Seven years after an agreement at the World Trade Organization (WTO) to allow developing countries to import inexpensive copies of costly patented medicines, the compromise has failed to deliver on its promise as a pharmaceutical lifeline for the global poor. Since the 2003 compromise was reached, just a single shipment of anti-retroviral drugs (ARVs), the only effective treatment for HIV infection, has been delivered under its terms.
With upwards of 55 million people expected to need ARV therapy by the year 2030, health experts warn that global patent rules are contributing to a looming “time bomb” as current drugs lose their effectiveness and their newer, patented replacements are priced out of reach of all but the wealthy.
Unless the system is fixed, analysts caution, the flow of affordable life-saving generic medicines to the world’s poorest could slow to a trickle and millions of lives — most of them African — will be lost.
Higher costs on the horizon
The reason nearly 3 million Africans are now on ARV therapy is that the drugs are available for as little as $80 per patient per year, Emi Maclean, a treatment access officer for the non-governmental Médecins sans Frontières (MSF), tells Africa Renewal. This compares with an annual cost of over $10,000 when the patented treatments were first developed. The price drop, she says, was caused by fierce competition from Indian generics manufacturers who were free to copy the drugs under Indian law.
But that is about to change. With Indian patent laws now compliant with the WTO’s strict patent rules, she notes, it will be much harder to produce cheap generic versions of newer, more effective ARVs that are already standard in Europe and North America. Because of serious side effects with the specific combination of medicines now commonly used in Africa, Ms. Maclean argues that there is already an urgent need to switch to the European and North American version. But that version is “two to three times more expensive.”
The problems will mount further as the HIV virus develops resistance to the drugs now being given. MSF treatment programmes in Africa report that about 15 per cent of their patients are already showing signs of drug resistance, Maclean explains. They will risk death unless they are moved to second-line treatments, which are 8-12 times more expensive than the current regimen in Africa. Even more advanced ARV treatments, which patients eventually will need, can cost 27 times more.
The UK’s All Parliamentary Group on AIDS noted in July 2009 that the need for more expensive medicines makes it vital to keep drug costs low. But the group also observed that competition among generics manufacturers, “the most important factor in reducing prices” in the past, “is unlikely to be possible” because of global patent rules — creating a “treatment time bomb” in poor countries.
Finding a fix
The 2003 agreement, reached after nearly two years of hard negotiations at the WTO, was designed to create a loophole in the international rules governing medicine patents. These rules are known as Trade Related Aspects of Intellectual Property Rights, or TRIPS in WTO parlance. TRIPS grant patent holders a 20-year monopoly on their creations, but allows governments to override those protections under some circumstances through the issuance of a “compulsory licence” to a local manufacturer to make copies of patented products without the patent owner’s permission.
Because TRIPS allowed countries to issue compulsory licences only for domestic use, however, countries without local drug-manufacturing industries, including 37 in Africa, were unable to use compulsory licences to keep medicines affordable.
The 2003 exemption allowed poor countries to import generic drugs made under compulsory licences in other WTO member states provided a number of steps were followed. These included advance notification by the importer of the type and quantity of drugs ordered, and mandatory changes in the shape, colour or packaging of the products to distinguish them from the patented versions.
Complex and cumbersome
Many non-governmental medical groups and anti-AIDS activists immediately criticized the agreement as unworkable.
They argued that the need for prior notification exposed the importing countries to political and economic pressure from donors, multinational drug companies and trading partners opposed to the use of compulsory licences. The adoption of an order-by-order approach, MSF said in a 2006 analysis, prevented generics suppliers from achieving economies of scale through mass production.
Mandeep Dhaliwal, head of the UN Development Programme (UNDP) HIV/AIDS Human Rights and Gender Division, echoed such concerns. “What’s the point of having ‘flexibilities’ in the rules if they’re too complicated to use?” she asks Africa Renewal. The question, she continues, is what to do about it. “Re-opening the agreement at the WTO may not be the strategic thing to do. We could end up with a worse agreement than we have now.”
Tenu Avafia, a UNDP specialist on intellectual property and AIDS, agrees. He notes that powerful commercial interests often exert great influence on their governments’ positions at the WTO. The 2003 deal was “not an easy mechanism in the first place, but it is the mechanism we have.”
Canada tests TRIPS
For this reason advocates are watching with keen interest Canada’s efforts to make the TRIPS compromise effective. Canada was among only a handful of countries to amend its laws to allow local companies to export drugs under the 2003 accord. Dubbed the Jean Chrétien Pledge to Africa after the then prime minister, the enabling legislation was passed in 2004 and became law the following year.
Canada is also the only country to actually ship an order of medicine under the agreement’s terms, an order of ARVs from the Canadian generics company Apotex to the Rwandan government.
But according to Richard Elliott, executive director of the non-governmental Canadian HIV/AIDS Legal Network, the process revealed flaws in Canada’s legislation. “They started with an imperfect model at the WTO and made it less perfect. Canada can make its own legislation more workable.”
The requirement that companies have a firm order before seeking a compulsory licence was one problem, Mr. Elliott says. This meant that governments had to place an order without knowing if the licence would be granted. Provisions that require new licences for each order, he notes, “are user-unfriendly. This is not how governments buy drugs. Nor is it how the pharmaceutical industry operates.”
Licensing requirements, moreover, “need to be commercially viable and administratively straightforward,” Mr. Elliott says. “At the moment countries are looking at the legislation and asking, ‘Why should we jump through all these hoops?’”
Dr. Bruce Clark, the vice president of Apotex, told Africa Renewal that his company encountered many difficulties with the Canadian legislation. For example, Apotex’s effort to obtain voluntary licences from the patent holders before applying for the compulsory licence, as required by Canadian law, lasted more than a year and was finally unsuccessful. On balance, Dr. Clark says, the steps needed to produce drugs for export under the law “are simply too difficult and complicated. As it is currently written, we will not use it again.”
Legislation that Mr. Elliott and other advocates say would streamline the laws has been introduced in parliament and could be debated as early as mid-year.
Not everyone agrees that the legislation needs fixing. Russell Williams, president of Canada’s Research-Based Pharmaceutical Companies, an industry trade group, tells Africa Renewal that delays in filling Rwanda’s order were unrelated to either WTO or Canadian rules. “The law has worked once. So we know it can work again,” Mr. Williams argues, although Apotex’s Dr. Clark disputes that claim.
With virtually all major drug-exporting countries now in compliance with TRIPS, the MSF’s Ms. Maclean observes, making the 2003 exemption viable could be a matter of life and death for millions.
“We see a closing window of opportunity for drug access unless major changes are made,” Ms. Maclean argues. “You really have a crisis in waiting — not just on HIV/AIDS, but for all the diseases whose medications are priced out of reach because of patent barriers.… The needs are tremendous, and there will be real human consequences if those needs are not met.”