1. Benjamin Coriat * and Luigi Orsenigo**
IPRs, Public Health and the Pharmaceutical Industry Issues in the Post-2005 TRIPS agenda
Benjamin Coriat * and Luigi Orsenigo**
Universitè Paris XIII, Villetaneuse
**University of Brescia and KITeS, Bocconi University, Milan Italy
IPD, Manchester June 2009

2. Bio-pharmaceuticals
this sector brings the trade-offs and issues involved in patent theory to their extreme consequences
an industry where patents are actually very important mechanisms of private appropriability
a science-based, innovation-intensive industry
A “strategic” industry:
High growth
Skill-intensive
Health as an important factor of growth
a socially sensitive industry: health as a human right
undergoing deep and unforeseeable transformations
IPD, Manchester June 2009

3. Pandemics make the problem even more “visible” and compelling.
controversies about the welfare implications of patents have characterized this industry ever since its inception.
But in the last thirty years or so, the establishment of strong tendency towards an extremely tight IP regime has made this debate even more heated.
Pandemics make the problem even more “visible” and compelling.
IPD, Manchester June 2009

4. Pushing the controversy to the extreme
1) Advent of biotech:
progresses in molecular biology and their increasing relevance for industrial innovative activities have strained to the limit a patent system which was essentially conceived for technologies like mechanical engineering and chemistry.
Stretching the notions of novelty and usefulness
The development of the biotechnology industry itself is strictly dependent on a highly favourable IPR regime
the transformations of the latter have been significantly influenced by the growth of the biopharmaceutical sector.
IPD, Manchester June 2009

5. Pushing the controversy to the extreme (2)
2) The spread of policy doctrines aiming at facilitating the commercial exploitation of publicly funded (basic) research – the Bayh-Dole Act in the USA in 1981 and the subsequent attempts to import at least part of its principles in other countries - has also been crucial in such a strongly science-based industry as pharmaceuticals.
IPD, Manchester June 2009

6. Pushing the controversy to the extreme (3)
(3) TRIPS Agreements — of which the pharmaceuticals industry is one the main supporters — has ignited raging controversies which go beyond domestic boundaries and reach the global level.
Now the debate regarding the desirability of property rights in drugs takes place not only within (rich) countries but also between developed and developing countries.
IPD, Manchester June 2009

7. The revival of the debate
most of the new contributions have an empirical nature.
the economic theory of patents was often deemed to be inconclusive given that radically different results could be obtained by slight changes in even ancillary assumptions.
But still, despite the progress empirical evidence remains flimsy: problems of measurement and sheer lack of adequate data
Data are extremely hard to get access to and when they do exist they are often available at prices and terms which are unaccessible to anybody except few specialized research groups.
Not only patents: regulations restricting access to clinical trials data for generic producers
In search for alternatives: prizes?
IPD, Manchester June 2009

8. The Broad Questions
Can a tight IPR regime foster innovative capabilities and growth in developing countries?
What are the costs of a tight IPR regime on drug prices and access to healthcare?
What is the structure of an IPR system that could best promote innovation, access to new (and older) technologies and growth?
Should we forsake the patent system?
What are the alternatives?
IPD, Manchester June 2009

9. Main propositions
There are, indeed, profound trade-offs between the incentives to innovate and ensuring public access to medicines for which no obvious and simple solutions exist.
The effects of strengthening the patent regime depend (non linearly) on a wide variety of conditions in any given country:
institutions (price controls; health systems, in general; basic research..);
Capabilities and opportunities for innovation;
size of markets;
modes of competition; the specific nature of patent laws themselves and court interpretations
IPD, Manchester June 2009

10. Main propositions (2)
The IPR system governing pharmaceuticals has become increasingly dysfunctional — even in countries like the U.S. The efficacy and desirability of extending strong IPR protection in the rest of the world raises very legitimate doubts.
Excessively tight IPRs can have negative effects not only on prices, but also on the rates and directions of innovation
Both economic theory and the evidence increasingly suggest that the strengthening of IPR regimes in developing countries is likely to impose upon them a series of negative consequences that most likely outweigh any potential benefits gained from the tighter regime.
IPD, Manchester June 2009

