[Ip-health] Why Chemotherapy That Costs $70, 000 in the U.S. Costs $2, 500 in India (The Atlantic)

Sophie Mayer sophie.emma.mayer at gmail.com
Thu Apr 11 06:55:57 PDT 2013

Why does Gleevec, a leukemia drug that costs $70,000 per year in the United
States, cost just $2,500 in India?

It's seemingly simple. Gleevec is under patent in the U.S., but not in
India. Accordingly, Novartis, its Swiss-based manufacturer, may prevent
competitors from making and selling lower-cost versions of the drug in the
U.S., but not in India.

Last week, India's highest court rejected an application to patent Gleevec.
While the legal issue in the case is important -- the patentability of
modifications to existing drugs under Indian law -- the impact of the
decision will likely be broader than just that issue, escalating a
long-simmering fight over patented cancer medications in emerging markets.

Rejecting the Gleevec patent application is not the only step that the
Indian government has taken to circumvent patents on cancer drugs. Last
year, India issued a compulsory license on Nexavar, a late-stage kidney and
liver cancer treatment, enabling a local drug firm to produce a generic
version of this medicine without the permission of Bayer, the patent
holder. India has recently announced plans to grant compulsory licenses on
another leukemia drug and two breast cancer therapies.

India is not alone. Indonesia recently issued a compulsory license for a
treatment for liver cancer-causing hepatitis B. China and the Philippines
amended their pharmaceutical patent laws, making it easier for those
governments to take similar measures as India.

Three trends are driving these moves, suggesting more fights over patients,
patents, and drug prices are forthcoming.

First, cancer rates are increasing fast in many developing countries. With
rising incomes and better access to childhood vaccinations, people are
living longer in most developed countries. The major health risks worldwide
are now behavioral -- such as tobacco use and household air pollution. The
increases in longevity and exposure to behavioral risks are outpacing the
improvement in health and regulatory systems in developing countries. As a
result, people in these countries are developing cancers younger, in
greater numbers, and suffering more chronic disability for cancer and other
noncommunicable diseases (NCDs) than ever seen in developed countries.

Second, access to effective cancer treatment, patented or otherwise, is
limited in developing countries. Most patients pay out-of-pocket for most
of their medicines, and high prices put drugs beyond their reach. Cancers
that are preventable or treatable in wealthy countries are death sentences
in the developing world. Cervical cancer is largely preventable in
developed countries with the human papillomavirus vaccine; in sub-Saharan
Africa and South Asia, it is the leading cause of cancer death among women.
Ninety percent of children with leukemia in high-income countries will be
cured, but 90 percent of those with that disease in low-income countries
will die from it.

Third, middle-income countries like India have both health and industrial
policy reasons for encouraging domestic production of cancer drugs. Cancer
rates are growing fastest in these populations, and governments are under
pressure to better address the health needs of their ailing citizens.
India, China, and other emerging nations are expanding coverage of
medicines in their public sectors, but expenditures are rising
astonishingly fast. IMS Health projects that annual drug spending in
middle-income countries will double between 2012 and 2016, to more than
$300 billion. Requiring local production of cancer drugs lowers their cost
and also helps domestic manufacturers break into the oncology market, a
lucrative therapeutic area in which multinational drug firms are heavily

The measures that India and other countries have taken -- compulsory
licensing and adopting strict standards on patentability -- are consistent
with its international trade commitments, but will be corrosive to the way
that pharmaceutical research and development (R&D) is funded
internationally. More countries are likely to follow India's lead. Cancer
is not the only NCD on the rise in developing countries, with rates of
diabetes, cardiovascular, and chronic respiratory illnesses likewise
increasing. U.S. patients will not indefinitely pay a 20-fold increase on
the price of medicines that Indian consumers pay.

The fight over cancer drugs in India exposes a fundamental tension in the
way we fund pharmaceutical R&D. Patents allow pharmaceutical firms to
charge high prices for drugs for a limited period of time to recoup their
investment in R&D. This results in more of the drugs that we need, but
makes them less accessible to those who need them. The tension becomes
greater in the global context because the income disparities between
developed and developing country patients are so vast.

This tension in the patent system has been exposed before. A decade ago,
courtroom battles and protests over access to patented HIV/AIDS medications
in South Africa dominated international headlines. Those fights subsided
when multinational companies donated their drugs, charged rock-bottom
prices for them in poor countries, or allowed local companies to make
generic versions. Yet the emerging fight over cancer medicines threatens to
be bigger, as it involves the emerging markets and disease groups on which
the multinational drug industry has banked its future.

The international community shows no appetite to agree on new ways to fund
pharmaceutical R&D. Talks on alternatives like prize funds and R&D treaties
at the World Health Organization have gone nowhere. The United States,
Europe, and other developed countries have too much invested in the
intellectual property (IP) system. According to the U.S. Patent & Trademark
Office, IP in the U.S. is worth more than $5 trillion and is responsible
for the employment of as many 18 million U.S. workers. On the other hand,
countries like India are not about to agree to tightening standards on the
flexibilities that the current IP system gives them on patentability and
compulsory licensing.

The solutions to fights pitting cancer patients against patents in India
are more likely to reside in making the current system of funding
pharmaceutical R&D work better.

First, multinational drugs firms can, and should, reduce the cost of R&D,
which would enable these firms to better function in the increasingly
price-sensitive global marketplace for drugs. Last month, Andrew Witty, the
CEO of GlaxoSmithKline, called the often-cited $1 billion price tag for
developing a new drug an "industry myth," based on unacceptably high
research failure rates. Government programs can help. The U.S. Food and
Drug Administration's Critical Path Initiative is working with the drug
industry to improve R&D productivity and could do more with greater

Second, multinational firms must realize that there are low-income segments
of the global marketplace that these firms cannot serve, but whose health
needs must be met for international support of the pharmaceutical, trade,
and IP system to persist. These companies must again be willing to license
their patents to emerging country generic manufacturers better able to meet
the low-cost, high-volume treatment needs of their poor. Novartis has
protested that it was providing free Gleevec to nearly 16,000 patients in
India, but more than 300,000 patients had been receiving the drug through
local generic producers.

The international patent system has spurred tremendous pharmaceutical
innovation. The inventors of Gleevec were awarded both the Lasker Award and
the Japan Prize for their contributions to medicine and science. But the
patent system must meet the legitimate needs of its constituents to
function. If not, accommodations must be made, or last week's fight in the
Indian Supreme Court will be simply one of many to come.

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