Globalisation and equitable access to essential drugs

While there are a number of factors, such as high cost, insufficient production, and lack of research and development, which have ontributed to denying equitable access to drugs to millions in the Third World, it is the international trade regulations arising from globalisation that may prove to be the biggest obstacle to such access. Ellen 't Hoen considers these impediments to access and suggests some new global approaches to overcome them.

ONE-THIRD of the world's population lack access to essential drugs. In the most impoverished parts of Africa and of Asia, more than half the population do not have access to essential drugs.1 Many effective remedies are and have for many years been out of reach to the people in developing countries. Because of globalisation and new international trade rules, the situation may even get worse in the near future, hence the need for new approaches to protect and further the basic human right to access to health care.

Lack of availability of essential drugs can have different causes, including logistical supply and storage problems, substandard quality, irrational selection of drugs, wasteful prescribing and use, insufficient production, insufficient drug research and development (R&D) and prohibitive cost. This paper will discuss access problems related to cost, insufficient production, lack of R&D and consequences of global trade regulation.

Essential drugs

The World Health Organisation (WHO) published the first Essential Drugs List (EDL) in 1977. Essential drugs are 'those that satisfy the health needs of the majority of the population; they should therefore be available at all times in adequate amounts and in the appropriate dosage form'. The first EDL contained 200 drugs. The EDL is revised every two years. The current list contains 306 drugs. The inclusion criteria for the EDL are proven safety and efficacy, well-understood therapeutic qualities and reasonable price or cost. Most of the drugs on the EDL are generic products: only around 15 are patented products.2 The essential-drugs concept has been for many years a key strategy to help improve access to essential drugs and contribute to improved health. Over 140 countries have adopted national essential drug lists and access to essential drugs has increased. There are, however, concerns that the gains will be lost because of the prohibitive costs of new essential drugs, lack of research and development for tropical diseases and the effects of new international trade agreements on drug prices and local manufacturing capacity.

Prohibitive cost of medicines

Because of prohibitive cost, a number of essential drugs are already not included in the EDL. All the AIDS drugs (except AZT for the prevention of mother-to-child infection) and certain new antibiotics are not included even when infectious diseases such as HIV and tuberculosis are responsible for a large proportion of deaths occurring between the ages of 15 and 59 years in low- and middle-income countries.3

The HIV/AIDS crisis shows an increasing gap in access to treatment between the developed and developing world. Eighty-three percent of the HIV-infected people in the world live in sub-Saharan Africa. The standard triple-therapy for HIV infection costs around US$10,000 per year. The per capita expenditure on drugs in the sub-Saharan region is approximately US$8.4 Treatment that has considerably increased the life expectancy of people with HIV/AIDS in industrialised countries is out of reach for almost all people with HIV/AIDS in developing countries.

Treatment of multidrug-resistant tuberculosis (MDRTB) in a developing country can range in cost between $8,000 and $10,000. Most countries do not have the resources to provide these treatments. The incidence of MDRTB will increase if the disease is left untreated; more people will die even though effective treatment exists and the disease will spread across borders.

Lack of production of essential drugs

The other side of the supply problem is the discontinuation of essential drugs because they are not commercially viable. This is the case with eflornithine (DFMO), used in the treatment of human African trypanosomiasis, better known as 'sleeping sickness'. Sleeping sickness is caused by a parasite transmitted by the tsetse fly and affects 30,000 people per year. In the advanced stage, the parasite affects the central nervous system. If left untreated, the disease will lead to death.

DFMO was developed in the mid-1970s as an anti-cancer agent by Merell Dow. In 1985 the effectiveness of DFMO in the treatment of sleeping sickness was established and development took place under a successful public/private co-operation project between WHO and Merell Dow during the 1980s. DFMO is the only treatment of proven efficacy for advanced-stage sleeping sickness and is on the WHO EDL. Because of lack of commercial opportunities, the company ceased production in the early 1990s. Five years ago Hoechst Marion Roussel (HMR), which had taken over Merell Dow, offered the technology, patent and commercial rights of DFMO to WHO. WHO has since then been involved in negotiations to make the product available again but to no avail.

