Intellectual property and access to medicine

Nurse dispensing medicines in the Chelebiler village health post in Azerbaijan. Photo: Kieran Doherty / Oxfam

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Today, more than two billion people across the developing world lack access to affordable medicines, including many patients in countries negotiating in the Trans-Pacific Partnership (TPP) free trade agreement. Two critical factors limit access to treatment: the high prices of new medicines, particularly those that are patent-protected, and the lack of medicines and vaccines to treat neglected diseases, a consequence of lack of R&D.

Intellectual property (IP) has different forms; in the case of access to medicines, we are talking about patents. Patents are a public policy instrument aimed at stimulating innovation. By providing a monopoly through a patent—which gives inventors an economic advantage—governments seek to provide an incentive for R&D. At the same time, the public benefits from technological advancement.

This trade-off underpins patent systems everywhere. Governments need to maintain an appropriate balance between incentivizing innovation, on the one hand, and, on the other, ensuring that new products are widely available. High levels of IP protection in developing countries exacerbate, rather than help solve, the problem of access to affordable medicines. Extensive patent protection for new medicines delays the onset of generic competition. And because generic competition is the only proven method of reducing medicine prices in a sustainable way, such high levels of IP protection are extremely damaging to public health outcomes.

A word on background: The 1994 TRIPS Agreement represented the single greatest expansion of IP protection in history, but it also includes a range of public health safeguards and flexibilities, which were reinforced by the 2001 Doha Declaration on the TRIPS Agreement and Public Health.

Yet US trade agreements over the past decade have sought to redefine and even undermine the Doha Declaration, as FTAs have included provisions that curb governments’ ability to use the health safeguards in TRIPS and have mandated higher levels of IP protection. These provisions block or delay the onset of generic competition, keeping medicine prices high. Higher treatment costs are devastating to poor people, and they undermine the sustainability of public health programs—particularly in low- and middle-income countries, where public finance for health care is limited and most patients pay for medicines out of pocket.

The agreement reached between Congressional leadership and the Bush administration on May 10, 2007, broke this trend of imposing increasingly stricter IP protections in trade agreements by scaling back so-called TRIPS-plus rules in the FTAs with Peru, Panama, and Colombia. This agreement was very significant—not only did it confirm the importance of the Doha Declaration on the TRIPS Agreement and Public Health, but it also recognized that higher levels of IP protection can in fact run counter to public health interests and US trade and development goals. Under this agreement, which has become known as the May 10 Agreement, three key TRIPS-plus provisions that Oxfam believes have been most harmful in delaying generic competition were rolled back: namely, patent linkage and patent-term extensions were made voluntary, and important flexibilities were included in the data exclusivity (DE) provisions to speed up the introduction of generic medicines.

Patent linkage prohibits a country’s drug regulatory authority from approving a medicine if there is any patent—even a frivolous one—in effect. It requires regulatory officials to police patents in addition to their core work of evaluating the safety and efficacy of medicines.

Patent extension provisions allow companies to seek extensions of the 20-year patent term to compensate for administrative delays by patent offices and drug regulatory authorities. (Such delays are inevitable in developing countries, where these offices are chronically underfunded and are facing increasing numbers of patent applications.)

Data exclusivity creates a monopoly that is separate from patents by prohibiting a country’s drug regulatory authority from approving a generic medicine based on the clinical trial data provided by the originator company.

Although the May 10 Agreement did not eliminate all TRIPS-plus rules, Oxfam considered it to be a step in the right direction—after a long time going the wrong way. It reflected a meaningful effort to ensure that US trade policy more appropriately balances IP protection with public health considerations in developing countries. Oxfam fully expected this new approach in US trade policy to continue.

But the Office of the US Trade Representative (USTR) effectively abandoned the May 10 Agreement in TPP negotiations and added new provisions that would further constrain generic competition—for example, by expanding the scope of what can receive monopoly protection—and Oxfam’s concerns with the USTR TPP proposal relate not only to the IP chapter, but also to a proposed chapter on “transparency” in pharmaceutical reimbursement, which would hinder government efforts to control the cost of reimbursing medicines through public health care programs.

The reality is that fragile gains in health in developing country TPP partners are at risk from the USTR proposal. For example, Peru is a low- to middle-income country with high levels of poverty and inequality and with a high burden of chronic and noncommunicable diseases that require medicines over the long term. Prices for patented medicines to treat cancer, for example, are unaffordable for households and have exhausted most of the government’s resources available to pay for treatments under the public health system.

A 2010 study by a Peruvian government entity (the Director General of Medicines, Supply and Drugs, or DIGEMID) revealed this stark reality: the monthly cost of one key patented medicine needed to treat head and neck cancer is equivalent to 880 times the daily minimum wage in Peru, an amount that would take a worker more than two years to earn, without a single day off. The TPP would not only undermine the efforts of other countries to protect public health, but would also undermine US efforts to improve access to health care around the world. Thanks to the cost savings from use of generics, PEPFAR (the President’s Emergency Plan for AIDS Relief) has successfully initiated treatment for more than three million people worldwide, and saved $380 million in 2010 alone.

In Vietnam, where more than half the population lives in poverty, 97 percent of antiretroviral medicines purchased under PEPFAR ($323 million in 2004–2009) are generics. If Vietnam had to adopt what USTR is proposing in the TPP trade agreement, it would undermine the sustainability of HIV and AIDS treatment under PEPFAR, and also undermine broader efforts by the Vietnamese government to ensure access to affordable medicines. Not surprisingly, the USTR IP proposal has generated stiff resistance from TPP negotiating partners. It’s been hard to sell greater monopoly rights and less competition as facilitating access to medicines. What’s more, the USTR proposal will not enhance pharmaceutical innovation.

It’s important to challenge the argument that stricter IP rules and high prices are essential to promote innovation. This logic is flawed in rich countries and simply does not apply in most developing countries. Additional IP protection in developing countries does not alter the calculus that multinational pharmaceutical companies employ when deciding where to invest limited R&D resources. Even accounting for recent economic growth, developing countries still only represent in total about 1 percent of global pharmaceutical demand.

Stricter patent rules in a few countries may generate greater profits for drug companies, but won’t lead to additional innovation that would meet the public health needs of those countries. And such rules could undermine patients’ access to new treatments. In order to generate greater innovation, changes need to be made within the pharmaceutical industry itself. This is not something that a trade agreement can achieve.

The problem of access to affordable medicines cannot be solved through trade agreements, but it can be exacerbated. That will be the outcome if USTR succeeds in its insistence that TPP partners institute far-reaching IP rules that upset the important balance between access and innovation, thereby rewarding multinational companies with excessive monopolies at the expense of the public interest.

Extended patent protection will not generate additional R&D for medicines and vaccines needed in the developing world. To the contrary, evidence indicates that high levels of IP protections harm access to medicines. The trade-off proposed by USTR is thus unacceptable from a public health and development perspective.

If the TPP is to represent America’s diplomatic, development, trade and commercial interests in a balanced manner, it is critical that USTR go back to the May 10 Agreement and build on its underlying principles and objectives for access to medicines, excluding any additional monopoly protections and enabling all the public health flexibilities in TRIPS.

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