[Ip-health] MSF Oral Testimony to the United States ITC Public Hearing on Trade Investment and Industrial Policies in India

Joanna Keenan-Siciliano joanna.l.keenan at gmail.com
Mon Feb 17 08:34:13 PST 2014

*Médecins Sans Frontières Oral Testimony to the United States International
Trade Commission Public Hearing on Trade Investment and Industrial Policies
in India: Effects on the U.S. Economy*


Good afternoon. My name is Rohit Malpani and I am the Director of Policy
and Analysis at the Access Campaign of Doctors Without Borders/ Médecins
Sans Frontières - also known by our French acronym, MSF.

MSF is an international medical humanitarian organization which provides
impartial medical assistance to those affected by armed conflict,
epidemics, natural disasters, or exclusion from health care. Today, MSF
carries out this work in 70 countries worldwide, while also using our voice
to raise awareness on neglected crises and advocating for improved medical
care, tools and protocols.

As a medical treatment provider with more than 40 years of experience
caring for vulnerable people, MSF is able to speak about the relationship
between intellectual property rules and access to medicines, and about the
role India has played in enabling access to life-saving medicines for

In 2001, MSF faced what seemed like insurmountable barriers in meeting
critical health needs and saving the lives of our patients. In particular,
we faced an astronomical 10,000-dollar per-person per-year price-tag for
life-saving HIV medicines, which barred millions from treatment and
prevented us from being able to reach more than a very limited number of

But a solution was found in India. The legal safeguards introduced in the
country's 1970 patent law excluded patents on life-saving medicines and
resulted in boosting the manufacture of low-cost, quality generic medicines
for a fraction of the existing price. In 2001 the cost to treat someone
with HIV fell by over 96 percent - literally overnight - to 360 dollars per
person per year. Since then generic competition has seen the cost fall even

As a result, nearly 10 million people worldwide today receive treatment for
HIV, many of those from PEPFAR and other U.S. government-funded programs
like the Global Fund to fight AIDS, TB and Malaria. India's role in this
treatment scale up has been - and continues to be - a critical one. As the
'pharmacy to the developing world', and as the biggest source of quality
generic medicines, governments and donors such as the United States rely
heavily on Indian generic medicines. According to the latest data, 98
percent of the medicines used in the American taxpayer-funded PEPFAR
program rely on low-cost generic medicines. This represents important cost
savings that stretches America's significant investment in global health
further and saves millions of lives.

According to the last U.S. government budget, in fiscal year 2014 this U.S.
Government investment amounts to more than 7 billion dollars just for
HIV/AIDS, TB and malaria alone. The generous contributions of the U.S.
government in the global fight against HIV and AIDS have been pivotal in
bringing us to the point where we can, for the first time, talk about
reversing the AIDS epidemic as a feasible policy objective. We welcome new
ambitions and efforts on the part of the U.S. government to translate the
new science - that HIV treatment is, in fact, prevention - into policies
that will scale up access to treatment. But the ability to implement these
policies is directly linked to the ability of patients, treatment providers
and donors, including the U.S. government, to access medicines at
affordable prices.

HIV/AIDS is just one example. We need access to affordable treatment for a
variety of medical problems that affect our patients, including both
communicable and non-communicable diseases.

International trade and intellectual property rules govern what it is
governments can and can't do to protect public health and access to
affordable medicines. Member States of the WTO - including the U.S. and
India - have agreed to these rules which set standards for what deserves a
patent, and for how long a patent should last. In 2001, WTO Member States,
including the US and India, also signed the Doha Declaration on TRIPS and
Public Health, which enshrines the right of governments to implement
safeguards and flexibilities to protect public health.

In recent years, the U.S. has made additional commitments to recognize the
importance of public health. For example, through the 2007 New Trade
Policy, the U.S. recognized the importance of public health safeguards for
developing countries. The U.S. again committed to the importance of public
health in the 2008 WHO Global Strategy and Plan of Action on Public Health,
Innovation and Intellectual Property.