11. Market structure
Pharmaceuticals has been traditionally dominated by a stable core of large, globalised innovative firms (USA, UK, Switzerland, Germany, Japan), but also:
Small domestic firms involved in adaptation, manufacturing, marketing
Biotech firms
Generics producers
Small entry and turbulence (until biotech)
Low demand price elasticity, high income elasticity
Strong information asymmetries
The third payer problem
IPD, Manchester June 2009

12. The dynamics of competition
Schumpeterian competition:
High profits after introduction of new drug
Imitation and me-too-drugs before patent expiration
Entry of generics after patent expiration
Branded “generics”
Low concentration (despite high R&D and marketing intensity, M&As):
little cumulativeness in innovation (random screening)
independent sub-markets
IPD, Manchester June 2009

13. The Golden Age
The system seems to have been working reasonably well for many years
Innovative opportunities
Welfare systems
Moderate IPR regimes:
The interpretation of novelty
The interpretation of usefulness
Scope and breadth
High rates of innovation
The scope and efficacy of patent protection has varied significantly across countries. Many countries allowed only process patents did not offer protection for pharmaceutical products:
Product patents: France in 1960; Germany 1968; Japan 1976; Switzerland 1977;, Italy and Sweden in In some cases, as in Japan and Italy (and possibly France) the absence of product patent protection induced  firms to avoid product R&D and to concentrate instead on finding novel processes for making existing molecules. In other cases, primarily Germany and Switzerland, this negative effect didn’t happen
IPD, Manchester June 2009

14. The transformation of the industry: Technology and Organization
Increasing role of fundamental science (“biotech”)
From random screening to rational drug design to molecular biology
The biotech industry: networks and vertical specialization
Markets for technology
Venture capital
IPRs
A new, finance-led, model of innovation?
Diffusion of knowledge and capabilities worldwide, but strong concentration in the USA
But: soaring costs of discovery and development
declining research productivity
IPD, Manchester June 2009

15. The Productivity Paradox
Between 1978 and 2003, research “productivity, has been falling:
R&D expenditures increased tenfold while patenting output increased only sevenfold (Nightingale and Martin 2004).
New Chemical Entities approved by the FDA in the U.S. between 1983 and Some increase was displayed until the mid 1990s, followed by a sharp decline in the years since. In 2002, U.S. R&D expenditures in pharmaceuticals were 30 times greater than in the early 1980s, while roughly the same number of drugs were approved annually.
High rates of attrition, longer times in Phase I, the Phase II bottleneck
Depletion of opportunities,more difficult pathologies
Increasing complexity, explosion of the research space
Increasing costs of regulation (?)
IPRs (?)
IPD, Manchester June 2009

16. Evergreening of patents and patentability for second use
Mee-too drugs?
Evergreening of patents and patentability for second use
Are Big Pharma simply becoming manufacturing and marketing organizations, using knowledge created elsewhere (universities, biotech,..)?
IPD, Manchester June 2009

17. Biotech is no better
Although around 1/3 of new drugs originates from basic research conducted at universities, hospitals and biotech companies, the performance of the biotech segment is disappointing (Pisano 2006):
Operating profits
New drugs
transaction costs and market failures
IPD, Manchester June 2009

18. Further changes in the industry
Regulation, product approval: (evidence-based medicine, multi-country trials…) before and after product approval;
But also significant rationalization and time/cost cutting, especially for some categories of drugs (e.g. orphan drugs)
Markets: diffusion of generics
Appearance of new firms and countries as producers of generics
Increasing marketing expenditures (prices of branded drugs increase after patent expiry, market segmentation); Direct to Consumer Advertising
Cost containment policies
Raising perceptions of health as a human right plus humanitarian catastrophes (HIV/AIDS)
Substantial and controversial changes in the IPR regimes in the North
IPD, Manchester June 2009

19. Is the Big Pharma, blockbuster model still viable?
Is the current biotech/Big Pharma model efficient?
A real issue: how to sustain R&D and innovation?
IPD, Manchester June 2009

20. The debate on IPRs
Neverending debate on the effects of patents in pharma well before Trips
The Kefauver Commission (1962)
“Excessive” prices and profits ?
The fundamental trade off: monopoly power is needed to sustain the private funding and the incentive to innovation
IPD, Manchester June 2009

