This article outlines the basis of Canada's Access to Medicines Regime (CAMR), its principal deficiency (among several) and the key reforms proposed to fix it. It also rebuts the most common misleading and misguided arguments that have been repeatedly advanced by both Canadian government officials and lobbyists for the brand-name pharmaceutical industry against those reforms. (For more detailed analyses, see the materials online at www.aidslaw.ca/camr or www.medicinesforall.ca.)
Government of Canada misleads Parliament and public, kills bill on access to medicines for developing countries
by Richard Elliott*
Executive Director, Canadian HIV/AIDS Legal Network
March 4, 2013
Following intense advocacy by civil society organizations, Canada’s Parliament unanimously passed a bill in May 2004 that amended the Patent Act and the Food and Drugs Act to create what is now known as “Canada’s Access to Medicines Regime” (CAMR, www.camr.gc.ca ). The stated purpose of the regime was to help get lower-cost, generic medicines for public health needs to patients in developing countries, by enabling the compulsory licensing of pharmaceutical products during their patent term in Canada solely for the purpose of export to eligible recipient countries.
Sadly, despite the best efforts of civil society organizations, in its final form, the legislation created a regime whose processes and requirements are unnecessarily cumbersome and are ill suited to the practical realities facing developing countries and generic manufacturers. As feared, these have proven to be a disincentive to CAMR’s use. In almost 9 years, only one country (Rwanda) and one Canadian generic manufacturer (Apotex Inc.) have used the regime, and only one licence has been issued regarding one order of one medicine. At this writing, there appears to be little prospect of further use of CAMR unless it is reformed - and the Government of Canada has deliberately and repeatedly blocked amendments to the regime.
This article outlines the basis of CAMR, its principal deficiency (among several) and the key reforms proposed to fix it. It also rebuts the most common misleading and misguided arguments that have been repeatedly advanced by both Canadian government officials and lobbyists for the brand-name pharmaceutical industry against those reforms. (For more detailed analyses, see the materials online at www.aidslaw.ca/camr or www.medicinesforall.ca.)
Origins of CAMR: WTO consensus
In November 2001, following demands by developing countries and under pressure from health advocates concerned about the ways in which stringent intellectual property rules impede access to more affordable medicines, WTO Members unanimously adopted the Doha Declaration on TRIPS and Public Health. In the declaration, they agreed that the WTO’s Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) “does not and should not” prevent countries from protecting public health, and that the treaty “should be interpreted and implemented” in ways that let countries do this. They affirmed the right of every WTO Member to use the “flexibilities” in TRIPS “to promote access to medicines for all,” that this includes compulsory licensing, and that countries are free to determine for themselves the grounds on which compulsory licenses may issue.
However, they also recognized a barrier in TRIPS that makes it difficult for countries with insufficient pharmaceutical manufacturing capacity to “make effective use” of compulsory licensing to obtain lower-cost, generic pharmaceutical products. Article 31(f) of TRIPS limits the use of compulsory licences in potential exporting countries to “predominantly” supplying the domestic market, thereby restricting the quantity of generic medicines that could be exported to countries in need of imports. WTO Members committed to finding an “expeditious solution” to this problem; that solution ultimately took the form of the WTO General Council’s Decision of August 30, 2003. Subject to numerous conditions, that decision temporarily waives this restriction in TRIPS, allowing “eligible importing countries” with insufficient manufacturing capacity to tap generic producers beyond their borders to address domestic “public health problems.” In essence, it aims to put such countries in the same position of being able to use compulsory licensing as countries with their own capacity to produce generic pharmaceutical products.
Contrary to what some have repeatedly claimed, the wording of the 2003 Decision and the earlier 2001 Doha Declaration is explicit that these are not limited to addressing only emergencies or public health crises or epidemics, or only to supplying medicines for specific diseases such as HIV, TB and malaria, but rather to help countries address “public health problems.”
