1. Setting the scene
In an age of unprecedented scientific advancement, it is unacceptable that vast segments of the world’s population lack access to essential medicines. Sadly, this is the current state of affairs, with only two thirds of the world’s population having regular access to essential medicines . In contrast, the World Health Organisation (WHO) estimated that 15 per cent of the world’s population consumed over 90 per cent of the world’s production of pharmaceuticals (by value) in 2007 .
Disparities in global access to medicine may be explained in relation to two factors: costs of drug development and patent protection. The discovery of potential drug molecules (candidate compounds) and their ultimate testing are costly as only about 20% of drugs that enter Phase I clinical trials ever make it to market . Pharmaceutical companies then recoup the costs of drug development by obtaining patent protection for their compounds.
A patent is “the right granted to an inventor by a State… which allows the inventor to exclude anyone else from commercially exploiting his/her invention for a limited period, generally 20 years” . Only after the patent has expired can production of low-cost, generic versions of the drug occur in countries where the drug patents were granted. As patents are sought at very early stages of drug development, the resulting period between a drug coming to market and patent expiration is a major hurdle for developing countries which cannot afford patented drugs.
Patents also affect the health policies of middle-income countries with the potential capacity to produce large quantities of medicines. This is because the granting of a patent generally renders the production of low-cost generic versions of that drug unlawful.
2. Three proposals
2.1 Essential Medicines Patent Pool (EMPP)
We propose creating the EMPP to cover all essential medicines that developing countries require. The EMPP is modelled on the existing Medicines Patent Pool (MPP) - a UN-backed public health organisation working to increase access to HIV, viral hepatitis C and tuberculosis treatments in low- and middle-income countries . The EMPP should incorporate all medicines on the WHO List of Essential Medicines.
The EMPP will involve pharmaceutical companies voluntarily assigning their patented drugs to the pool, so generic drug producers can be licensed to produce low-cost versions of patented drugs . To encourage pharmaceutical companies to join the EMPP, they will receive royalties from generic manufacturers.
The EMPP is primarily aimed at helping developing nations. It can be funded via UNITAID, an air travel tax which has been used successfully to fund the MPP .
Figure 1: A schematic overview of how the EMPP would work based on the MPP model.
The EMPP will ensure essential drugs are available even where their patents have not expired and their production by generic manufacturers was previously prohibited. This is particularly relevant to infectious diseases where causal agents can develop resistance to the first-line standard treatments: those drugs used in the first instance to treat disease are most often the oldest drugs. If resistance develops, treatment then requires the use of second- and third-line drugs . Indeed, the best price for second-line ARVs is 4.4 times higher than for first-line ARVs . This is because most second- and third-line drugs have been developed more recently, which means they still enjoy patent protection and are therefore more expensive. Such drugs are prime examples of medicines that should be included in the EMPP.
2.2 Patent law reform for middle-income countries
Reforming patent law in middle-income countries would allow such countries to take advantage of the flexibilities in the Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement . Through such reforms, middle-income countries with sufficient manufacturing capacity can produce their own low-cost versions of essential medicines. Proposed reforms include:
1. Stricter patentability criteria, thus preventing granting of patents for incremental innovation (minor changes to an existing drug) and reducing the number of patents granted annually;
2. Allowing governments to grant compulsory licences for the production of essential medicines that are still under patent protection, thus allowing generic versions to be manufactured; and
3. Allowing legal challenges to be made before drug patents are granted.
Such reforms are consonant with the 2001 Doha Declaration on the TRIPS Agreement and Public Health  which stated that TRIPS flexibilities should be interpreted with the aim of promoting ‘access of medicines to all’ . These include the ability to grant compulsory licenses, thus enabling generic drug production for that country before patents expire . Moreover, the World Trade Organisation (WTO) recognised that developing nations face “economic, financial and administrative constraints”  and thus extended the transition period for TRIPS-compliance to 1 July 2021  Both aforementioned measures have prevented a complete halt in the production of generic drugs for the short term, but have done little to increase access to medicines in countries that lack manufacturing capabilities in the long term .
2.2.1 India: A Case Study
Under India’s Patents Act 1970, patents were only offered for five years for manufacturing processes, not pharmaceutical products . This helped India become a leading generic drug producer, paving the way for other middle-income countries to reform their patent legislation and begin generic drug production .
