Patent wars: affordable medicines versus intellectual property rightsBMJ 2014; 348 doi: https://doi.org/10.1136/bmj.g1533 (Published 17 February 2014) Cite this as: BMJ 2014;348:g1533
The pharmaceutical industry is increasingly looking towards emerging markets, where demand for new drugs is rising rapidly alongside rates of chronic disease. But in recent years India, known as the “pharmacy of the developing world,” has led the battle for affordable drugs, using legal mechanisms to overturn patents so that its generic drug companies (which produce a fifth of the world’s generic drugs) can undercut the Western giants. Developing countries have followed India’s example, and battles over patent protection and prices have broken out from Indonesia to Brazil.
The fight echoes the one over access to treatments for HIV infection a decade or two ago, but it is now being fought over a far wider range of drugs with greater financial implications for Western drug companies.
In a series of high profile court cases, India has rejected several patent claims for cancer drugs and Roche decided in August not to pursue a patent application for its breast cancer drug trastuzumab (Herceptin) because it viewed it as a losing battle in India’s current intellectual property environment.1 2
Public health arguments
A key decision came in 2012, when India issued a compulsory licence for Bayer’s cancer drug sorafenib (Nexavar), allowing a local company Natco to produce a generic version.3 A compulsory licence allows a company to produce a patented product without the consent of the patent owner. Under the World Trade Organization’s trade related aspects of intellectual property rights (TRIPS) agreement countries are free to grant compulsory licences in the interest of public health; however, there is much argument about how this is defined. The Indian courts ruled that the costs of $4500 (£2700; €3300) a month for sorafenib were unaffordable to the Indian government. A generic version of the drug is now available for $175 a month.
Since that decision a further two applications for compulsory licences have been rejected. But the Indian government has set up an expert committee to review drug patents and identify whether any additional compulsory licences should be issued.4 The drug industry fears that the floodgates will open and that this will create an “innovation crisis.” Andrew Jenner, executive director of the International Federation of Pharmaceutical Manufacturers and Associations, said: “Increased use of compulsory licensing provisions will reduce the incentive to invest in the research and development of new medicines in India and should be seen as a last resort as open discussions with patent holders often lead to successful outcomes.”
India is not the only country issuing compulsory licences and rejecting patent applications. In 2012 Indonesia issued compulsory licences to override the patents on seven hepatitis B and HIV treatments. In Thailand compulsory licences have mainly been issued for HIV drugs but it also issued three compulsory licenses in 2007-08 for cancer treatments.
In 2012 China overhauled parts of its intellectual property laws to allow compulsory licensing. It was speculated that it would issue its first compulsory license for tenofovir, Gilead’s drug for HIV and hepatitis B. Anticipating this, the manufacturer reduced tenofovir’s price, but it was not enough and last year the Chinese State Intellectual Property Office revoked the drug’s patent saying it lacked novelty. In 2008 the Philippines brought in the Universally Accessible Cheaper and Quality Medicines Act, which also includes measures to grant compulsory licences. So far none has been issued, however. Brazil is currently amending its patent laws. A parliamentary committee report in October recommended stricter rules for what deserves a patent and the right to issue compulsory licenses. The report recommends that an independent government body vetoes patent applications if the drug does not meet certain standards of innovation.5
South Africa is also reforming its patent laws. Under its current system South Africa grants far more patents than other countries with the result that it pays up to 35 times more for branded drugs than some other countries do, according to Médecins Sans Frontières.
US fights back
The pharmaceutical industry in the United States is lobbying hard over what it sees as India’s growing non-recognition of intellectual property rights. The US government has responded by putting political pressure on India. A report released last year by the Office of the United States Trade Representative placed India on the priority watch list for failing to uphold international drug company patents.6 It said that it would “monitor closely” developments concerning compulsory licensing, which it described as a “troubling precedent.”7 Other countries placed on the list for failing to protect intellectual property rights include Algeria, China, Indonesia, and Thailand. The Global Intellectual Property Center of the US Chamber of Commerce also last year introduced a new index ranking 11 countries on the strength of their intellectual property rights systems, with the US ranked highest and India ranked lowest.8 The US is also putting pressure on 11 Pacific Rim countries to sign up to the Trans-Pacific Partnership agreement.9 This is currently being negotiated in secret but is understood to include intellectual property clauses that would restrict access to affordable generic medicines.
