Articles
Pipeline patents, compulsory licensing and the costs of AIDS treatment in Brazil
Paula Martini · Rio de Janeiro (Brazil) · 17/2/2008 07:06 · 40 votes
More than 200,000 HIV positive people receive anti-retroviral drugs (ARVs) at no cost from the Brazilian government. However, the sustainability of this AIDS Programme is being threatened by the high prices of the patent protected medicines: the universal distribution policy costs the Health Ministry about US$1 billion per year – 80 percent of which is spent only on six out of the 18 ARV medicines provided by the program.
The six drugs in question – lopinavir/ritonavir, abacavir, nelfinavir, ritonavir, amprenavir and efavirenz – had their Brazilian patents claimed in 1996 via the country-exclusive mechanism known as the "pipeline", a temporary institute created by articles 230 and 231 of the Brazilian Industrial Property Law (9.279/96) that resulted in the filing of 1,182 patents, many of which were products already in the public domain prior to 1996.
Prior to the amendment, products like food and pharmaceuticals could not have their patents filed in Brazil. The 1996 law went much further than the plain suppression of that prohibition (which was actually required for the implementation of the 1994 WTO's TRIPS Agreement): it allowed all patent claims for those products – previously requested in any other country – to be automatically approved and granted in Brazil, as long as the object had not been comercialized in any market yet, and that any efforts to explore it had taken place in the country.
The interested parties had one year to formalize the patent at the Brazilian patent office, the National Institute of Industrial Property (INPI), and only had to prove the original filing was made elsewhere. Still, according to the law, those patents would even skip the traditional INPI's previous evaluation. "The impact was the creation of monopolies that had a huge impact on prices", says Michel Lotrowska, Brazil's representative of the campaign on access to essential medicines led by the NGO Médecins Sans Frontières.
As a result, the country's novelty requirement was also neglected in the pipeline mechanism, even though the TRIPS' Article 27, paragraph 1 stated that "any inventions, whether products or processes, in all fields of technology, provided that they are new (...)" are patentable. This becomes a bigger issue when the 1988 Brazilian Federal Constitution adopted a principle of absolute novelty for industrial property, i.e., if the protection-claimed technology already became public prior to the patent filing date, no temporary monopoly privilege can exist.
Compulsory licensing: does it actually hurt innovation?
Brazil is one of the ten biggest pharmaceuticals market in the world. The universal access to treatment, granted by the 1988 Federal Constitution, creates a broad and reliable market for the transnational pharmaceutical industry, as well as a unique and special client: the government.
But sometimes customer's old dissatisfaction can spill over. In May 2007, one of the six ARVs of the AIDS program licensed under the pipeline mechanism was compulsorily licensed by the Brazilian government in an historical decision: efavirenz had its public interest declared by the President Luiz Inacio Lula da Silva after Merck refused to reduce its price from US$1.57 a patient/day to the 65 cents at which it is sold to Thailand. Efavirenz's first patent claim was filed in 1992, i.e., had the pipeline patent not been granted, this active ingredient would be in the public domain and could have been produced generically in Brazil, as it has been in India. So, from May 2007 on, efavirenz is being bought from Indian laboratories, and royalties of 1,5 percent over the amount invested by government on the drug purchasing are being paid to Merck – that remain the patent owner.
A compulsory license is legal under the TRIPS Agreement, Article 31, if: "prior to such use, the proposed user has made efforts to obtain authorization from the rights-holder on reasonable commercial terms and conditions and such efforts have not been successful within a reasonable period of time". But the same article also states that this requirement may be waived in cases of "national emergency or other circumstances of extreme urgency or in cases of public non-commercial use". In 2001, the Doha Declaration on the TRIPS Agreement and Public Health also reinforced countries' liberties to decide when public health concerns come before intellectual property rights.
