Governments should devise a binding treaty de-linking drug prices from research and development (R&D) since the current market-based approach of providing medicines to billions of sick people around the world has failed, a much-awaited UN report states.
The report on enhancing global access to medicines released on 14 September is likely to generate much protest from big pharmaceutical companies and from governments of some rich countries. The findings, however, come as a respite to global health activists who have been striving for a much greater role of the state in bringing drug prices to affordable levels.
The UN High-Level Panel (HLP) for Access to Medicines urges governments to "urgently" increase their current levels of investment in health technology innovation, to enter into negotiations for a binding R&D treaty that de-link costs of innovation from the end prices of drugs and to globally prioritise research for diseases whose needs are unmet.
Another very important recommendation, that if implemented could change the whole paradigm of the issue of access to medicine, is the attempt by the panel to make drug prices transparent — of the costs of developing the drugs as well as marketing, distribution and advertising — to the government and the consumers.
“With the taxpayer effectively paying twice for health technologies in terms of R&D grants and/or tax breaks as well as the end costs for the technology, the report recommends a paradigm shift in transparency to ensure that the costs of health
technology R&D, production, marketing and pricing,” the UN states.
The true cost of developing a new drug now is estimated to be anything between $150 million and $4 billion per medicine.
The recommendations are unlikely to go down well with Washington.
Michelle Lee, Director of the US Patent and Trademark Office on 13 September said that the panel has a "narrow focus" and a "biased mandate". The US official had promised to take "appropriate steps" after reviewing the report.
Significantly, it also attacks powerful western governments for the "implicit threats" that they sometimes use to bully poorer countries from exercising their legitimate right in overriding drug patents under World Trade Organisation’s (WTO’s) Trade-Related Aspects of Intellectual Property Rights (TRIPS) flexibilities rules.
On 19 November last year, United Nations Secretary General Ban Ki-moon announced the creation of a high level panel on innovation and access to health technologies for "remedying the policy incoherence" between the rights of inventors, international human rights law, trade rules and public health in the context of health technologies.
The 15-member panel consisted of innovators, leaders of the pharmaceutical industry, public health, human rights and international law experts, civil society and government, under the leadership of former Swiss president Ruth Dreifuss and the former president of Botswana Festus Mogae. The panel also had eminent Australian jurist Michael Kirby, generic-making giant Cipla’s chairman Yusuf Hamied, GlaxoSmithKline chief executive Andrew Witty, renowned economist Sakiko Fukuda-Parr, among others.
James Love, an internationally-renowned health activist, who devised the $1 per day HIV/AIDS regime that saved, and continues to save, millions of lives in Africa, said that the over-reliance on high drug prices to incentivise innovation reduces access significantly.
"The most important recommendation from the UN experts is to delink the cost of R&D from the prices of drugs. You cannot rely upon high drug prices to finance R&D without harming patients and creating unequal access," Love said in a statement after the release of the report. He referred to all the recommended measures on transparency and encouraging countries to license patents to generic companies in developing countries as “important and useful”.
The idea of delinkage is based on the premise that incentives created by patents for pharmaceutical innovation through charging high prices cannot be the only way to finance innovation.
“The normal type of tax payers money is not the only way to finance global public goods," Fukuda-Parr said.
"The voice of Indian generic drugs was 'very well heard' in our high-level panel — to avoid obstacles to the timely entry of generic drugs," Dreifuss told a group of international journalists in a telebriefing after the release of the report.
"That's going to be something that the government of India is going to have to consider when it gets the report and see how the report operates on the not inconsiderable generic drug manufacturing industry of India. That is something which is beneficial to the world. But it is also beneficial to India," Kirby said responding to a journalist’s question on whether the Indian government expressed concerns to the HLP on being pressured to not use their TRIPS-flexibilities entitlements.
The current market innovation model of funding R&D has failed on many counts: it is ill-equipped to respond to the increasing emergence of infectious diseases, such as Ebola and Zika, there is a big gap in research in diseases that have a heavy burden like non-communicable diseases, there is a looming problem of investment in neglected tropical diseases and dealing with superbugs because of the not-so-big returns for pharmaceutical companies from such investments.
