Pharmaceutical companies have become the pioneers of health care innovation, providing new therapies to diseases that remained untreated. As a consequence of this innovation, pharmaceutical companies have used the patenting process to hold a monopoly on their ideas and product so that they might recoup their investment in research and development. Because of these patents, drugs have increased in price and many citizens of developing nations are unable to afford therapies that they need. Members of these developing nations have challenged the World Trade Organization to allow for developing nations to ignore patent rights during a time of public health crisis. This article addresses the balancing of public health and patent rights.
Emergence of Pharmaceuticals in America
Health is an important social and economic asset to our global society. Illnesses not only affect the person who is diagnosed but also their families and society. The healthier a society, the more productive it is. Before America became an industrialized society, individuals were forced to rely on medical treatments from the local medicine man. Often these treatments were not successful at curing the illnesses of the patients and patients were often left with death wishes. During the late 19th century, an emergence of pharmaceutical chemistry and pharmacology led to the establishment of pharmaceutical companies in the United States. These pharmaceutical companies began identifying and developing synthetic drugs aimed at various pathological conditions. The pharmaceutical companies began to observe the positive effects of the synthetic drugs on these pathological conditions, ultimately leading to the rise of the field.
Pharmaceutical Companies’ Role in Innovation
The pharmaceutical industry is known for playing a critical role in the innovation that has occurred in the health care field. , The emergence of pharmaceutical companies in America led to a number of breakthroughs in the development of synthetic vitamins, antibiotics, hormones, antihistamines, and new vaccines. Pharmaceutical companies were now developing cures for illnesses such as tuberculosis, diphtheria, and pneumonia. Due to the advances in therapeutics, mortality rates in the United States were cut in half and maternal deaths were nearly eliminated. Profits from the development of therapeutics such as penicillin by American pharmaceutical companies created the capital for these companies to invest in their infrastructure, ultimately leading to the style of firms we have today.
From the creation of American pharmaceutical companies until 1937, the pharmaceutical industry operated without regulation. , In 1937, a chemist decided to use “antifreeze” in his cough syrup to make it sweet tasting. The cough syrup was not extensively tested and resulted in over 100 deaths, leading to the development of the Food and Drug Administration (FDA). , . From 1937 until the present, pharmaceutical companies are not required to share data from studies conducted in-house, but the FDA does require companies to conduct phase 1 to 3 studies on humans to prove safeness and effectiveness.
Due to the new regulations placed on the pharmaceutical industry, new products that are developed take a very long time to reach the market for patients in need. Today, the average therapeutic takes 10–15 years to be developed and validated for its safety and effectiveness before being granted market approval by the FDA. It is reported that only 5 in 5,000 drugs that enter preclinical trial testing successfully make to human testing and of those, only 1 in 5,000 make it to market. The average cost for development of each therapeutic is estimated to cost a pharmaceutical company around eight-hundred million dollars.
Patent Rights are Critical for Pharmaceutical Companies Success
Because drug development is such an expensive undertaking for pharmaceutical companies, they usually rely on strong patent protection to recoup their investment in pharmaceutical research and development. Patents provide inventors the legal right to exclude others from replicating and using their invention. This protection was included in the United States constitution to help promote the progress of science by providing the inventor a limited time to recoup their significant investment in research and development. Inventors of patents are given a twenty-year exclusivity to protect their investment. Due to recent changes in patent law, the United States is moving to the European Union standard, meaning patent ownership is now based on the first person to file the invention. In order for the pharmaceutical company to protect their investment, it is required to file the patent early on during the development of the patent. Because patents take on average 10–15 years to bring to market, a significant portion of the patent term for the invention is lost before the pharmaceutical company is able to earn a single dollar from its invention. Once the therapeutic is on the market, the pharmaceutical company has on average 11.5 years to recoup its investment.
