[Ip-health] Health Policy Watch: Drug Pricing Transparency To Be Discussed At World Trade Organization

Thiru Balasubramaniam thiru at keionline.org
Thu Oct 17 09:48:18 PDT 2019


Drug Pricing Transparency To Be Discussed At World Trade Organization

17/10/2019 by Grace Ren

A request by South Africa to the World Trade Organization (WTO) TRIPS
Council to “address the transparency of R&D costs and pricing of medicines
and health technologies” is expected to be reviewed Friday, 18 October 2019
as the TRIPS Council meets this week for its third session this year.

The TRIPS Council, the administrative body for the 1995 TRIPS Agreement,
will thus become the third international  body to take up the issue of
transparent drug pricing, following the landmark resolution by the World
Health Assembly in May, followed by a Human Rights Council Resolution in

While the discussion at the third annual meeting (17-18 October) is
unlikely to have immediate policy impacts, it will highlight the political
barriers that countries face in using TRIPS flexibilities, which can
involve threats of political repercussions far from the pharma arena.

The request by South Africa is also the latest in a series of moves by
individual countries, as well as civil society, to move the transparency
agenda further forward following the adoption of a landmark WHA resolution.

The United Kingdom’s Labour Party leader, Jeremy Corbyn, highlighted the
high price of Orkambi, a life-saving cystic fibrosis drug, in a speech at
his party conference in September, saying that the Labour Party, if
elected, would override patent protections for excessively-priced
medicines,. Civil society watchdog, Observatoir Transparence Médicaments,
appeared in front of the French Parliament to discuss a “transparency
checklist” – a document that proposes establishing a public database of R&D
and drug pricing data from different countries.

And earlier this month, Malta’s deputy prime minister and one of the
leaders of the “Valletta Group,” composed of Italy, Malta, and eight other
European states. described a new initiative by the group to share drug
pricing data in an effort to improve their collective bargaining power to
negotiate down prices with pharmaceutical companies.

High-level regional officials have also brought the issue to their forums,
with the outgoing European Union Health Commissioner, Vykenis Andriukaitus
calling transparency “a priority of the Commission.”

“We need transparency on public investment in R&D and pricing to ensure
supply of affordable meds… Public funding should be reflected in the price
and be given back in case of launch of successful products,” Andriukaitus
said at the European Health Forum (Gastein).

High drug prices have been a major barrier to accessing treatment for many
patients in countries of all income levels.

Defendants of the high costs of new medications say that the prices are
justified in light of the risks and costs associated with R&D. Yet research
and development information, including information about the associated
costs, is highly protected, so that the true cost of R&D for many or most
drugs remains largely unknown.

The issue is particularly thorny in the debate about drugs where the
initial research was carried out in public institutions or subsidized by
public grants.

The TRIPS Agreement, a two-decades old global trade agreement, created
important categories of exemptions for governments, whereby they could
bypass certain patent protections in cases where patents have impeded
access to new products, including new essential medicines.

So called “TRIPS flexibilities” allow those governments to issue
“compulsory licenses” for local production of patented drugs under certain
conditions, parallel importation of patented drugs from generic producers,
or other curbs on patent rights, so as to bring down prices. But
implementation of these flexibilities has seen mixed results.

Transparency as a Facilitator of TRIPS Implementation

Historically, low- and middle- income countries that have trouble affording
costly new medicines for complex chronic conditions or rare diseases such
as cancer and cystic fibrosis have pushed forward the transparency agenda.
But drug prices have skyrocketed to a point where even high-income
countries are now looking for ways to bring down prices.

Suerie Moon, co-director of the Graduate Institute’s Global Health Centre
in Geneva, pointed to the recent proposals floated in the United Kingdom,
the EU and by players on both sides of the US political spectrum as
evidence that drug pricing and transparency becoming key issues in broader
political campaigns, in an op-ed titled “There are solutions to the global
drug price problem” published in the Financial Times on October 17. Indeed
it was Italy that first helped push the issue of drug transparency at the
World Health Assembly earlier this year.