Today the only existing DFMO vials are in the Medecins Sans Frontieres (MSF) drugstore in Kampala and will expire by the end of July 1999. HMR offered the remaining 200 kg bulk product for free but is no longer able to put the product in vials. WHO and MSF have offered to pay for this and are presently looking for a company that can put the product in vials. For the long term, there are no sustainable solutions yet for the production of DFMO.6

Lack of essential research and development

Under present systems for research and development of new drugs, there is a lack of commitment to product development in the public interest. Research and development for diseases found in developing countries is insufficient and has since the 1970s practically come to a halt. Between 1975 and 1997, out of 1,223 new chemical entities, only 13 (1%) are for the treatment of tropical diseases. Only four of these are the result of R&D activities of the pharmaceutical industry.7

Pharmaceutical investments focus R&D on products that may be attractive from a commercial point of view but which add little to therapeutic innovation. In the period 1981-1998, an assessment of 1,779 new drugs in France showed that only seven could be considered a real therapeutic breakthrough. In total, 1,043 were drugs that fell into the category 'nothing new' and were mostly 'me-too' products. A 'me-too' product is an imitation - a slightly modified molecule - of a successful product of a competitor brought out to secure a share of a particular segment of the market. It hardly ever provides significant new  therapeutic possibilities.8

The lack of essential R&D by drug companies poses the question: should the industrial agenda be set by the industry alone? The present situation calls for an international approach to essential medical research and development to ensure that the vast amount of financial resources used for new drug development will lead to the production of products that address real health needs.

Global trade regulation and access to drugs

Globalisation and international regulation of trade is becoming increasingly important for the health field. There are legitimate concerns about the effects of the World Trade Organisation (WTO) Agreement on Trade-Related Aspects of Intellectual Property (TRIPS) on access to drugs. TRIPS is the most important international agreement on the protection of patents, copyright and trademarks. TRIPS obliges WTO member states to provide a minimum term of patent protection of 20 years. Industrialised countries should have implemented the TRIPS Agreement by 1996, and developing countries by the beginning of this year. Least developed countries have to apply the provisions of the agreement by 2006.

Concerns about the effect of the TRIPS Agreement on access to drugs include the following:
* Increased patent protection will lead to higher drug prices, while the number of patented drugs of importance from a public-health point of view will increase in the coming years.
* The access gap between developed and developing countries will increase. A key question is whether developing countries should have to wait for 20 years before they can have access to innovations.
* Enforcement of the WTO regulations will have an effect on local manufacturing capacity and remove a source of generic innovative quality drugs on which the poorer countries depend.
* There is no reason to believe that the TRIPS Agreement will encourage technology transfer and R&D in developing countries; neither are there incentives or provisions to ensure that increased revenues will go towards the development of essential medical technologies.
* Industrialised countries will pressure developing countries to implement patent legislation that provides a higher standard of protection for the patent holder than under the minimum requirements of the TRIPS Agreement.

International trade and WHO

The concerns about globalisation and the effect of international trade agreements on access to drugs were raised at the World Health Assembly (WHA) for the first time in 1996 in a resolution on the Revised Drug Strategy (RDS). The WHA is the gathering of member states of WHO and the governing body of WHO. It meets once a year.

The Revised Drug Strategy was formulated in 1985 and adopted by the WHA in 1986 (WHA39.27). The RDS is a comprehensive policy to ensure equitable access to essential drugs of acceptable quality and to promote the rational use of drugs. It promotes the development of national drug policies and addresses all stakeholders. The WHO member states have reaffirmed their commitment to the RDS in a series of WHA resolutions and have made additions to the RDS to enable WHO to address current pharmaceutical issues.