Patents were included in the Constitution to encourage pharmaceutical companies, and inventors to continue the development of new therapeutics for diseases that affect the human race globally, by providing it with protection for its investments. For pharmaceutical companies to receive such protection, they must disclose to the world patented research and science underlying the invention. Thus, important scientific information behind a new cancer drug becomes available immediately to researchers worldwide. Pharmaceutical companies are often criticized for the cost of their therapeutics and their use of patents to exclude generics from entering the market in developing companies.
WTO TRIPS Agreement and access to medicines
The Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement was an agreement that was created by the World Trade Organization (WTO). The WTO is a global international organization that helps create rules of trade between nations. As of July 29th, 2016, there are 164 nations that are members of the WTO. The TRIPS Agreement was drafted and implemented to provide minimum standards of protection for intellectual property amongst these member nations. The TRIPS Agreement is said to have a western influence because it provides patent protection for 20 years in the member nations, and protects both process and product patents. All of the member nations were given until 2006 to implement the TRIPS Agreement.
Developing nations are fearful of the effects of the TRIPS Agreement because it is believed that it will have a damaging effect on the access to medicine for its citizens. The Developing nations feared that by protecting patents in their nation that it would increase the number of monopolies pharmaceutical companies would have on the drug market in their nations. Developing nations fear that these monopolies will lead to increased drug prices, therefore, limited the availability to those who can afford them rather than are in need. The fears of the developing nations are ones that are legit when comparing the prices of drugs on patent to their generic counterparts. Developing nations argue that by preventing or limited patent protection, allows for competition in the market and results in lower drug prices. The lower the drug prices the more accessible the drug.
Access to Medicine in Developing Countries
The AIDS crisis in the developing world lead many developing nations to questions the potential effects of the TRIPS Agreement, and whether member nations would stand by the flexibilities built into the Agreement for nations in crisis. During times of crisis, the TRIPS Agreement would allow developing nations who lack the capital to bypass patent protection that was awarded to patent holders to address public health issues in their nation. Many developed countries wanted the TRIPS Agreement to prevent developing nations from importing generic versions of patented drugs from other nations or mass producing it within the country.
In these non-member nations, generic therapies are created from reverse engineering the patented therapies on the market. The developing nations, who are members of WTO, argue that its citizens who are unable to afford the patented drug prices will have to wait years until the patent on the drugs expires. Access under the TRIPS agreement has become such an issue that over 60 nations requested a TRIPS Council Session to discuss access to medication in their nation. These nations proposed to have a separate declaration in Doha on the TRIPS Agreement and access to medicine. These nations were seeking to a declaration that would find that public health and lives were more important than intellectual property. The nations are asking to be able to set aside patent rights to provide the proper medical treatment for their citizens. The issue developing nation face is while you want to be able to set aside patent protection to help the citizens, you also want research and development for new therapies.
Pharmaceutical companies in USA, Japan, Switzerland, Australia and Canada opposed the declaration, because of the importance of intellectual property protection for research and development. It was argued that protection granted to drug and device companies allows for the further production of products aimed at addressing other public health issues. By allowing pharmaceutical companies to have restricted access to their inventions, it agrees to continue to innovate in areas such as public health. In order for innovation in the public health field, which is driven by pharmaceutical and device companies, to continue their ideas and work products have to be protected so that funding for innovation can continue. Patents protection is critical for innovation, it is reported that 70%-80% of a pharmaceutical company’s revenue comes from its patents.
Pharmaceutical companies argue that the price of therapeutics is the only issue that developing nations must address. For example, if Pfizer decided tomorrow that it would offer a number of its therapeutics for free to several developing nations, it would still not help the issue because it would not reach the individuals in need. Many of the developing nations have poor health infrastructure, which contributes significantly to the access of medicine for its citizens. Another issue developing nations face is the lack of proper sanitation. Not having the proper sanitized facilities for drug and medical device production can lead to cross contamination or microbial multiplication in the product. This would result in a more complex medical issue for the citizens of that nation. Finally, manufacturers in developing nations often face a shortage of funding for the production of generic drugs. Shortage of funding can often lead to citizens not having access to much-needed therapy or can lead to short cuts by the manufacturer to save money, both ultimately harming the public health of the developing nation. Parallel imports are subject to the same issues of lack of safety and effectiveness, lack of proper sanitation, and lack of proper funding which is often not monitored by the country seeking the import. This ultimately means that a country could be important sub par or contaminated product for their citizens.