“Italy blazed a trail at the World Health Organization in shaping the
passage of the historic transparency resolution (WHA72.8)…At the World
Trade Organization, South Africa has crossed the Rubicon in bringing the
transparency debate into the halls of the TRIPS Council,” said the Geneva
Representative of Knowledge Ecology International (KEI), Thiru

The WTO TRIPS Council is expected to accept South Africa’s request, which
“will challenge trade negotiators to provide state practice on measures to
enhance the transparency of R&D costs including “information on grants, tax
credits or any other public sector subsidies and incentives,” said

In its submission to the TRIPS Council, South Africa said, “The current
model of medical innovation [based on patent protections] is ill-equipped
to respond to the increasing emergence of infectious diseases, the
unprecedented explosion of NCDs and neglected tropical diseases.”

South Africa argues that “abuse of IP rights” is difficult to monitor when
there is no “reliable, transparent, and sufficiently detailed data on the
costs of R&D inputs (including information on the role of public funding
and subsidies), the medical benefits and added therapeutic value of

Quoting the UN Secretary General’s High-level Panel on Access to Medicines,
South Africa pointed to the panel’s observation of “transparency as a
component of good governance, especially where civil society and patient
groups rely on transparency of information. Transparency, as further
stated, can also ensure fairness during negotiations that take place
between biomedical companies and procurement organizations.”

In recent years, the WTO TRIPS Council, the governing body for the TRIPS
Agreement, has focused its attention on aspects of intellectual property
and innovation including innovation incubators, sports, and university
technology partnership. According to Knowledge Ecology International, an
intellectual property watchdog, the past few years have seen developing
countries such as South Africa, India and Brazil pushing for agenda items
to be more related to issues of “public interest.”

Mixed Success In Implementation of TRIPS Flexibilities

WTO’s Agreement on Trade-Related Aspects of Intellectual Property Rights
(TRIPS), which entered into force in 1995 attempted to strike a balance
between the long term social objective of providing incentives for future
inventions, and the short term objective of allowing people to use existing
inventions and creations.

But in the case of public health, the adoption of the TRIPS minimum
standards resulted into a significant loss of policy flexibilities by
developing countries in regulating the granting and use of pharmaceutical
patents and controlling the cost of medicines, notes a South Centre

The Agreement, however, did provide for so called “TRIPS flexibilities”
allowing governments to take certain measures to remedy anti-competitive
practices and in situations of clear public health needs. These included
issuing producers “compulsory licensing” to produce generic versions of
patented products or to engage in “parallel importation” of products when
the appropriate patented product was either unavailable or too expensive.

In 2001, the rights of countries to make use of TRIPS flexibilities for
public health were reaffirmed under the Doha Declaration. The protocol
amending the TRIPS Agreement to permit the granting of special compulsory
licenses for the export of medicines entered into force on 23 January 2017.

A variety of ARV drugs used to treat HIV infection.

Over the past 15 years, TRIPS flexibilities were a major tool used in major
health milestones such as the decisions by South Africa, Brazil, and other
low- and lower middle income countries to produce and use generic
anti-retroviral (ARV) drugs for treatment of HIV/AIDS.

But in lesser profile cases, countries have been less successful in
wielding the tools – or reluctant to use them at all because of the
inherent political pressures. Countries such as Colombia have been
discouraged by the US and Switzerland from issuing a compulsory license for
imatinib, an expensive cancer drug that Novartis, a Swiss company, holds
many national patents for.

And over two decades on – no authoritative international body has done a
truly comprehensive and systematic mapping and assessment of experience
with TRIPS   – which is why the South African question to WTO is relevant.

Elaine Ruth Fletcher contributed reporting to this story.

Image Credits: NIAID, WTO, FDA/Michael Ermarth.

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

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