The Future of DFID's Programme in India - International Development Committee Contents


Written evidence submitted by Stop AIDS Campaign

INDIA, ESSENTIAL MEDICINES AND THE FTA—A TECHNICAL DETAIL THAT PUTS MILLIONS OF LIVES AT RISK

The UK's critical role in securing a safe and sustainable supply of affordable, essential medicines from the Indian generic pharmaceutical sector for India and the developing world:

  • India's generic pharmaceutical industry supplies vital, life-saving medicine to its own people and the whole of the developing world. It provides 80% of anti-retrovirals treating people living with HIV in Africa,1 making the global AIDS response possible.
  • Free Trade Agreement negotiations between India and the EC, which are nearing completion, threaten to ramp up restrictions on intellectual property and strangle this industry and its vital supply of life-saving drugs, putting millions of lives at risk.
  • Strong leadership from the UK government across DFID, the FCO and BIS is essential to protecting the "pharmacy of the world".

CONTEXT

1.  India is home to a third of the worlds poor.2a Nutrition levels are worse than most Sub-Saharan African countries.2b It is estimated that there are 2.4 million Indians living with HIV,2c the third largest population of any nation. The country lies in 119th place in the Human Development Index—just two places above Swaziland and only seven above the Congo.2d India has incredible development challenges and the UK has a critical role in tackling them—particularly through their support to effective multi-lateral agencies such as the Global Fund to Fight AIDS, TB and Malaria. However, this submission will focus less on the detail of the problems facing India and more on the vital role India's generic pharmaceutical industry has come to play in overcoming public health challenges across the developing world through the production of essential medicines.

INDIA'S ROLE IN SUPPLYING ESSENTIAL MEDICINES

2.  The history of the expansion of access to life-saving HIV treatment is defined by the impact of generic competition, largely between Indian companies, on the price of anti-retroviral drugs. In the case of HIV, that generic production has forced prices from over $10,000 per patient per year down to less than $70.3 This effect has been mirrored in other diseases. India has worked hard to comply with international trade laws and protect public health needs.

3.  A recent study showed that at least 80% of people on anti-retroviral (ARV) treatment for HIV across Africa were taking high-quality, affordable generic drugs legally produced in India.1

4.  Incredibly, a third of the world's entire population lack access to the medicines they need—rising to 50% in parts of Asia and Africa. In developing countries, medicines account for 60-90% of household expenditure on health.4 Supply of essential medicines is a critical public health issue, and the only proven way of supplying low cost, high quality drugs is through generic competition.

India and TRIPS

5.  The production and sale of essential medicines is shaped by the regulations of the World Trade Organisation (WTO). When India joined the WTO, as a developing country, it was given until 2005 to comply with a central aspect of WTO regulations—Trade Related Aspects of Intellectual Property Rights (TRIPS). TRIPS grants 20 year patents on all newly developed products, including drugs. Before this time India's national law did not give patent protection to pharmaceutical products and so India was able to legally produce and supply generic versions of essential medicines to its own people and people across the developing world, giving rise to the title "the pharmacy of the world".

6.  Competition between generic drug manufacturers drove down the prices of essential medicines. The cost of AIDS treatments which were produced before 2005 and so not affected by TRIPS, reduced by more than 99% from US$ 10,000 per patient per year in 2000 to under US$ 70 today.3 These dramatic price reductions facilitated the huge increase in anti-retroviral coverage across Africa and Asia. A recent study found that more than 80% of donor-funded purchases of AIDS medicines from 2003 until 2008, were sourced from producers of affordable generics in India.1

Graph 1

COMPETITION AS A CATALYST FOR PRICE REDUCTIONS.

