Bringing Neglected Diseases Back to the Marketplace:
Encouraging a Pharmaceutical Industry Response
through Market-Driven Strategies
Mahbod Hosseinian
TABLE OF CONTENTS
Part I: Introduction ......................................................................................................................... 2
Part II: Defining the Problem .......................................................................................................... 5
Neglected Diseases ............................................................................................................. 6
Global Failure to Develop Treatment for neglected diseases ............................................. 8
Costs Involved in Developing a New Drug ........................................................................ 9
Part III: A Move Towards A Free Market Solution ...................................................................... 10
Public-Private Partnerships: The Social Venture Capitalists Approach .......................... 10
Drugs for Neglected Diseases intiative ............................................................................. 12
Back to the Marketplace ................................................................................................... 13
Part IV: The Relationship between TRIPS and neglected diseases ............................................. 14
Evolution of TRIPS........................................................................................................... 15
TRIPS and Neglected Diseases ......................................................................................... 18
Part V: Strategies for Promoting Innovation ............................................................................... 19
Existing Strategies ............................................................................................................ 20
Immunity to Compulsory Licenses ................................................................................... 21
Criticism: Ineffective Incentive ............................................................................ 22
Criticism: Hinders Access..................................................................................... 22
Exclusivity of Alternate Drug ........................................................................................... 23
Criticism: Prevents Access to Other Drugs .......................................................... 24
Criticism: Forced Charity ..................................................................................... 25
Biobanking ........................................................................................................................ 26
Summary of Strategies ...................................................................................................... 28
Part V: Conclusion ....................................................................................................................... 28
Bibliography ................................................................................................................................. 30
1
PART I: INTRODUCTION
Third world access to medicines is one of today’s foremost global concerns. Almost two
billion people have inadequate access to essential medicines whereby an improvement in access
could save ten million lives each year, four million of whom would be saved in Africa and South
East Asia.1 Developing and least developed countries are plagued by diseases such as HIV,
malaria, tuberculosis, and other diseases of poor, which not only hinders economic growth but
also constitutes a major humanitarian crisis. The inadequate health of third world citizens is a
result of factors such as poor nutrition, access to clean water, and shortage of medical personnel;
however, the problem is founded in the third world’s lack of access to affordable medicines.
One third of the world’s population does not have access to the most basic essential drugs, a
figure which increases to one half in the poorest parts of Africa and Asia.2
Third world medicine shortages can be attributed to inadequate infrastructure,
substandard drug quality, incorrect selection, inappropriate and wasteful use, and shortages in
production.3 This paper will investigate two additional factors that affect third world medical
access.
The main issue addressed is neglected diseases, defined as diseases with non-existent
treatments and insufficient market potential to attract pharmaceutical response.4 Neglected
diseases are discussed while taking into account another major element of the overarching
problem, the inaccessible price of existing medicines resulting from international patent
monopolies.
Syed Ahmed, “New But Not Improved: A Critique of Compulsory Licensing of Pharmaceuaticals for Exporte as a
means of Improveing Access to Medicises in the Developing World” (Osgoode Hall Law School, 2007) at 5
[Ahmed].
2
Ellen ‘t Hoen, “TRIPS, Pharmaceutical Patents, and the Accesss to Essential Medicines: A Long Way form Seattle
to Doha” (2002) 3 Chi. J. Int’l. L. 27 at 28 [Hoen].
3
Ibid.
4
“Fatal Imbalance: The Crisis in Research and Development for Drugs for Neglected Diseases”, online: Medicins
Sans Frontieres <http://www.msf.org/source/access/2001/fatal/fatal.pdf> at 11 [Fatal Imbalance].
1
2
The relation between accessible medicine and international intellectual property rights is
defined by The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). In
April 1994, TRIPS was established by the World Trade Organization to institute global
intellectual property reform. TRIPS mandates a global 20 year minimum patent on medicines,
giving developers a monopoly aimed at reimbursing them for their large investments.5 These
monopolies drive up the price of medicine, making them unaffordable for developing nations.
Although TRIPS includes a mechanism for countries to issue compulsory licenses in times of
emergency6, it is ineffective for the developing nations as they generally lack the ability to
manufacture their own drugs.
The negative impact of TRIPS on world health was acknowledged by the World Trade
Organization (WTO) at the 2001 Ministerial Conference in Doha, Qatar, where a declaration was
made that seemed to unequivocally recognize the primacy of public health over commercial
issues.7 The Doha Declaration led to the implementation of a system allowing countries to issue
compulsory licenses for export to eligible countries.8
While still in the early stages of
development, the new scheme represents a laudable step by the WTO to aid the developing
world9; however, this WTO humanitarian achievement fails to address the other leg of the
accessibility problem, neglected diseases. Pharmaceuticals still lack the incentive to develop
drugs for the poor.
Maxwell R. Morgan, “Medicines for the Developing World: Promoting Access and Innovation in the Post-TRIPS
Environment” (2006) 64 U.T. Fac. L. Rev. 45 at para. 20 [Morgan].
6
Annex 1C of the Marrakesh Agreement Establishing the World Trade Organization, 15 April 1994, Article 31,
online: WTO < http://www.wto.org/english/docs_e/legal_e/27-trips_04c_e.htm> [TRIPS].
7
Uche Ewelukwa, “Patent Wars in the Valley of the Shadow of Death: The Pharmaceutical Industry, Ethics, and
Global Trade”(2005) 59 U. Miami L. Rev. 203 at 205, [Ewelukwa].
8
Decision of the General Council of 30 August 2003, WTO Doc. WT/L/540, online: WTO
< http://www.wto.org/english/tratop_e/trips_e/implem_para6_e.htm>.
9
Ahmed, supra note 1.
5
3
Recently, the global failure to address neglected diseases has led advocates to take a step
back from the marketplace and the pharmaceuticals.
Since 1996, numerous public-private
partnerships have emerged, each one with a very specific mandate or disease it seeks to
eradicate.10 Using funding obtained from philanthropy and the public sector, these partnerships
utilize a venture capitalist approach to efficiently invest their funds in advance of their cause.
