[Ip-health] Shreerupa Mitra in Common Cause - Access to Cheaper Drugs (April June 2017 edition)

Thiru Balasubramaniam thiru at keionline.org
Fri Aug 18 00:16:15 PDT 2017


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                        International Trends & Developments

                                        Shreerupa Mitra*

In May last year, leaked diplomatic cables of internal communications
between the officials at Colombian embassy in Washington and their
headquarter revealed an interesting fact. These officials feared that their
government's decision to produce a generic version of Novartis' cancer drug
Gleevec could lead to the US withdrawal of financing for the war-torn
country's peace process. A staffer with the Senate Finance Committee, which
is led by Orrin Hatch, the Republican Senator of Utah, warned Colombia of
repercussions if the drug Imatinib (sold under the brand name Gleevec among
others)—that figures in World Health Organisation's (WHO's) Essential
Medicines List (EML)—for treating chronic myeloid leukemia was produced in
cheaper versions. The drug was unaffordable for most Columbians.

It was reported by the media that Hatch has close ties with the
pharmaceutical industry. The Pharmaceutical Research and Manufacturers of
America (PhRMA)—the industry's trade group—had spent $7,50,000 funding an
organisation that backed Hatch's re-election in 2012 and donated to the
family's charity. One of the senator's son was employed with the lobbying

The WHO defines access as having medicines that are “affordable and
available” within one hour of walking distance. Lack of access to
healthcare, including medicines, is a complex issue that sometimes involves
flailing health systems, inequalities within countries, regulatory
barriers, discrimination, health insurance and social safety networks,
intellectual property (IP) rules and exclusive marketing rights, among
other determinants. Though pharmaceutical companies like to point out that
crumbling social systems are the cause for patients not getting the
medicines they need, but patent laws also play a huge role in achieving
this undesired end. It is estimated that even if 95 per cent of the drugs
on the EML are unpatented, the five per cent would still be a huge burden
for a national health budget. At least a third of the world's population
has no regular access to medicines. The ethical argument for drug
availability is one that confronts the developed countries as much as the
poorer ones.

Not a North/South Issue

On June 23, a bicameral letter addressed to US President Donald Trump, that
included the signatures of well-known senators like Elizabeth Warren,
Bernie Sanders and Al Franken, said that they were “particularly troubled”
that his administration's draft healthcare reform bill “includes policies
that, perversely, would make prescription drugs more expensive here and
abroad” and gives the pharmaceutical industry “much of what it wants”. This
is in spite of Trump's declaration that the drug industry “is getting away
with murder”.

The Trump administration plans to extend the patent life of drugs in
foreign markets to “provide for protection and enforcement of intellectual
property rights.” This will ensure “that American consumers do not unfairly
subsidise research and development for people throughout the globe.”
Foreign governments “pay too little” for medicines, it says. Also, it shows
that the Trump administration plans to review and revise all multilateral
and bilateral agreements “to promote greater IP protection and competition
in the global market”.

This essentially translates to more bilateral and plurilateral trade texts
that contain provisions which lie beyond, and even violate international
trade laws of the World Trade Organisation (WTO).

The Trump administration plans to extend the patent life of drugs in
foreign markets to “provide for protection and enforcement of intellectual
property rights.” This will ensure “that American consumers do not unfairly
subsidise research and development for people throughout the globe.”
Foreign governments “pay too little” for medicines, it says. Also, it shows
that the Trump administration plans to review and revise all multilateral
and bilateral agreements “to promote greater IP protection and competition
in the global market”.

                                                                  [ 20 ]


The stipulation is diplomatese for arm-twisting weaker nations and
generic-producing countries, like India and Thailand, to accept more
expansive monopoly protections for biopharmaceutical patents.

“Shamefully, the order even blames developing countries and outlines a plan
to intensify the patent abuses that already cost lives and entrench
unaffordability around the world,” Peter Maybarduk, Director, Public
Citizen's Access to Medicines Programme, which helps developing countries
overcome pharmaceutical monopolies, said in a press statement about the
draft reform healthcare bill.