India's patent law and its judiciary are under pressure for policies which
we consider are entirely in line with its obligations as a WTO member.  In
compliance with it is international obligations, India has started to
provide significant patent protection for medicines: between 2005 and 2008,
India granted over 2000 patents for medicines, and continues to grant
patents today, including on new antibiotics for TB treatments, which we
urgently need in our medical operations. Treatment providers are already
seeing the impact of these patents, which delay generic competition,
keeping newer medicines out of affordable reach.

Take HIV for example again - although first line treatment has benefited
from important price reductions, more people need to be switched to newer
and more effective medicines.  MSF has started to switch HIV patients who
develop drug resistance onto newer medicines, which are expensive because
they are under patent and there is no competition. At our clinic in Mumbai,
India, salvage regimen drug raltegravir is prohibitively priced at 1,775
dollars per person per year.

New medicines to treat Hepatitis C, which affects around 180 million people
worldwide, provide another critical illustration. New medicines entering
the market, including the recently approved sofosbuvir, will be priced by
brand-name companies as high as 1,000 dollars per pill in the U.S.  While
it is likely that these medicines will be less expensive in India and other
countries, we know that without generic competition, affordable and
effective treatment for millions of people living in developing countries
will not be possible.

While India does grant patent monopolies to a vast number of pharmaceutical
products, it is trying to strike a balance between providing intellectual
property protection and having the flexibility to protect the
constitutional right to health. It does so in at least two ways:

*(1) Strict patentability*

The first way is by defining strict patentability criteria. Under TRIPS,
governments have the right to define 'scope of patentability' - what does
and does not deserve a patent - in a way that addresses the needs of their
own citizens, as long as they abide by international agreements. The U.S.
recently contributed to its own definition when the Supreme Court
reaffirmed strict patentability criteria for gene patents.

India has adopted a standard of patenting that is stricter than that in the
U.S. or Europe, but which is in line with international trade rules.

There are numerous examples of how India's application of strict standards
of patentability has resulted in improved access to medicines.  For
example, a secondary patent application on a life-saving cancer drug,
imatinib by Novartis was rejected because it was for a modified form of an
already known substance. Novartis challenged this decision. When the Indian
Supreme Court upheld the decision of the patent office last year, it was
legally validating a choice by the Indian parliament to better define
standards of patentability for medicines. While a patent should reward
innovation, in reality the overwhelming majority of patents are applied for
incremental developments on existing medicines.

In contrast to India's stricter patentability criteria, the U.S. has patent
standards which allow for the granting of secondary patents for very
obvious modifications of existing medicines. This practice, known as
'ever-greening,' acts to delay generic competition and keep prices high,
and is a common tactic by which the pharmaceutical industry extends their
monopoly on drugs beyond the original patent's 20 years. A recent study
found that evergreening extends patent protection by an average of more
than 6 years. Allowing companies to extend patent protection and keep
prices high is expensive for U.S. consumers and the U.S. government.

For example, the patent on the active ingredient in imatinib, marketed as
Gleevec, the cancer drug at the heart of the Novartis case, will expire
next year in the US. However, secondary patents will extend Novartis's
market monopoly in the US until 2018, preventing more affordable generics
from entering the market

The U.S. recognizes that excessive patenting can undermine innovation and
American economic productivity across many sectors. President Obama's State
of the Union Address reflects this in his calls for reform of the U.S.
patent system and limits to costly patent litigation that "[allow] our
businesses to stay focused on innovation."