21. Back to the basics
The early literature (Nordhaus 1969, etc..) predicts that stronger IPRs increase the incentive to invest in R&D and hence the rate of innovation.
Increasing the number of potential inventors: individuals, small firms, outside inventors lacking complementary assets
Raising propensity to invest in R&D
But the theoretical let alone the empirical implications are weak. In particular, they rest on a vast range of ancillary but critical assumptions related e.g. to:
curvature of the innovation function and/or probability distribution of innovating (the space of innovative opportunities)
Definition of the population of potential and actual innovators (Baumol (1990) Murphy, Shleifer,and Vishny (1991)): incentives and competences
elasticity of R&D expenditures to profits
cost structure of R&D
Specifics of R&D decision making process
Costs of imitation wrt costs of innovation
actual patterns of imitation (how much does imitation bite)?
IPD, Manchester June 2009

22. Costs of IPRs
monopoly power, higher prices, lower production, net changes in social welfare
These effects are magnified by low price elasticity of demand and by the third payer problem
Patents as a benefit taxes (Stiglitz, 2004):
only those who benefit from the innovation pay for
But it is a regressive tax
IPD, Manchester June 2009

23. Additional costs Persistence of monopoly
Stronger IPRs can slow down the pace of innovation: market structure and innovation
Cumulative innovation
Patent conflict can impede innovation
Distortions in the direction of research: much of R&D activity directed at circumventing or strengthening monopoly, me-too products, etc..
IPD, Manchester June 2009

24. Recent Changes in the IPR regimes
Substantial and controversial changes in the IPR regimes:
Diamond vs. Chakrabarty
Bayh-Dole
The Federal Circuit
Patents scope
Stretching the notions of novelty and usefulness: genes, ….
Most of these changes are based on the argument that IPRs favour commercialisation of inventions, not because they stimulate innovation
IPD, Manchester June 2009

25. Further justifications for strong IPRs
patents disclose information (vs. secrecy)
But information different from knowledge
patents induce commercialization of innovation (e.g. biotech): markets for technology (Arora et al, 2004)
But implies that no further mechanisms of protection are available in the development process
It might hinder further innovation if the invention is “basic”
The anticommons problems (Eisenberg)
prospect theory
but ignores advantages of experimentation in conditions of uncertainty
IPD, Manchester June 2009

26. The empirical evidence and the new research
These developments trigger further theoretical and empirical research
effects of strengthening IPR regimes
Increasing skepticism
Less skepticism when patents are conceived not so much as an incentive to innovation but a mechanism for creating market for technologies (Sokoloff and Lamoraux, Sokoloff and Kahn, Arora et al., ..)
IPD, Manchester June 2009

27. What do we know? patents are important in bio-pharmaceuticals
But there are also other methods of protection (marketing, organizational capabilities,…)
Scherer: co-movements of profitability and R&D investment
But, how much does increasing patent protection actually stimulate innovation?
Patents -> profits -> R&D -> innovation
especially in a period of diminishing productivity of research
IPD, Manchester June 2009

28. Empirical results
Studies on effects of lower prices on R&D (in the USA)
Most of them suggest drastic reductions in R&D (e.g. Vernon)
- estimations of elasticity of innovation (as measured by patents) to IPR regime:
Arora, Cohen and Walsh:
patent premium ranging from .50 to .90, but 1.75 to 2.25 for pharma:
%change in R&D wrt to 10% change in patent premium: 6% but 7.5% to 8.9 pharma;
Equivalent subsidy rate: 17% (22% pharma)
Linn and Acemoglu (2004): in pharmaceuticals a 1% increase in the size of the market for pharmaceutical products raises the number of new drugs by 4% to 6%, implying an elasticity of innovations to R&D ranging from .8 to . 85
IPD, Manchester June 2009

29. Should we increase the incentives to tap (depleting) opportunities?
Or more should be done to raise research productivity?
And to increase the capabilities to access and tap opportunities?
IPD, Manchester June 2009