The 2003 establishment of Drugs for Neglected Diseases initiative (DNDi) represented a
complete shift from the marketplace. DNDi aims to independently develop drugs for neglected
diseases while primarily relying on the public sector and philanthropy for financial support.11
The purpose of this paper is to provide a preliminary analysis of the issues encompassing
neglected diseases and the potential for solutions within the marketplace. I will demonstrate that,
despite the fact that the international community has thus far failed to address neglected diseases
via the marketplace and the pharmaceuticals, those routes must not be abandoned. I posit that
the devastating effect of neglected diseases requires a sustainable solution outside of publicprivate partnerships and DNDi whose success is dependent on philanthropy and public sector
donations. While the pharmaceuticals currently have no incentives to cure neglected diseases,
using a combination of strategies pharmaceuticals can be motivated by the market to become a
sustainable agent in curing neglected disease. The TRIPS mandate must be adapted to induce,
rather than discourage, pharmaceuticals to invest into generally non-profitable drugs.
In
addition, innovative solutions such as utilizing the value of Biobanks must be fostered by
enacting property rights over one’s own biological tissues.
Craig Wheeler and Seth Berkley, “Initial Lessons from Public–Private Partnerships in Drug and Vaccine
Development” (2001) 79 Bull. World Health Org. 8 at para. 4, online: SciELO
< http://www.scielosp.org/scielo.php?script=sci_arttext&pid=S0042-96862001000800008> [Wheeler].
11
“Questions and Answers”, online: DNDi < http://www.dndi.org/> [DNDi Q&A].
10
4
The paper is divided into four parts. Part II introduces the issue of neglected diseases by
explaining its impact, the global failure to respond, and the costs that underlie the problem. Part
III begins with a discussion of PPPs and DNDi, their merits and shortcomings, and concludes
that any viable and sustainable solution must include the pharmaceuticals.
The nature of
pharmaceuticals must be realized and compensation for their endeavors must be provided by
means of market-driven strategies. Part IV reviews the evolution of TRIPS and the significance
of the 2001 Doha Declaration.12 Although the Declaration targeted access to existing medicines,
it demonstrated the flexibility of TRIPS in favour of public health, which sets the stage for
possible solutions. Part V presents a series of strategies and their respective criticisms.
Given the inherent moral urgency to improve the current situation, my approach in this
paper is strictly practical; analyzing the problem with an eye on feasibility and results, not ethics
and morality. With this paper, I hope to begin the discussion of issues pertaining to neglected
diseases and provide a starting point for further analysis.
PART II: DEFINING THE PROBLEM
As mentioned above, this section provides the landscape in which the subsequent
discussion will take place. To define the problem I provide a description of neglected diseases
and their impact, the extent to which these diseases are ignored and where the system fails them,
and the costs involved in developing drugs which is at the heart of the problem.
12
Declaration on the TRIPS agreement and public health, WTO Doc. WT/MIN(01)/DEC/2, online: WTO
<http://www.wto.org/english/thewto_e/minist_e/min01_e/mindecl_trips_e.htm> [Doha].
5
NEGLECTED DISEASES
Neglected diseases are defined as diseases which exclusively threaten a market
population that is too poor to provide the financial incentive that pharmaceuticals require to
perform research and development (R&D).13 Due to the low purchasing power of third world
populations, pharmaceuticals will not receive adequate return on their R&D investments in
neglected diseases. These diseases include malaria, tuberculosis, certain strains of HIV, and a
series of tropical diseases.
Malaria is present in over 50 countries, threatening half the world’s population.14 Every
year over 350 to 500 million are afflicted worldwide, killing approximately 1 million people15,
most of which are children and pregnant women in sub-Saharan Africa.16 Malaria is the number
one killer of children under five in Africa17, killing approximately 3000 children per day.18
Moreover, Malaria constitutes 10% of Africa’s overall disease burden.19 In addition to the
deaths, Malaria has a detrimental effect on the growth of developing nations. It is estimated that
the disease causes African nations $12 billion a year in lost GDP, although it could be controlled
for a fraction of that amount:20 “When a substantial proportion of a country's population is ill
with malaria for five or six months each year, sustained economic development is very difficult
to achieve.”21 Treatments for Malaria do exist, but over the past few decades the two most
13
Fatal Imbalance, supra note 4 at 11.
“Neglected Diseases”, online: DNDi <http://www.dndi.org> [DNDi ND].
15
Ibid.
16
Kelley A. Friedgen, “Rethinking the Struggle between Health & Intellectual Property: A Proposed Framework for
Dynamic, Rather than Absolute, Patient Protection of Essential Medicines”, (2002) 16:2 EmoryInt’l L. Rev. 689 at
690 (HeinOnline) [Friedgen].
17
“Malaria in Africa”, online: Roll Back Malaria
< http://www.rbm.who.int/cmc_upload/0/000/015/370/RBMInfosheet_3.htm> [RBM].
18
DNDi ND, supra note 14.
19
RBM, supra note 17.
20
Ibid.
21
Friedgen, supra note 16 at 731.
14
6
successful drugs, chloroquine or sulphadoxine pyrimethamine, have become increasingly
ineffective due to drug resistance, triggering the need for new drug development.22
HIV has a devastating effect on the developing world23, yet it is difficult to imagine HIV
as a neglected disease and thereby a subject to this analysis. However, the types of HIV found in
the developed and developing world are different.24 The drugs being developed are aimed at the
strains afflicting the developed nations25, thus the strains prevalent in the third world can be
deemed neglected diseases.
Tropical diseases such as Human African Trypanosomiasis (HAT or sleeping sickness),
Visceral Leishmaniasis (VL), and Chagas disease exist in markets so poor that it is believed no
amount of tinkering with market forces will likely lead to interest from pharmaceuticals26;
therefore, they are referred to as the most neglected diseases. HAT is fatal if left without
treatment, it infects 50 000 to 150 000 people per year, and puts 50 million people in subSaharan Africa at risk.27 VL is also fatal without treatment, it infects 12 million people, and
jeopardizes the health of 350 million people in poor, remote areas.28 Finally, Chagas disease is a
potentially fatal disease affecting 8 million people, with another 100 million at risk in South and
Central America.29 The existing treatments available for these diseases are inadequate as they
are expensive, difficult to administer, toxic, and/or ineffective.30
22
DNDi ND, supra note 14.
