[e-drug] Access to Medicines in Under-served Markets: overview

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E-DRUG: Access to Medicines in Under-served Markets: overview
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[Extract from the executive summary of the review paper; the original 35-page report is downloadable at: http://www.dfidhealthrc.org/shared/publications/Issues_papers/ATM/DFID_synthesis_aw.pdf  [repair URL!]

Warning - long message! The layout is probably better in the original PDF file! WB]

What are the implications of changes in intellectual property rights, trade and drug registration policy?

This DFID HSRC overview summarises the key findings of seven studies commissioned by DFID's Access to Medicines Team in 2004. It was written by Nel Druce, with contributions from Professor Brook Baker, Elizabeth Gardiner, Cheri Grace and Dr Suzanne Hill.

Background and summary

To address concerns over unmet public health needs and to expand access to medicines for all, in November 2001 WTO members unanimously adopted the Doha Declaration on the TRIPS Agreement and Public Health (the Doha Declaration). This clarified TRIPS-compliant flexibilities for accessing medicines. More recently, through the 30 August Decision (so called Paragraph 6 decision) in 2003, WTO members agreed a mechanism for supplying needed new medicines to non-producing countries that lacked sufficient capacity to produce such products domestically.

At the same time that international IP rules are both tightening and being clarified with respect to their flexibilities, there is increasing public health demand, and financing, for new and effective drugs of assured quality in under-served markets in Africa and Asia, especially for AIDS, TB and malaria. There is also growing demand for the widespread adoption of good practice in manufacturing standards. Major financer require that medicines procured with their funds be approved for marketing by competent drug registration authorities or meet WHO’s Good Manufacturing Practice (GMP) standards.

Finally, there is growing acknowledgement of the need for public sector investment and market interventions to secure adequate R&D for sustainable access to newer and more costly medicines.

1.2 Key questions and findings

Use of TRIPS flexibilities

TRIPS flexibilities theoretically enable countries with public health needs and with insufficient manufacturing capacity to import lower-cost products from other countries.

But what legislative and policy measures must importing countries and exporting countries implement to make these flexibilities more useable? What are the advantages and disadvantages of these flexibilities? What is the experience at country level, for example, Kenya and Malawi? What issues do developing countries face in ongoing trade negotiations? And what can and should donors do to expedite access to medicines? (See Baker 2004, Lewis-Lettington and Munyi 2004, Lewis-Lettington and Banda 2004, and Grace 2004a).

Enhanced IP protection affects access to medicines in both producing and importing countries by stimulating changes in market and industry structure. On the one hand, increased patent protections stimulate investment in R&D for new medicines, especially for products with demand in rich country markets. At the same time, enhanced patent protection limits price competition on new medicines by generic producers.

Overall, the reported findings suggest that TRIPS-related legislation is already having and will continue to have a negative effect on public health by increasing prices and decreasing availability of newer drugs. The prime example of this effect is India, which as of January 1 2005, will no longer be able to reverse-engineer pharmaceutical products and then sell the generic equivalents at much lower prices (where the product’s patent status and IP regime permits). In the short term, tightened IP protection may be contributing to a net decrease in pharmaceutical capacity in developing countries such as Chile.

However, not all of the study findings were negative. With appropriate public policy incentives, the stronger IP rights protection put in place with TRIPS could create incentives for R&D for drugs for the developing world, including neglected diseases. It may also create a secure environment for increased technology transfer and production capacity in emerging and under-served markets. Some developing country economies with growing innovative capacity, like India, may benefit from higher intellectual property protections. Some innovator pharmaceutical companies may register drugs in markets, such as China, previously deemed too risky from an IP protection perspective.

Analysts argue that TRIPS-related public health flexibilities can provide useful means for importing countries to gain legal access to new medicines, and for producing countries to manufacture less costly generics for export. These flexibilities include parallel importation, compulsory licences and government-use orders, and special import/export rules under the 30 August Decision (see Annex 1 for definitions).