30. Costs of patents
the average increase in price for pharmaceuticals due to patent protection is probably close to 400 percent, with the gap in many cases exceeding 1000 percent of the marginal cost (Baker and Chatani, 2002)
Huge welfare losses: The size of the deadweight losses range between 0.1 and 0.5 percent of GDP, approximately equal to the amount that the industry currently claims that it is spending on pharmaceutical research in the United States.
The deadweight loss may increase even more as costs of research increase (Baker, 2004)
IPD, Manchester June 2009

31. Further costs
1) Higher profits, higher marketing expenditures, the efficiency of which is dubious, given information asymmetries and the third party payer
2) Distortions in the directions of research:
useful research: discovery of patentable products.
less productive lines of research, duplicative drugs
3) incentives are created through political interference to pursue less productive lines of research;
4) incentives are created to obstruct the free flow of research findings
Controversial evidence on the role and effects of “me too drugs”
IPD, Manchester June 2009

32. Patents as a in incentive to commercialize inventions
Bayh – Dole
Patents on basic, embryonic inventions and research tools
Broad patents
Exclusive licenses
Impediments to scientific research
Research tools and cumulative innovation
the anticommons issue
IPD, Manchester June 2009

33. The evidence
Mixed
Explosion of university patents and spin-offs: the biotechnology industry
Numbers up, quality down
Advantages of division of innovative labour (Arora et al); Gambardella et al. show that licensed compounds fare better than in-house developed molecules
But research productivity is still falling (Pisano)
IPD, Manchester June 2009

34. Mixed evidence on impediments to knowledge circulation and trade-offs between publishing and patenting
But at the very least a general case for the efficiency of such arrangements is vastly overstated
IPD, Manchester June 2009

35. Analyses of tighter IPRs regimes
We have seen the effects of patents in general; what about further strengthening?
Recent evidence shows almost unanimously that strengthening IPRs regimes does not lead to higher rates of innovation:
studies of the broadening of Japanese patent scope (Sakakibara and Branstetter [2001]),
the establishment of the Court of Appeals for the Federal Circuit in the United States (Kortum and Lerner [1998], Hall and Ziedonis [2001]),
the strengthening of patent protection of pharmaceuticals in India (Lanjouw [1998]) and Italy (Scherer and Weisburst [1995]).
But under what conditions might stronger patent protection have a powerful effect on innovation?
IPD, Manchester June 2009

36. Non linear, non monotonic relationships
when patents are already strong, increasing patent protection further may actually depress the level of innovation (Gallini [1992], Cadot and Lippman [1995] and Horwitz and Lai)
The effects depend critically on existing technological capabilities, innovative opportunities and the stage of development of a country (incentives and competences)
These models similarly suggest that the relationship between patent length and innovation will display an “inverted U” shape.
Confirmed by studies by Lerner (2000) and Qian (2007)
Introduction of patent protection does not increase levels of innovative activity but may have stronger effects on changing the direction of innovative activity (Moser, 2005)
IPD, Manchester June 2009

37. The landscape
IPD, Manchester June 2009

38. Search
Firms randomly screen the molecules, spending a given amount of money (a fixed share of their initial budget is used for the search activity,
The firm draws from the environment n molecules and adds them to the array of (potential) projects.
Firm 3 1 2 38
NB = Imitative firm doesn’t draw and doesn’t pay the cost of draw

39. Some results. Benchmark50
100
0.2
0.4
0.6
0.8 1
HtotP/HtotQ
time
HtotQ
HtotP
HTAP/HTAQ
200
400
600
800
1000
Innovative/imitative products
imitative
innovative 20 40 60
alive firms with products
alive with products
alive
150
Number of TA viewed 10 30
number of firms
Imitative firms
innovative firms
300
500
Avg TA size
Ta Size
Patiets reached 2 3
Avg prices
Price Inno
Price Imi
Price patent 4 6 8
Avg develop time
Inno
Imi
Avg earnigs from signle products
patent
number of products out 39

40. Patent duration,opportunities and innovation

41. Patent duration, size of the market and innovation

42. Tightness of product approval procedures, opportunities and innovation

43. Tightness of product approval procedures, market size and innovation

44. Developing countries Effects of IPRs on innovation in the South
Effects of IPRs in the South on innovation in the North
Multinational Corporations: FDI and local R&D
Prices and access to drugs
Price discrimination and parallel trade
Price controls and health systems
Alternative proposals
IPD, Manchester June 2009