Pharma Industry Invests Hugely in Lobbying, Election-Campaign Coffers

The pharma industry spends twice as much as other business sectors do on
lobbying—and the numbers go up every year. The New York Times (NYT),
quoting from the Center for Responsive Politics' data says that the
pharmaceutical and health products industry has already spent $78 million
on lobbying in the first quarter of this year, a 14 per cent jump over last
year, and “has billions in profits on line”.

The drugs industry poured more than $58 million into the election-campaign
coffers of members of Congress and presidential candidates in the 2016
election cycle, the Center for Responsive Politics data shows. “That was
the biggest investment in the industry's history and a 20 per cent jump
from the last presidential election cycle in 2012,” says the NYT.

PhRMA increased its dues by 50 per cent this year, which generated an extra
$100 million. The extra cash was used to flood the social media, television
and newspapers. Also, ads were used to peg the blame for steep prices on
health insurers and other actors to dodge the spotlight on itself.

Lack of Transparency on R&D Drug Spending

Though the Big Pharma argues that the high drug prices are needed for
investing in research and development (R&D), there is a complete lack of
transparency on how much the industry actually spends on R&D and what
percentage goes in advertising.

Advertisement spending on health products in the US was $5.2 billion in
2016, which is a 60 per cent increase between 2011 and 2015, according to a
Stat analysis. Meanwhile, only one antibiotic—Teixobactin—has been
discovered in the last 30 years because antibiotics have a low return on
investment unlike, say, medicines for blood pressure that need to be
consumed on a daily basis. Similarly, there is no investment on “orphan
diseases”—that affect small numbers of individuals-- and neglected tropical
diseases (NTD) -- that mostly strike poor populations-- for the lack of
profitability in such ventures.

Drugs Developed on Public Funding Sold at Exorbitant Prices

Additionally, many pharmaceutical companies develop drugs and vaccines on
public funding but sell them at exorbitant prices –something currently
being witnessed in the US with the Zika vaccine. Unaffordable for the
public, this vaccine was developed at the US' Walter Reed Army Institute
for Research, and the Department of the Army funded its development. But
now the US Army plans to grant exclusive rights to this potentially
groundbreaking vaccine–along with as much as $173 million in funding from
the Department of Health and Human Services—to the French pharmaceutical
corporation Sanofi Pasteur. They want a monopolistic license without any
commitment to keep prices affordable, says Knowledge Ecology International
(KEI), an award-winning American non-profit that works on patent issues,
and had leaked the Columbian diplomatic cables. Sanofi manufactures a
number of vaccines, but it has also faced repeated allegations of
overcharges and fraud. “It's a familiar, if tragic, pattern: A medical
breakthrough is discovered at public expense, only to be licensed to a
private corporation that earns billions of dollars by making it
unaffordable for ordinary people,” Richard Eskow wrote in the Nation on
June 20 in the context of the Zika vaccine licensing.

                                                                    [ 21 ]


The Fight at Multilateral Forums

The US and some other rich countries, like the United Kingdom (UK) and
Japan have taken the pharma lobby's battle to multilateral forums like the
WHO, UN Human Rights Council (UNHRC) and the WTO.

At the centre of this battle lies the UN Secretary General's High-Level
Panel on Access to Medicines (UNHLP) whose report was released in September
2016. The UNHLP has concrete recommendations for reining-in price-gouging
strategies used by pharma companies. Some of these are: WTO members must
respect the flexibilities included in the WTO Agreement on Trade-Related
Aspects of Intellectual Property Rights (TRIPS), also in the context of the
right to health; that there must be no more undue political and economic
pressure from states and corporations on countries who evoke compulsory
licenses (CL) to counter 'evergreening' and “other misuse of market
practices”; and to create a database of medicines showing how much a brand
costs across countries, the dates of expiration of patents and the results
of clinical trials.