Hoen, supra note 2 at 1. HIV kills almost 3 million people per year in the developing world
24
Bradly J. Condon and Tapen Sinha, "Global Diseases, Global Patents and Differential Treatment in WTO Law",
(2005) online: Social Science Research Network <http://papers.ssrn.com/sol3/papers.cfm?abstract_id=664621>
[Condon]. The most common subtypes of HIV-1 (the most common HIV infection) occurring in Europe and North
America are subtype B, while in Africa the most common subtypes are A,C,D, and 02_AG (CRF02_AG).
25
Ibid. at 35.
26
Fatal Imbalance, supra note 4 at 11.
27
DNDi ND, supra note 14.
28
Ibid.
29
Ibid.
30
Ibid.
23
7
GLOBAL FAILURE TO DEVELOP TREATMENT FOR NEGLECTED DISEASES
The international community, including the private and the public sector, has thus far
failed to adequately address the diseases of the poor. From 1975 to 2004, 1556 new drugs were
marketed around the world. Of those new drugs, only 10 targeted the most neglected diseases or
18 if malaria is included.31 These diseases account for 12% of the global disease burden.32 In
comparison, 173 new drugs were devoted to cardiovascular diseases which accounts for only
11% of the global disease burden.33 Moreover, of the money annually invested in health related
research, only 0.2% is aimed at pneumonia, diarrhoeal diseases, and tuberculosis, yet these
sicknesses account for 18% of the global disease burden.34 In fact, of the $73 billion annual
health-related investments worldwide, only 10% goes to diseases that comprise 90% of the
global disease burden.35
Although pharmaceuticals represent a powerful potential to help eradicate the diseases
that paralyze third world development, due to market economics they lack the financial
incentives required to invest into neglected diseases. Developing countries constitute threequarters of the world population, yet they account for less than ten percent of the global
pharmaceutical market.36 The discrepancy is even more dramatic in Africa. In 1998, Africa’s
spending on medicine amounted to only 1% of the global spending.37
Pierre Chirac & Els Torreele, “Global framework on essential health R&D” (2006) 367 Lancet 1560, online: The
Lancet <http://www.thelancet.com/journals/lancet/article/PIIS0140673606686728/fulltext> [Chirac].
32
Fatal Imbalance, supra note 4 at 10.
33
Fatal Imbalance, supra note 4 at 10. The figures for cardiovascular drugs are for the years from 1975 to 1999,
thus the 173 new drugs is an underestimate of the true value.
34
Hoen, supra note 2 at 95.
35
“10/90 Report on Health Research 2003-2004”, online: The Global Forum on Health
< http://www.globalforumhealth.org> at 35 [GFH]. Measured in Disability Adjusted Life Years.
36
Hoen, supra note 2 at 28.
37
Michael Kremer, “Pharmaceuticals and the Developing World” (2002) 50 J. Econ. Persp. 67 at 70 (Jstor)
[Kremer].
31
8
COSTS INVOLVED IN DEVELOPING A NEW DRUG
The reason behind the shortage of new drugs directed at neglected diseases is lack of
compensation for enduring the high cost of developing safe drugs. Pharmaceutical companies
endure great costs, effort, and risks to develop novel drugs. The costs of R&D have increased by
147% from 1994 through 2003.38 It is estimated that the cost to develop a new drug runs
anywhere from $100 to $500 million.39 This process involves four steps: drug discovery, preclinical testing, clinical trials on volunteers, and FDA approval.40 On average, the whole process
takes 15 years.41
The development of drugs for neglected diseases generally fails in the
transition between drug discovery and pre-clinical research. On average, only 5 in every 10 000
compounds successfully complete these two stages. In addition to the cost, there is a great deal
of risk involved in development; only one out of every 10 000 compounds discovered is
approved as a safe drug by the FDA.42
Regardless of the costs, pharmaceuticals are very profitable. In 2007, there were 12
pharmaceuticals on the Fortune 500 list of most profitable companies.43
This introduces
opportunity cost as yet another factor which must be taken into account. When investing their
resources to cure neglected diseases, these companies are not only sacrificing expenditures in
R&D, they are sacrificing the potential discovery of the next “blockbuster drug” such as Lipitor
38
U.S., Government Accountability Office Report. New Drug Development: Science, Business, Regulatory, and IP
Issues Cited as Hampering Drug Development Effort (2006) online: Challenges in IP Course Page
<http://osgoode.yorku.ca/Quickplace/pinadagostino> [New Drug Development].
39
Fatal Imbalance, supra note 4 at 17.
40
New Drug Development, supra note 38 at 6.
41
Ibid.
42
Ibid., at 8.
43
“Fortune 500 Global 2007, Industry: Pharmaceutical”, online: CNNMoney
<http://money.cnn.com/magazines/fortune/global500/2007/industries/21/1.html>.
9
or Plavix which could individually profit large pharmaceuticals billions of dollars.44 Such
opportunity costs must be respected and considered in the assessment of compensation for
pharmaceuticals.
PART III: A MOVE TOWARDS A FREE MARKET SOLUTION
This section presents two types of initiatives that constitute a shift away from a marketdriven approach to drug development for neglected diseases. However, as the programs rely on
public funding and philanthropy for funding, they are not a sustainable solution.
pharmaceuticals must be part of the equation.
The
This section concludes with an assertion a
pharmaceutical response can be achieved through the marketplace and therefore such options
must be exercised.
PUBLIC-PRIVATE PARTNERSHIPS: THE SOCIAL VENTURE CAPITALISTS APPROACH
Between 1996 and 2000, three public-private partnerships (PPP’s) were established, each
setting out to develop treatment for HIV, malaria, and tuberculosis respectively.
45
These
partnerships focus on high-risk and high-cost projects by exploiting the venture-capital approach
to investing.46 Using a small management team, they screen potential projects for feasibility,
providing funds to selected projects while ensuring that the goals and assets of the investing
organizations match the goals and needs of the projects47. They fund projects involving forprofit organization in a manner that serves both parties’ agendas. For example, the International
“10 Most Profitable Drugs”, online: howstuffworks <http://health.howstuffworks.com/10-most-profitabledrugs.htm>. With respective annual sales of $12.9 billion and $5.9 billion, Lipitor and Plavix were the top earning
drugs of 2005.
45
International AIDS Vaccine Initiative, Medicines for Malaria Venture, and Global Alliance for TB Drug
Development.
46
Wheeler, supra 10 at para.3.