Yellow fever and Ebola virus — that killed thousands in west Africa — had health technologies in the process of development abandoned midway due to the lack of incentives for pharmaceutical companies, Malebona Precious Matsoso, director-general in the national health department of South Africa, and a panelist on the HLP said.
According to 2009-10 data, of the $240 billion investment in health R&D, 60 percent comes from the private sector, 30 percent from public sector and 10 percent from non-profit sector. Also, of $240 billion, a whopping 89.5 percent of the investment is from the rich countries, 7.9 percent from the upper-middle income countries, a negligible 2.6 percent from low-income countries like India, and 0.1 percent from low-income countries. Therefore, currently, pharmaceutical companies from rich countries forming powerful lobbies have a disproportionate influence on drug prices and access issues.
The report also engages extensively with free trade agreements (FTAs) that have proliferated in the past decade increasingly covering huge geographical swathes and involving large chunks of the global economy. These trade deals contain expensive patents and data protection clauses on health technologies, thereby blocking access to such technologies.
The way in which intellectual property laws and trade deals have worked through the system, the unaffordability of high-priced drugs is not the sole concern of the poorer governments anymore — the global north as well as the south have been struck by the diminished capabilities of governments to deliver the right to health to their citizens.
"And because these are global in nature, a single national government cannot deal with these issues," Fukuda-Parr said.
An issue, therefore, that consumed much energy of the HLP was: "How we can ensure that the flexibilities that were envisaged in the TRIPS agreement and in the Doha Declaration should be observed and honoured. [Because] Unfortunately, that has not been happening," said Kirby.
The report cites two examples where powerful governments have arm-twisted countries to stop them from using compulsory licensing provisions — Thailand’s 2006 decision to import generic versions of the antiretroviral medicine Efavirenz from India under compulsory licence was met with hostility and ensuing retaliatory measures from the US government, the European Trade Commissioner and from the manufacturer Merck. Similarly, various foreign parties issued covert threats to the Colombian government for its decision of issuing compulsory licensing for Imantib — a drug for treatment of leukemia which is on WHO’s essential medicines list.
So-called TRIPS Plus agreements that lie beyond the purview of the WTO are inserted into FTAs thus making weaker governments suffer the consequences from countries asserting their IP laws.
The UN has asked countries to complain to the WTO if they are prevented from using TRIPS flexibilities.
"One of the key recommendations of the report is that this should not happen and countries that threaten and retaliate against others for using their entitlements under the TRIPS agreements, face significant, serious sanctions for doing so. That requires collaboration by WTO which is not an UN agency as such," Kirby added.
The UN special rapporteur on the promotion of a democratic and equitable international order Alfred de Zayas on 13 September urged the UN Human Rights Council to ensure the mainstreaming of human rights into trade agreements and WTO practice.
It is unclear if this will happen in the near future.
The panel also spent much time debating if countries should be encouraged to implement a system of compulsory licensing in national legislation that is "effectively automatic". Though majority of panel members were in favour of such a recommendation, a "sizeable minority" objected to its inclusion for its "potential incompatibility of such measures with the TRIPS agreement and the unintended consequences that may result from such an approach".
Witty, the sole representative from the big pharmaceutical industry on the HLP, expectedly, called compulsory licensing as a "serious issue of concern" and expressed strong doubts about the implementation of the proposed R&D treaty given the fact that governments would require billions of dollars to make this work.
"The threat is coming really from the weakness of WTO now in front of the member states who are now developing their own regional and bilateral FTAs. So this is not a matter of goodwill, I would say, from the WTO — it is a matter of weakness of WTO after the failure of concluding the Doha round… many of these bilateral and regional trade FTAs do not [have] the same power on two sides of the table," the former Swiss president said.
Regardless of the challenges in implementing the recommendations of this important report, the UN’s voice in affirming the right to health is a shot in the arm for activists and governments struggling to deliver life-saving drugs to the dying millions.