A High Price for Medicine

Geneva – Intellectual property (IP) rights are a key reason for high medicine prices, rendering such medicines unaffordable and therefore out of reach for poor people. While mechanisms exist to circumvent IP, poor countries have been browbeaten into adopting stringent IP laws.

“Of all the issues discussed at World Health Organisation governing bodies, access to medicines consistently sparks the most potentially explosive debates,” stated Margaret Chan, director general of the World Health Organisation (WHO), at a symposium on access to medicines.

The symposium, jointly hosted by the WHO, the World Trade Organization (WTO) and the World Intellectual Property Organisation (WIPO), was held in Geneva on Jul 16.

“This is all the more so since these discussions almost inevitably turn to questions of prices, patents, intellectual property protection and competition. The debates are often clouded by the suspicion that medicines are being treated just like any other commodity, despite their health-promoting and life-saving roles,” she continued.

Chan submitted that, “taking these concerns on board is part of the quest for consensus on ways to make public health policies more equitable”.

She explained that, “the price has a decisive impact on access to medicines, together with the remoteness of services, lack of staff, poor procurement practices and delivery systems and the absence of health insurance schemes. But price can be an absolute barrier for the poor.

“Up to 90 percent of the population in developing countries purchase medicines through out-of-pocket payment – it is their second highest expenditure after food.”

Tariffs on medicines are usually low and least developed countries (LDCs) are frequently exempted from tariffs. But, behind the border other factors strongly influence the price of medicines, with intellectual property (IP) playing a key role.

Pascal Lamy, director general of the WTO, said at the symposium that, since the Doha Declaration in 2001, WTO members have “rightly” stressed the need for the effective use of the IP regime and of the flexibilities in the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights.

“As discussed in Doha, TRIPS needs to be part of the wider national and international action to address public health problems,” Lamy added.

The Doha Declaration allows a country to issue a “compulsory licence” in the case of a public health emergency for the production of generics without the consent of the patent owner. The definition of a public health emergency is left to ministries and leads to uncertainty, some argue.

“Brazil, Thailand and India have been able to use their laws to organise compulsory licences and obtain successes. TRIPS flexibilities can only work if countries change their laws to make it possible,” noted Denis Broun, director of the UNAIDS regional support team for Europe and Central Asia.

“But compulsory licences have not been used as much as necessary,” said Michelle Childs, director of policy and advocacy at Médecins Sans Frontières (MSF).

“The reason is that countries that use them are often threatened by Northern countries.” MSF, also known as Doctors without Borders, is one of the largest international medical and humanitarian aid organisations.

“It was agreed that TRIPS does not and should not prevent members from taking measures to protect public health,” added Pascal Lamy. “This has led to the first, and so far the only, amendment agreed to the entire package of WTO law since the ink dried in Marrakech over 16 years ago: the so-called paragraph 6 mechanism.”

The paragraph 6 mechanism, adopted in 2003, allows countries without the capacity to produce generic medicines to import such drugs from other countries where the drugs were produced under compulsory licensing.

The problem is that, as largely recognised at the symposium, this mechanism does not work well. For example, in 2007, Rwanda notified the WTO that it intended to import generic antiretroviral (ARV) drugs from Canada. Both countries had to issue compulsory licences. The process was cumbersome and long, taking more than three years.

Out of the 154 WTO members, 84 fall in the categories of low to medium access to medicines (50 to 70 percent of the population) and very low access of medicines (less than 50 percent of the population). LDCs fall into the last category.

“We have a 2016 deadline coming up for patents in the poorest countries but most of them already have a restrictive patent law. The capacity of LDCs to manufacture is low because of the patent legislation and of their manufacturing capacities,” said Broun.

Middle and low-income countries were given a 10-year extension to adopt IP laws on pharmaceuticals. India, for example, the largest producer of generics for developing countries, adopted such a law in 2005.

LDCs were given a 20-year deadline that will expire in 2016 — even though the WTO is currently undergoing an LDCs needs assessment process, focussed on the priorities of individual countries.

“Some African countries are developing their production capacity but we are concerned about the 2016 TRIPS deadline — not only for production but also for import — because of the threat of prices rising,” added Childs.

The WHO essential medicines list now contains 423 drugs, among which only 20 are still patented, most being second line ARVs. “This is the biggest public health challenge. And the third line ARV will be even more costly,” stated Dr Hans Hogerzeil, WHO Director of essential medicines and pharmaceutical policies.

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