The fall in the price of first-line combinations of stavudine (d4T), lamivudine (3TC), and nevirapine (NVP), since 2000. This dramatic price drop was possible because of competition among multiple generic manufacturers in countries where these drugs were not patented, such as Brazil, Thailand and India.3

Prioritising public health whilst respecting TRIPS

7.  Generic drugs under manufacture in India before 2005 were not affected by the application of TRIPS. However, from 2005 and the enforcement of TRIPS, newer, more effective drugs would not be made available to the world's poor through the Indian generic industry as they would fall under the new patent regime. This is particularly important for people living with HIV, as the virus becomes resistant to treatment over time and new drugs are needed to keep the patient healthy. Several HIV/AIDS medicines, including Etravirine ($913 per patient per year) and Raltegravir ($1,113 per patient per year) have already been patented in India, blocking the production of more affordable generic versions.5

8.  However, India prioritised public health through the creation of legislation that respected the conditions of TRIPS, but only granted patents on a drug when it was considered to be truly innovative and showed improved therapeutic effect over existing medicines. This meant that a new patent could not be licensed on a new medicine just because of a change in dose or concentration, or for combining two drugs into one pill. This is important for two reasons. Firstly it ensures that incremental improvements in the efficacy of HIV drugs can be accessed by people across the developing world. And secondly, it protects against "evergreening", the tactic employed by pharmaceutical companies to extend the length of a patent on a drug by making small changes to its formulation as it reaches the end of the original patent protection period.

9.  This legislation has therefore ensured people in the developing world, including India, have access to many essential medicines they otherwise would not have done. This law, however, has been attacked by originator pharmaceutical companies who have been battling in the Indian courts to overturn Indian's pro-poor patent laws.

10.  Access to ARV treatment in India has substantially declined since the introduction Trade-Related Aspects of Intellectual Property Rights (TRIPS) in India in 2005, meaning many people are already unable to access the medicines they require. The Delhi Network for Positive People (DNP+) stated that they have already noticed that the "patents in India on Cancer, HIV and Hepatitis medicines are making treatment expensive for newer therapies for these diseases."6

11.  As more time passes and increasing numbers of drugs fall under the new TRIPS regime in India, the supply of affordable medicines to the developing world will become increasingly difficult to sustain. Despite this threat, further restrictions on the ability of India to produce affordable generic medicines are being pushed through in the EU-India FTA.

PUSHING BEYOND TRIPS

12.  The term "TRIPS-Plus" is used to describe constraints imposed upon a country which go beyond what they are required to do under TRIPS. Generally these terms are imposed in bi-lateral negotiations where the developing country is in a weaker negotiating position and is forced to accept conditions it would ordinarily reject.

13.  Since late 2006 the European Commission, representing the UK, has been in negotiations with India over a Free Trade Agreement. The negotiations cover a raft of policy areas and regulations including border controls, migration and economic policies. The draft text also includes a number of clauses related to intellectual property.

14.  Negotiations are expected to conclude in the coming months. The draft text, if implemented, would lead to the imposition of additional "TRIPS plus" constraints on India, threatening the vital supply of Indian medicines. Text relating to Data Exclusivity and other terms are technical details that could put the lives of millions at risk. In these negotiations and across the UK's development, trade and diplomatic relations with India, the protection of the supply of affordable, essential medicines must be assured.

The EU-India Free Trade Agreement

15.  The clause in the EC-India FTA which poses the greatest threat to the generics industry is known as Data Exclusivity, and has been defined by leading experts, including the WHO, as being a "TRIPS-Plus" constraint. Indeed, western governments pushed for its inclusion in TRIPS during the original negotiations but it was explicitly rejected.

16.  According to evidence given by the Centre for International Trade and Sustainable Development to the UK All-Party Parliamentary Group on AIDS, and included in their 2009 "Treatment Timebomb" report on the threats to a sustainable supply of anti-retroviral HIV drugs, Data Exclusivity for pharmaceutical products is the TRIPS-Plus term which has the worst impact and represents about 90% of the medicine cost increases predicted as a consequence of the imposition of TRIPS-Plus terms.7

17.  Data Exclusivity is one of three main aspects of the Free Trade Agreement between the EU and India that could seriously affect access to essential medicines for the developing world, along with injunctions and intellectual property in the investment measures.

Data Exclusivity

18.  Inclusion of Data Exclusivity would lead to monopolies of up to 10 years on medicines that do not qualify for a patent under India's current legislation. Currently generic manufacturers carry out relatively inexpensive bioequivalence tests to prove that their product is the same as the original drug. They can then point to the results of the original clinical trials to prove the efficacy and safety of their product. Data exclusivity prevents generic manufacturers from relying on existing clinical trial data to register generic versions of medicines, stating that those who pay for the data have the exclusive right to use it. Without registration, a medicine cannot be marketed. Data exclusivity therefore acts as an effective ban on generics until the period of exclusivity ends.