A CL is evoked when a government allows someone else to produce a patented
product or process without the consent of the patent owner. India has used
this provision only once in its history to manufacture Bayer's drug
Sorafenib Tosylate (Nexavar) used for the treatment of kidney and liver

“Procurement decisions and generic manufacturing are often delayed by the
absence of clear, accurate and up-to-date information on existing and
expired patents,” the report states.

Developed and Developing World at Loggerheads

The EU, the US, the UK, Japan, among other countries, discredited the UNHLP
even before the report could be published, calling it a “flawed premise” of
assuming incoherence between IP rights and access to medicines. References
to the UNHLP were removed from resolutions during negotiations at the UN,
if these countries were to support a text.

India, along with Brazil, Iran, South Africa and some other countries had
urged the WHO's powerful Executive Board (EB) in January this year for a
discussion on the UNHLP report. It was turned down by the former
Director-General Margaret Chan and the EB. It later turned out from leaked
emails by KEI that US representatives were opposed to its inclusion as an
agenda. Several health activists from across the world were enraged with
the decision and wrote to Chan.

The discussion on the UNHLP was then moved to the WTO for discussion. It
was also added as a sub-item at the last World Health Assembly (WHA) held
in May this year under an agenda item on shortage of medicines, though
delegates pointed out that shortage and access to medicines were two
separate issues.

“If the EB140 (WHO Executive Board) does not discuss the report, WHO risks
losing its leadership on such a vital global health issue. This would be a
serious setback to its credibility and integrity, particularly when it is
trying to justify an increase in its programme budget,” an Indian official
said at the beginning of the EB meet in January.

                                                                   [ 22 ]


India, again, raised the issue with a group of countries a month later
during the UNHRC session in March at a general debate on a resolution on
the right to health sponsored by India, Brazil and South Africa, among
other countries.

“It's unfortunate that some members and even WHO are undermining any
discussion on the report,” India had told the Council in March.

Rich Nations Too Wary of High Drug Prices

However, although the EU as a constituency does not support the UNHLP
report, many countries like Netherlands and Portugal, and some other rich
nations, are wary of medicines and vaccines being unaffordable for their

Michael Kirby, a former justice in the Australian High Court and a member
of the UNHLP, told the UNHRC on March 8 that at the public hearings of
governments, industry, civil society, and patients held in London,
Johannesburg and Bangkok during the investigation for drafting the UNHLP
report “curiously the voice that was most haunting” was that of an
ambassador from the Netherlands.

“Don't assume this is just a problem of poor countries or poor people.
This, he said, is a challenge for us all – a challenge for Netherlands, a
rich and inventive country. The cost of essential drugs is now excessive
for our budget,” the Dutch ambassador told the UNHLP members.

“In recent times, the dramatic increase of prices of new and innovative
medicines made them unaffordable to large segments of the population also
in rich countries while threatening the sustainability of healthcare
systems. In too many countries, prices of new medicines (to treat Hepatitis
C and cancer, for instance) are particularly shocking,” a senior Portuguese
delegate told the Council in March.

“A recent study by EY Poland of 30 important cancer drugs found that only 2
of the 30 were routinely available for reimbursement in Poland and the
Czech Republic, while 30 of 30 were routinely reimbursed in the
Netherlands, and 28 of 30 were reimbursed in Switzerland. In the UK, just
half were routinely reimbursed. The 2016 ESMO European Consortium Study on
the availability, out-of-pocket costs and accessibility of antineoplastic
medicines in Europe provides additional evidence of the vast disparities in
access among 48 countries in greater Europe and Central Asia,” Jamie Love,
the director of KEI and a well-known American health advocate, wrote in
Medium on June 17.

Protest in Spain over High Drug Prices

Salud por Derecho, a Spanish non-profit, launched a campaign called 'Sick,
Sick, Sick' in June that has a fake talent show to denounce the high prices
of medicines and pharma industry practices. They also wrote a letter with a
signature campaign addressed to Farmaindustria- the association of
pharmaceutical companies in Spain-- asking them, among other things, to
lower the prices of medicines, to cease pricing secrecy, reveal percentage
of public funds invested in research, and to stop the barriers for
generics' entry into the market.