As TRIPS came into force, India adapted its patent laws whilst maintaining provisions for compulsory licensing and restrictions on awarding patents for incremental modifications , as expressly allowed under TRIPS Article 31 . Compulsory licences allow governments to authorise the use of patented products without the consent of patent holders  and the Doha Declaration allowed countries the freedom to decide when compulsory licences can be granted .
Next, India placed restrictions on incremental modification, preventing them from being granted for slight changes to existing drugs that do not significantly raise their effectiveness. The Indian Supreme Court relied on such restrictions to deny Novartis a patent for their anti-leukaemia drug Glivec (Imatinib) . Indeed, the Indian Supreme Court case involving Glivec further reveals the usefulness of another provision in Indian patent law: the ability for anyone to challenge the granting of a patent . The ability to pose a legal challenge to patenting Glivec allowed for generic versions of the medication to continue to be produced in India for a fraction of the original price.
2.3 Essential Drugs Incubator (EDI)
2.3.1 How the EDI works
The EDI should be an international body under the WHO. It would be in charge of disbursing funding to start up research and development (R&D) teams worldwide that are seeking solutions to diseases neglected by existing pharmaceutical companies.
The start-up teams should receive a minimum sum to start their research, and further top-ups based on the subsequent social impact of their work. Social impact should be assessed using a weighted basket of quantitative and qualitative measures.
In exchange for the minimum sum and top-ups they receive, the start-up teams cede their patent rights to the EDI, which will function as a central registry for the drugs they produce.
In the short term, the EDI should be financed by state contributions and philanthropic donations, similar to the UN Global Fund to fight AIDS, Tuberculosis and Malaria. As more EDI drugs come on-stream, the EDI could rely increasingly on funds gained through auctions of licences for marketing and manufacturing. In these auctions, firms specialising in the marketing and manufacturing of drugs will be invited to bid for licenses to produce the drugs in the EDI registry. The prices of EDI drugs should be capped at affordable levels for their target populations.
2.3.2 How the EDI relates to existing proposals for reform
The EDI builds on three existing proposals for enhancing access to, and the development of, essential medicines.
First, consider the Developing Economies Fund for Essential New Drugs (DEFEND). DEFEND was to be managed by the WHO, and tasked with procuring licences to produce and sell generic drugs in developing nations . Pharmaceutical firms could then obtain returns linked to the proportion of patients helped globally.
The EDI builds on DEFEND in recognising that essential medicines are developed not only for developing economies, but also for diseases that are endemic across the globe. This is seen with Hepatitis C, which is common not only in Asia and Africa, but also in the US and the UK.
Second, there is the Health Impact Fund (HIF). Companies get a stake in the HIF if they agree to provide their drugs at cost price and are paid according to their addition of quality-adjusted life years (QALYs) . The HIF is to be financed by state and non-state contributions .
The EDI is structurally similar to the HIF, but transcends the HIF’s focus on QALYs by using a weighted basket of indicators for success. Moreover, the EDI suggests drug companies should focus on research or manufacturing, unlike the HIF which preserves the structure of pharmaceutical companies. Currently, most pharmaceutical firms focus on costly research along with manufacturing and marketing. This means increased costs associated with manufacturing and marketing in order to recoup research costs can be factored into drug prices. Since this makes drugs less affordable, firms should focus on research or manufacturing and marketing to increase access to essential medicines.
This leads us to consider a third reform proposal: the creation of a Drug Development Corporation (DDC) . Finkelstein and Temin propose legislating that all pharmaceutical firms divest their R&D functions so we end up with firms specialising in R&D, and firms focusing on manufacturing and marketing. The DDC would provide an interface between these two types of firms. It would collate drug portfolios from R&D firms, sell licences for generic production of drugs and give R&D firms royalties proportionate to the social impact of the drugs in question.
While the EDI seeks the outcome envisioned with the DDC, it does not do so by breaking up pharmaceutical firms, a move which will cause harmful disruptions. Instead, the EDI seeks to provide a credible alternative to existing pharmaceutical firms that cover both research and manufacturing. As the EDI’s portfolio of essential drugs grows, this should encourage evolution towards a pharmaceutical industry divided into research firms and manufacturing firms.
The EDI should serve as a complement in the long run to the reform of patent laws in middle-income countries and the EMPP, both of which can be implemented over the short to medium term. The implementation of the EDI is intended to encourage the restructuring of the pharmaceutical sector into research and manufacturing to promote greater efficiency and access to essential drugs.
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