The Manila Times Internet Edition | TOP STORIES > Will public health trump patents in House, Senate?

The antihypertension drug Norvasc, manufactured by Pfizer, is well-known among doctors here and abroad for its efficiency and efficacy. But Dr. Rosan Badon does not prescribe the medicine to her patients at community health clinics in Bagong Silang, Caloocan, and Dagat-Dagatan, Navotas.

“They can’t even afford to buy medicine that costs P5, how can they ever afford one that costs eight times more?” Badon asked. In fact, even though a generic equivalent was introduced in the market last year, Norvasc was still being sold at P44.76 per five-mg tablet and P74.57 per 10-mg tablet as of last August. In India, Norvasc retails at what amounts to P8.74 per five-mg tablet and P17.09 per 10-mg tablet. In Pakistan, it is priced even lower, and can be had for P5.98 per five-mg tablet and P8.95 per 10-mg tablet.

The World Health Organization (WHO)-commissioned book Drugs and Money: Prices, Affordability and Cost Containment cites four main reasons for steep drug prices: costs invested in research and development; factors that tend to create monopolies like patent protection; third-party payers that make consumers less price-sensitive; and consumers’ attitudes that tend to use price to judge the quality and efficacy of a drug.

Still, Ireneo Galicia, former Intellectual Property Office (IPO) deputy director general, argues that patents are primary to blame for the high cost of medicines in the Philippines. He said, “[To] an extent that a patent gives monopoly to a patent right owner, it gives the owner some leeway in dictating the price of a patented medicine.”

Unwittingly, too, Philippine intellectual-property laws have been protecting the monopolies of multinational drug companies. It is telling that from 2001 to August 2006, only two of the 2,296 pharmaceutical patents issued by the IPO were local.

In proposing amendments to the Intellectual Property Code (Republic Act 8293), observers and legislators alike thus believe both the Senate and House affordable-medicines bills are on the right track. For one, they say, these trace the situation of overpriced drugs to the country’s legal structure of intellectual property and trademarks. Indeed, six years after the so-called Doha Declaration, Philippine intellectual property law has yet to incorporate many of the flexibilities provided in the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement).

Provisions for the “flexibilities”

Introduced to the international trading system in 1994, the TRIPS Agreement is a set of intellectual property rules, largely patterned after the US intellectual-property regime that, among others, grants drug patent protection for 20 years. Apprehensions by developing countries over the agreement’s impact on public health led to a “development round” of negotiations of new trade rules that later produced the Doha Declaration.

Among the flexibilities under the Declaration are parallel importation (allowing countries to import a patented product marketed in another country at a lower price), compulsory licensing, and government use (allowing governments to temporarily override a patent and authorize production of generic equivalents of patented medicines in the public interest).

As expected, though, multinational drug companies are against the proposed amendments to the intellectual property law. They said these are discriminatory and violate the Constitution’s due process and equal-protection clauses. The firms also said the proposed changes are inconsistent with international treaty obligations of the Philippines.

One of the amendments they object to is present in both Senate and House bills and follows the lead of other countries such as the United States, Canada, Australia, Israel, Argentina, and Thailand: it allows a generic manufacturer to start preparing a generic version about two years before a drug’s patent expires. Thus, as soon as the patent expires, the generic equivalent is ready for selling in the market. This is commonly called the early working or “Bolar provision,” after a 1984 US case law decision.

Here in the Philippines at present, it is only after a drug’s patent coverage is up (a fixed period of two decades) that a generic manufacturer can start doing research or conduct its own tests to produce a generic equivalent. Such a process, Galicia said, takes from anywhere between 18 to 24 months.

The drug firms are also against a common provision in both bills that excludes from patent protection “new uses” of a previously patented product or process. The rationale for this provision?which is patterned after amendments in the India Patents Law and is present in both the Senate and House bills?is the phenomenon of “evergreening.” This consists of the patenting of minor changes to existing products (e.g. formulations, dosage forms, polymorphs, salts, etc.), thereby extending artificially the protection conferred by the original patent over a drug. The tactic has caused the proliferation of frivolous patents on just about any demonstrable “new use” ?and denies people access to drugs whose patents have actually expired.

More objections

The way the Pharmaceutical and Healthcare Association of the Philippines (PHAP) sees it, though, Section 22 in House Bill 2844 and Section 26 in Senate Bill 1658 discriminate against pharmaceutical inventions and go against the three basic requirements of patentability: novelty, inventive step, and industrial application.

The association said the Intellectual Property Code has sufficient safeguards against double patenting and evergreening, which do not have a significant impact on access to medicines. After all, it argues, only 1 percent of the drugs on WHO’s List of Essential Drugs are patented, with the rest already outside the patent system.

But Bureau of Food and Drug (BFAD) Deputy Director Joshua Ramos counters, “What if the 1 percent with patents are the ‘miracle drugs’ needed by large numbers of people? Also, those that are already off-patent as new molecules?the 99 percent they claim?may again be patented for new use without the provision preventing patentability based on ‘new use.’”

The association’s arguments actually go to the heart of the pharmaceutical industry’s justification for strengthening the regime of intellectual property protection, which is that it provides an incentive to develop innovative drugs and allows it to recoup investments on research and development.

