Global Trends by Martin Khor

Monday 28 November 2005

Avian flu fear sparks chase for drugs

The warnings that a human-to-human type of avian flu is emerging that could affect millions worldwide have prompted many governments to stockpile a drug that can treat the disease.  However, supply cannot match demand, and there are renewed concerns over the role of patents in restricting access to badly needed medicines.

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The scare over the possible emergence of an avian flu pandemic has re-ignited the controversial issue of  patents being a hindrance to access to badly needed medicines.

Although there have been less than 200 cases of death from avian flu, all of these in Asia, the World Health Organisation has warned that a worldwide pandemic is imminent and that up to 7.4 million people may die from it.

Last month, at a specially called meeting in Geneva, the WHO warned that “indredients for a pandemic are abundantly available.”  If the avian flu virus combines with the human flu virus, a new pandemic flu virus would be formed that can be transmitted from human to human.

The drug, Tamiflu, is now recommended by health authorities for reducing the severity of avian flu H5N1 which infects humans.  It is now in great demand as governments are ordering this drug to stock it in case the pandemic emerges.

However, it is produced by only one company, Roche, which is unable to produce fast enough to meet demand.  The estimate is that it will take several years before the company can meet the present orders.

Moreover, the drug is quite expensive.  Thus, there is a near-crisis feeling developing among health authorities as they try to secure some stocks, in the fear that it would be too late to start ordering if and when avian flu breaks out in their countries. 

Many governments are now considering locally producing Tamiflu.  Roche says it will consider granting voluntary licenses to local producers to produce generic versions, but so far the terms of such licenses are not known and few, if any, companies have been given such licenses.

The Indian generic drug company, Cipla, has announced it is ready to produce cheap versions of Tamiflu and sell the drug to developing countries at a “humanitarian price.” 

It may however face opposition from Roche, which has applied for a patent for the drug in India.

According to various reports, many governments are looking at the possibility of issuing a compulsory license enabling a local agency or company to produce generic versions of Tamiflu.

Under the rules of the World Trade Organisation, a government can issue such licenses for local production or importation of a drug that is patented in the country, provided that compensation is paid to the company holding the patent.  The compensation rate can be around 4 percent of the price of the generic medicines, according to expert reports, including one published by the UN Development Programme.

Malaysia was one of the first developing countries to issue a type of compulsory license (known as government user order).  The license was issued last year for a local company to import three types of drugs to treat HIV-AIDS

The cost of the drugs was drastically reduced as a result of the use of the imported generic drugs, according to the Health Ministry.

Last week, the Taiwan government became the first to announce that it will issue a compulsory license to enable local production of Tamiflu, so as to build stockpiles of the drug to prepare for an avian flu pandemic.

“We are allowing the Department of Health to produce Tamiflu on its own or mandate a local company to produce the drug, but it must use up all Tamiflu which has already been supplied or will be supplied by Roche before starting to use its own supplies,” said Tsai Lien-sheng, director-general of the intellectual property office.

The compulsory license is limited to domestic use and limited to the end of 2007. The Department of Health must pay Roche “appropriate” license fees, and the compulsory license can be revoked once the two sides reach an agreement for voluntary licensing.

However, according to a Financial Times report, Roche had agreed to increase Tamiflu supplies to Taiwan to a level which made it unlikely that the government would have to tap locally-made stockpiles.  Taiwan has ordered courses of the drug to cover 4% of its population of 23 million by mid-2006.

The Department of Health will nevertheless start mass production of the drug as soon as it receives the compulsory license from the patent office.  It has documentation of already made small amounts of Tamiflu and trained two local companies in mass-producing materials for making the drug.

The action by Taiwan is likely to spark interest in other countries for local production of a medicine that is much in demand for obvious reasons.  The WHO has stated that  “on present trends, most developing countries will have no access to vaccines and antiviral drugs throughout the duration of a pandemic.’ 

According to Sanya Smith, a researcher based in Kuala Lumpur with the Third World Network, the owner of the Tamiflu patent, Gilead, has licensed the right to manufacture and market the drug to Roche.

The best price that Roche is offering is 12 euros per course of 10 capsules to developing countries. Averaging that out across the population at the WHO recommended level of stocks for 25% of the population, that is 3 euros per capita. The total government health expenditure in at least eight countries is less than that per year.

“Furthermore, according to the WHO, it would take Roche producing Tamiflu at full capacity for the next 10 years and stockpiling it for there to be enough at the end of that period for 20 percent of the world's population,” says Smith.

“Given the price and quantity problems, developing countries need to consider sourcing generic versions which can be 69 times cheaper. This is feasible both legally and practically.”

In light of the avian flu situation, Consumers International (CI) has also called on members of the WTO to review its intellectual property rules and practices to address public health problems.

This review should include an assessment of the medical threats to the public health that an avian flu pandemic, SARS (severe acute respiratory syndrome) or other
emerging health threats present, and an assessment of the degree to which WTO members have prepared for such cases, including the stockpiling of medicines for an avian flu pandemic or other important threats.

It should also look at the degree to which the WTO’s intellectual property treaty should be modified in order to ensure that effective measures are taken to protect the public from such emergencies, said CI.

As more cases of avian flu are reported, and the public’s concerns increase, we can expect more demands made on governments to ensure supply of the drug, and for local production or importation of cheap generic versions.