The pharmaceutical industry often argues that compulsory licensing hurts innovation due to the high investments required for research and development (R&D). Renata Reis, coordinator of the Working Group on Intellectual Property (GTPI) from the Brazilian Network for the Integration of Peoples (REBRIP), says: "R&D substantial investments are not made in the South countries. Usually the medicine is an adaptation, for local conditions, of the already existing medicine. Besides that, industry tends to include marketing costs in its R&D budgets, as James Love reported in a 1993 document by the CPTech".
An article published in the Berkeley Technology Law Journal compares rates of patenting and other measures of inventive activity before and after compulsory licenses over drug patents, suggesting that "the assertion that licensing categorically harms innovation is probably wrong".
TRIPS Agreement and production of generic drugs
Since the TRIPS Agreement signing by the WTO's Member States, the World Health Organization (WHO) has been alerting countries about the need for monitoring the implications of this and other international treaties on the enforcement of access to medicines policies.
At the time of the signing, developing countries that did not recognize patents for pharmaceuticals (like India and Brazil) had the option to only do so after a 10-year transition period, a flexibility foreseen in the TRIPS Agreement. Under pressure, Brazil decided to start recognizing patents immediately (from 1997 on), while India chose to do so only in 2005. That allowed Indian local industry to develop and export not only generic versions of many medicines that are patent-protected in most countries, but also to develop new combinations in fixed doses of patented ARVs, which can facilitate adhesion to the treatment due to a reduced number of pills to be ingested.
Countries like Brazil and Thailand could only structure their AIDS programmes because the main ARV medicines were not protected by patents and could be cheaply imported and/or locally produced. And the success of the Brazilian programme derived complimentary concerns, as Renata Reis says: "The survival rate is very high here, so access to new second-line therapy drugs has critical importance for keeping HIV infection under control by overcoming the long-term patient's growing resistance to the ARV previous treatments".
The prices of the second-line ARVs threaten the sustainability of Brazilian universal drugs distribution policy, since they cannot be locally manufactured as generics. Though the country has got full capacity and ability to produce the second-line ARV medicines, as attested by the document "ARVs Production in Brazil - An Evaluation", by Professors Joseph M. Fortunak and Octavio A. C. Antunes – indeed, until the 1990s, Brazil had national production of ARVs, a process prematurely interrupted by the pipeline mechanism.
The six drugs in question – lopinavir/ritonavir, abacavir, nelfinavir, ritonavir, amprenavir and efavirenz – had their Brazilian patents claimed in 1996 via the country-exclusive mechanism known as the "pipeline", a temporary institute created by articles 230 and 231 of the Brazilian Industrial Property Law (9.279/96) that resulted in the filing of 1,182 patents, many of which were products already in the public domain prior to 1996.
Prior to the amendment, products like food and pharmaceuticals could not have their patents filed in Brazil. The 1996 law went much further than the plain suppression of that prohibition (which was actually required for the implementation of the 1994 WTO's TRIPS Agreement): it allowed all patent claims for those products – previously requested in any other country – to be automatically approved and granted in Brazil, as long as the object had not been comercialized in any market yet, and that any efforts to explore it had taken place in the country.
The interested parties had one year to formalize the patent at the Brazilian patent office, the National Institute of Industrial Property (INPI), and only had to prove the original filing was made elsewhere. Still, according to the law, those patents would even skip the traditional INPI's previous evaluation. "The impact was the creation of monopolies that had a huge impact on prices", says Michel Lotrowska, Brazil's representative of the campaign on access to essential medicines led by the NGO Médecins Sans Frontières.
As a result, the country's novelty requirement was also neglected in the pipeline mechanism, even though the TRIPS' Article 27, paragraph 1 stated that "any inventions, whether products or processes, in all fields of technology, provided that they are new (...)" are patentable. This becomes a bigger issue when the 1988 Brazilian Federal Constitution adopted a principle of absolute novelty for industrial property, i.e., if the protection-claimed technology already became public prior to the patent filing date, no temporary monopoly privilege can exist.
Compulsory licensing: does it actually hurt innovation?
Brazil is one of the ten biggest pharmaceuticals market in the world. The universal access to treatment, granted by the 1988 Federal Constitution, creates a broad and reliable market for the transnational pharmaceutical industry, as well as a unique and special client: the government.
