Point: Generics And The Pharmaceutical Industry

Point: Generics and the Pharmaceutical Industry In this very brief presentation, I hope to illustrate some of the pressing issues confronting the developing world and discuss how these problems can be mitigated by giving people affected by AIDS, malaria and other diseases access to generic versions of drugs they so desperately need. The facts are rather harrowing. While about a tenth of one-percent of North Americans and less than a third of a percent of Europeans are infected with HIV-AIDS1, the story is markedly different in sub-Saharan Africa where over 26% of the population is infected in Swaziland, 23% is infected in Botswana, 28% in Lesotho and 24% in Zimbabwe and the list goes on. Even in South Africa, one of the wealthiest and most developed African nations, over ten percent of the population has HIV2 and the pandemic could cause life expectancy to decrease to from 59 to 40 within ten years.3 Malaria--and many of the 5000 other orphan diseases—which, in the Untied States are diseases that affect fewer than 200,000 Americans--are eminently curable with modern medicine--also ravage the developing word, namely the African continent4. Over 90% of the world’s one million malaria deaths occur in Africa, deaths which could be easily prevented with access to affordable anti-malarial drugs. 5 However, laws such as America’s Orphan Drug Act of 1983, and their European, Japanese, and Australian equivalents, give orphan drug manufactures 7 year periods of market exclusivity in addition to any patent protection the drugs might ultimately enjoy.6 If a pharmaceutical company discovers that an existing drug can treat an orphan disease, say, for example, that Viagra could treat a strain of anemia, generic versions of Viagra could not be used to treat anemia even after the twenty-year patent protection on the drug had ended and generic versions were available to treat erectile dysfunction. Going back to HIV-AIDS, a disease which is ravaging the developing world, particularly the African continent---destroying communities, creating social instability and undermining the region’s prospects for economic development and normalcy, the adverse effect of this deadly plague can be slowed or even reversed with anti-retroviral drugs. To demonstrate just how effective antiretroviral drugs can be, “death rates for people with HIV/AIDS in developed countries had dropped by 84%” four years after a treatment known as HAART became available in 1996.3 However, with pharmaceutical companies charging as much as $20,000 per person per year for the most effective triple therapy cocktails7, the drugs remain far out of reach for the overwhelming majority of people in the parts of the world that need them most. According to a 2005 study by the World Health Organization, only 15% of the 6.5 million people who need antiretroviral treatment in the developing world received treatment they need as 2005.8 This is not surprising considering an article in the Journal of the American Medical Association states, 1

http://en.wikipedia.org/wiki/AIDS_in_Africa

2

http://en.wikipedia.org/wiki/List_of_countries_by_HIV/AIDS_adult_prevalence_rate

3

http://www.avert.org/generic.htm

4

http://www.medterms.com/script/main/art.asp?articlekey=11418

5

http://news.nationalgeographic.com/news/2003/06/0612_030612_malaria.html

6

http://www.medterms.com/script/main/art.asp?articlekey=11418

7

http://www.inmotionmagazine.com/global/vshiva4_int.html

8

http://www.journaids.org/treatment.php#treatingaidsrel

“the impossibility of poor countries paying for antiretroviral treatment themselves cannot be overemphasized; countries such as Ghana, Nigeria, and Tanzania have annual national health budgets of $8 or less per capita”9 in Sub-Saharian Africa, the figure drops to a whopping $.3 per capita.10 Generic drugs have been a godsend. According to Avert, an NGO, “generics are exactly the same as their branded counterparts in dosage form, safety, strength, route of administration, quality, performance characteristics and intended use. The notable difference between the two is the price.”11 Led by Cipla, an Indian company which has become the biggest supplier of generic antiretroviral drugs12, the brand-name triple therapy antiretroviral that sold for $10,439 per person per year was available for $350. By the end of 2007, generics could be purchased for as low as $87! At these prices, governments, philanthropic foundations and other NGOs can realistically purchase drugs for people in need—something not remotely feasible at the exponentially higher rates. Unfortunately, the situation has become markedly less auspicious. While Cameroon once paid $200 per person per year for HIV-AIDS treatment, new changes in the international patent landscape as a result of The Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) has impeded access to affordable treatment. The 1995 treaty, which all members of the World Trade Organization agree to uphold, mandates that each country confer 20 years of patent protection to pharmaceutical products-regardless of their country of origin—and states that countries cannot produce generic versions of patented drugs in the interim.13 There are two exceptions provided for “public health emergencies.” First, countries can pursue voluntary licenses in which a pharmaceutical company grants permission for a generic version of a drug to be manufactured—usually for some sort of royalty. During the Avian influenza scare, for instance, Roche, which enjoys patent protection on Tamiflu through 2016, granted countries voluntary licenses so stockpiles could be made quickly and cheaply14. In practice, voluntary licenses are not a common practice since they “depend on the goodwill of the patent holder, and can be lengthy to negotiate.”15 The second option is compulsory licensing in which governments coerce drug companies to grant licenses for the production of generic versions of their patented drugs. This provision of TRIPS initially only permitted domestic production only, but most developing countries—hit hardest by HIV-AIDS and orphan diseases do not have the capability to produce drugs at home. Therefore, an amendment was added allowing countries facing a “serious health crisis” to import generic drugs produced abroad. Compulsory licensing arrangements are also fraught with risk. After Thailand issued compulsory licenses for antiretroviral drugs produced by Abbott Laboratories, Abbott decided quite simply not to sell seven of its newest drugs in Thailand 9