45. Effects of IPRs on innovation in the South
Background:
growth of India, Brazil, Thailand without IPRs
role of public research centres and organisations
entry in generics
What happens after TRIPs?
In general, what are the opportunities for entry and growth in pharmaceuticals for developing countries?
Typically, entry in lower segments of the industries and/or specific niches:
generics
orphan drugs
IPD, Manchester June 2009

46. Conditions for and obstacles to transition
Presumes sufficient scientific and technological capabilities (incentives and competences);
Always requires accumulation of local scientific and technological capabilities: access to knowledge and active participation in research networks are crucial
Presumes large domestic markets and/or ability to export
Current IPRs regime:
may hinder development of domestic scientific capabilities (royalties on basic research tools);
but there is evidence of the contrary too: weak property rights make licensing critical research tools difficult
the anticommons problem
Restrictions to generics development: data exclusivity agreements
Patentability for second use
access to exports and limitations to exports through royalties, litigation, etc..(S. Ramani)
IPD, Manchester June 2009

47. Evidence (so far): India
Segmentation of the local industry
Some firms attempt at establishing themselves as (global) generics producers
Attempts at making the transition to R&D-intensive companies, competing with Big Pharma: little success so far
Differential attitudes towards IPRs among domestic firms according to their strategies
Little evidence of effects on directions of research: local diseases and orphan drugs
IPD, Manchester June 2009

48. Evidence (so far): Brazil
Sharp increase in domestic patents
But: mainly by non residents (the usual suspects)
IPD, Manchester June 2009

49. IPD, Manchester June 2009

50. Foreign Direct Investment
Possible increasing investment by MNCs, depending on:
local skill endowments,
Infrastructure,
demand characteristics
Possible stronger effects as it concerns clinical trials and market development activities
Stronger patents (and trade secrets and brand protection) could have the effect of lowering transaction costs and facilitating know-how transfers (Arora, 1996)
But possible “crowding out” effects on local researchers
Evidence?
IPD, Manchester June 2009

51. Effects on prices and access to drugs in the South
IPRs as a regressive tax
Increase in prices is function of:
market structure before and after the new patent regime matters
Brand loyalty and marketing
demand elasticity (income levels..)
pricing regulations
competition policies (parallel imports, sole distributorship laws)
Lack of data prevent firm conclusions
But most are pessimistic (Lanjouw (1998), Watal
(2000),Maskus (2001))
Evidence of higher prices and lower access to HIV/AIDS drugs in Brasil (Coriat and Orsi, 2005)
Faster introduction of new drugs?
IPD, Manchester June 2009

52. Effects on innovation in the North
direct erosion of profits through imitation in local markets: how big is the market?
Indirect erosion of profits through export
How much does actually imitation bite? Main effect on other generics producers, rather than on innovation as such
How much does the erosion of profits translate into less R&D?
How much less R&D translates into less innovation?
the topography of the innovation opportunity set
me-too-drugs and therapeutic value
IPD, Manchester June 2009

53. Issues The Bolar exemption Patentability for second use
Data exclusivity agreements
Compulsory licencing
Price discrimination
Parallel imports
Price regulations:
cost-plus” formula encourage firms to set high transfer prices on imported ingredients
reference prices: firms have an incentive to bargain for the highest possible prices in the low-price economies in order to gain a higher set of global reference prices.
IPD, Manchester June 2009

54. Alternatives Price discrimination Prizes
but prices are often higher than in developing nations than would be expected under a simple price discrimination equilibrium and, indeed, are at times higher than in the rich nations.
Prizes
Socialization of clinical trials
IPD, Manchester June 2009

55. TRIPS and Acces to Care in DC’s
PART II.
TRIPS and Acces to Care in DC’s
The post 2005 Issues

56. TRIPS as an Answer of the Big Pharmas to the new threats
Type of “economics answers” to the threats
M&A, between equals (and rivals) to re-establish « dominant positions » on key sub-sgements : « bigger is better policy» (Pfister)
Develop (or acquire through Mergers) generic divisions (Novartis),
Co-marketing and co-promotion agreements …
… With generic producers to prevent the entry of rivals : “policy of market pre-emption”
But the key answer is : Strengthening and extending patent rights (through the enforcement of a tighter IPR regime)
Extending the Length of Patent duration (20 years)
Establishing new rights (data exclusivity,…)
Enforcing worldwide a « strong » patent protection (TRIPS, FTAs)

