The recent internationally reported decision by India’s Supreme Court prohibiting increased patent protection for a vital life saving cancer drug, Gleevec, has focused long overdue attention to a “tactic”….some call it a bureaucratic “trick”….used and abused by the multinational pharmaceutical companies to increase patent protection from twenty to forty years.
by William F. Haddad
William F. Haddad, Chairman/CEO, Biogenerics, Inc., has been a pharmaceutical executive since 1986. As Chairman of the generic trade association, he initiated and negotiated Hatch-Waxman, the legislation that opened the door to generics in the United States. He was CEO of a major generic manufacturing company. Earlier he worked with Jack and Robert Kennedy and Senator Estes Kefauver. He was one of the founders of both the U.S. Peace Corps and the Office of Economic Opportunity (poverty program) and served as the Inspector General or both organizations. As a newsman at the NY Herald Tribune and the NY Post, he won a dozen awards for investigative reporting. He also learned about the wiretapping of Watergate three weeks before the break-in and reported it to the Democratic leadership. He exposed the worldwide tetracycline cartel by locating secret cartel minutes in two Latin American countries, destroying the cartel and leading to a $200,000,000 fine for Pfizer. He also found the secret minutes of the Uranium cartel that led to Congressional hearings conducted by then Congressman Albert Gore and Haddad. Using New York State’s subpoena he uncovered of the role of the New York banks in profiting from the collapse of the Cityâs financial system; located and exposed secret state police files that contained the names of a million citizens almost all had neither been accused of or committed a crime; he investigated organized crime’s role in sports; and he subpoenaed the major television networks to explain covert arrangements with advertisers in advertising to children. As a volunteer, he worked with Cipla to remove the barriers to the use of generic AIDS medicines. He has published several books. He was a merchant marine officer at sea when he was sixteen.
(First of a series)
Compulsory Licensing of Life-Saving Medicines
“A Story and a History”
“A Problem and a Solution”
The recent internationally reported decision by India’s Supreme Court prohibiting increased patent protection for a vital life saving cancer drug, Gleevec, has focused long overdue attention to a “tactic”…..some call it a bureaucratic “trick”…used and abused by the multinational pharmaceutical companies to increase patent protection from twenty to forty years.
After seven years of persistent deliberations and the personal courage of a small cadre of determined voices, India’s Supreme Court opened the door to a long overdue discussion of the practical solution for a responsible, legal way to provide affordable life-saving medicines for the millions currently sick or dying in the poor nations of the world.
The Indian Court’s ruling was the second citing misuse of a patent by a multinational pharmaceutical company. For the multinational pharmaceutical companies the ruling and the worldwide reporting of the decision was regarded as âhandwriting on the wallâ of things to come.
The multinationals began their counter-offensive by organizing attacks on India itself, a tactic they have previously avoided preferring to work within the small circle of political influence. Those actions may have been a serious mistake.
Both rulings highlighted publically what many in positions of influence around the world already knew:
The price of medicines was often beyond the means of a developing nation or its citizens to pay. For lack of available medicines, people continued to suffer, and millions died.
For the multinationals private access to prominent public officials was their preferred forum to lobby for continued monopoly control, often by using arguments not viable in public forums.
Now, rather unexpectedly, India’s highest courts are engaged, spotlighting how competition was side-tracked. Their rulings stirred and renewed worldwide attention and threatened to open up both the tactics and the success of how a handful of multinational pharmaceutical companies were, in the words of an observer, “digging the graves” of poor people around the world.
If continuous pandemics had occurred in western nations, or in China or Russia, and medicines to control or cure the diseases were available there is little doubt these nations would use existing international law to acquire or manufacture them.
When a potential medical crisis developed in the United States ….mail containing anthrax, a deadly poison, was sent to Members of Congress and the media….. it was revealed the life-saving remedy, the medicine, Cipro, was unaffordable.
Offshore generic companies offered to immediately provide the medically approved Cipro clone at one-fiftieth the price the original multinational pharmaceutical company offered.
Although the multinational pharmaceutical companies often use the U.S. government to argue their case for patents, or to condemn nations that provide affordable medicines without regard to patents, in the anthrax crisis the U.S. government said it was considering bypassing Bayer’s patent to insure affordable medicines were available to prevent a potential national tragedy. Eventually, Bayer marginally reduced its price to block competition.