http://www.iipi.org/articles/antiretroviral_article.pdf

10

http://books.google.com/books?id=kg63qTfE7owC&pg=PT10&lpg=PT10&dq=per+capita+aids+%248&source=bl&ots=2CV MP7OSEu&sig=Pp0wgk5k98GZz50yYZ0K0JAFeiU&hl=en&ei=jT_9SZX1PJ6ltgfo7a3FCg&sa=X&oi=book_result&ct=result &resnum=4 11 http://www.avert.org/generic.htm 12

http://en.wikipedia.org/wiki/Cipla

13

http://www.iipi.org/articles/antiretroviral_article.pdf p.1891

14

http://ipbiz.blogspot.com/2005/10/tamiflu-patent-to-gilead-licensed-to.html

15

http://www.avert.org/generic.htm

including a heat-resistant form of an antiretroviral that would suit the country’s tropical climate.16 Pharmaceutical companies are not happy with this provision since a health emergency is a very ambiguous term and the United States government “uses considerable bilateral pressure to stop developing countries from using compulsory licensing for pharmaceuticals”17 In 2005, when developing countries became bound by TRIPS, countries such India—the generic powerhouse—enacted national law banning the production of generic versions of patented drugs by Indian companies18. This is particularly problematic because in recent years, second-line drugs have been developed which are “generally less toxic, easier to take and more effective at fighting HIV” and might be the only option for people who have become resistant to their existing treatments as is the case with 10-15% of antiretroviral users within 4-5 years.19 According to Fatima Hassan of South Africa’s Treatment Action Campaign, “The latest drugs are only supplied by western multinationals and they cost $4,800 a year. We cannot afford those prices."20 South Africa is not an anomaly: “the median cost of the most commonly used secondline regime was US$1214 in low-income and US$3306 in middle-income countries.” While the United States and other Western countries would call this behavior piracy, I believe that it is an essential move to save the people of the developing world from the scourge of pandemic disease. As Vandana Shiva so eloquently phrased it, generics are “are not piracy drugs, which is the way the U.S. pharmaceutical industry talks about them. They are generic in the sense that different processes have been used. The same medicine, the same retroviral, costs $20,000 in the United States because of patenting -- that is the only difference… We want to define monopoly as monopoly and recognize that … things like medicine should be accessible to those who are dying of AIDS, and no regime in the world can put profits above people’s lives.”21 While the other side will inevitably tout tiered or differentiated pricing as better solution, this has not proven viable. Already, with tiered pricing on a Tuberculosis drug, the medicine still costs 500 times the average Tanzanian’s hourly wage, while costing less than an hour-and-a-half’s wage for the average Swiss person. 22 Further more, drug companies are reluctant to publish cheaper prices for their product because if an “identical product [is] being sold in poor countries for just one-tenth-or one-hundredth- the price in Europe or the United States…such discounting could lead to a demand for lower prices in rich countries as well.” 23 There is also a fear of parallel importation, meaning that wealthy countries would import substantially cheaper versions of drugs from developing countries. The reality remains that the world has not to date seen an effective tiered pricing system. Otherwise, if one existed that it would furnish drugs to developing countries at appropriate prices, this debate would be moot. 16

http://www.avert.org/generic.htm

17

http://www.cptech.org/ip/health/cl/faq.html

18

http://yaleglobal.yale.edu/display.article?id=5459

19

http://www.avert.org/generic.htm

20

http://yaleglobal.yale.edu/display.article?id=5459

21

http://www.inmotionmagazine.com/global/vshiva4_int.html

22

http://samvak.tripod.com/pp151.html

23

http://samvak.tripod.com/pp151.html

The international patent system, as it currently exists, is keeping essential drugs out of the hands of those who need them most. Generic drugs provide a way for the people of the developing world to get the drugs they need so badly but could never afford. If pharmaceutical companies would develop fair, tiered pricing regimes or agree to voluntary licensing they could gain additional revenue streams they never would have otherwise had. Baring this, however, governments in developing countries should live up to their end of the social contract and serve their people by making cheap generic drugs readily available. As the University of Pennsylvania’s motto says, “Leges sine moribus vanae” or “Laws without morals are useless.” There is a moral imperative to violate patent laws as millions of lives are at stake.