Yet a report by the US National Institute for Health Care Management makes this assumption of innovation among pharmaceutical companies suspect. From 1989 to 2000, the institute reported, only 35 percent of the approved 1,035 new drug applications in the US Food and Drug Administration (FDA) were products with new active ingredients. The rest had active ingredients already available in an approved product. More than half (54 percent) were in fact incrementally modified drugs or new versions of available medicines. Eleven percent out of the supposedly new drugs, meanwhile, contained the same active ingredient as identical marketed products.

The Pharmaceutical and Healthcare Association’s list of objections, however, includes the House bill’s provision on parallel importation. Citing the lack of an adequate infrastructure and effective monitoring systems to monitor parallel imports and prevent entry of counterfeit drugs into the country, the association said substandard medicines and counterfeit drugs could proliferate through uncontrolled parallel importation.

Yet an industry insider concedes that with or without the bill, the problem with counterfeit drugs (those that are marketed without Bureau of Food and Drug registration) and fake medicines (illegally manufactured copies of the original) exists. He said that along with substandard medicines, these constitute an enforcement matter involving the bureau and has nothing to do with the intent of the bill to provide quality, affordable medicines. “It’s a classic obfuscation tactic,” the insider said.

The bureau’s Ramos also said there is “no real threat” as the agency, together with law enforcement agencies, can easily detect counterfeit drugs. Besides, medicines that will be subject of parallel importation will have to be registered with the Bureau of Food and Drug. The agency is also tasked to conduct the necessary post-market surveillance.

“The counterfeit medicines issue is not a real issue,” Elpidio Peria said. An associate of the Third World Network that is among the various non-government organizations supporting the Senate bill, Peria explained that most, if not a large majority, of the pharmaceutical products that will be brought in through parallel imports are the same products produced by the same pharmaceutical firms already operating in the country.

“It is a fact,” he added, “that these same companies imported from their mother units or manufacturing bases and made money out of the price differentials between the Philippines and the countries from where these products were sourced.”

But a health-care professional who was once part of the Department of Health said that while the parallel-importation provision in the House bill is “relevant,” it is nevertheless “too simplistic.” He said there are no protocols to ensure checks and balance; neither are there provisions to ensure that imported drugs would come from firms complying with current good manufacturing practice and from legitimate wholesalers and consolidators. He also notes the lack of punitive clauses for those who would import or manufacture substandard generic drugs.

The nonmanufacturing drug industry

The health-care professional added that the provision on compulsory licensing (which the World Trade Organization said happens “when a government allows someone else to produce the patented product or process without the consent of the patent owner”) practically means nothing since Philippine drug manufacturers have no technical capacity to make drugs in the true sense of the term. “What we do have is secondary manufacturing which is compounding, tableting, and capsuling,” he said.

For sure, given its total dependence on imported raw materials and chemicals, the Philippine pharmaceutical industry cannot be considered a true drug industry. Although almost 90 percent of drugs sold are locally produced, Philippine drug companies are mainly compounders, formulators and packagers. The big pharmaceutical firms either import their products or have them totally manufactured at the foreign-owned Inter-Phil Laboratories.

Yet while the Philippine drug industry remains far from having India’s economies of scale and the heavy investments in science and technology, there are now a few local companies such as United Laboratories, Elin Pharmaceuticals, and Pascual Laboratories that are engaged in the manufacture of active substances. Besides, if the country invokes the Doha Declaration on the TRIPS flexibilities, compulsory licensing can be extended to countries with manufacturing capability to cover the needs of those without such capability, Ramos said.

Still, for all the hopes being pinned on the passage of the affordable medicines law to either usher in amendments to the Intellectual Property Code, or a drug price regulation scheme, or both, there are those who acknowledge it is not going to be a magic pill.

“No bill filed in the Fourteenth Congress could single-handedly lower the price of medicines,” said Akbayan party-list Rep. Ana Theresia Hontiveros-Baraquel. She added that to bring down the exorbitant price of medicines in the country, a more comprehensive legislation is necessary.

Such a situation is rooted in a complex mix of problems involving dynamic forces that affect the market, the industry, doctors and health professionals, and patients, plus the reality of national poverty. What future legislations will have to provide are solutions to the issues that observers say the current bills failed to address. Among these are the fundamental problems of market failure in pharmaceuticals, the need for true quality generics competing fairly in the Philippine market, the need for monitoring and limiting unethical promotions, advertising, and marketing practices that influence prescribing and add to the cost of drugs.

In the meantime, Rosan Badon and other doctors who deal with impoverished patients have become innovative. Badon said she has even resorted to prescribing traditional Chinese medicine to some of her very poor patients, reasoning that it would be useless anyway to prescribe a modern drug that they will not be able to afford.

For hypertensive patients, for example, Badon recommends tiny pechay seeds that are stuck to a piece of bandage and are then placed at the back of one’s head. “This is actually part of acupuncture,” said the doctor, who is also an acupuncturist. She also explained that the treatment is part of a holistic approach. “We also advocate a low-salt diet and a healthy lifestyle,” she said.

But Badon said extremely poor patients see a doctor only when they already feel very ill, which makes it more difficult to treat them. Ironically, that is almost always because they feared they would not be able to afford the medicine they needed to get better in the first place.

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