In 1996 the WHA adopted a resolution on the RDS in which it requested the WHO's Director-General 'to report on the impact of the work of the World Trade Organisation (WTO) with respect to national drug policies and essential drugs and make recommendations for collaboration between the WTO and WHO.'

Trade issues were again on the agenda of the WHA in 1998. A draft resolution on the RDS proposed by the representative of Zimbabwe led to heated debate. The US fiercely opposed the resolution and claimed that WHO had no role to play in trade issues. The proposed resolution was not adopted and the issue was referred back to the WHO Executive Board. A major stumbling block was the proposed wording: 'urges Member States to ensure that public health interests rather than commercial interest have 'primacy' in pharmaceutical and health policies and to review their options under the TRIPS to safeguard access to essential drugs'.

The 1999 WHA adopted a revised resolution that strengthens the mandate of WHO in international trade affairs and asks WHO to study the effects of international trade regulation on health and to assist countries in implementing trade regulation while addressing public health needs and priorities.9

On the surface of it, the resolution may seem rather innocuous but it may have far-reaching consequences. Following the adoption of the resolution, Gro Harlem Brundtland, Director-General of WHO, said, 'When trade agreements affect health, WHO must be involved from the beginning. We need to analyse and monitor how new international agreements can support public health'. The spokesperson for the South African minister of health said: '... health  now  has  a  role  in  all international trade and finance agreements'.

The TRIPS Agreement sets out minimum requirements. It also provides options to incorporate provisions in national patent laws to ensure and increase access to drugs. The RDS resolution gives WHO the mandate to assist countries in developing or adjusting patent legislation in order to increase access to drugs and protect public health. Examples of such options are parallel imports of patented drugs and compulsory licensing.10

Parallel imports

Parallel imports are cross-border trade in a product without the permission of the manufacturer. It takes place when there are price differences for the same product in different markets. For example, the price of Glaxo Wellcome's AZT from international parallel importers varies from $124,95 to $53.50 per 250mg/40 cap. pack.11 A pricing study carried out by Health Action International in 1995 shows the following prices for Smithkline Beecham's Amoxicillan Amoxil: $8 in Pakistan, $14 in Canada, $16 in Italy, $22 in New Zealand, $29 in the Philippines, $34 in Malaysia, $36 in the USA, $40 in Indonesia and $60 in Germany.12 Malaysia could enjoy considerable savings if it buys Amoxil in Pakistan.

Parallel importing is the global version of shopping around for the best value. It is permitted under the TRIPS Agreements. Countries can decide whether they want to restrict parallel imports for certain products. Many European countries have significant parallel trade. Clearly it is not in the interest of developing countries at this point to restrict parallel imports of pharmaceuticals.

Compulsory licensing

Compulsory licensing refer to when a legal authority, for example a court or a government, grants a licence without permission from the patent holder. This may be done on various grounds of general interest, including public health. The patent holder receives an adequate remuneration. Compulsory licensing is a legal option that is consistent with the TRIPS (Article 31). In many countries compulsory licensing is part of the patent law. The French law, for example, authorises compulsory licensing when patented drugs 'are only made available to the public in insufficient quantities or quality or at abnormally high prices'.

Disputes over compulsory licensing

Opponents of compulsory licensing for public health reasons warn of its harmful effects on R&D for new medicines. According to an industry spokesperson, compulsory licensing presents barriers to innovative treatments needed by patients around the world.13 Harvey Bale, director of the International Federation of Pharmaceutical Manufacturers Associations (IFPMA), wrote to the e-mail list 'Treatment Access Forum': '... if anyone wants to kill incentives for further research into a targeted disease area (e.g., AIDS), then one of the quickest ways to do this is to institute a compulsory licensing regime for drugs that treat that disease.'