But sometimes customer's old dissatisfaction can spill over. In May 2007, one of the six ARVs of the AIDS program licensed under the pipeline mechanism was compulsorily licensed by the Brazilian government in an historical decision: efavirenz had its public interest declared by the President Luiz Inacio Lula da Silva after Merck refused to reduce its price from US$1.57 a patient/day to the 65 cents at which it is sold to Thailand. Efavirenz's first patent claim was filed in 1992, i.e., had the pipeline patent not been granted, this active ingredient would be in the public domain and could have been produced generically in Brazil, as it has been in India. So, from May 2007 on, efavirenz is being bought from Indian laboratories, and royalties of 1,5 percent over the amount invested by government on the drug purchasing are being paid to Merck – that remain the patent owner.
A compulsory license is legal under the TRIPS Agreement, Article 31, if: "prior to such use, the proposed user has made efforts to obtain authorization from the rights-holder on reasonable commercial terms and conditions and such efforts have not been successful within a reasonable period of time". But the same article also states that this requirement may be waived in cases of "national emergency or other circumstances of extreme urgency or in cases of public non-commercial use". In 2001, the Doha Declaration on the TRIPS Agreement and Public Health also reinforced countries' liberties to decide when public health concerns come before intellectual property rights.
The pharmaceutical industry often argues that compulsory licensing hurts innovation due to the high investments required for research and development (R&D). Renata Reis, coordinator of the Working Group on Intellectual Property (GTPI) from the Brazilian Network for the Integration of Peoples (REBRIP), says: "R&D substantial investments are not made in the South countries. Usually the medicine is an adaptation, for local conditions, of the already existing medicine. Besides that, industry tends to include marketing costs in its R&D budgets, as James Love reported in a 1993 document by the CPTech".
An article published in the Berkeley Technology Law Journal compares rates of patenting and other measures of inventive activity before and after compulsory licenses over drug patents, suggesting that "the assertion that licensing categorically harms innovation is probably wrong".
TRIPS Agreement and production of generic drugs
Since the TRIPS Agreement signing by the WTO's Member States, the World Health Organization (WHO) has been alerting countries about the need for monitoring the implications of this and other international treaties on the enforcement of access to medicines policies.
At the time of the signing, developing countries that did not recognize patents for pharmaceuticals (like India and Brazil) had the option to only do so after a 10-year transition period, a flexibility foreseen in the TRIPS Agreement. Under pressure, Brazil decided to start recognizing patents immediately (from 1997 on), while India chose to do so only in 2005. That allowed Indian local industry to develop and export not only generic versions of many medicines that are patent-protected in most countries, but also to develop new combinations in fixed doses of patented ARVs, which can facilitate adhesion to the treatment due to a reduced number of pills to be ingested.
Countries like Brazil and Thailand could only structure their AIDS programmes because the main ARV medicines were not protected by patents and could be cheaply imported and/or locally produced. And the success of the Brazilian programme derived complimentary concerns, as Renata Reis says: "The survival rate is very high here, so access to new second-line therapy drugs has critical importance for keeping HIV infection under control by overcoming the long-term patient's growing resistance to the ARV previous treatments".
The prices of the second-line ARVs threaten the sustainability of Brazilian universal drugs distribution policy, since they cannot be locally manufactured as generics. Though the country has got full capacity and ability to produce the second-line ARV medicines, as attested by the document "ARVs Production in Brazil - An Evaluation", by Professors Joseph M. Fortunak and Octavio A. C. Antunes – indeed, until the 1990s, Brazil had national production of ARVs, a process prematurely interrupted by the pipeline mechanism.
tags: Rio de Janeiro Brazil policy-law brazil access-to-medicines a2m hiv aids anti-retrovirals pipeline-patents local-context-global-commons medecins-sans-frontieres gtpi rebrip efavirenz compulsory-licensing trips world-trade-organization world-health-organization
extracted from:Creative Commons
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