulsory licensing as a means of reducing the price of Cipro--an anthrax antibiotic--during the anthrax scare in October 200l.(4) However, Governments in developing countries that attempt to bring down the price of medicines have come under pressure from industrialized countries and the multinational pharmaceutical industry. Western Governments and the industry push for a much stricter interpretation, forcing countries to exclude those elements that allow for public health to be protected. South Africa was taken to court by the industry for attempting to pass a law that was perfectly compliant with TRIPS, which prevented implementation of health legislation for more than three years. Thailand has been pushed by the United States for the last ten years to adopt patent laws much stricter than required by WTO.(5) Similar struggles are currently underway in many least developed countries.

The TRIPS Agreement has come under fierce criticism because of the effects that increased levels of patent protection will have on drug prices.(6) While it offers safeguards, in practice it is unclear whether and how countries can make use of these safeguards when patents increasingly present barriers to medicine access.

The 4th Ministerial Conference of WTO, held in Doha, Qatar in November 2001, was a breakthrough in the international debate about the impact of the Agreement on access to medicines. The Declaration on the TRIPS Agreement and Public Health was adopted by 142 countries, driven largely by developing countries, which firmly placed public health needs above commercial interests and offered much needed clarifications about key flexibilities related to public health in the TRIPS Agreement.(7)

The very fact that public health and access to medicines have been singled out by WTO as an issue needing special attention acknowledges that health care must be treated differently from other products and gives countries leeway for taking measures to counter the negative effects of excessive intellectual property protection on health. The case of AIDS drug prices illustrates what is to come when all new pharmaceutical products will be patent protected in 2006, after most WTO members have implemented the TRIPS Agreement.(8)