The patent system allows drug companies to charge high prices for drugs for a limited time in order to recoup their research and development costs. And drug companies are not the only ones warning that their ability to invest in research and development will be seriously damaged if they lose this source of revenue. An independent report from the UCL School of Pharmacy argues that without intellectual property rights private investment in high risk biomedical research would be unlikely.10
David Taylor, professor of pharmaceutical and public health policy at University College London and author of a recent report, Health and Health Care in India, also argues that countries such as India should spend more on healthcare and improving access to medicines. India spends only 1.2% of its gross domestic product on publicly funded healthcare, a lower figure than most other comparable countries, the report points out.11 Taylor argues that the country’s focus on new anticancer drugs that can be used only in high technology settings is the wrong approach and will mainly benefit richer patients while many people do not have assured access to the most basic treatments.
“There is a widespread belief in India that new anticancer drugs can cure cancers, although what is needed is more investment in preventive measures against tobacco related harm and cancers caused by infections,” he said.
Questions over costs
Others suggest that industry spends far less than it claims on research and development. The drug industry claims the cost of each successful innovation is $1bn to $2bn. But Donald Light, network fellow at the Edmond J Safra Center for Ethics at Harvard University and a professor at Rowan University, calculates that when inflators are removed from the industry’s principal dataset costs average around $100m per product.12
Leena Menghaney, a lawyer and spokesperson for Médecins Sans Frontières in India, said that she didn’t dispute that research and development cost money. “But pharmaceutical companies won’t reveal what they spend on R and D so we can’t determine if the price is fair or not. And even when they are earning huge profits they continue to price drugs out of reach. They choose the low volume high profitability model over high volume low profitability.”
She cites the $70 000-80 000 cost for a three month course of the new hepatitis C treatment sofosbuvir, which was approved by the US Food and Drug Administration in December. “Such insanely high prices are an issue even for developed countries,” she says.
Light also says that over the past 30 years patent law has become increasingly loose, with an ever widening set of criteria. “Patents can be granted on new formulations, such as moving from a pill to an injection or to a combination,” he explains. Light says 95% of new drugs licensed by the European Medicines Agency or the FDA are judged by independent review teams of physicians as having little or no advantage for patients. “What India wants to do is redraw the line so that a patent is only granted on new molecules and clinically superior drugs. This would be better not only for patients in India but also those in the UK, Europe, and the US.”
But Jenner, from the International Federation of Pharmaceutical Manufacturers and Associations, counters: “Innovation is a continual process. Incremental innovation delivers changes to medicines, such as better tolerability and improved dosing, that are often critical to better care, and these advancements are recognised by the vast majority of patent systems around the world.”
New approaches are also being proposed to diffuse the patent row. Light favours a prize based system to encourage the development of new medicines in high priority areas. Another approach is a wholesale system of differential pricing, with companies charging less in poorer regions of the world than in richer ones. This already happens to some extent, with companies such as GlaxoSmithKline leading the way. The problem is that there can be “leakage” of lower priced drugs into wealthier countries. And people in wealthier countries are starting to complain that they are paying far higher prices than patients in other countries.13
India’s fight for affordable drugs
2001: The Doha declaration on trade related aspects of intellectual property rights (TRIPS) and public health reaffirmed the right to balance public health needs with intellectual property rights
2001: Indian generic company Cipla begins marketing a $1 a day generic combination antiretroviral therapy
2005: India signs the World Trade Organization’s TRIPS agreement, which includes a 20 year patent term for medicines
March 2012: India awards first compulsory licence for a generic version of Bayer’s cancer drug sorafenib (Nexavar)
April 2013: Indian Supreme Court rules against Novartis, ending seven year battle to patent an updated version of leukaemia drug imatinib
May 2013: India put on the Office of the US Trade Representative’s priority watch list
August 2013: Roche decides not to pursue its patent on trastuzumab (Herceptin)
Cite this as: BMJ 2014;348:g1533
Competing interests: I have read and understood the BMJ Group policy on declaration of interests and have no relevant interests to declare.
Provenance and peer review: Commissioned; not externally peer reviewed.