CAMR’s flaws and proposed reforms
With the passage of the Jean Chrétien Pledge to Africa in May 2004, Canada became the first country to enact a detailed legislative framework implementing the 2003 WTO Decision. The same month, Norway promulgated less detailed regulations to implement the decision, and a number of other jurisdictions have since followed suit. Sadly, with the exception of the single use of Canada’s regime, described below, the mechanism set out in the 2003 decision has gone unused in the near-decade since. It would be a mistake, however, to conclude - as the Canadian government has consistently reiterated - that Canada’s experience “proves” that its legislation embodies the expeditious solution that WTO Members promised in the 2003 decision. It should be noted that it took more than three years to achieve that single use of CAMR, in part because of the unnecessary hurdles built into it. It is shocking that Canadian government ministers and representatives characterize a single compulsory licence issued under CAMR, to supply a single order of one drug for one country, with little likelihood of further use, as a success in addressing the enormous global gap in access to affordable medicines. Rather, the experience of using CAMR provides important lessons about how important it is for countries to implement the 2003 WTO Decision in as simple and straightforward a manner as possible, which Canada has so far failed to do.
Instead of simply ensuring that the parameters set out in the 2003 WTO Decision are satisfied through conditions attaching to a compulsory licence once issued, CAMR unnecessarily “frontloads” a series of requirements - some of them defined more restrictively than the WTO Decision - into the process as preconditions to even seeking a licence. For example, before even being able to apply for a compulsory licence under CAMR, and thereby be in a position to supply a product legally to a would-be purchaser in an eligible importing country, a generic manufacturer must first convince the government of that country to file a notification with the WTO’s TRIPS Council setting out a specified quantity of the medicine. The generic manufacturer must then attempt to negotiate, for at least 30 days, with the company or companies holding the Canadian patent(s) on the product for a voluntary licence authorizing export to that country. That 30-day negotiation period does not begin running until the generic manufacturer discloses both a specific country and specifies a fixed, “maximum quantity” of the medicine for which it seeks a licence. In the absence of being able to provide such information, the process remains stuck in limbo - as was indeed the experience for some 18 months in the sole attempt to date to use CAMR.
It is only if and when this 30-day negotiation period has expired, with no agreement on the terms of a voluntary licence, that the generic manufacturer may then file an application to the Commissioner to Patents for a compulsory licence. Any licence issued by the Commissioner may only authorize the generic manufacturer to export up to the fixed maximum quantity previously specified, only to the country previously specified, and only for a maximum period of 2 years. (Regulations in CAMR set out the formula for calculating the royalty payable by the generic manufacturer to the patent-holder(s). This uses a sliding scale based on the importing country’s ranking on the UN’s Human Development Index, with a maximum royalty of 4% of the value of the contract between the generic manufacturer and the purchaser. In the case of the single licence issued to Apotex to supply 15.6 million tablets of an AIDS drug to Rwanda, the applicable royalty was 0.45%.)
In essence, Canada’s current law requires a separate negotiation and licensing process for every single drug order from every single country, with all the associated transaction costs. CAMR’s requirements, and their sequencing, create disincentives for both eligible importing countries that are potential purchasers of medicines and generic manufacturers that are the potential suppliers. It is one significant reason that the system has been used only a single time. For this reason, health and human rights advocates have, through a series of three different - and ultimately unsuccessful - private members’ bills in Parliament, between March 2009 and November 2012, proposed to streamline CAMR by creating a “one-licence solution,” among other reforms. These were first proposed by the Canadian HIV/AIDS Legal Network and other NGOs during a 2007 Parliamentary review of CAMR.
