Download the diversion of public health

THE BETRAYAL OF PUBLIC HEALTH
Intellectual Property Regime, Innovation and Access to Medicines
Guilhem Fabre 蒲吉兰
Le Havre University & EHESS China Centre (CECMC)
CASS-SHANGHAI UNIVERSITY, April 23-24, 2016
HISTORICAL PERSPECTIVE
• Property regimes have critical effects on
capital accumulation, harnessing of profits
and distribution of income
• Agrarian societies : property of land
• Industrial societies : property of fossil fuels
• Knowledge societies : property of ideas and
living forms.
THE U.S.A EXAMPLE
• Three of the four main export sectors
(aeronautics, audio-visual products, IT and
pharmaceutical industries) are based on
intellectual property rights (IPR)
• IT opens possibility to duplicate easily these
industries’ products: movies, software, drugs
The strategic role of IPR for TNCs
• With the globalization of markets, it becomes
crucial for TNC to control the use of their
products in emerging markets.
• Such control is realised through IPR which
becomes a key source of their profits.
• In the absence of IPR enforcement, counterfeiting
(the reproduction of a product without the
approval of the patent or copyright owner) wins.
• That is why IPR have been globalized with the
WTO TRIPS Agreement in 1994, inspired by Pfizer,
Dysney & Microsoft (among others).
IPR & PUBLIC HEALTH
• The globalisation of IPR raises challenges for
public health.
• The poorest countries, especially in Africa, are
unable to care for their sick patients with
medicines at the same prices as northern
countries.
• The HIV crisis exacerbated this problem during
the pandemic of 2005.
The HIV/AIDS CRISIS
• In the 1990s and the beginning of this century,
there were tensions between the push to respect
IPR, promoted by the TNC, and simple human
rights: acces to medicines at affordable prices in
case of a health crisis and high mortality rates in
poor countries (Africa and especially South
Africa).
• UN AIDS, WHO and many NGOs (Doctors Without
Borders, DWB) promoted the development of
generic medicines, which reduced morbidity from
HIV/AIDS
ACCESS TO GENERIC MEDICINES
& REDUCTION OF MORBIDITY
• The cost of HIV treatment declined from > $
10,000/year to less than $200/year, through
the production of generic medicines (India,
Brazil)
• In 2013, mortality due to HIV/AIDS declined by
35% compared with the peak of the pandemic
in 2005.
TNCs vs. NGOs & BRICS
• Two philosophies confront each other:
• (1) Big Pharma surrenders on the production of
generics for Least Advanced Countries (LAC), but
counter-attacks on the defense of IPR as a
« guarantee for R&D and pharmaceutical
innovation » while controlling the South-South
exchange of generics.
• (2) NGOs and southern countries (Brazil, India,
Thaïland) want to generalize the use of
compulsory licences for generic products.
IPR & PHARMA INNOVATION
• IPR are supposed to legitimate innovation, but
what is the real situation?
• Patented medicines have induced the high
growth of the pharmaceutical industry since
the 1960s.
• Based on a purely quantitative definition of
innovation (number of patented medicines),
most studies suggest that the trend is
constant and positive.
PHARMA INNOVATION IS RARE
• If we rely on other definitions, e.g. economic markers
(productivity of R&D, cost-effectiveness, market share),
patent rates and their subsequent citations, or therapeutic
value measures, the trend is not favourable in most of the
literature.
• 1975-2000: a study by P.E Barral for Aventis concluded that
only 10 percent of patented drugs represented a
therapeutic innovation.
• 1981-2002；2002-2012 : Prescrire Review concluded that
less than 10 percent of patented drugs represented a
therapeutic innovation and only 0.3% were entirely
satistactory. The trend declined in 2002-2012, with 0.2% of
patented medicines representing a breakthrough
innovation.
MOST INNOVATIVE DRUGS
WERE PATENTED BEFORE 2000
• Kesselheim & Avron, two Harvard scholars,
surveyed physicians in 15 specialities in 30
leading U.S academic medical centres to
identify the most innovative drugs approved
between 1989 and 2009, based on their
superiority over pre-existing ones.