The U.S. government continues to make adjustments to its patent system to
achieve a better balance between rewarding innovation and providing for
public health needs. It should allow other governments, like India, to do
the same. The measures taken by the Indian government do not undermine
rewarding innovation through the patent system, but rather curtail the
worst excesses of it, ensuring that companies focus their energies on
scientific innovations and research for new drugs, rather than business
strategies that extend existing patent monopolies with low or no inventive

When it comes to incentivizing innovation, determining the right balance
for governments to strike in deciding what deserves a patent and what does
not is a complex matter. MSF supports the Indian government decision that
patents should only be granted for innovations that satisfy rigorous
criteria to assess inventive step and have accomplished something
significant in terms of therapeutic efficacy.

*(2) Compulsory licenses*

Compulsory licences are another legally recognized safeguard that allows a
country to balance intellectual property protection with the right to
protect public health. The U.S. government has threatened or used
compulsory licenses for medicines in the past to meet public health needs,
and stated that it would look to use them in the future if necessary.

The Indian Patent Office has had the ability of using compulsory licenses
for many years, but unlike the United States and others - and despite the
unaffordable medicine prices charged by multinational drug companies - had
never issued one until very recently. In 2012, the country issued its first
- and so far only - compulsory license in the interest of public health,
when faced with a price-tag for a cancer drug which kept it out of reach of
98 percent of those eligible for treatment. Granting the compulsory license
reduced the price by 97 percent. The Indian courts also recognized the
innovation behind the drug, and obliged the generic manufacturer to pay a 7
percent royalty to the patent holder.

MSF hopes that where access barriers exist, compulsory licenses will be
issued for the newest drugs to address critical health priorities, enabling
 affordable generic versions will be available not only in India, but in
the rest of the developing world. With new HIV, cancer and hepatitis C
medicines priced beyond the reach of patients and treatment providers, the
use of public health safeguards in India will be necessary to ensure that
medicines are affordable to the millions who require treatment.

*Need for reform*

Make no mistake - MSF recognizes the need to reward innovation and the need
to finance research and development. We are a humanitarian medical
organization that needs and welcomes biomedical innovation to improve
treatment options for our patients. R&D is important, and someone needs to

However, the reality is that relying on high prices for medicines, backed
up by intellectual property monopolies, is a flawed paradigm to pay for
medical innovation.  It creates both access problems due to high prices -
as we have seen - and at the same time it does not stimulate innovation for
many of the diseases affecting people in developing countries, where
patients have limited purchasing power and the private sector sees no
incentive.  Today, we basically have a trade off between innovation and
access.  If you have wide access, says the industry, you aren't supporting

New approaches to medical innovation are demonstrating that significant
medical breakthroughs with access are possible - in particular, models of
innovation that break the link between the cost of research and development
and the high price of the end product.

Seeking greater intellectual property norms in countries like India that
are the source of access for millions around the world, not only does
little for innovation but it perpetuates a failed business model. Instead
of aggressively pushing governments, such as India, to ignore its legal
rights under international trade rules to ensure affordable medicine
prices, the U.S. government should work with India and other countries, to
invest in and develop new models of innovation that promote both innovation
and access.


Every country has the right to take steps to increase access to medicines
and implement a patent system in line with its public health needs. We
strongly object to the pressure exerted by the U.S. on developing
countries, including India, for using legal flexibilities to protect public
health.  India's measures are fully compliant with global trade rules and
with the laws of India.  These attacks undermine the global trading system
as well as the independence of the Indian judiciary, which was responsible
for the decisions under discussion today.

Most importantly, the measures India has implemented to safeguard public
health are of critical importance to protect the health of millions of
people across the world. India has been nicknamed the 'pharmacy to the
developing world' in recognition of this fact.  Losing this 'pharmacy'
would be devastating for patients and for treatment providers.

MSF urges the ITC to evaluate the decisions made by the Indian government
under international trade rules, taking in consideration its impact on
public health.

Thank you again for the opportunity to provide testimony on this important

Joanna Keenan
Press Officer
Médecins Sans Frontières - Access Campaign
P: +41 22 849 87 45
M: +41 79 203 13 02
E: joanna.keenan[at]geneva.msf.org
T: @joanna_keenan


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