47
Ibid., at 23.
44
10
AIDS Vaccine Initiative (IAVI) gives relatively large grants to biotechnology firm but foregoes a
substantial equity in the firm. The firm retains rights to their products in the industrialized world
and the private sector of the developing world, however, IAVI has the right to transfer the
technology if the firm does not market the medicines at an affordable price in the public sector.48
The success of such partnerships has led to the launch of numerous other PPP’s49, which are
expected to produce eight to nine drugs by 2011.50
PPP are exactly the type of innovative approach required to solve the problem of
neglected diseases.
However, these partnerships are still dependent on philanthropy and
government donations for funding. They are innovative in the manner in which they spend their
funds. These funds may not be sustainable, however, especially when considering that a large
fraction is donated by a single source, the Bill and Melinda Gates Foundation.51
In addition, there is a funding gap of several hundred million dollars because existing initiatives
move into the more expensive stage of clinical trials.52 Also, even if the eight or nine drugs are
successfully developed, it is not enough to change the overall situation.53 Finally, PPP’s are at
least partially depending on the existence of appreciable market prospects in developed countries
to attract private interest54, thus PPP’s have a limited impact on the most neglected diseases.55
48
Friedgen, supra note 16 at 714.
Wheeler, supra 10 at para. 5. They include Leishmania Vaccine Initiative, Malaria Vaccine Initiative, Alliance
for Microbicide Development, Cooperative Research Centre for Vaccine Technology, Concept Foundation,
Epidemic Meningitis Vaccines for Africa, Hookworm Vaccine Initiative, and Sequella Global TB Foundation.
50
Chirac, supra note 31 at 1561.
51
Ibid.
52
Ibid.
53
Ibid.
54
Morgan, supra note 5 at para. 24.
55
DNDi Q&A, supra note 11.
49
11
DRUGS FOR NEGLECTED DISEASES INTIATIVE
In 2003, seven organizations56 joined forces to create a not-for-profit foundation that
could revitalize drug development as a public responsibility instead of a strictly market-driven
enterprise.57 DNDi has begun developing drugs for the most neglected diseases, HAT, VL, and
Chagas disease. Currently it has 10 drugs in the discovery stage, 4 in the pre-clinical phase, and
6 being tested in clinical trials.58 For the past five years, the funding for DNDi has been supplied
by Medecins Sans Frontiers (MSF); however, there is a shift towards receiving funding from the
public sector and private sources. DNDi’s strategy is to take the development of drugs for the
most neglected diseases out of the marketplace and encourage the public sector to take
responsibility.59 Breaking the tie to the marketplace is viewed as the only effective way to
advance R&D aimed at neglected diseases, especially for the most neglected diseases.
Although DNDi’s achievements are highly commendable, shifting away from the
marketplace foregoes the great resources of the pharmaceuticals. First, the large pharmaceuticals
have the financial means to ensure development progresses smoothly. If unexpected costs arise
at some stage in development, the pharmaceuticals can easily overcome them with no set backs.
The public sector is effective in discovering drugs but it is the pharmaceuticals that lead
development from pre-clinical trials to regulatory approval.60
“About DNDi”, online: DNDi
< http://www.dndi.org/cms/public_html/insidearticleListing.asp?CategoryId=87&ArticleId=288&TemplateId=1>.
The partners include the Oswaldo Cruz Foundation from Brazil, the Indian Council for Medical Research, the Kenya
Medical Research Institute, the Ministry of Health of Malaysia and France’s Pasteur Institute; one humanitarian
organisation, Médecins sans Frontières (MSF); and one international research organisation, the UNDP/World
Bank/WHO’s Special Programme for Research and Training in Tropical Diseases (TDR).
57
Valerie J. Brown, “Pharmaceuticals. Paying Attention to Neglected Diseases” (2004) 112:1 Environmental Health
Perspectives A24 (Jstor) [Brown].
58
“DNDi's Portfolio Map”, online: DNDi < http://www.dndi.org >.
59
DNDi Q&A, supra note 11.
60
Fatal Imbalance, supra note 4 at 20.
56
12
Second, the pharmaceuticals already have access to their own patents, which is
advantageous in the development of new drugs. The shear size of pharmaceuticals gives their
scientists access to a huge pool of patents, a privilege that DNDi simply does not have.
A third factor to consider is the issue of sustainability. The number of not-for-profit
organizations developing drugs themselves is limited.61 Furthermore, DNDi currently depends
solely on funds from the humanitarian organization MSF. To stay afloat it requires funding from
the public sector which could be inconsistent. Thus, we should not depend on DNDi to address
neglected diseases because if their public and charitable funding extinguishes, replacement
organizations will not fill the void.
BACK TO THE MARKETPLACE
The resources of pharmaceuticals must not be overlooked when solving the issue of
neglected diseases. Organizations that rely on donations may take great strides, but nonetheless,
they may not be sustainable and may not have the resources required to continuously meet the
medicine needs of the developing world.
They are “woefully under-funded in terms of
investment levels typically required to foster optimal levels of dynamic pharmaceutical
innovation.”62 We cannot become dependent on such schemes as our sole solution because they
could fall short of making substantial progress. While these organizations are doing their part,
strategies must be conceptualized and implemented allowing the market to naturally motivate the
pharmaceuticals to develop drugs for the third world.
Inducing a sustainable pharmaceutical response necessitates a complete accommodation
of the corporate bottom line, profits. The morality underlying the multinational pharmaceutical
61
62
Other than DNDi, I was unable to find any non-profit organizations developing medicines themselves.
Morgan, supra note 5 at para. 24.
13
companies is not at question in this paper; for better or worse, they are the most capable agents in
developing medicines and must be made part of the solution. The pharmaceuticals are simply a
product of the free market; if they do not please their shareholders they will be consumed by
their competitors.
The high cost of developing drugs is an unfortunate reality for which
pharmaceuticals are not at fault. Given their corporate nature, it is essential to regard them as
faceless bodies and set aside expectations of good will. A viable solution can only be attained by
accepting and respecting their needs.
A sustainable solution requires a market configuration that leads to a natural response
from the corporations. This is obviously an arduous task, illustrated by our historic inability to
achieve results, and the shift away from the marketplace (discussed above). Furthermore, as will
be discussed below, international laws have not provided a framework that fosters research for
neglected diseases. Despite all this, pharmaceutical response via the marketplace is possible.