57. The New Constraints Generated by the TRIPS
The signing of the TRIPS (1994) meant
The extension at the world Level of patent protection provisions designed for the firms of the most developed countries (patenting of therapeutic molecules, 20 years length protection …)
This “upward harmonization” of IP protection
Negated the differences in national capabilities to provide access to medicines, a provision that was at the basis of the former Treatise (WIPO, Paris Convention…)
Key consequence
The TRIPS have put an end to the right of developing countries to produce and/or import generics drugs, at low costs to satisfy the needs of the poor

58. Pharmaceutical Patents Regime under the TRIPS
2005 implies an entry in a comptely new world
- End of the transitionnal period for DC’s to comply with the TRIPS constraints
- Key event : the 2005 Amended Indian Patent Law
However : existence of some “flexibilities” in the TRIPS treaty
Some Articles (Art 28 to 31) states the right to use « compulsory licenses », especially in case of « health emergency »
Art 31f seems to prohibit the « imports » of generic drugs, even for the countries lacking of the technical capabilities required to produce the drugs localy
… but : the working of these clauses were never clarified in a satisfactory manner…
2001 and the “Doha Declaration” opens some room for DC’s and LDC’s but the Declaration has never been enforced as an international law (see Genova 2002)

59. Key features of the post 2005 period
As regards IP issues, the Post 2005 period is marked by a strong contradiction between
WHO´s High Level Decision and Gleneagles’ statements recommending “universal access by 2010”
… At a time when a series of changes make this goal especially difficult to reach
End of the transitional period of the TRIPS agreement (signed in 1994)
Spread of TRIPS + agreements …
Hence … the question addressed in this part of the presentation : are the TRIPS flexibilities “flexible enough” to secure access to care in DCs ?

60. Issues to be discussed Looking to the past : the Pre-2005 period
The post 2005 scene and the emergence of new IP issues
Using TRIPS flexibilities : lessons from case studies
Provisional conclusions

61. Looking to the Past : Procurement Policies in the Pre-2005 Period
: Transitional period allowing local production in developing countries
Doha 2001, WTO August 2003 Decision…
India and Thailand as the “Pharmacies of the south”
AAI policy of « preferential prices » for DC’s and LDC’s
… In a context where very powerful financing mechanisms were installed
GFATM, Pepfar, World Bank PAM,
The combination of generic supply + AAI + branded ARVs at negotiated prices resulted in … massive decreases in ARV prices (1st line)

62. Pre-2005 : A Spectacular decreases of prices The case of first Line Regimen (1/2)

63. Evolution of prices of ARV drugs in Africa
Lamivudine (3TC)
Benin
(GSK)
3.98 US$
Senegal
(GSK - AAI)
3.13 US$
Cameroon
(CIPLA)
1.36 US$
Source: ETAPSUD
ANRS / ORS-PACA / UMR-912

64. ARV procurement strategies in Sub-Saharan African countries
Source: ETAPSUD
ANRS / ORS-PACA / UMR-912

65. Innovative treatments : The case of the FDC “Triomune”
Today : (estimated) half of all patients on ARVs in developing countries depend on Indian generic ARVs
A major innovation : the fisrt FDC
More generally : a large spectrum of generic ARV available before 2005,
Most of them being now pre-qualified by WHO
India and Thailand as
« pharmacies of the South”
ADULT JUNIOR BABY
Cipla’s Fixed-Dose Combination
d4T/3TC/NVP

66. The post 2005 scene Changes in the legal context …
End of the transitional period (Amended Indian Patent Act)
Spread of “TRIPS plus” Agreements
Changes in the scale of population under ART…
Relevant increase in the number of patients under ART (3 millions in 2008)
Along with changes in the therapeutic recommendations (WHO) with inclusion of new much more costly ARVs, most often protected by patents (TDF, LPV/r…)
Rapid acceleration of people in need of 2nd and 3rd line treatments within the national therapeutic programs
yearly, 10 % of each cohort has to pass to 2sd line regimen
New hindrances to the Sustainability of HIV/AIDS Programs in Southern Countries