The multinational did the same some years later as regards Tamiflu made by Roche. In both these cases of Anthrax and Bird flu, the Indian generic company Cipla came forward and offered the approved generic to the United States government. The only way the government could purchase generics during the life of a patent was by compulsory licensing, which the United States government was reluctant to do. Should the destiny of the United States or other countries be controlled by a private company? Such is the power of monopoly.
The Legal Right to Provide Medicines
Currently Third World nations have the legal right to produce or purchase medicines to insure they are available and affordable. This right, “compulsory licensing” of a medicine, is guaranteed by binding international agreements: the Trade-Related Aspects of Intellectual Property (TRIPS) of the World Trade Organization (WTO). Those rights allow a nation to either manufacture or import medicines.
Why, then, aren’t those rights used by Third World nations to provide the affordable medicines they need?
The answer is not a secret. Nations who need affordable medicines are often intimidated by the “behind-the-scenes” influence of the multination pharmaceutical companies, the brand companies, and their political allies, western nations, who often use public and private threats to discourage competition. Their tactics, fear and retaliation, successfully prevent Third World nations from using that right.
When western nations finally acknowledged the right to compulsory licensing was binding, the multinationals went, as Americans say, “around the barn” to “convince” forty nations to publically pledge not to exercise that right. Almost all Third World nations refused to join the boycott. It does not require a sophisticated knowledge of politics to imagine what took place behind those closed doors to convince nations to abandon a right they might need to provide their citizens with affordable medicines.
Clearly, the multinationals fear an affordable price for identical medicines in Third World nations will be contrasted to the high prices they demand in developed nations where they maintain a twenty year monopoly.
Their fear is justified.
The multinationals have learned the competitive and licensed generic industry is able to quickly end monopolies both as regards the active pharmaceutical ingredients (API’s) and drug formulations by providing regulated and affordable clones of a branded product on the very day monopoly patent protection ends. Generic companies routinely clone patented medicines and subject them to regulatory authorities long before a patent expires.
After decades of denial, the AIDS crisis finally exposed the consequences of the multinational pharmaceutical companies callous attitude towards Third World nations. Those who lived in western nations with AIDS could survive using available medicines and those who lived in the poor nations of the world, would die. Some labeled the intransigence of the multinational companies as “a death sentence”.
Around 2001, in Africa, of the estimated 36 million suffering from AIDS, only 4,000 could afford treatment of the ARV drugs made by multinational companies costing US$ 12,000 per patient per year and approximately 8000 were dying per day. The results were not only traumatic but tragic. When, as often happened, husband and wife died a slow and painful death from AIDS, they often left behind generations of children forced to return to live with grandparents in the villages their parents left in search of education or opportunity.
These undisputed facts could have and should have forced a vigorous public or political response but most nations and too many institutions sat hopelessly on the sidelines. The western nations argued they were bound by patent laws and the poor nations said they feared legal actions if they used their international rights.
Not everyone accepted “the stand down” attitude.
Multinationals Face Unexpected Challenge
The AIDS crisis unexpectedly opened the door enabling Third World countries to legally provide the medicines now denied them. In one sense, it was the needed harbinger for compulsory licensing.
Cipla, a leading generic company in India, refused to stand down and openly challenged the right of the multinational pharmaceutical corporations to deny affordable medicines to Third World nations, including India. The steps they took were totally legal and within the framework of India and Africa traditions.
The company developed an affordable AIDS medicine that, in one tablet, taken twice a day, ended a complicated daily regime of medicines from three brand companies, and reduced the cost of the “cocktail triple” from $12,000 per patient per year, to $ 300 a year.
Today, similar “triples” is recommended as “first line treatment” for AIDS by WHO and is manufactured by a dozen or more generic companies in several countries.
UNAIDS recently reported the wide usage of generic AIDS medicines. Today these are extensively used to sustain life by around nine million people at a cost of under US$100 per patient per year. Almost all the patients in the Third World countries and particularly in Sub-Saharan Africa are treated and maintained on generic drugs..
Fearful of the spread of generic competition in Africa and with an affordable AIDS drugs cocktail on the horizon, thirty-eight brand companies in 2001 sued in a South African court to stop competition from affordable medicines manufactured by generic companies. Several western nations, including the United States, wrote to the Court supporting this legal action.
Subsequently, the United States, after domestic protests, withdrew its support and the brand companies later withdrew their opposition.