South Africa has been under pressure from the US to repeal its draft medicines law because it contains provisions for compulsory licensing and parallel import. Through these provisions South Africa aims at increasing access to essential drugs. South Africa has endorsed the TRIPS accord and the medicines law is TRIPS-compliant. If South Africa ever issues a compulsory licence, the US government could challenge the action before the WTO. This would be a fairer course of events than bilateral pressures and trade sanctions. The US foreign policy has led to a global campaign in which AIDS activists from Africa, Asia and the USA join forces to oppose the US government's policies. As a result the question of trade policies and access to life-saving medicines is high on the political agenda in the US.14

Compulsory licensing and parallel imports are no panacea and will not be useful at all, or not be useful in many situations or at a particular moment. Still these options need to be maintained and protected. Many countries are under tremendous pressure to remove provisions for compulsory licensing and parallel import from their legislation or to not incorporate them in new patent laws. WHO and the World Intellectual Property Organisation (WIPO) should play a strong role in providing technical assistance and advocating and protecting provisions in trade agreements that can be used to increase access to essential drugs. Dr Michael Scholtz, executive director, pharmaceuticals and medical technology at WHO, spoke the following encouraging words on access to essential drugs in March 1999: 'It is our mandate given by the WHA to assist Member States to implement TRIPS in consideration of public health concerns. This includes provisions for compulsory licensing as outlined in the agreement.'15

Access to drugs and commercial interests

Will greater access to drugs at lower prices affect commercial interests in such a way that the future of drug development is at stake? To answer this question, the following points need to be taken into consideration:
* In 2002 Africa will account for 1.3% of the entire world pharmaceutical market. South-East Asia and China will account for 5%.16 These markets are relatively unimportant from a commercial point of view. It is hard to see how providing drugs  - that were previously not purchased - at lower cost can harm the commercial interests of the pharmaceutical industry.
* The research and development costs for new drugs are high. However, consistent and reliable figures on the cost of developing a new drug are hard to come by. Estimates vary from $1.6 million - 4 million (NIH National Cancer Institute estimates from 1988), $2.3 million (US government tax credit office '94)17 to an estimate of $ 500 million by the IFPMA.18 The truth is that information about the costs of developing a new drug is shrouded in secrecy. Still, important policy decisions are made based on unreliable data.
* Although the cost of R&D is high, so are the profits and returns of the pharmaceutical industry. The pharmaceutical industry is one of the most profitable in the world. In 1997 total sales increased by 11.5% and accounted for $112.1 billion.19 The CEO of a UK-based drug company received a pay package in 199920 that amounted to more than the public spending on health in some least developed countries.
* Much of the real innovation is a result of extensive government efforts and public funding. This is true for many of the anti-AIDS drugs such as AZT, DDI and D4t.21
* Effective patent protection is a prerequisite for a successful, innovative pharmaceutical industry. Patents are used to restrict access to innovations in order to create economic incentives for R&D. But restrictions to access must be reasonable and not create a situation where large sections of a population are denied effective therapies.

Recommendations for the future

To ensure more equitable access to essential drugs in a globalised economy, new approaches are needed. Clearly, implementation of national drug policies to increase the rational supply, quality and use of medicines remains a basic instrument in public health policy. But national policies will be increasingly influenced by international agreements and the international market.

New global approaches are therefore needed:
* International trade agreements should be humanised and should be subject to health impact assessments. The protection of public health should have primacy over commercial interests. Future review of the TRIPS Agreement should seek to bring about an exceptional status for essential health care products. WHO's input into understanding and implementing TRIPS should be sought and its involvement in trade disputes with a health angle should be standard.
* Unilateral pressure on countries to adopt trade, patent or health legislation that is not in the public interest and is not legally required should be ended.
* Public health policy should include strategies to ensure the development of essential medical technology. Public policy should aim at shifting the focus of commercial R&D to addressing real health needs and encourage R&D for tropical diseases. National orphan drug policies should take the needs in developing countries into account.
* Alternative methods of world-wide sharing of R&D costs should be developed.
* The international community should take the responsibility to ensure the production of essential medicines where the market fails to do so.
* Reliable cost data on the development of new drugs should be made public.
* Industrialised countries should develop policies to make government invented drugs available to poor countries. WHO should spearhead a project on developing an international agenda for essential medical research and assess the impact of the WTO agreements on health, including access to drugs.
* WHO in cooperation with other UN agencies should consult with the academic medical community, consumer groups, and a wide range of industry groups to determine where compulsory licensing of medical technologies is needed to overcome market failures.22
To take these recommendations further, a strong, broad-based global advocacy movement for greater access to essential medicines, that includes WHO, is needed.  