After the Netherlands assumed presidency for the EU this year the issue of
access to medicines has been gaining some traction. On September 26,
members of the European Parliament will host two days of meetings on
delinkage, where the proposal for a Cancer Innovation Fund will be

                                                          [ 23 ]


Canada has also said in UN forums that medicines are becoming too expensive
even for their own relatively rich population, though a June 30 decision of
the Supreme Court of Canada has made it easier for biopharmaceutical
companies to gain patents--perhaps succumbing to years of American pressure.

Outrage Against US Drug Companies

The US-based Interfaith Center on Corporate Responsibility (ICCR) reported
that long-term shareholders are “outraged” that major American drug
companies, including AbbVie, Amgen, Biogen, Bristol-Myers Squibb Company,
Eli Lilly, Gilead Sciences, Johnson & Johnson, Merck & Co., Pfizer, and
Vertex Pharmaceuticals, have scuttled shareholders' proposals for greater
transparency around excessive price increases on critical drugs. A recent
Kaiser poll indicated that 74 per cent of the American public believes that
the pharmaceutical industry puts profits before the needs of people. At
least 16 American states have introduced legislation calling for greater
drug pricing transparency. Some 22 million Americans could lose insurance
by 2026 under Trump's health bill to replace Obamacare, a Congressional
report says.

Over and above, price gougers are at liberty to raise costs of drugs
whimsically— as in the case of Martin Shkreli, who spiked the price of an
AIDS and cancer medicine by 5,000 per cent overnight.

Cancer Resolution at World Health Assembly

The fractious nature of the issue of access was exposed, again, recently at
a cancer resolution debated at the last WHA (World Health Assembly).

On May 31, the WHA adopted a landmark cancer resolution proposed by Brazil,
Canada, Colombia, Costa Rica, France, Netherlands, Nigeria, Panama, Peru,
Russia, Thailand and Zambia (India and some other countries later
co-sponsored the resolution), to improve prevention, diagnostics,
treatment, and implement evidence-based protocol for cancer management,
including palliative care for cancer.

Among other things, it asks the UN health agency chief “ to prepare a
comprehensive technical report to the Executive Board at its 144th session
[January 2018] that examines pricing approaches, including transparency,
and their impact on availability and affordability of medicines for the
prevention and treatment of cancer, and options that might enhance the
affordability and accessibility of these medicines”.

About 29 civil society organisations and 33 health professionals,
activists, and economists, including Nobel laureate Joseph Stiglitz, had
written to the WHA for governments to support a feasibility study for
progressive delinkage of costs of research and development (R&D) from
cancer drug prices, and bringing greater transparency in cancer drugs cost.

This emerged as the most contentious part of the resolution and the text
had to be removed due to objection by some governments that included the US
and the UK, though European countries like Portugal and France supported
the idea.

On May 24, in a side-event at the WHA on addressing access barriers and
affordability challenges for cancer medicines organised by KEI, Oxfam and
Health Action International, Brazilian deputy permanent representative to
the UN Guilherme Patriota said that it is increasingly difficult to get
negotiators to agree on anything beyond, malaria, AIDS and tuberculosis,
and that “you are dealing with investors directly sitting on the
decision-making rooms”. Patriota said that the final shape of the
resolution was not what people had hoped for but it was “a great beginning”.

24 ]


Drugs make $ 1 trillion Business

Manon Ress, founder and acting director of Union for Affordable Cancer
Treatment (UACT) said that the drug industry is a whopping $1 trillion
business that includes getting $100 billion from cancer drugs every year.
“We are dealing with a beast,” Ress said.