19.  The only way around this ban would be to require generic producers to generate their own clinical trial data, which would not only be prohibitively expensive, but also unethical, as it would mean repeating trials for drugs already proven effective, and withholding life-saving medicine from the "control group". Data exclusivity is particularly dangerous because it can apply to drugs that do not merit a patent under India's law—if the final text of the FTA includes Data Exclusivity, even if a drug was not found to merit a patent, only the originator company would be allowed to produce for a period of up to 10 years, thereby maintaining the monopoly and completely undermining the public health flexibilities in India's patent law.

20.  As an example, a patent on Nevirapine syrup to treat children living with HIV/AIDS was rejected by the Indian patent office, allowing generic producers to begin manufacturing right away. If Data Exclusivity had been in place, they would have had to wait up to 10 years to be able to start producing this drug, even though it did not deserve a patent.

Injunctions

21.  One of the EC's demands is to introduce the mandatory use of court injunctions. When a patent or trademark dispute emerges between a generic and a patent-holding company, this would mean that the production of drugs by the generic manufacturer would have to stop, even before a case for infringement has been heard in court. The courts would therefore not be allowed to balance the constitutionally-enshrined right to health and access to medicines against the economic harm and compensation due to the rights holder if the case is proved.

Intellectual Property (IP) in the Investment Measures

22.  The EC has failed to clarify whether it is seeking to have IP included in the investment measures of the FTA. This would open a whole new arena for litigation as soon as India adopted any regulation, injunction, administrative decision or legislation that favours patients over profits. In February 2010, Philip Morris, the tobacco company, filed a case against Uruguay under a Switzerland-Uruguay Bilateral Investment Treaty in order to challenge Uruguay's decision to increase the size of warning labels on cigarette packets. Philip Morris argues that these measures infringe their trademarks and hamper their competitiveness in the Uruguayan market. The case is ongoing. This is a clear example of how companies can use a bilateral investment treaty to challenge government decisions related to public health on grounds of IP infringement.

THE IMPACT ON INDIA AND THE WORLD

23.  These measures, in particular Data Exclusivity, would clearly act as barriers to affordable essential medicines produced in India. The impact has already been seen in other countries following similar FTAs. Although the results of an FTA between the EU and India cannot be predicted without using an effective economic model, studying the impact of TRIPS-Plus measures on other developing countries demonstrates what are highly likely to be the consequences of such an agreement.

Jordan

24.  Jordan is, like India, a Lower Middle Income Country. A study conducted by Oxfam in 2007 called "All costs, no benefits: How TRIPS-plus intellectual property rules in the US-Jordan FTA affect access to medicines" sets out the impact of this FTA, which introduced five years of Data Exclusivity onto any medicines filing for a licence in Jordan. The impact has been stark:

  • Medicine prices increased by 20% since 2001.
  • Data exclusivity delayed generic competition in 79% of medicines newly launched by 21 multinational pharmaceuticals between 2003 and 2006.
  • Anti-diabetes medicines are now up to 800% more expensive than in neighbouring Egypt where no FTA has been agreed and generic competition is not restricted.8

Thailand

25.  In 2004-05, the International Health Policy Program (IHPP) and the Ministry of Public Health, Thailand, with support from the Fiscal Policy Research Institute Foundation, Ministry of Finance, carried out a study on the impact of the Thai-US Free Trade Agreement on health expenditures and access to essential medicines in Thailand. The magnitude of the impact and additional expenditures was calculated by comparing the prices of innovative, patented drugs with that of generics. This study found that the inclusion of Data Exclusivity, which essentially acts as an additional patent, would have significant impacts on health expenditure in Thailand and access to essential medicines in the country. The main findings from the study concluded:

  • Competition between generic drug manufacturers with TRIPS plus measures would be 35% lower, drastically increasing the overall price of essential medicines.
  • Data Exclusivity would create an additional cost of $260million for the 42 top selling medicines in Thailand in 2003.
  • Data Exclusivity would create a three to seven fold increase in total expenditure on ARV treatment specifically.9

26.  The introduction of TRIPS-Plus provisions in India would have serious implications for the public health of the sub-continent. We can expect to see the price of essential medicines drastically increase due to the lack of competition between generic drug manufacturers and access to appropriate medicines reduce. The National AIDS Control Organisation (NACO) in India has demonstrated that the price of ARV drugs for one patient for one year is reduced by Rs 2,000 with the presence of competing drug manufacturers.10 With nearly 2.5 million people in India living with HIV, this is a saving which could run into tens of millions of pounds.

