[Ip-health] TAC open letter to USTR regarding US government pressure on India

Lotti Rutter lotti.rutter at mail.tac.org.za
Wed Jul 24 01:44:45 PDT 2013



This is an open letter dated 23rd July from the Treatment Action Campaign
sent to USTR Ambassador Michael Froman outlining our concerns with mounting
US pressure aiming to restrict India's generic medicines industry. You can
find the original letter here.



Dear Ambassador Froman,


The Treatment Action Campaign (TAC) of South Africa is extremely concerned
with recent attempts by the US government to discourage and curb the globe's
supply of affordable generic medicines available from India. Specifically,
we object to the placement of India on the US 'Special 301 Watch List' over
objections to the country's intellectual property system, as well as
subsequent condemnation from Members of Congress stemming from US
pharmaceutical industry pressure, and attempts by a group of US commercial
businesses (under the banner of 'Alliance for Fair Trade with India') to
influence Vice President Biden's current meetings in India. 


Through the development of its effective generic manufacturing industry,
India has become an essential source of affordable medicines, producing over
80% of medicines, and as many as 90% of paediatric medicines used in the
developing world[1]. The historic scale up of antiretroviral treatment has
reached over 8 million people in the developing world with life saving HIV
treatment (ARVs) -including 2 million people in South Africa. But this
breakthrough has only been possible due to major price drops achieved
through the introduction of generic competition. Prices reduced from initial
unaffordable levels of as much as US $10,000ppy in the 1990s to less than US
$139ppy[2] for a standard first-line HIV regimen used in the public sector
today. The United States has played a key role, but the goal of an
"AIDS-Free Generation"[3] affirmed by President Obama during his last State
of the Union Address is heavily dependent on sustaining the supply of
Indian-produced generic medicines that constitute the vast majority of drugs
used by PEPFAR, the Global Fund and the governments of developing countries.


Despite a variety of voluntary and tiered pricing mechanisms, the cost of
originator pharmaceutical ARVs continues to vastly exceed generic
equivalents, for example the generic options of the one-pill-a-day
combination (TDF/FTC/EFV) are considerably cheaper at $158 than the
originator company versions, which have remained constant since 2007 at $613
for low-income countries, and $1,033 for lower middle-income countries[4].
Competition has been the single most effective method of delivering
affordable prices for essential health commodities. 


The attack currently being faced by India from the US government is
illustrative of domestic industry interests pushing to repeal prior U.S.
global agreements[5] and violates the spirit of specific commitments made to
Africa[6], and once again protects commercial interests at the expense of
public health. Following the landmark cases pertaining to imatinib (Glivec)
and sorafenib (Nexavar) there has been pressure on India to increase
intellectual property protections despite the fact that in both instances
India acted in compliance with the WTO's agreement on Trade Related Aspects
of Intellectual Property Rights (TRIPS).  


Through strict patentability criteria outlined in Section 3(d) of the Indian
Patents Act which grants new patents only to medicines with enhanced
efficacy, India has avoided granting excessive monopolies for secondary use,
combinations or mere minor incremental changes. The recent Supreme Court
decision in India defended the validity of Section 3(d) by denying Novartis'
appeal for a patent on a new form of Glivec. The absence of a patent on
Glivec in India created a competitive market where the drug rapidly became
available for 94% less than the originator equivalent, now at an affordable
US $17 per month[7]. 


When India's Intellectual Property Appellate Board (IPAB) upheld a
compulsory license on Nexavar despite heavy pressure from Bayer, the price
quickly plummeted from US $5,500 per month to US $175 per month[8] -
ensuring patients were able to start accessing this crucial cancer drug. It
would be hypocritical of the US government to condemn this legal action
after the Bush Administration threatened to utilise this same flexibility to
produce a stockpile of ciprofloxacin (Cipro)--enough to treat 10 million
people in the face of an Anthrax scare in 2001[9].


In South Africa, the combination of low patentability criteria and the lack
of an effective patent examination system have lead to excessive patenting
in the country, maintaining artificially high prices on newer, more
effective medicines and blocking generic equivalents from entering the
market. Increasingly, equitable access to important newer medicines are
priced out of reach for the public sector; sorafenib is currently produced
only for the South African private health sector at a cost more than 23
times the price of the Indian equivalent[10]. Restrictions on India would
amplify such problems on a disastrous global scale.  


The negotiated flexibilities built into the TRIPS agreement allow countries
to adopt fair pro-public health policies that protect lives. Traditionally,
the pharmaceutical sector has argued against these flexibilities in order to
maintain excessive monopoly protection and thus higher commercial reward,
claiming that high premiums are essential to drive effective medical
innovation--however even proponents of the sector have established that
these huge price tags around R&D are "one of the great myths of the
industry"[11]. Even using industry assertions, pharmaceutical related R&D
spending by the private sector was less than 8 percent of global sales in


The US government is the largest funder of AIDS programs worldwide through
PEPFAR - which procures 98% of its medicines from generic manufacturers
globally. Instead of threatening India with trade sanctions, the US must
recognise that any restrictions on Indian generic manufacturing would
invariably lead to significant increases in medical procurement costs and
ultimately less value for money within US aid budgets. In regard to HIV, the
effect of this would become increasingly apparent as the epidemic ages, when
increasing numbers of people are put on life-long antiretroviral treatment,
and more people living with HIV need to be switched to more expensive 2nd
and 3rd line regimens. In stark contrast to the recommendations of the US
Blueprint to end AIDS, an increase in medicine prices would deny any
opportunity for the global community to reach a tipping point in the
epidemic, where treatment initiation outpaces new infections.


At a time of budget deficits and funding cuts, additional costs must not be
incurred to restrict access to life-saving medicines that millions of people
rely on around the world. We urge the US government to stand strong against
pressure from the pharmaceutical lobby and actively support and applaud
enabling policies that ensure that India, the 'pharmacy of the developing
world', can continue to produce affordable generic medicines that so many of
us rely on to stay alive.


Yours sincerely,


Anele Yawa

Treatment Action Campaign Chairperson



Susan Rice, National Security Advisor

Ambassador Eric Goosby, Office of the Global AIDS Coordinator

Ebrahim Rasoo, South African Ambassador to United States

Nirupama Rao, Indian Ambassador to United States



For all media enquiries please contact:

Lotti Rutter

lotti.rutter at tac.org.za

+27 (0) 81 818 8493




Lotti Rutter

Senior Researcher

Policy, Communications and Research


Treatment Action Campaign

Tel: 021 422 1700

Cell: 081 818 8493

Skype: lotti.rutter

Twitter: @FixPatentLaw


 <http://www.fixthepatentlaws.org> www.fixthepatentlaws.org

 <http://www.tac.org.za> www.tac.org.za



[1] http://www.ncbi.nlm.nih.gov/pmc/articles/PMC2944814/

[2] http://www.doctorswithoutborders.org/press/release.cfm?id=6844

[3] http://www.pepfar.gov/documents/organization/201386.pdf 

[4] MSF Untangling the Web of Antiretroviral Price Reductions; 16th Edition,
July 2013

[5] http://www.wto.org/english/thewto_e/minist_e/min01_e/mindecl_trips_e.htm

[6] http://www.gpo.gov/fdsys/pkg/FR-2000-05-12/pdf/00-12177.pdf



[9] http://www.cptech.org/ip/health/cl/recent-examples.html#United

[10] http://www.fixthepatentlaws.org/?p=420


[12] http://keionline.org/node/1152

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