The international community must implement new laws to indirectly compensate and encourage
corporate involvement. Moreover, a set of novel property rights should be developed to exploit
the current emergence of Biobank sciences. Individually, these strategies may not provide
reimburse pharmaceuticals for their R&D costs but a multifaceted approach utilizing a number of
them could be adequate. In the following sections I will elucidate the various strategies available
and give an assessment of their feasibility.
PART IV: THE RELATIONSHIP BETWEEN TRIPS AND NEGLECTED DISEASES
This section seeks to demonstrate how TRIPS and the Doha Declaration can advance the
neglected diseases cause. The 2001 WTO declaration set forth an initiative including provisions
that allow for compulsory licenses for export.
Such measures are a major step towards
14
improving access to existing medicines. Although, the provisions do not explicitly address the
issue of neglected diseases, they set forth a doctrine allowing for flexibility in the interpretation
and implementation of TRIPS to “promote access to medicines for all.”63 The underlying
objectives expressed in the Doha Declaration can be exploited to justify provisions promoting
the development of medicines for the poor. At the very least, they provide an illustration of the
WTO’s resolve to improve third world health conditions, suggesting the plausibility of the
strategies discussed in the later sections.
EVOLUTION OF TRIPS
In April 1994, TRIPS emerged from the Uruguay Round of Multilateral Trade
Negotiations that established the WTO64, setting out minimum standards for the protection of
intellectual property, effective in most of the developed and developing world.65 All WTO
Member states are obligated by TRIPS to provide patent protection for any inventions, in all
fields of technology, including pharmaceuticals. Protection must be granted for a minimum of
20 years from the date of filing, giving the patentee exclusive rights to prevent third parties from
making, using, offering for sale, selling, or importing for such purposes, a product that is the
subject of his or her patent.66
TRIPS underlies the world’s primary model for developing new medicines. Patent can be
viewed as instruments of social policy, serving as the primary incentive for the private sector to
invest into R&D, thereby generating long-term dynamic efficiency and economic growth.67 The
63
Doha, supra note 12 at para. 4.
“The WTO”, online: WTO < http://www.wto.org/english/thewto_e/thewto_e.htm>.
65
Friedgen, supra note 16 at 695-7. The agreement was signed by 117 nations, including India and Brazil which
until then had no phramaceutical patent protection, therefore their populations where provided with generic
medicine.
66
Morgan, supra note 5 at para.20.
67
Morgan, supra note 5 at para. 14.
64
15
pharmaceutical industry is particularly dependent on patent protection because of the immense
cost of developing new drugs and their vulnerability given the relative ease of reverseengineering those drugs.68
“Essentially, a bargain is struck between the patent owner and
society. In return for a limited period of monopoly granted to the patent holder, society gains full
disclosure of the new invention, which anyone can then copy upon patent expiration.”69 These
patents allow pharmaceuticals to manipulate the strong demand and limited supply with inflated
prices, offsetting the prior R&D expenses.
As mentioned, TRIPS is fiercely criticized for driving up the cost of essential medicines,
especially in poor countries in dire need of treatments. TRIPS came as a packaged deal with
WTO membership, resulting in inflated drug prices in developing countries least able to afford
them.
The agreement included provisions allowing for compulsory licenses in special
circumstances such as emergencies.70 However, as per section 31(f), compulsory licenses were
only allowed for domestic use of drugs71, rendering them useless to countries without the means
to produce drugs.
The prohibitive prices are arguably in violation of Article 12 of the International
Covenant on Economic, Social, and Cultural Rights, a treaty ratified by a majority of the United
Nations’ member states.72
1. The States Parties to the present Covenant recognize the right of everyone to the enjoyment of
the highest attainable standard of physical and mental health.
2. The steps to be taken by the States Parties to the present Covenant to achieve the full
realization of this right shall include those necessary for:
…(c) The prevention, treatment and control of epidemic, endemic, occupational and other
diseases;73
68
Ewelukwa, supra note 7 at 208.
Morgan, supra note 5 at 14.
70
TRIPS, supra note 6 s.31.
71
Ibid., s.31(f).
72
Friedgen, supra note 16 at 697.
69
16
Pressures from various sources, chiefly the UN Human Rights Commission and the WHO, led to
a reconsideration of the TRIPS mandate and the compulsory licensing scheme, which was
expressed at the November 2001 Ministerial Conference in Doha, Qatar.74
The Doha
Declaration on the TRIPS Agreement and Public Health represented a symbolic stride, affirming
the importance of global public health.
The Declaration begins with recognition of “the gravity of the public health problems
afflicting many developing and least-developed countries, especially those resulting from
HIV/AIDS, tuberculosis, malaria and other epidemics,”75 and stresses that TRIPS be “part of the
wider national and international action to address these problems.”76 Next, it recognizes the
importance of intellectual property rights for development of new medicines along with the
concerns about its effect on prices.77 Paragraph 4 boldly asserted the primacy of public health.
4. We agree that the TRIPS Agreement does not and should not prevent members from taking
measures to protect public health. Accordingly, while reiterating our commitment to the TRIPS
Agreement, we affirm that the Agreement can and should be interpreted and implemented in a
manner supportive of WTO members' right to protect public health and, in particular, to promote
access to medicines for all.
In this connection, we reaffirm the right of WTO members to use, to the full, the provisions in the
TRIPS Agreement, which provide flexibility for this purpose. 78
Paragraph 6 instructs the Council for TRIPS to find an expeditious solution to the section 31(f)
problem mentioned above.79 After two years of negotiations, an agreement was reached and
paragraph 6 was implemented, establishing a compulsory licenses for export scheme.80
73
International Covenant on Economic, Social, and Cultural Rights, 3 October 1975, 993 U.N.T.S. 3 (entered into
force 23 March 1976) online: UNHCHR
< http://www.unhchr.ch/html/menu3/b/a_cescr.htm>.
74
Friedgen, supra note 16 at 698.
75
Doha, supra note 12 at para. 1.
76
Ibid., at para. 2.
77
Ibid., at para. 3.
78
Ibid., at para. 4.
79
Ibid., at para. 6.