Under the proposed reforms, a generic medicines manufacturer could easily get a single compulsory licence to export lower-cost medicines to multiple countries already listed as eligible importing countries in the current law. This would clear the way for generic suppliers and developing countries to navigate the bidding and procurement process without multiple hurdles and uncertainty along the way, thereby making it the rapid solution that Canada and other WTO Members promised years ago. By enabling economies of scale, it would also make it even easier for Canadian generic manufacturers to offer even lower, more competitive prices to developing country purchasers. As required by the current CAMR and WTO law, the brand-name pharmaceutical company holding the patent on the product would still be paid a royalty on all sales of the product to eligible countries.
– this streamlined “one-licence solution” for the compulsory licensing process; and
– an improved definition of “pharmaceutical product” for which a compulsory licence can be obtained and exported to eligible countries (so as to replace the limited list of products currently found in CAMR and directly incorporate the broader, more flexible language agreed upon in the 2003 WTO Decision).
The proposed reforms to CAMR were informed by the single experience to date of the hurdles encountered in attempting to use the current regime. Bill C-398 sought to simplify the process and make CAMR “fit for purpose.” As a result, CAMR could and would have been used as a means of supporting developing countries by creating another avenue for obtaining more affordable medicines needed to deal with public health problems, including HIV. Indeed, there was already a public, repeated commitment by Canada’s largest generic manufacturer to use CAMR, if reformed, to supply a much-needed medication to treat infants and children with HIV as a first, next step.
Misguided objections, misleading Parliament and the public: Canadian government and big pharma kill the bill
On November 28, 2012, Bill C-398 was put to a critical vote in the House of Commons, to determine whether it would proceed on to more detailed committee deliberations. Despite widespread support from the public, major national news outlets, prominent Canadians (including celebrities), faith leaders, and health professionals, the now-majority government of Prime Minister Stephen Harper maintained its staunch opposition to CAMR reform. Government spokespeople repeatedly mischaracterized the contents of the bill during Parliamentary debates. The government whipped its caucus in the House of Commons to require all Cabinet ministers and parliamentary secretaries to vote against the bill. It also exerted sustained pressure against those backbench MPs in its caucus who had previously supported these reforms in the previous bill brought before the previous Parliament. (In late 2011, the previous Bill C-393, proposing these same two reforms, had passed through the House of Commons with a solid 60-vote majority, including 26 backbenchers from the government’s own caucus. However, the government deliberately and repeatedly stalled it in the Senate, where it then died on the Order Paper when Parliament was dissolved for a general election.) This time, the pressure worked to kill the bill in the House even before further committee study: in the end, Bill C-398 was defeated at second reading by a mere 7 votes (148 against to 141 in favour).
In the days following, numerous MPs from the government caucus stated, in media reports and letters to constituents, that they “chose reason over emotion” in deciding to vote against Bill C-398, and attempted to justify their position by repeating the same inaccuracies about the bill and about the broader issue of access to medicines in developing countries that had by then become standard talking points from government spokespeople and big pharma lobbyists. A number of patently false claims were frequently reiterated by opponents of reform, and it is important to correct them.
First, Bill C-398 would not have removed measures to ensure the quality of medicines being supplied to developing countries. CAMR currently requires Health Canada review for all products exported under CAMR, which must mean the same regulatory standards as any product destined for sale in Canada. Even a cursory examination of Bill C-398 shows that it proposed no changes to CAMR’s existing requirements under the Food and Drugs Act.
Second, reflecting what was negotiated at the WTO in 2003, CAMR contains numerous safeguards aimed at preventing the diversion of medicines, including differentiating the generic product exported under CAMR from the brand-name product, as well as publicly disclosing detailed information, before each shipment, about the quantity being shipped and the chain of custody. Contrary to claims by the government, a reading of Bill C-398 illustrates that it would have preserved all these existing requirements. In fact, tracking the exact language of the 2003 WTO Decision, Bill C-398 would have added that any licence issued under CAMR only authorizes a generic manufacturer to produce and export the “expected quantities” of medicines that eligible recipient countries have notified in writing to the WTO (or, in the case of an importing country that is not a WTO Member, directly to the Government of Canada through diplomatic channels, as the current CAMR requires). Exceeding “expected quantities” notified by eligible countries would be a basis for terminating the compulsory licence. This would have allowed flexibility under a single compulsory licence to respond to eligible countries’ needs as they evolve, while still respecting WTO requirements.