Although some developing countries have already enacted legal provisions to take advantage of some TRIPS flexibilities, there are substantial legal and administrative obstacles to introducing and implementing these complex provisions in domestic law in sub-Saharan African countries, for example. These obstacles could reduce the availability of affordable new drugs.

An important finding is that existing IP protection in many least developed and developing countries, including Kenya and Malawi, is often already stronger than the minimum required by TRIPS   in other words, existing legislation is frequently TRIPSplus. Such countries will be precluded from using important TRIPS-compliant flexibilities, unless domestic legislation is amended further.

Several least developed countries may need to legislate to take advantage of the 2016 extension for becoming TRIPS-compliant with respect to medicines but very few have done so. Accordingly, they risk legal challenges from patent holders if they import newer medicines without using TRIPS-related provisions. In addition, virtually all countries need to amend their national legislation to take advantage of the import/export mechanism sanctioned by the 30 August Decision.

There is widespread lack of clarity about the options available for importing generic medicines from lawful foreign producers. The lack of information about the patent status of products in both importing and exporting countries is a further barrier. For example, even if a drug is not under patent in its exporting country, it cannot be imported (without a licence or the patent holder’s agreement) by another country where a patent has been granted and remains in force.

Within developing country governments, awareness of public health threats, and the political will to act, are often low. Experience in implementing TRIPS and its flexibilities is limited and requires effective cooperation between different government departments, including health, trade and industry, that may have limited experience in developing common policy.

Developing countries remain under economic pressure from more powerful countries to introduce so-called “TRIPS-plus” legislation as part of regional and bilateral trading agreements. The experience to date of these agreements suggests that their effect on access to essential medicines is unlikely to be positive.

Much in TRIPS is open to a range of interpretations, and pro-access initiatives have historically been subjected to legal challenge. Examples include the pharmaceutical industry’s 1998 lawsuit against the South African government’s amendments to its Medicines and Related Substances Control Act and the USA’s 2001 WTO complaint against Brazil.

[..section on registration and local production omitted for later discussion..]

Prospects for R&D

Stronger IP protection, especially in larger and richer markets, provides theoretical incentives for R&D. However, there is a risk that any increased expenditures by companies in India and China will be targeted towards the more profitable treatments for conditions affecting richer populations rather than toward the so-called neglected diseases. Publicly financed incentives need to be provided through domestic policy measures and international public-private partnerships (See Grace 2004a).

1.3 Policy and research implications

Looking forward, several interventions are needed to shape the legal and regulatory environments, and to support market development for improved access to medicines. 
Action is needed in three broad areas, information, technical support and advocacy, to: 
* Provide technical advice and capacity building inputs with developing country governments, and regional organisations, on the legislative changes and procedures required for the legal use of TRIPS flexibilities.

* Assist governments to understand the implications of free trade agreements; and discourage TRIPS-plus provisions that may be detrimental to public health goals.

* Strengthen regional collaboration in regulatory harmonisation   to maximise use and development of regulatory science capacity; to harmonise data requirements for new and generic products; and to develop new approaches for developing, evaluating and registering generic medicines, that provide TRIPS-compliant measures for protecting confidential data (but that simultaneously avoid data exclusivity and patent/registration linkages that delay or preclude marketing of generic products).

* Strengthen information about patent and drug registration status at country, regional and international levels, through patent banks and regional collaboration, for example.

* Support the World Health Organization’s efforts for prequalifying high quality products and producers and other efforts to increase good manufacturing practice.

* Support the development of appropriate administrative structures and cultures to allow efficient, accurate and corruption-free drug regulation.

* Advocacy (together with appropriate incentives to focus on under-served markets) with pharmaceutical companies to explore further investment in low-cost production; further development of differential pricing schemes and nonregistration of patents in poor countries; and research into neglected diseases and technology transfer to developing countries.

* Support civil society in coordination and advocacy for the use of TRIPS provisions to protect public health. 

[end of exec summary]
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This report was produced by the Health Systems Resource Centre on behalf of the Department for International Development, and does not necessarily represent the views or the policy of DFID.

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