In January, 2000, presiding as the rotating Chairperson of the United Nations Security Council, American Ambassador Holbrooke took the unprecedented action to emotionally and forcefully focus the world’s attention on the AIDS pandemic, the first time the U.N. Security Council focused on a health emergency. His plea won worldwide support, but when the excitement died, the multinational pharmaceutical Companies continued with their unaffordable pricing making it impossible to tackle the AIDS problem in a sincere and realistic way.
Years later when the impact of the AIDS crisis again made headlines, the U.N. called for a meeting of the multinational pharmaceutical companies to discuss the problem.
Inexplicably, only the multinational pharmaceutical companies were invited. Generic companies were specifically told they could not attend. At one point, annoyed by the repeated request to offer alternative pricing, a generic company’âs supporter was told “don’t bother us again.”
With that attitude, the results of the U.N. meeting were not difficult to predict. Nothing resulted from the meeting. The high prices remained intact.
The World Trade Organization, Barrier to Competition
The World Trade Organization, created to regulate trade between nations, specifically authorizes the right of any nation to obtain medicines without regard to patents.
Few nations could refrain from joining an organization established to create the rules and regulations for world trade but Third World nations seeking membership were required to abandon their pharmaceutical laws designed to provide affordable medicines and accept, over time, western patent laws.
One WTO concession, however, authorized a nation to manufacture or import medicines without regard for patent limitations, opening the door to potential competition. (Doha Declaration)
To safeguard against change, a unanimous vote was required to change WTO rulings, a right used by some western nations to deny WTO had authorized the importation or manufacture of medicines without regard to patents. The veto or threat of its use prevented clarification of the right of a nation to manufacture or import medicines without regard to patents.
Eventually, pressures built and the U.S. suddenly decided it would not use its veto to prevent a clear interpretation of a nation’s right to manufacture or import products. A Committee was established to determine how the right to manufacture or import could be used. The Committee decided to meet secretly in Geneva.
During the negotiations it was “leaked” that the Committee was using a basic document prepared by Pfizer, one of the largest of the multinationals, to determine how that right was to be used. Years earlier Pfizer, after the New York Herald Tribune exposed the Pfizer cartel, the company was fined $200,000,000 for controlling the price of tetracycline worldwide. At the time, tetracycline was the “miracle” drug but Pfizer set prices virtually unaffordable in poor nations.
It was not long before the Third World nations realized they may have won the WTO battle, but they had lost the war.
To date, only two nations, Brazil and Thailand have exercised their WTO rights. Another seven cited the WTO stipulation to manufacture or import AIDS medicines.
For all practical purposes the rights affirmed by WTO have been quietly and effectively swept into a dark corner never to be heard from again.
The multinational pharmaceutical companies and their entrenched political allies could, with immunity, continue to âbullyâ nations into submitting to their prices.
Compulsory Licensing
Simply stated, compulsory licensing of a patent is the key to providing affordable medicines and as noted that right is specifically authorized in two binding compacts signed by all WTO Member states. It legalizes and authorizes a nation to manufacture a medicine by paying a perpetual dividend on sales, usually three to five percent.
Multinational pharmaceutical companies have and do routinely negotiate and award the exclusive right to manufacture and market their products in exchange for a suitable royalty on sales.
Canada’s Compulsory Licensing Law (Bill S-91 valid from 1969 to 1992)
Compulsory licensing is not a new or unique concept. For decades, compulsory licensing of medicines was the law in Canada.
After a short period of exclusivity, the patent owner was required to license competition allowing generic companies to clone and market the product often at a dramatically lower price than the branded product.
The spread of compulsory licensing, in the words of one brand manufacturer, “was a nightmare”.
The multinationals feared Canada’s solution to affordable prices would spread to other nations, not only Third World, but western nations.
What they lacked at the time was a serious sponsor who would could undermine or change Canada’s compulsory licensing system.
Eventually, the multinationals and their corporate allies convinced President Ronald Reagan to offer Canada financial assistance if they abandoned their Bill S-91 and accepted patent protection as in the United States. NAFTA was created in 1992, a three country agreement between Canada, USA and Mexico. This necessitated Canada giving up their Bill S-91.
Although Canadians opposed the change, the government approved it and quickly both patent law and high prices were and remain the Canadian norm. The multinationals had ended their “nightmare”.