• Only 4 drugs of the 21 identified (1/5) were
approved by the FDA in 2000 or later.
PUBLIC FUNDING & PHARMA
INDUSTRY SUPPORT
• Most of the transformative drugs were based
on R&D conducted by scientists in academic
medical centers, often supported by the
National Institutes of Health.
• Pharma industry collaborators sometimes
support the investigation stage, but always
support and manage the clinical stage.
R&D PRODUCTIVITY CRISIS LINKED TO
THE MAXIMALIST STAND ON IP ?
• Returns on R&D continue to decline. The cost
of drug innovation is systematically
overestimated by the pharmaceutical industry
to defend a maximalist view of IP
• In practice, public funding explains
breakthrough innovations, even if the pharma
industry is critical at the clinical trial stage.
THE PARADOX OF IPR
STRENGTHENING
• In the two major branches of today’s
technological revolution – biotechnology and
IT – where acquisition of knowledge is a
cumulative process and each innovation builds
on previous discoveries, the growth of IPR is
inhibiting the innovations that they are meant
to encourage (John Sulston, Nobel Price on
gene sequencing)
THE BIG PHARMA BUSINESS MODEL
UNDER THREAT
• The Big Pharma business model is funded on
IPR and sales volumes, especially for
«blockbuster», drugs whose sales exceed $US
I billion in the global market.
• The rise of generic drugs, the expiration of
many patented drugs and the growth of
emerging markets, most importantly in China,
threaten this model.
CHINA: THE #1 EMERGING MARKET
• The Big Pharma business model is founded on sales
volumes and payment of:
• 1. hospitals that manage the distribution of drugs
(15% on sales, which can fund 50% of their budget);
• 2. doctors who can double their relatively small
salaries (US $ 6,000/year in Shanghai)
• This business model is threatened after 2012, when
China surpasses Japan to become the second
prescription drug market after the USA
CHINA’s $ 150 BILLION DRUG BILL
• Of 400 essential drugs, half are distributed by
TNC at negociated prices.
• Only 10% are patented drugs; the rest are
branded drugs – much more expensive than
their generic versions which can be produced
locally.
• But the revenues of hospitals and doctors rely
on drug prices and sales volumes = absurd
(especially for antibiotics)
ANNUAL GROWTH OF CHINA’S DRUG SPEND
DECLINE FROM 20 to 5 PERCENT
DRUG SALES BY CITY SIZE
SALES OF TNCs ARE DECLINING
HEALTH CARE REFORM &
DEMOGRAPHIC CONTEXT
• The population aged 65+ will rise from 150
million in 2015 to 300 million in 2029.
• Hospitals’ revenues linked to drugs likely to
decline from 50 to 30 percent.
• The growth of Big Pharma is threatened by
negociated prices, generic production and
Chinese turn to innovation.
BIG PHARMA STILL HAS RECORD PROFITS
• From 2000-2011, Big Pharma profits attained
record levels (2 to 3 times the average of Fortune
500 firms)
• Some scholars explain these profits as arising
from «institutionnal corruption,» i.e. the capacity
of the Pharma lobby to influence the full chain of
its activities (from legislation in the US Congress,
to the scientific press, FDA and even doctors’ and
patients’ communication platforms)
LOBBY & TRADE AGREEMENTS
• The Big Pharma lobby has clearly influenced
the TPP and other regional agreements which
tend to replace the OMC with a TRIPS +
orientation.
• The TPP signed in 2016 between 12 countries,
after 8 years of secret negociations, contains
some maximalist provisions in terms of IP (5
year secret on clinical trials, 8 year secret on
biological innovation)
CONCLUSION
• The IPR Regime appears to have had stronger
effects on the profits of the Pharma industry than
on the pace of drug innovation.
• It has direct consequences on public health,
especially in emerging nations, through
restricting or increasing access to drugs
• A new balance has to be found between
innovation and health care, among northern and
southern nations, in order to finance innovation
and to all greater access to medicines.