 
Endnotes

1  WHO to address trade and pharmaceuticals. Press release WHA/13. Geneva, Switzerland: WHO 22 May 1999.
2  Scholtz M, Executive Director, Health Technology & Pharmaceuticals. Presentation at the Meeting on Compulsory Licensing of Essential Medicines. Geneva, 26 March 1999.
3  The World Health Report 1999. Making a Difference. Geneva, Switzerland: WHO 1999.
4   Velasquez G, Madrid Y, Quick JD. Health reform and drug financing. Selected topics. Health Economics and Drugs No.6. WHO Action Programme on Essential Drugs. Geneva, Switzerland: WHO 1998.
5  Information provided by Richard Stern, Director of the Asociacion Agua Buena in San Jose, Costa Rica by e-mail, 19 July 1999.
6  Pecoul B. Sleeping Sickness, After three years of negotiations. Medicines Dossier. Paris, France: Medecins Sans FrontiŽres 1999.
7  Pecoul B, Chirac P, Trouiller P, Pinel J. Access to Essential Drugs in Poor Countries. A Lost Battle? JAMA. 1999; 281:361- 367.
8  Enrichir sa panoplie therapeutique. Bilan de l' annee 1998. La revue Prescrire. 191;43:55. Janvier 1999.
9  Revised Drug Strategy. WHA52.19. 24 May 1999.
10  WHO has published key information for countries that are reviewing their patent legislation: Globalization and Access to Drugs. Perspectives on the WTO/TRIPS Agreement. Health Economics and Drugs DAP series No. 7 Revised. Geneva, Switzerland: World Health Organization 1999.
11  Pricing information from Informedica presented by James Love at the Technical Briefing at the 52nd WHA, Geneva, May 1999.
12  Balasubramaniam K. Dr. retail drug prices in the Asia-Pacific region. HAI News Number 86, December 1995.
13  Statement released by the IFPMA on the occasion of a meeting on ÔCompulsory Licensing and Access to Essential Drugs', 26 March 1999.
14  Campaign over drug licensing to grow. Financial Times 29 March 1999.
15  For additional information about intellectual property rights and health, visit: http://www.cptech.org/ip/health/ or http://www.haiweb.org
16  WWW.IMS-global.com/insight/report/global/report.htm
17  Love J. Call for more reliable costs data on clinical trials. Marketletter, 13 January 1997.
18  The Question of Patents. The key to medical progress and industrial development. '98 edition. Geneva, Switzerland. IFPMA: 1998.
19  IMS American Business Watch. May 1999.
20  Finch J. Record 93m package for boss of drugs firm. The Guardian 25 March 1999.
21  Mitsuya H, M.D., Weinhold K, Yarchoan R, M.D., Bolognesi D, Broder S, M.D. Credit government scientists with developing anti-AIDS drugs. Letter to the editor. New York Times, 29 September 1989.
22  This is in line with the 'Recommendations of the Trans Atlantic Consumer  Dialogue  (TACD) http://tacd.org/meeting1/dialoguehtml#pharmaceuticals.

Ellen 't Hoen is Coordinator, Globalisation Project of Medecins Sans Frontieres' Access to Essential Medicines Campaign.

(Aug-Sept 2000)