In South Africa, the annual price charged by Swiss multinational company
Roche in the private sector for trastuzumab (T-DM1) is about $38,365. The
few South African public facilities that have been able to procure the
medicine have done so at $15,735 per year. Analysis by health economists,
however, has shown a year's worth of trastuzumab can be produced and sold
for merely $240 and that includes a 50 per cent profit over the cost of

There have been, however, some positive movements recently on the access
issue that could potentially strengthen the back of health advocates.

On June 13, South Africa's Competition Commission announced that it has
launched an investigation examining alleged over-pricing of cancer drugs by
three pharmaceutical giants which includes, Africa's biggest generic drug
maker Aspen Pharmacare, Roche Holding and American drug maker Pfizer.

Also, in a rare instance of partnership at the WHO, a proposal by India
that the issue of access to medicines be included as an agenda item in the
EB for January 2018 was supported by the US. However, a stronger proposal
by South Africa that the issue be made a standing agenda item at the WHA –
a suggestion supported by many developing and developed nations – “was
discarded by the secretariat somewhat abruptly at the end of the discussion
today [May 27 at WHA],” reports IP Watch.

Litigations to Keep Medicines Costly

Though the landmark TRIPS agreement allows flexibilities in the way of
allowing signatories to tailor national IP regimes so that countries could
fulfill their human rights and public health obligations, governments have
often found themselves being dragged to courts for exercising these

In Brazil and Argentina, Roche is one of the pharma companies litigating
against those governments for their attempts to use TRIPS flexibilities.

Roche holds multiple evergreen patents -- referring to strategies through
which pharmaceutical patent owners use the law and related regulatory
processes to extend their high rent-earning IP rights particularly over
highly profitable “blockbuster” drugs--on trastuzumab, indicating market
misuse in many parts of the world, including South Africa where its patents
could block biosimilars from entering the market until 2033.

Lawsuits in India, Argentina for Slashing Life-Saving Drug Prices

Five lawsuits have been filed in India and Argentina in February alone this
year for slashing the cost of life-saving medicines for treating Hepatitis
C. The latest class of antiviral drugs does not merit the 20-year patent
monopoly that the drug manufacturers have asked for in the two countries,
litigants have argued. The treatment, which runs over three months,
currently costs more than the average annual salaries of people from
middle-income countries.

25 ]


In another instance, the Delhi High Court in May this year asked the
central government to explain the basis on which the Indian patent office
has rejected a patent of the University of California's prostate cancer
drug Xtandi (the university claims to have invented the drug). Astellas
Pharma, a Japanese pharmaceutical company that has marketing rights for the
drug, charges Rs. 3.35 lakh for a month's supply.

Generic competition for the drug could drive down prices to well less than
$0.50 cents per pill or about $2 for a day (from the current rate of $44.77
a pill), says KEI. “I think the University of California needs to explain
why it licenses a cancer drug to a company that charges $186 per day, in
India,” Jamie Love said in a blog.

“The high price of Astellas branded Xtandi in India is shocking to anyone
who thinks cancer drugs should be accessible and affordable, regardless of
where you live,” reads a letter, written by more than 50 health advocacy
groups, including UACT, KEI and Oxfam, to the University of California
President Janet Napolitano. Moreover, the university developed the drug
with federal funds currently sold in India at an “exorbitant” price.

“Generic competition in India has historically driven down prices and
significantly improved access to cancer drugs in India and other countries
that are currently sourcing from India, and this will also apply to
[Xtandi] as it goes into production and registration,” the letter further

International activists are hoping that successful litigations in poorer
countries may trigger off similar lawsuits in the developed parts of the

In June, a petition by Chilean lawmakers asked the government to use CL to
lower the high prices of enzalutamide (brand name Xtandi) and HCV drugs,
and ensure affordable access.Xtandi costs about $45,000 per patient per
year in Chile, which is three times the average income of $14,100.

Anti-Consumer Measures

The ongoing negotiations for the Regional Comprehensive Economic
Partnership (RCEP)—a massive trade deal between south-east Asian nations
and their trade partners—has its IP chapter being closely followed by
health advocates.