Third, it can only be wilful blindness or intellectual laziness that leads to the claim that the “one-licence solution” or other reforms proposed in Bill C-398 would have put Canada in breach of its obligations under TRIPS. The “one-licence solution” proposed in the bill was drafted carefully, and reviewed by some of the world’s leading legal experts (some of whom testified before Parliament), so as to be compliant with WTO requirements. The changes to CAMR proposed in Bill C-398 reflected carefully the language of agreements negotiated by Canada and all WTO members - in particular the 2001 Doha Declaration and the 2003 WTO Decision which CAMR implements. This detailed information was provided to all MPs, time and again. In essence, the government chose to put its incorrectly narrow interpretation of TRIPS and of the 2003 WTO General Council Decision ahead of a workable mechanism to help save lives.
In addition to the evidently inaccurate claims about the contents of Bill C-398, some MPs who voted against it continued to circulate bizarre arguments in an attempt to justify their vote.
For example, some MPs continued to claim, illogically, that there is no need to fix CAMR to supply more affordable medicines because “the real barrier” is inadequate infrastructure in potential recipient countries. While it is true that there are multiple barriers to access to medicines, which vary from country to country, nobody credibly denies that the price of medicines is a key factor affecting access. Making medicines affordable, strengthening health systems and other initiatives to improve health in developing countries are not mutually exclusive; rather, they are complementary. All the clinics, doctors and nurses in the world won’t suffice if medicines are priced out of reach. Reforms to make CAMR work would have helped address one barrier; indeed, freeing up resources by securing medicines at lower prices would enable greater investments in strengthening health systems where needed.
Similarly strange is the unfounded assumption, regularly heard from numerous MPs, that Canadian generic manufacturers are unable to compete on price with generic manufacturers elsewhere. Yet the available evidence indicates the contrary, as they often do already. Furthermore, in the one instance of CAMR’s use, the Canadian generic company supplied the fixed-dose combination AIDS drug to Rwanda at the same price (19.5 cents US per tablet) then being offered by Indian generic manufacturers and won the contract through a competitive bidding process. Rwanda has since purchased more of this medicine from Indian generic manufacturers on numerous occasions at essentially the same price, according to figures from the WHO’s Global Price Reporting Mechanism. Furthermore, the simpler it is for generic manufacturers to use a regime such as CAMR to supply multiple developing countries, the greater the economies of scale and the lower the costs of production they can achieve, thus making them more competitive. The “one-licence solution” proposed in Bill C-398 would have actually made it easier for Canadian companies to compete globally to supply medicines at the lowest possible price. MPs who opposed the bill essentially voted to maintain barriers impeding Canadian companies from responding to global health needs.
That Bill C-398 was defeated by a combination of intellectual dishonesty and moral cowardice is bad enough. What’s worse is that Canada’s Parliament had a chance to do something to stop the tragedy of ongoing human suffering and death, and a bare majority failed to rise to the challenge. The experience to date also illustrates that the 2003 WTO Decision itself has failed to deliver what was promised, and that WTO Members must take alternative measures open to them - whether under TRIPS as it stands or by changing the treaty - so that sovereign states can indeed manage their intellectual property policy to promote “access to medicines for all.” Failing this, WTO Members’ earlier declaration, more than a decade ago, that TRIPS “does not and should not” prevent countries from protecting public health, including through the use of TRIPS flexibilities, is empty rhetoric.
*Richard Elliott is the executive director of the Canadian HIV/AIDS Legal Network (www.aidslaw.ca), an organization working to advance human rights in the response to HIV, in Canada and internationally. For more information, see www.aidslaw.ca/camr and www.medicinesforall.ca.