Patents Must Serve the Public Interest

By Marcus Low, Treatment Action Campaign

Thousands of people in South Africa have drug-resistant tuberculosis (TB). Many of them will die slow, horrible deaths. Many of those who live will struggle with severe side effects during the up to two years of daily pills and injections. Some, like 23-year old Phumeza who spoke at our press conference last week, will live, but lose their hearing.

Linezolid, made by the pharmaceutical company Pfizer, is one of the few drugs that is reasonably effective in treating drug resistant TB. It is currently sold in South Africa at an unaffordable R676 per pill in the private sector and must be taken for up to two years. Médecins Sans Frontières (MSF) would like to treat 300 DR-TB patients in Khayelitsha with linezolid, but can only afford to buy the drug for 22. Right now, MSF doctors are in the terrible position of having to decide who gets to take the drug and who doesn’t.

Linezolid is not particularly expensive to make. A generic version is available in India for a mere R25 per pill. Had South Africa been able to import the Indian generic, MSF would likely be able to treat all 300 patients in Khayelitsha who need the drug. However, mostly because of South Africa’s outdated patent laws, we cannot import the Indian generic, nor is there any workable way in which we can force Pfizer to drop the price. The only option open to MSF so far has been to ask Pfizer to reduce the price – a request to which Pfizer has been indifferent.

On September 4th the Department of Trade and Industry (DTI) released South Africa’s much-anticipated Draft National Policy on Intellectual Property (IP) for public comment. This policy could in time provide us with the legal tools to deal more effectively with issues like the lack of access to linezolid. The policy is not just about TB though, it will also impact the ability of medical schemes to pay for their members’ cancer or heart disease medicines. But as always, the intricacies of patent law quickly become highly contested ground. Given the consequences this policy could have on healthcare in South Africa and the affordability of National Health Insurance, it is essential that this is not just a debate between industry lawyers, but between people from all sectors of the health system and society more widely.

The policy will lead to the first substantial intellectual property law reforms in decades. It provides an opportunity to recalibrate the existing framework to better serve the public interest. Section 27 of the Constitution places an obligation on the state to take reasonable legislative measures to ensure the progressive realisation of the right to access healthcare – forcing us to consider the impact this policy process will have on people’s daily lives. Legally, we cannot allow this process to be hijacked by narrow economic interests.

The draft policy explicitly acknowledges that access to healthcare must be considered when developing patent law. The drafters understand that earlier access to generic medicines, like the Indian generic of linezolid, is in the public interest. This is a major step in the right direction – for which the DTI must be commended.

This kind of rebalancing of the patent system is nothing new – and South Africa is by no means the first country to take these steps. Under international law (the WTO’s TRIPs Agreement) all countries are able to protect the right to health. There are a whole host of safeguards deliberately built into the system that aim to balance the rights of patients with the private interests of patent-holders.

Other developing countries like India, Brazil, Argentina and Thailand have led the way in proactively incorporating these WTO-sanctioned safeguards into their national laws to protect public health. Yet it is not only patients who benefit – these legal safeguards also promote local generic manufacturing. That is in part why India is in a position to supply roughly 80% of the medicines used in Africa. The industry versus patients frame in which the patent debate is frequently presented is misleading. Since the majority of the South African pharmaceutical industry makes generic medicines; both industry and patients stand to gain from legislation that enables quicker access to cheaper generic medicines.

Without doubt the economic interest of large multinational companies is to secure as many patents as possible. Here the debate becomes more nuanced. In our view, and according to the draft policy, patents should only be granted for medicines that are truly new and innovative. Of course you deserve a patent if you invent a brand new cancer cure. Neither the DTI nor we at the TAC are disputing that. However, as in other developing countries, we should stop granting patent monopolies for every reformulation or new use of an existing medicine. This process of ‘evergreening’ is a tactic used by the pharmaceutical industry to continually extend their patent protection by making minor changes to existing drugs. On top of high prices a further implication of this is actually to reduce the incentive to develop truly new medicines by offering hard-to-resist income streams for less risky, but also less innovative investment in ‘ever-greening’. In short, the incentive for making yet another cholesterol drug that is about as good as all the others is currently much greater than the incentive to develop the kind of drug that would have prevented Phumeza’s hearing-loss.

Apart from setting the bar for patentability higher, the policy also seeks to make it easier to override patents (through compulsory licensing) where the public interest demands it. Of course some will argue that if we, for example, use legal mechanisms to override a patent like that on linezolid, then we’ll undermine the incentive for companies to invest in researching new medicines. Had pharmaceutical companies spent say 50% of sales on researching the kind of medicines the world needs, then this argument may have been compelling. In reality, major multinationals spend on average less than 8% of sales on R&D in 2010 – and much of that is spent on making reformulations or on churning out yet more variations on existing hypertension or cholesterol drugs. If patents are to serve the public interest, we must make it less enticing for companies to waste billions on developing me-too drugs, marketing them, and litigating and lobbying to maintain the regulatory status quo.

The recent Novartis case is telling on the question of funding R&D. According to Knowledge Ecology International (KEI), Novartis invested between US $38m and $96m developing their cancer drug Gleevec but a much greater investment was made with US public research funds. Gleevec is a new formulation of an existing cancer medicine and the patent was therefore rejected in India. Novartis unsuccessfully fought this battle all the way up to the Indian Supreme Court demanding that they deserved a patent to recover their R&D costs – this while making US $4.6billion from Gleevec in 2012 alone, recovering their entire investment every 13 days. Surely, while some cancer patients can’t afford the drug, such profiteering can not possibly be in the public interest.

Furthermore, commonly made threats that more progressive patent regimes lead to disinvestment are merely a cover for this underlying need to maximise profits. Despite India’s progressive patent laws  according to The Economic Times, India realised US$1 billion of foreign direct investment from April-June 2013. By contrast, South Africa’s experience has been largely opposite. Since adopting U.S. style patent laws in the late nineties, 37 pharmaceutical plants owned by foreign multinationals have shut down. Instead choosing to move operations to regions with cheaper labour and production costs.

At the time of the landmark Gleevec decision, Novartis still had 146 patents in India. So even in the most progressive legal framework the vast majority of patents are upheld. Whatever the victim rhetoric from big pharma, the truth is that the United States, Europe, and the pharmaceutical companies that they represent won the war over patents when the TRIPs Agreement was signed, locking all WTO members into granting 20 years of patent protection. What India, Brazil (with their current reform Bill) and others have achieved is to bring some nuance and sensitivity to the blunt and indiscriminate instrument that the rich world wants intellectual property to be. Our Constitution demands we follow their example.

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