17
TRIPS AND NEGLECTED DISEASES
The patent system has been effective in developing treatments for global disease but has
failed to do so for neglected diseases.81 The 20 year monopoly can only recover R&D costs by
means of a market that can afford inflated prices; therefore, R&D for diseases that only affect
poor populations are financially unsound.
Neglected diseases, such as Malaria and
Tuberculosis, have received some attention due to a minor demand in wealthy countries82,
whereas, the most neglected diseases have yet to provide any incentives through the market.
Furthermore, patents often hinder innovation by placing limits on research knowledge.
Molecules that could be promising for the treatment of neglected diseases become inaccessible
for research.83
The recent provisions compelling licenses for export represent a great improvement in
terms of access medicines84; however, they do not address neglected diseases and arguably, they
thwart the cause. Compulsory licenses only affect pharmaceuticals rights to withhold existing
medicines. Furthermore, it is argued that compulsory licensing makes developing drugs for
neglected diseases even more unattractive because those drugs are more likely to be subject to
compulsory licenses. 85 Such an assertion is not supported by empirical data86, nevertheless, it is
an important concern for pharmaceuticals.
Frederick M. Abbott and Jerome H. Reichman, “The Doha Round’s Public Health Legacy: Strategies for the
Production and Diffusion of Patented Medicines under the Amended TRIPS Provisions” (2007) 10:4 J.Int.Econ. L
921 at 935 (LegalTrac). The agreement was in fact a rejection of an administratively simple solution sought by
developing nations, and instead an administratively complex solution was adopted as envisioned by the EU and the
United States. However, the practical merits of this plan are not discussed in this paper.
81
Morgan, supra note 5 at para. 13.
82
Ibid., at para. 9.
83
Fatal Imbalance, supra note 4 at 22.
84
There have been strong critism of the new regime allowing for compulsory licenses for export (see paper and
Abbott). However, for the purposes of this paper, the new regime is a great improvement in terms of access to
existing medicines.
85
Condon, supra note 23 at 37.
80
18
Although the Doha declaration and the subsequent implementation of its instructions are
only directed at access and not towards innovation, it did encourage a mandate that may justify
the implementation of new strategies promoting R&D. The general goals discussed above apply
to innovation as much as they apply to access. In paragraph 4, the declaration expresses the
importance of “protecting public health” and promotes “access to medicines for all.”87
Development of essential drugs is fundamental to both those objectives. Furthermore, as will be
explained in the following section, the language allows for the inclusion of cross border policy,
whereby one country may enact domestic laws to promote access in another.88 At the very least,
the Doha Declaration recognizes the primacy of public health over commercial interests and
demonstrates the flexibility of TRIPS in the pursuit of public health, which includes development
of essential drugs. “TRIPS is a reality that must be taken into account in any strategy to remedy
the gaps in access and innovation in developing world pharmaceutical markets.”89
PART V: STRATEGIES FOR PROMOTING INNOVATION
This section provides a series of possible market based strategies that can form part of the
incentive for a pharmaceutical response.
The two components of the issue of access to medicines are fundamentally different in
nature, which characterizes the respective solutions available. Access to existing medicines
generally requires rules that deny pharmaceuticals their rights to protect their patents in limited
86
Ibid. The risk of compulsory licenses has not deterred investment in the U.S. market where compulsory licenses
are permitted.
87
Doha, supra note 12.
88
This is demonstrated by Compulsory Licenses for Export as that regime essentially removes domestic protection
of patents for the benefit of another country.
89
Morgan, supra note 5 at para. 19.
19
situations. On the other hand, lack of R&D aimed at neglected diseases requires positive laws90
that are inappropriate in the free market economy. Therefore, the laws and strategies must
encourage R&D by providing incentives that currently do not exist.
EXISTING STRATEGIES
One strategy used to promote innovation in non-profitable fields is tax breaks. Tax
breaks are effective in promoting development if the targeted disease is located in the same
country as the developer.91 When the developer is located in a different country from the class of
individuals benefiting from the new drug, international agreements establishing a system of
reciprocity that grants tax breaks might be necessary.92 Currently there is no precedence for such
a system.93
R&D grants and advance purchase commitments (APC) are two donor-financed
strategies that directly award innovation. International and domestic R&D grants are push
mechanisms94 that motivate companies by providing money upfront. APC seeks to mimic the
real market by guaranteeing to buy the neglected disease drugs once developed; thereby, they
have the advantage of only financing drugs which are actually developed.95 The success of an
APC program is contingent on the commitments being credible and a sufficient quantity of drugs
purchased to make the endeavor worthwhile.96 Despite their simplicity, both R&D grants and
An example of positive duties is given in MSF supra (pg28). “Essential research obligations” are mandates
forcing pharmaceuticals to reinvest a percentage of sales into R&D for neglected diseases. Such a level of
regulation is highly unlikely in a free market economy.
91
Brian Su, “Developing Biobanking with an Oliver Twist: Addressing the Needs of Orphan and Neglected
Diseases” (2006) 66 La. L. Rev. 771 at 804 (HeinOnline) [Su].
92
Ibid.
93
Ibid.
94
The Public Private Partnerships discussed earlier are a subset of these push mechanisms.
95
Morgan, supra note 5 at para. 128.
96
Ibid., at para. 129.
90
20
APC are flawed because they require public donations or philanthropy for financing; therefore
they suffer from the same weaknesses as PPPs and DNDi.
IMMUNITY TO COMPULSORY LICENSES
Pharmaceuticals can be enticed to invest in neglected diseases if they are given immunity
within the compulsory licenses in exchange. Immunity would alleviate the negative impact of
compulsory licenses discussed earlier. There are several variations to this doctrine, including
immunity to domestic compulsory licenses and immunity to compulsory licenses for export.
Immunity to domestic compulsory licenses could be very beneficial to the
pharmaceuticals. When a country invokes their rights to compulsory licenses, the developer
stands to lose, even when considering that the developer must be compensated. There are
economic advantages to negotiating private licensing agreements as opposed to determining
compensation in court.97 Furthermore, immunity removes the threat of compulsory licenses.
Countries such as Brazil have used the threat of compulsory licenses to negotiate lower price on
drugs for their national programs.98 Immunity will likely be ineffective against compulsory
licenses in cases of emergency since most nations can enact new laws in states of emergency that
override previous obligations.