Beyond India

27.  A study by Waning et al in 2010 measured the role of Indian generic manufacturers in supplying antiretroviral medicines to developing countries. This study found that Indian generic manufacturers "dominated the ARV market, accounting for more than 80% of annual purchase volumes." For specific forms of ARV treatment, the Indian generic manufacturers accounted for between 89% and 91% of the global purchases in 2008. Furthermore, 96 out of 100 countries purchased generic medicines produced in India in 2008, including many countries in sub-Saharan Africa with a high prevalence of HIV. This is because Indian-produced generic ARVs were significantly less expensive than non-Indian generic medicines. The conclusion of this study was simple:

28.  Indian generic producers supply the majority of ARVs in developing countries. Rather than agreeing to inappropriate intellectual property obligations through free trade agreements, India and its trade partners—plus international organizations, donors, civil society and pharmaceutical manufacturers - should ensure that there is sufficient policy space for Indian pharmaceutical manufacturers to continue their central role in supplying developing countries with low-priced, quality-assured generic medicines.1

29.  It is critical India is able to continue supplying high-quality, affordable medicines to the developing world. This study clearly demonstrates the impact the FTA, including Data Exclusivity, would have on India and its role as the pharmacy of the developing world. This agreement would not only impact India's public health or people in need of ARVs, but also millions of people in the developing world in need of live-saving medicines that they can only access through India's generic drug industry.

THE EC'S WEAK DEFENCE

30.  The EC has claimed that it will ensure that the details of the FTA will not harm access to medicines, however no impact assessments have been conducted to show how the new rules being proposed would affect generic production or medicine prices and availability. Furthermore, as was seen in the case of Jordan, and other countries that have agreed to Data Exclusivity, the evidence points to extremely negative outcomes.

31.  The EC Trade Commissioner, Karel de Gucht, has claimed they are taking a number of steps to protect the generic production of medicine, but MSF have clearly highlighted how these moves simply will not address the problems created by the inclusion of TRIPS-Plus terms such as Data Exclusivity in a briefing entitled "The Truth Behind the Spin".11 Specifically, the EC has claimed that the FTA will not impact on the issuing of compulsory licences for patented medicines—a right India has under TRIPS. However, this ignores the fact that Data Exclusivity would have the greatest impact on the medicines which are not granted a patent. India's patent law protects only truly innovative medicines—Data Exclusivity is specifically designed to counteract this and would block generic production even if the medicine doesn't warrant patent protection. Data Exclusivity is a direct attack on India's public health-protecting patent system.

32.  There is a track record of western governments reassuring developing countries that TRIPS-Plus terms will not have a negative impact. The US stated that TRIPS-plus measures would have a positive impact on access to medicines in Jordan in a variety of ways. The US claimed it would encourage foreign direct investment (FDI), spur local research and development and encourage pharmaceutical companies to launch innovative products. None of these things have come to pass.

33.  The reality of the FTA is that the EC is pushing intellectual property rights restrictions on India far beyond what India is required to accept under international law. These terms will be detrimental to the health of the people of India and the whole developing world in order to protect the interests of European companies. Simply put, the EC must drop its demands for inclusion in the FTA of all TRIPS-Plus terms, including Data Exclusivity.

QUESTIONS FOR THE UK

"Reducing the costs of drugs could enable savings that could fund access to life-saving treatment for an additional one million people every year, even without new resources. DFID, Achieving Universal Access"

"The UK's Strategy for Halting and Reversing the Spread of HIV in the Developing World" 2008.