67. Impacts of the new legal framework on access to HAART
(1/2) The case of 1st line regimen’s prices

68. Impacts of the new legal framework on access to HAART (2/2) The budget surge for 2sd line treatment
x43
x17
Median price paid in 2007 by developing countries for the most commonly used second-line antiretroviral treatment (abacavir + didanosine + lopinavir/r), compared with first-line regimen (lamivudine + statuvidine + nevirapine)
Source: WHO´s Global Price Reporting Mechanism (2007)

69. Using TRIPS flexibilities : lessons from case studies
Understanding TRIPS Flexibilities
“Bolar Exception” for scientific use
Parallel Imports
Pre-Grant Oppositions
Compulsory Licenses  different alternatives provided by article 31 of the TRIPS agreement, including : Governmental Use, National Emergency, Public Interest …

70. Pre-grant opposition and Compulsory License what is it about ?
“documents and information intended to assist the examination may be filed by (any) interested persons between publication of the application and completion of the examination” Brazil’s legislation, article 30 of Law 9279/96
Issuing of Compulsory License
“ limited exceptions to the exclusive rights conferred by a patent, provided that such exceptions do not unreasonably conflict with a normal exploitation of the patent and do not unreasonably prejudice the legitimate interests of the patent owner” (article 30).

71. The case studies in a nutschel (1/2)
3 key drugs : EFV, TDF, LPV/r
3 major countries
India : 1st world provider of generics
Brazil : largest HIV programme in the South
Thailand : major producer of generics with large national programme of access to care
2 types of flexibilities
Pre-grant opposition (TNF)
Compulsory licenses (EFV, LPV/r)

72. The case studies in a nutschel (2/2) Post-2005 uses of TRIPS Flexibilities
Compulsory License
Thailand issues a CL on Efavirenz (2006)
Thailand issues a CL on Lopinavir/r (2007)
Brazil’s Compulsory License of Efavirenz (2007)
Pre Grant opposition
Thai´s Pre-Grant opposition to AZT+3TC patent application (2006)
India’s Pre-Grant opposition to Tenofovir’s patent application (2006)
Brazil’s Pre-Grant opposition to Tenofovir’s (2007)

73. Positive Outcomes Pre-grant on TDF (India, 2006, Brazil 2007)
Offers at lower prices from patent owners (the quality of the patent was known as poor)
… Surprisingly : US PTO in a recent move has negated some of the claims first granted
India (and Brazil) have refused to grant a patent to the drug
Compulsory licences
EFV
Many successive offers at lower prices by patent owners in different countries
Since feb 2007, already (in generic form) available in Thailand
Since March 2009, ditributed in Brazil
LPV/r still in process in Thailand

74. Positive Outcomes of the use of IP flexibilities : the case of EFV
Source: MSF (2007)

75. But serious limits too ….
Complex mechanisms…
Implemented always under high political pressure…
The case of Brazil 2006 (LPV/r)
India 2006 and 2007
Thailand
Subject to oppositions and litigations by patent owners
Mechanisms not available for countries lacking of technological capabilities…
Few uses, to date :
3 countries, 3 drugs only ! …
(even if used successfully in some “minor” countries)
Total impact on costs remains very modest

76. Questions arising from the case study on the use fo TRIPS flexibilities
Should the future of 3 millions people under ART (to morrow much more !...) be dependant of battle fought on judicial grounds ?
Need of innovative mechanisms guaranteeing the procurement of drugs, especially the new most innovative and efficient ones (2sd line, and switch to new 1st ones…)
More then ever creativity is required to put in practice the Doha Statement
“the TRIPS Agreement does not and should not prevent Members from taking measures to protect public health”

77. General Conclusion Preserve open science
Excessive tightness of the IPR regime even in the North
A real issue for global R&D and –perhaps - and its productivity
Opportunities in the light of the restructuring of the pharma industry
There are methods for softening the problem
expanding local markets through the construction of better health systems
Are size of the market and patent protection substitutable? Incentives and volumes of R&D expenditure
IPD, Manchester June 2009