Now Is the Time for Compulsory Licensing
Cloned (and simplified) AIDS medicines became the high visibility example of what can happen when Third World nations remove imposed barriers to providing affordable medicines for their populations. Cipla achieved its results by creating an AIDS drugs combination and its availability eventually opened doors to wide usage in Africa.
Creating clones of medicines is now routine. The staggering price difference between brand and generic medicines is well documented. The Third World has the unquestioned authority and the opportunity to cure or control chronic diseases and confront epidemics.
The obvious question is “why hasn’t this happened”?
Literally, life and death depend on the answer. We know an epidemic will raise the question again…and again…but the multinational companies appear secure in their belief they can continue to hide behind western nations and pull the strings of their puppets and avoid serious challenge to their monopolies.
The multinationals have learned from long experience that their backdoor success works, but they also understand continued success depends on casting doubt on the existing right of nations to exercise that right to lower the cost of medicines. They realize change will only result from sustained public protest, based on public knowledge and political courage, both now suppressed, develops.
Some multinationals fear such awareness is on the horizon but unless it becomes visible and an informed public understands what is happening, it may take another worldwide pandemic to end the practice of refusing to provide affordable medicine when it is available elsewhere.
Literally, public records reveal that unique profits from sales in western nations more than compensate for the artificial estimates of the cost of creating …..not often finding …a new medicine.
Also to be faced are the other ways to extend patent life.
Tricks of the Trade
Over the years, the multinationals have found ingenious, sometimes, illegal, ways to extend patents. Sometimes they are caught, most times not. Nations are just beginning to realize what they lost, and the cost, of expanding patent life from seventeen to twenty years with little opposition. The promise of a burst of new medicines was never realized. The extra years have only strengthened the status quo worldwide.
One trick used to extend the monopoly on a product for an additional twenty years is to add a new component to the existing medicine, often without an acknowledged medical improvement. By “coincidence” these alleged “discoveries” occur just as the existing patent is expiring.
The “new and improved” medicine is the old medicine in “disguise” ….sometimes the view of regulators and medical authorities…. but it is patented and marketed as a new medicine usually at an increased price. Its reality, its purpose is to avoid competition. Unfortunately, it is often successful.
Where Do We Go From Here?
India and China have indicated they are capable of exercising their right to compulsory licensing, but, judging from the public response of the multinationals and their allies, India remains the primary target.
The recent Indian Supreme Court decisions have blocked a legal pathway to extend patent life. The multinationals remain uneasy but their preference, it would appear, is not primarily directed at the Supreme Court decisions that may be the harbinger of what is to come. Instead, they are seeking and finding allies to attack India itself. How far the United States is prepared to wage that attack with them, or to open up the doors for them, is unclear. But, for all practical purposes, the battle is joined and how many live and how many die as a result of their tactics, remains unresolved.
India and China, if they use its yet-to-be-tested right to compulsory licensing law, are capable of opening a door to compulsory licensing that the multinationals may find difficult to close even with the support of western nations. Too many people, young and old, are dying for a business decision to close the doors to life.
The discussion of compulsory licensing is urgent. Cipla, the company that first enabled AIDS drugs to be available and affordable and the other Indian companies now manufacturing AIDS medicines may be prevented from challenging the next generation of AIDS medicines.
The newer AIDS drugs now covered under patent in India cannot be manufactured and marketed by them. This will return the supply of AIDS medicines to the very high pricing that prevailed prior to 2001.
India itself will be denied the life-saving medicines it has provided over the years. In answer to a request from media about providing life-saving medicines at affordable prices and controlling of disease, it was suggested “what is best for India is to have an easy to operate pragmatic compulsory licensing system.”
With a population of over 1.3 billion, India provides an example of why a monopoly in healthcare cannot be tolerated. The country’s disease profile is alarming: 110 million mental patients, 60 million diabetics, 60 million asthmatics, 50 hepatitis cases, etc. Apart from this there is a high prevalence of T.B., malaria and AIDS and other diseases.
“India must not get swayed by the developed countries because the country has become the battleground on which access to medicines may be fought.”
No nation should deny its citizen’s access to medicines especially when that right is specifically permitted under WTO’s TRIPS regulations.
The forum for this important discussion should begin without delay at WTO. It is time that WTO takes the next logical step by opening the door to compulsory licensing to be enforced in a rational and timely manner in the third world and the developing countries.
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