While compulsory license immunity may alleviate the inherent deterrent it creates for
pharmaceuticals, the immunity could specify limits regarding which countries can import drugs
so that only the most desperate countries are included. Furthermore, immunity could come with
the obligation to market the product at a reasonable price; not the price of generic drugs, rather,
simply less than the highly inflated drug monopoly prices. At a minimum, attaching limits and
Amanda Mitchell, "Tamilflu, the Takings Clause, and Compulsory Licenses: An Exploration of the Government’s
Options for Accessing Medical Patents”(2007) 95 Cal. L. Rev. 535 at 544 (HeinOnline).
98
Morgan, supra note 5 at para. 84.
97
21
conditions ensures that the compulsory licenses for export system will not hinder innovation of
neglected disease drugs.
Criticism: Ineffective Incentive
The first criticism speaks to the effectiveness of such an immunity to actually motivate
the corporations.
Given the fact that neglected diseases exist in poor markets, the
pharmaceuticals do not stand to lose anything if compulsory licenses are invoked, rendering
immunity valueless and providing no motivation for R&D: “drug development for neglected
diseases will not automatically increase, no matter how strong the level of intellectual property
protection.”99 Therefore, immunity to a mandate that could compromise such protection will not
increase development either.
In response, there are numerous neglected diseases that are somewhat present in rich
nations such as AIDS, malaria, and tuberculosis. These drugs could have potential markets in
countries that may exercise their rights to compulsory licenses, which would act as a disincentive
to develop the drugs in the first place. It follows that immunity to compulsory licenses would
remove this threat and consequently remove the disincentive. Granted, this reasoning depends
upon the existence of some market potential. Immunity to compulsory licenses is much less
effective to battle the most neglected diseases affecting a population with no market potential.
Criticism: Hinders Access
Immunity is also criticized for compromising access to essential medicines, which is
contrary to the overarching goal of public health. By protecting the pharmaceuticals’ restrictive
monopolies under all circumstances, we are in fact protecting their rights to make drugs
99
Fatal Imbalance, supra note 4 at 22.
22
inaccessible. Therefore, the scheme is in fact self-defeating, and possibly in complete conflict
with access to medicine.
In response, immunity is granted on drugs that are non-existent, and that would remain
non-existent without such incentives. Immunity is not being granted for drugs that would
otherwise potentially reach populations in need; immunity is being granted for drugs that would
otherwise not exist. Once the drugs have been created and the 20 year patent runs out, the people
in most need will finally have access to them. Despite the 20 year restrictive patent, this
situation is more advantageous when compared to a scenario where no drug is developed in the
first place.
EXCLUSIVITY OF ALTERNATE DRUG
Typical market exclusivity programs make it easier for pharmaceuticals to invest in high
risk, low return diseases.100 The U.S. Orphan Drug Act101 provides an example; by means of a
series of incentives, including exclusivity, the Act successfully promotes R&D for diseases
which are unattractive to pharmaceuticals because they impact a limited population.102 Market
exclusivity means that developers have a seven year exclusive marketing right on Orphan drugs
that are otherwise not patentable.103 However, market exclusivity could potentially drive up the
cost of drugs.104 Furthermore, the drugs being developed are for a population with no market
potential, thus market exclusivity would be worthless.
100
Su, supra note 91 at 805.
U.S., Bill H.R. 5238, Orphan Drug Act, 97th Cong. 2d session, 1983 (enacted).
102
Su, supra note 91 at 785-6. The Orphan Drug Act was enacted in 1983 to promote research into diseases
affecting less than 200 000 persons. By providing a series of incentives, including exclusivity for seven years, they
successfully increased innovation. Between 1973 and 1983 only 10 treatments had been developed for Orphan
diseases, however, between 1983 and 2003 the Act had encouraged the development of 1100 treatments.
103
William H.E. von Oehsen, “Orphan Drug Act on congressional agenda” Physician Executive (5 January 1989)
online: HighBeam Encyclopedia <http://www.encyclopedia.com/doc/1G1-8134773.html>.
104
Su, supra note 91 at 805.
101
23
A modified system of exclusivity could be implemented where a pharmaceutical is not
given market exclusivity of the neglected disease drug, but instead they are given market
exclusivity of a different non-patentable drug with a profitable market. In other words, in
exchange for investing into unprofitable diseases, they are given favourable treatment in a
different market on a different drug. Ideally, a wealthy country would grant the favourable
treatment, increasing the value of the incentive.
This modified exclusivity system requires developed world governments to enact laws
with a wider scope than is presently dictated by TRIPS. Such practice would not run contrary to
TRIPS because TRIPS only sets minimum protection standards.105
A country is free to
implement laws that protect drugs not covered under TRIPS.106 Details such as the length of the
exclusivity period and the extent of the protection it offers will not be discussed in this paper;
those elements require in depth research outside the scope of this paper. The strategy being
proposed is for governments in wealthy countries to provide market exclusivity for otherwise
non-patentable drugs, which would provide an incentive for the pharmaceutical to cultivate drugs
targeting the developing world.
Criticism: Prevents Access to Other Drugs
Exclusivity reduces access to drug or treatment which do not qualify under traditional
patent rules107, thus the system partially undermines the existing patent system and decreases
access to medicines. This strategy’s effect of lessening access raises the same concerns that were
Peter Drahos, “Developing Countries and International Intellectual Property Standard-Setting” (2006) 5:5 J.
World I.P. 765 at 789.
106
The exclusivity laws would be limited by the anti-competitive agenda.
107
Morgan, supra note 5 at para. 20. TRIPS requires patents for inventions which are new, involve an inventive step
and are capable of industrial application.
105
24
voiced in regards to the immunity strategy above; the strategy could run in countenance of its
main objective: increasing access to medicine.
However, this solution can be distinguished from immunity in that the neglected disease
drug is itself not subject to the exclusivity. The protected drug could be immaterial in terms of
public health. For example, the treatment could be cosmetic in nature or it could be one of
several viable treatments for an ailment.
Admittedly, the strategy is self-defeating if the
protected drug is an essential medicine. This introduces an additional element to the strategy; the
protected drug must not be essential.
In further response, the drug could target a wealthy market that could afford the increased
costs. This leads into the next criticism: why should wealthy populations bear the cost of third
world diseases?