"In these difficult, economic times donors have a double duty, a responsibility to achieve maximum value for money: not just results but results at the lowest possible cost."
Andrew Mitchell, speech given at Carnegie Endowment, Washington DC, Friday 25 June 2010

34.  The current economic climate means there is more pressure than ever to prove our development aid is being spent effectively and efficiently. It is critical, therefore, that we are getting value for money in our investment in treatment for people in the developing world. Without the price reductions generic competition has generated, we would not have been able to scale up coverage to HIV medicines. Supporting steps which will demonstrably lead to increased prices of essential medicines, putting them out of the reach of poor people across the world is in total contrast to our government's stated development aims, aside from being completely inhumane.

35.  Generic competition—largely driven by Indian companies—has forced down the price of generic ARVs from $10,000 in 2000 to just $70 today.3 If we spent our money buying the lowest priced originator first line ARV available today—a price which has only been driven down to its current level because of generic competition—we would still treat five times fewer patients than we could if we spent our money on the best priced generic version.3a

36.  Beyond India the imposition of TRIPS caused much controversy as the reality of the restraints it placed on countries' ability to access the drugs their people needed became clear. In 2007, Thailand came under extreme pressure from the USA and Abbott to retract a compulsory licence for a vital heat-stable ARV, Kaletra. Thailand were acting perfectly within their rights, but, in part, it took the support of then Secretary of State for International Development, Hilary Benn, who spoke out in defence of Thailand's actions, to get the USA and Abbott to back down and allow Thailand to utilise its legal rights. DFID has historically played a vital role in speaking up for the rights of countries to access the medicines their people need. Such a voice is crucial today.

37.  Without a sustainable supply of high-quality generic medicines from India the prospect of achieving the health MDGs, already vastly under-funded, will quickly become fantasy.

38.  Whilst protecting generic medicine production in India is clearly in the best interests of the people of the developing world and key to efficient development interventions, it is in the interests of pharmaceutical corporations to shut it down as much as possible.

39.  In February 2011, the Department for Business, Innovation and Skills announced that it would focus the UK's economic recovery on expanding trade with the developing world, with Business Secretary Vince Cable specifically highlighting how crucial the EU-India FTA was to their plans.

40.  The government are yet to clearly state their position on the inclusion of TRIPS-Plus terms in the FTA, but have emphasised the need to balance public health needs with the rights of businesses to protect their intellectual property, and that the UK will do so on a "case-by-case" basis depending on the level of development of the country.13 This however, gives the government a large amount of room to manoeuvre.

41.  Recent revelations in the Wikileaks cables suggest that, whilst the UK has in the past been publically opposed to TRIPS-Plus conditions, there are internal differences of opinion between departments. Notes from a meeting in 2007 between US officials and officials from the UK Department of Health and the Intellectual Property Office indicated that the UK "broadly agrees with the US position" on Intellectual Property and health. They had sought to keep IP issues off the agenda of the World Health Organisation, but that the third member of the UK delegation to the WHO, DFID, who were not represented at the meeting, "might have differing views".12 This internal dissonance could clearly be a factor in the formation of the UK government's current position on IP issues with India.

Key questions must be answered by the government:

  • What is the UK's formal position on the inclusion of TRIPS-Plus conditions in bi-lateral agreements? Will the government use its position within the EC to make a strong stand against conditions which will impact the supply of affordable generic medicines?
  • Have they confirmed that the UK position is understood by the EC negotiators and what steps have they taken to ensure it is adhered to?
  • In the specific case of India, what is the UK's position on Data Exclusivity, and how have they assessed its potential impact on health across the developing world?
  • Is there any internal difference in policy across Whitehall to these issues?
  • Which department has seniority in such matters? How are differences of opinion resolved, decisions reached, and what evidence is used to inform a government wide opinion?
  • Have the UK considered how the global community will meet the increased cost of supplying essential medicines to the developing world if this FTA is signed with terms that shut down generic supplies of medicines?

CONCLUSION

42.  Without urgent leadership from the UK the ongoing EU-India Free Trade Agreement negotiations will be finalised with the inclusion of text which will block access to essential medicines for millions of people in India and across the developing world. These terms are being included for the good of pharmaceutical profits at the expense of the lives of the world's most vulnerable. They are unnecessary and immoral and should be resisted.

