Compulsory licensing of life-saving medicines

By: Karimullah Adeni

THE state of a nation is determined primarily by the health of its people. To describe the state of health care in Pakistan as poor would be an understatement indeed. It is a common knowledge that there is a clear lack of doctors, health facilities and most importantly, availability of reasonably priced medicines.

The underprivileged members of our society, cannot even think of enjoying medical care though they mostly remain in need of such a care. It is a cruel joke indeed then to see the business of health care prospering like it does.

Recent reports suggest that pharmaceutical companies earn huge profits from the sale of essential medicines. The profits result directly from the prohibitive prices of medicines many of which are life saving and a necessity. A WHO report has ascribed the price increase mainly to two factors-. shortage of medicines in the market and patenting of drugs.

The patenting of drugs has remained a controversial issue and gained a notoriety with the nonof AIDS medicines in Africa due to restrictions imposed by patent law. Yet, this law remains the only legal remedy available in securing inventors' inventions; that it adds to the cost of manufacturing drugs is indisputable. Researchers of drugs commit an immense amount of resources- both human and financial--in developing these drugs and the patent law helps them in recouping those costs by selling the drugs at a premium.

All good and fair. However problems arise when the premium afforded to pharmaceuticals come at the cost of an entire nation's health. The purpose of medicines and of healthcare is to cure and this must always take precedence over the recouping of costs and making profits. The exorbitant prices for patented life-saving vaccines jeopardise the lives of millions in developing and underdeveloped countries where these medicines are mostly used.. An outcome such as this is unfair and provisions have been included in the law to counter this and allow the access of medicines to those in urgent need. That these provisions are hardly ever availed is another question entirely. The TRIPS--the treaty that governs patent law globally, has extended the powers of the statutory body to issue compulsory licenses to third parties for the manufacture of patented drugs.

Such a license is premised in view of public interest and to protect health of masses. In particular such licenses can be granted, under law, with matters relating to national security, nutrition and health of the public or for the development of the national economy. These licences can have a positive impact on a society. In legal terms, compulsory licensing allows a government to issue a licence to a company or a government agency, the right to use a patent without the consent of the patent holder. The objective of granting compulsory licences is to prevent the abuse of monopoly granted by the patent and to safeguard the public health.

A patent is granted to provide legal protection to an invention from getting infringed. However, this legal protection is subjected to a time period of four years after the date of grant of patent for bringing the patent into utility.

Hence, where a patent has not been exploited in a manner, which contributes to the promotion of technological innovation and to the transfer and dissemination of technology, the government has the power to decide that a government agency may exploit the patented invention.

The government before taking any decision, shall give the owner of the patent an opportunity of being heard if he wishes so. Though, in the circumstance that the patent holder refuses to let a compulsory licence be issued or if he allows licensing but not on reasonable commercial terms, the government shall have the power to grant the compulsory license without the consent of the owner of the patent. Here the third party has to present evidence that the patent holder had been approached for his consent before coming to the government.

The system of compulsory licensing is an integral part of the patent law and one that is present in most countries of the world including Pakistan and the Britain from whom we inherited the Patent and Designs Act 1911. This system is a century old and was incorporated in the UK Act of 1907. It is principally founded upon the idea that a government must safeguard the interests of its people, which most importantly includes their health.

In the Patents and Designs Act, 1911, there are provisions vide Sec22, 23 and 23A, whereby any person interested may present a petition to the government alleging that the demand for a patented article in Pakistan is not being met to an adequate extent and on reasonable terms and praying for the grant of a compulsory license, or, in the alternative, the revocation of the patent.

This remedy is also available in the new Patents Ordinance, 2000 vide Sec 59, whereby the controller has the power to grant compulsory licences. The exploitation of the patented invention shall be limited to the purpose for which it was authorised and shall be subject to the payment to the said owner of an adequate remuneration taking into account the economic value of the government authorisation, as determined in the said decision.

There is a widespread misconception that a country can issue compulsory licence only in the case of an emergency. The Doha Declaration on Public Health confirms that countries are free to determine the grounds for issuing compulsory license and a great deal of flexibility is legally on offer. However the onus is on the proposed user to make necessary efforts and avail this flexibility.

This, however, does not mean that the entire system of patent law is invalidated by the provisions on compulsory licensing. According to Sec 59(2), a nonlicence shall not be issued if the owner of the patent satisfies the controller that circumstances exist which justifies the nonor insufficient exploitation of the patented invention. Thus it is the existence of a framework that includes respect for patent law along with compulsory licensing that allows for the establishment of a much fairer legislative system.

Example: To illustrate the current situation and how compulsory licensing would prove to be a useful way in improving access to medicines in developing countries; let us use the following example; a thousand children die of dysentery every day in Uganda and Kenya who are neighbours. Yet a child in Uganda has a much better chance of surviving the disease than a child in Kenya.

The reason is that Ciprofloxacin, an antibiotic that kills the `shigella bacteria’ that causes dysentery, sells for just seven US cents per tablet in Uganda whereas in Kenya the same drug is priced at $2.42, pushing this lifesaver far beyond the means of parents of the children suffering from dysentery. The simple reason for this vast price difference is that Kenya has laws respecting patents and Uganda has not.

Let us take another example; an antibiotic used in the treatment of respiratory and sexually transmitted infections (Azythromicin), - most highly prevalent diseases in developing countries--, costs $2.70 per 259gm capsule in Kenya where it is patented and marketed under the trade name Zithromaxg.

