[Ip-health] The Hindu op-ed: A historic move to make drugs affordable

Jamie Love james.love at keionline.org
Tue Mar 13 12:54:28 PDT 2012

This op-ed in the Hindu links the sorafenib compulsory license to the
broader reform agenda, including the Medical Innovation Prize Fund.

As a related development, the Senate is scheduled to hold a May 15,
2012 hearing on S.1138, the Prize Fund for HIV/AIDS Act.  Joseph
Stiglitz is execpted to be one of the witnesses in favor of the bill.



Opinion » Op-Ed

Published: March 14, 2012
A historic move to make drugs affordable

G. Ananthakrishnan

SLASH AND CURE: Compulsory licensing is perfectly legal and built into
the patents regime to balance corporate profit and public interest.
Photo: Bijoy Ghosh
The government's decision to grant a compulsory licence for the
manufacture of an important anti-cancer drug should be the first step
towards making available essential drugs at little or no direct cost.

India's use of the compulsory licensing provision under its patents
law for the first time to make the patented cancer drug Nexavar
available at affordable prices is an essential, although belated step
to curb the mounting cost of drugs.

The grant of the licence by the Controller-General of Patents, Designs
and Trade Marks to Natco Pharma for manufacture of the drug Sorafenib
Tosylate (Nexavar) to treat liver and kidney cancer is a landmark
event, consistent with the test of public interest that governs such a
measure. Under Section 84 of the Indian Patents Act, 1970, any person
can make an application to the Controller for a compulsory licence
after the expiry of three years from the date of sealing of the
patent, on the following grounds — non-fulfilment of reasonable
requirements of the public, or non-availability of the invention to
the public at a reasonable price. The Trade-Related Aspects of
Intellectual Property Rights and the Doha Declaration provide for
compulsory licensing in specified circumstances, including concerns on
public health or public interest.

Licence till 2021

Mere application of the test of reasonable price in a country with a
weak social health insurance infrastructure provides a strong argument
for compulsory licensing in the case of Nexavar, the patent for which
is held by the German multi-national company, Bayer. At present a
month's treatment regime of 120 tablets costs Rs.2.84 lakh, but
manufacture under compulsory licensing will slash it to Rs.8,880. The
Indian applicant has been granted the licence till the expiry of the
patent in 2021.

The use of compulsory licensing is bound to raise the temperature in
the pharmaceutical industry and be dubbed a move that will stifle
innovation. But that would be ignoring the point that it is perfectly
legal, and is in fact provided for in the patents regime to balance
public interest and corporate profits. Use of the provision has been
advocated by the High Level Experts Group (HLEG) of the Planning
Commission headed by Dr. K. Srinath Reddy, to address the issue of
lack of access to essential drugs and affordability.

The question of drug access and prices has become particularly
important after India changed over from a regime that recognises
process patents for medicines to one of patents for products, since
2005. The effects are expected to be felt most acutely in the case of
new drugs, notably those relating to cancer, HIV/AIDS and psychiatric
conditions. Further, the Planning Commission HLEG has drawn attention
to more possible negative outcomes if enhanced provisions of TRIPS
Plus, which would enable “evergreening” of patents beyond 20 years,
are applied.

Producing drugs is, no doubt, an expensive business, and significant
funds are invested in research and rigorous testing. The drugs
developed through this process have great impact on the well-being of
people. Yet, patents can also produce monopolies, and thus immense
power for corporations. It is important to remember that patents deal
with intellectual property, which, unlike other property, produces no
conflict over use. Use by one person does not cause any rivalry with
another and thus has no marginal costs.

Medical prize fund

The economist and Nobel Laureate, Joseph E. Stiglitz summed up the
problem in the British Medical Journal five years ago thus:
Restricting the use of medical knowledge not only affects economic
efficiency, but also life itself. We tolerate such restrictions in the
belief that they might spur innovation, balancing costs against
benefits. But the costs of restrictions can outweigh the benefits. He
cited in particular, the discovery and patenting of genes linked to
breast cancer, a development that would, in countries without a
national health service, deprive many poor women access to the
expensive test. As a departure from the corporate-led pathways of
innovation, which often invest in lifestyle drugs research rather than
life-saving formulations, Professor Stiglitz advocated a medical prize
fund to spur innovation, with large rewards for discoverers of cures
or vaccines for scourges such as malaria, and smaller rewards for
others that are similar to existing drugs. Such intellectual property
would then be open to generic drug manufacturers.

Issue of pricing

In the absence of effective intervention by the government, drug
pricing can produce expensive distortions. Indians consumed about
Rs.56,000 crore worth of medicines through private chemists in the
open market, going by March 2011 figures submitted to the Planning
Commission. What is revealing is that the price gap between government
procurement of drugs and retail sale can be staggeringly wide —
between 100 per cent and 5,000 per cent. Moreover, the price index for
medicines has parted from the index for all commodities and moved
steadily upward, since 1997-98. This is clear evidence of unethical
pricing of many medicines for rising profit, using patents as a cover,
as well as lack of regulation.

The bold move on compulsory licensing should be a first step in a
process of reform and price controls that will make available
essential drugs to all Indians at little or no direct cost. Drawing up
a strong essential drug list to suit the current national disease
profile is important. The public sector pharmaceutical industry and
its capability to produce generic drugs have a strong role to play in
such a plan, and deserves encouragement to revive its fortunes. This
initiative is crucial to the universal health coverage that the Indian
government wants to provide to all its citizens in coming years,
starting with the Twelfth Plan. It should also serve as a clear signal
to pharmaceutical companies to stop extracting staggering profits from
a market with weak social support mechanisms.

anant at thehindu.co.in

James Love.  Knowledge Ecology International
http://www.keionline.org, +1.202.332.2670, US Mobile: +1.202.361.3040,
Geneva Mobile: +41.76.413.6584, efax: +1.888.245.3140.  Sometimes I am
using my MaxRoam number: +447937390810

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