43.  DFID's role in protecting the production of generic medicines in India is vital.

44.  It has a significant international leadership role to play in speaking up for the rights of developing countries to fully utilise their rights to exploit legal flexibilities in international IP law for the good of their people's public health.

45.  DFID must lead the resistance against the imposition of TRIPS-Plus terms on developing countries.

46.  DFID must ensure that the public health of millions of people across the developing world is at the centre of the UK Government's trade, development, and diplomatic relationship with, and policies towards, India.

This paper was prepared utilising the extensive resources of key partners including MSF and Oxfam.

REFERENCES

1  Waning, B, Diedrichsen, E, Moon, S, (2010): "A lifeline to treatment: the role of Indian generic manufacturers in supplying antiretroviral medicines to developing countries." Journal of the International AIDS Society: 13: 35.

2a  World Bank Databank, https://data.worldbank.org/
siteresources.worldbank.org/IDA/Resources/.../IDA_AT_WORK_India.pdf

2b  Deaton, A and Dreze, J 2008, Nutrition in India, Fact and Interpretations.
http://weblamp.princeton.edu/chw/papers/deaton_dreze_india_nutrition.pdf

2c  http://www.unaids.org/en/regionscountries/countries/india/

2d  http://hdr.undp.org/en/statistics/

3  Medecins Sans Frontieres. 2010. Untangling the Web of Antiretroviral Price Reductions. [Online] Available at http://utw.msfaccess.org/ [Accessed 11 February 2011].

3a  Calculated using figures taken from the above report—lowest available first line generic ARV in June 2010 was $67, lowest available originator $331. The originator is 4.94 times more expensive than the generic.

4  DFID Factsheet, Jan 2006 http://www.aidsportal.org/repos/atm-factsheet0106.pdf

5  http://www.msfaccess.org/fileadmin/user_upload/diseases/hiv-aids/World%20AIDS%20Day%202010%20Background%20FINAL.pdf

6  Don't Trade Our Lives Away. 2011. DNP + letter to WHO on impact study on IP provisions in the India-EU FTA. [Online] Available at
http://donttradeourlivesaway.wordpress.com/2011/01/26/dnp-letter-to-who-on-impact-study-on-ip-provisions-in-the-india-eu-fta/#more-1489 [Accessed 11 February 2011].

7  Treatment Timebomb Report of the Inquiry of The All Party Parliamentary Group on AIDS into long-term access to HIV medicines in the developing world. July 2009
http://www.aidsportal.org/repos/APPGTimebomb091.pdf

8  Oxfam International. 2007. All costs, no benefits: How TRIPS-plus intellectual property rules in the US-Jordan FTA affect access to medicines. [Online] Available at
http://www.oxfam.org/en/policy/bp102_jordan_us_fta [Accessed 11 February 2011].

9  World Health Organisation Regional Office for South-East Asia (WHO), (2006) Impact Assessment of TRIPS Plus Provisions on Health Expenditure and Access to Medicines in South-East Asia. Bangkok. Available at http://203.90.70.117/PDS_DOCS/B2072.pdf [Accessed 11 February 2011].

10  AIDS Support Group. 2011. HIV Vaccines and ART Therapy. [Online] Available at http://aidssupport.aarogya.com/hiv/hiv-vaccines-art-therapy.html [Accessed 11 February 2011].

11  Medecins Sans Frontieres. 2010. The Truth behind the spin: How the Europe-India Free Trade Agreement will harm access to medicines. [Online] Available at http://www.msfaccess.org/resources/key-publications/key-publication-detail/index.html%3ftx_ttnews%5Btt_news%5D=1651&cHash=34b8fda4d1
[Accessed 11 February 2010].

12  The Telegraph. 2011. UK Agrees with US approach to upcoming WHO intergovernmental working group on public health, innovation, and IP. [Online] Available at http://bit.ly/h2dZ1z [Accessed 11 February 2011].

13  Letter from DFID Parliamentary Under Secretary of State for International Development, Stephen O'Brien MP, to the Stop AIDS Campaign January 2011.

30 March 2011



 
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© Parliamentary copyright 2011
Prepared 14 June 2011