However, in India where pharmaceutical products are harder to patent, many generic manufacturers market Azythromicin and because of competition, the Indian retail price for Zitgrinax is over three times cheaper than the trade price in Kenya ($84). Now if the Kenyan government were to issue a compulsory licence for Azythromicin, generic versions of the drug would be able to treat five to seven times more patients within the same budget.

In attempting to justify their position and role in hindering access to essential medicines, multinational pharmaceutical companies continue to claim that lower prices for drug therapies in developing countries would be a serious threat to their research and development funding. This is, however, a very weak argument indeed. Although the majority of the world's population lives in developing countries, these countries represent only a small proportion of the global pharmaceutical market. It is even more startling to note that compulsory licences have been issued in the richest countries of the world.

Licenses issued: Canada-- On February 2006, Canadian generic firm Biolyse requested the the ministers of health and industry to add Osteltamivir to the list of pharmaceutical products eligible for compulsory licensing for export. On July 2006, the Canadian government announced granting this licence.

United States: The anthrax scare in the fall of 2001 led DHHS Secretary Thompson to seek a large enough stockpile of ciprofioxacin (Cipro) to treat 10 million people. This quantity was far greater than the supply and Bayer lacked the capacity to produce it in a timely manner. On October 16, Senator. Schumer asked Thompson to issue compulsory licences to generic manufacturers.

Germany: A licensing agreement was reached between Roche and Chiron. Roche had been attempting to get the German government to get it to issue a compulsory licence for patents on "Blood screening HIV probe" held by Chiron.

Malaysia: The Malaysian government issued a compulsory licence to Indian companies to import generic variants of didanosine (ddl), zidovudine (AZT) and lamivudine+zidovidine (Combivir).

Indonesia: On October 5, 2004, Indonesia issued a compulsory license to local companies for the manufacture of generic versions of lamivudine and nevirapine, until the end of the patent term in 2011 and 2012, respectively.

Thailand: On November 29, 2006, the Thailand government announced a compulsory licence to import (from India) and locally produce Effavirenz.

Cameroon: On January 2005, the non-profit corporation Essential Inventions requested the minister of public health to grant a government use/ex officio compulsory license of the patents relevant for importation, manufacture or sale of generic versions of the following medicines used in the treatment of HIV/AIDS: Nevirapine (brand name Viramune Lamivudine (brand name 3TC*) Fixed dose combinations of Lamivudine and Zidovudine (Brand name Combivirt)

Ghana: On October 26 2005, the minister of health issued a government use compulsory licence for importation into Ghana of generic HIVmedicines.

Eritrea: On June 5 2005, the minister of health issued a compulsory licence for importation into Eritrea of generic HIVmedicines.

Zambia: On September 21, 2004 the Zambian minister of domestic trade and consumer affairs issued a compulsory license for lamivudine, stavudine and nevirapine. The license was granted to Pharco Ltd., a local producer to produce a triple fixedcombination. at a maximum royalty rate of 2.5 per cent.

Why not Pakistan?

The question arises, why Pakistan lags behind in the growth of its economy, protection of its nations health and most significantly, in protecting its pharmaceutical industry?

Weak growth: A major flaw in Pakistan pharmaceutical industry has been its failure to develop indigenous basic drug manufacturing expertise. This failure stems from the lack of largeeconomies and extensive facilities required for manufacturing of basic drugs. Other than this, there is the issue of non-existent research and development culture in the pharmaceutical industry, which in turn discourages innovation and creativity.

The imposition of GST too has played a crucial role in pushing up medicine prices. For instance, in December 2001 the government had announced a drug price increase of three on controlled and four per cent on decontrolled category of drugs respectively. But the prices went up by 40 per cent. Such increases in drug prices are due largely to the tricky policies of the government.

Strong growth of Chinese pharmaceutical industries (20 per cent per annum), relatively lower labour costs, existence of large number of profit oriented research and development institutions and liberal tax holiday regime are among the main factors that have given China a competitive edge over Pakistan.

Likewise, the threat from the Indian pharmaceutical industries stems from the better developed quality products and superior quality of R&D, the financial and scientific benefit of which is siphoned back into the development of new products.

Suggestions: It is true that drug prices all over the world, including the US, have registered a sharp increase. However, in Pakistan many additional factors, including ruthless manipulation of market forces, have further complicated the issue.

It would be instructive hem to quote Article 38(a) and (d) of the Constitution of Pakistan which says: "The State shall secure the wellof the people, irrespective of sex, case, creed and race, provide basic necessities of life such as medical relief for all such citizens as are permanently or temporarily unable to earn their livelihood on account of infirmity, sickness or unemployment. " Therefore, the government here needs to take necessary steps to improve the pharmaceutical infrastructure.

The government should develop the infrastructure and expertise required for basic drug manufacturing. Secondly, it should ensure local production of drugs whose patents have run out to lower the prices of drugs. And lastly, it should allow import of basic raw materials from India in view of the latter's expertise in this sector till Pakistan's pharmaceutical industry comes of age. Despite of all this, many developing WTO member countries have granted compulsory licenses for patented essential medicines and it is crucial time that Pakistan must ensure that drugs are available in domestic markets at affordable prices as lives and health of millions of its people depend on access to these medicines. 

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