“There are proposals (in RCEP) for patent extensions, restrictive rules on
exceptions to copyright, and dozens of other anti-consumer measures,
illustrating the power of right-holder groups to use secret trade
negotiations to limit democratic decisions that impact access to knowledge,
the freedom to innovate and the right to health, in negative ways,” Love
had said last year.

Also, the re-started negotiations on India-EFTA (European Free Trade
Association) trade deal is making health activists jittery where Swiss
negotiators want more extensive patent protection and want to include 'data
exclusivity,' a form of monopoly that prevents the marketing of generic
formulations, even when a medicine is not patented or no longer patented.

Pressure on India to Wind-Down Generics

“Through this deal, Swiss pharmaceutical corporations are working to erode
India's ability to produce and supply generic medicines for people across
the developing world,” Médecins Sans Frontières (MSF) said in a statement
on May 30.

“By pushing for so-called 'data exclusivity,' pharmaceutical corporations
are trying to get a backdoor route to a monopoly, even when a drug doesn't
merit a patent under India's law,” MSF further said urging the Indian
government “to stand strong and reject any provision that will be harmful
for people's access to the medicines they need to stay alive and healthy.”

                                                                      [ 26 ]


These demands which violate WTO rules are called TRIPS Plus provisions.
Leading US Congressmen had written to Trump before the visit of Indian
Prime Minister Narendra Modi asking him to pressure Modi to remove
barriers-- like the “inadequate” protection of IP rights, and “inconsistent
and non-transparent” licensing and regulatory practices-- to American trade
and investment.

The US Trade Representative's Special 301 report -- a
Congressionally-mandated annual report that has been issued every year
beginning in 1989—already puts India under its 'Priority Watch List' for
its IP regime and directs its chief trade negotiator to hold foreign
governments 'accountable' for IP-related trade practices that go against
the interests of American innovators and creators. There is tremendous
pressure on India both from the US and European countries to wind-down its
generic industry.

“The United States is paying too much, and so does everyone else, just not
to the degree that the US gets ripped off. What Trump and Modi should focus
on is a new trade framework that focuses on sharing the costs of funding
research and development as a public good," Love told me during an
interview for Firstpost.

Conclusion: All Eyes on WHO

Much depends upon the leadership of the new WHO DG Tedros Adhanom
Ghebreyesus and the people he chooses to surround himself with. Margaret
Chan was particularly unhelpful with pushing the UNHLP report's
recommendations and, therefore, the conversation on enhancing access.
Tedros, who goes by his first name, will find himself in a tight spot given
the fact that the top two finance-contributing countries to the
cash-strapped global health body—the US and Japan-- support the agenda of
the Big Pharma. Moreover, 80 per cent of WHO's finances come from voluntary
contributions that are often earmarked, like Bill and Melinda Gates
Foundation—the second largest financier of WHO when the private sector is
counted—who contribute finances for eradicating polio, while assessed
contributions from governments that the WHO is free to prioritise are
painfully slow to increase.

“The issue before us (access to medicines) is not only a matter of ethics,
though it is also that. It is also a matter of law – international law,”
Kirby told the UNHRC on March 8. He called the UNHLP report “the minimum,
prudent package” to address the prevailing global situation of unaffordable
health products, shortage of drugs and stimulating innovation systems on
delivering drugs for “non-profitable” diseases.

“We will never forget the voices of those who are left behind, many of them
women or girls, families forced to beg for charity for patented
medicines…,” Kirby told the Council. “Unless the world and the UN, and this
Council (UNHRC) act now… millions will be left behind and millions will


*Shreerupa Mitra is a journalist who writes on UN affairs, global health,
human rights, humanitarian aid, international trade and the WTO.

Volume: XXXVI No. 2
April June 2017

Thiru Balasubramaniam
Geneva Representative
Knowledge Ecology International
41 22 791 6727
thiru at keionline.org

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