Criticism: Forced Charity
Restricting access in developed world markets and thereby increasing costs, in effect,
passes on the cost of R&D for neglected diseases to the consumer. The consumer may not need
the protected treatment, but regardless, they are unwillingly required to spend more in support of
a foreign cause. It is not the responsibility of the developed world to finance third world
agendas.
The response to this consumer-shifting criticism pertains to all the strategies presented.
The moral question of “Who should pay?” is not addressed in this paper. Inherent in all my
arguments is that eradicating the detrimental impact of neglected diseases is paramount,
therefore the question I am answering is simply “Who will pay?”
I am working under the
presumption that the market will determine morality; if the consumer buys the medicine, they
must be able to afford it. Regarding the specific issue at hand, given that the medicine being
25
offered is not essential, the consumer has the freedom to choose whether to purchase the product
at the inflated price or to spend their money elsewhere. They are not suffering an injustice if
they freely opt to buy the luxury product.
BIOBANKING
Recent scientific innovation has actually created a situation where the pharmaceuticals
may need citizens of the developing world, giving those individuals leverage to spur R&D for
neglected diseases.
In Brian Su’s paper, “Developing Biobanking with an Oliver Twist:
Addressing the Needs of Orphan and Neglected Diseases”, a plan is proposed wherein neglected
populations can use the value of their own biological tissue samples as compensation for R&D. I
will briefly discuss this strategy to demonstrate how innovation could lead to solutions outside of
simple financial compensation. Also, such technological advances need to be supplemented with
innovative laws to effectively give poor people a voice.
Biobanks are the fuel for the emerging field of bioinformatics, which was formed by the
merger of information technology and genomics.108
This promising new field involves
biological information processing systems which “mine” genotypic and phenotypic data to
identify genes, model protein structure, and to discover drug targets.109
Bioinforomatics has
prompted demand for large collections of tissue samples, since each sample provides only a
small amount of data.110 Consequently, these tissue samples have become inherently valuable to
the pharmaceuticals, which could potentially supply the developing world with a bargaining
chip.111 PXE International, which represents a group of people afflicted with a rare disorder
108
Su, supra note 91 at 774.
Ibid.
110
Jocelyn Kaiser, “Population Databases Boom, from Iceland to the U.S.” Science 298:5596 (8 November 2002)
1158 (Jstor).
111
Su, supra note 91 at 775.
109
26
named PXE, is an example of a diseased group successfully harnessing the power of biobanks,.
The organization acquired over a thousand samples and only gave access to research aimed at
PXE, thereby using the biobank for the benefit of the donors themselves.112
For biobanking to effectively give poor people a voice there is a need for sound
international policy addressing issues such as ethics, exploitation, informed consent, and
privacy113. Another fundamental issue is the means by which the donors can guarantee R&D for
neglected diseases in exchange for their tissue samples. PXE International used contractual
property rights to ensure that donors received their end of the bargain114. However, contractual
rights can lead to uncertain results since contracts generally cannot be enforced against third
parties that may subsequently exploit the tissues.115 On the other hand, property rights over
one’s own biological tissue would be enforceable against the world116; the interest would be
vested in the donor thus their control over who can access their tissues would be protected.
As technology advances, we must develop laws that not only regulate such technology
but also supplement it to realize its true potential. Biological tissues are becoming increasingly
vital for the pharmaceutical industry, as such, laws must be enacted to protect the donor’s rights.
The new mandates must be quasi-property law to protect the physical tissue samples, but also
quasi-intellectual property law to protect the genetic data contained within the tissue samples.
Biobanking is a unique opportunity for the actual people affected by neglected diseases to create
incentives to pharmaceuticals; therefore, to encourage such potential, governments and courts
must be innovative and develop novel property rights to ensure the poor can take advantage of
their biological resources.
112
Su, supra note 91 at 779.
Ibid., at 792.
114
Ibid., at 793.
115
Dunlop Pneumatic Tyre Co. Ltd. v. Selfridge & Co. Ltd. , [1915] A.C. 847 at 853 (H.L.).
116
Su, supra note 91 at 793.
113
27
SUMMARY OF STRATEGIES
This section provided potential strategies that would encourage pharmaceuticals
investment into neglected diseases using market forces instead of charity. The strategies are in
their preliminary form, requiring R&D of their own. Once implemented, it is unlikely they will
individually provide sufficient compensation to entice R&D of new drugs. However, if they are
used in conjunction with other strategies, they could constitute a viable incentive to promote a
pharmaceutical response.
PART V: CONCLUSION
There is an urgent need to promote pharmaceutical involvement in the eradication of
neglected diseases. This paper aims to provide preliminary insight into the issues surrounding
neglected diseases and analyze the reasons why progress has been inadequate.
Recently,
initiatives serving neglected diseases have shifted away from the marketplace and the
pharmaceuticals. Such a trend is disturbing and signals the urgent need for the international
community to develop programs to prompt a pharmaceutical response through the market.
Pharmaceuticals are the only parties that have the resources required to significantly improve the
situation. We must accept the nature of the companies and compensate them for their R&D in
unprofitable diseases by providing market-driven sustainable programs that do not rely on
government funding or philanthropy.
The Doha Declaration provides a symbolic recognition by the WTO that public health
should prevail over commercial interests. The objectives ascertained in the Declaration pave the
way for a series of strategies which could help achieve substantive results. These include
28
provisions in our patent laws that give pharmaceuticals compulsory licensing immunity or
exclusivity for alternate drugs in exchange drugs for their participation in curing neglected
diseases. Furthermore, governments and courts may need to step outside the boundaries of
customary laws and create biological property rights that would supply the poor with a
bargaining chip to promote innovation. Considering the enormous cost of developing drugs,
these suggestions are not likely to provide adequate compensation by themselves, however, in
conjunction with each other they could suffice.
On October 4, 2007, Canada became the first country to give authorization to a generic
manufacturer to produce a patented drug for export under the WTO provisions of 2003117,
establishing Canada as a pioneer in the promotion of access to medicines. In a similar spirit,
Canada must lead the charge against neglected diseases, designing and implementing programs
that can finally cure these diseases of the poor.
WTO, News Release, “Canada is first to notify compulsory licence to export generic drug” (4 October 2007)
online: WTO < http://www.wto.org/english/news_e/news07_e/trips_health_notif_oct07_e.htm>.
117
29
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