The Doha Declaration on the TRIPS Agreement
At the WTO Ministerial Conference of 2001, members of developing nations brought their concerns of access to medication before the WTO. The WTO explained that the goal of the TRIPS Agreement was not to prevent member nations from promoting public health within their borders. The WTO explained that the TRIPS Agreement had built in flexibility that would address this concern, within the agreement was the option for compulsory licensing and parallel importing. The developing nations brought the concern before the committee, not because of the lack of clarity in the agreement, but rather the obstacles that they were facing at the national level when they were attempting to implement the flexibilities built into the agreement. The declaration to the TRIPS Agreement clarifies various forms of flexibility available to the developing nations to address the access to medicine by further addressing for compulsory licensing and parallel importing. Compulsory licensing refers to the ability of a government to allow someone else to produce a patented product or process without the consent of the patent owner. A parallel import is when an importer finds a cheaper price for the product in another nation and imports it to avoid paying higher local prices. The first question that arises is how would it be determined whether a nation meets the requirement to be able to utilize compulsory licensing and parallel importing? The next question for developing nations becomes whether or not it has the infrastructure to utilize the compulsory option?
Compulsory licensing and parallel importing create a number of issues for not only the pharmaceutical industry but also for the developing nations themselves. Pharmaceutical companies argue that if left unmonitored compulsory licensing can be a slippery slope and could easily result in abuse of the intellectual property rights of patent holders, which WTO was designed to protect. Compulsory licensing is designed to address a public health issue such as AIDS/HIV, but instead it also creates one. Therapeutics that have been developed by patent holders have undergone years of inspection and validation to prove that they are safe and effective. Allowing manufacturers to reverse engineer a patent compound could prove to not be as safe and effective as the patented product. In order for manufacturers to offer generic therapeutics at such a reasonable rate, it requires the bypassing of certain corners in the development and validation phase. However, changing even a methyl group can affect the properties of a therapeutic. An example of this is Budeprion, which is a generic version of Wellbutrin that was pulled from the market by the FDA for not being functional. Developing nations have to be careful to not allow local manufacturers to produce therapies like Budeprion, which may leave the citizens of developing nations taking ineffective medication. Citizens deserve to have access to therapeutics that have been extensively studied and validated.
The Doha Declaration creates a complex problem for members of the WTO who signed the TRIPS Agreement because it forces them to decide on the appropriate way to promote public health and innovation. Pharmaceutical companies argue that in order for them to continue to innovate, it must make a profit off the patents and products that it has on the market. Developing nations, on the other hand, argue that their citizens do not have access to proper medication because of the cost. In many of the developing nations, citizens are forced to live on less than several dollars a day because of the nation’s economic system. There would be no way for a citizen of this country to be able to afford a 50,000 cancer therapeutic. Leaders of these developing nations argue that under the TRIPS Agreement, they have a right to ignore patent owners’ rights in the name of public health. Pharmaceutical companies argue that this will ultimately hurt the citizens that the leaders are protecting because it would prevent innovation in other needed areas and opens the door to less safe and effective therapeutics.
To bridge this gap, WTO leaders should bring both patent owners and developing nation leaders to the table to see if there possibility for reducing the cost of the therapeutics. One mechanism maybe tax breaks for the pharmaceutical companies in their home nations or maybe the WTO can work in conjunction with the world health organization to develop grants for cost effective therapeutics for diseases plaguing the third world nations.