Patents block increasing number of people from accessing cheaper medicines

Reading Jasson Urbach’s latest attack on the draft intellectual property (IP) policy (New patents policy the wrong cure for improving access to medicines, September 13) reminds us of the story of the scorpion and the frog, and that doomed river crossing.

Despite the assurance that it was not in his interest to sting the frog, the scorpion just couldn’t help himself. "It’s in my nature," he shrugged as they both drowned.

As a self-styled independent economist, Urbach should know better than to rely largely on the conclusions of a single, contested study. To his credit, he also throws in a red herring and a misplaced quotation from one of SA’s foremost scientists. As a director of the Free Market Foundation and head of its health policy unit, he probably couldn’t help himself.

So let’s start with the single study. For those of us old enough to remember the battles around access to antiretroviral (ARV) medicines in the early 2000s, we’re pretty familiar with the work of Prof Amir Attaran, one of the co-authors of the paper. In an article published in 2001, when fewer than 1-million people with HIV/AIDS worldwide were on treatment, Attaran and a co-author confidently stated that "patents and patent law are not a major barrier to treatment access in and of themselves".

Instead, they wrote that, "a variety of de facto barriers are more responsible for impeding access to ARV treatment, including but not limited to the poverty of African countries, the high cost of ARV treatment, national regulatory requirements for medicines, tariffs and sales taxes, and above all a lack of sufficient international financial aid to fund  ARV treatment".

Treatment activists were not convinced. They argued that while necessary, removing all the other barriers was insufficient. Without access to a sustainable supply of affordably priced medicines, which could only be achieved by the market entry of generic competitors, ARV treatment could not be provided. Fast forward 15 years and, more than 18-million people with HIV/AIDS are now estimated to be on treatment, with the vast majority of them in Africa taking generics. Let’s put this differently: without affordable generics, the South African government simply could not have afforded to roll out universal treatment.

Now, to the study Urbach relies on to make the point that compulsory licensing – a legal, internationally acceptable and World Trade Organisation-compliant safeguard – somehow increases the cost of medicines.

First, it sits behind an expensive paywall in the pages of an academic journal, ensuring that pretty much no one can read it. Second, it is a highly contested study, the results of which are therefore to be treated with extreme caution. For instance, two well-respected public health experts have read and considered the study. In their comments posted online, Germán Velasquez and Tido von Schoen-Angerer focus on the flawed methodology adopted by Attaran and his co-authors, alleging that they not only compare apples with pears, but that their conclusions are not supported by the evidence.

To put this study in proper context, a leading civil society organisation, Knowledge Ecology International, characterised it as 'part of a public relations campaign by the drug companies to justify high prices'

The doctors point out that competitive medicine prices are an outcome of competitive markets – situations characterised by few or no patent barriers and multiple suppliers. Some countries, however, have only issued compulsory licences to allow for national production, and in these cases the quoted compulsory licence price is "typically based on one supplier". In such circumstances, this price is never going to be able to compete with that which an international procurement agency such as the Global Fund to Fight AIDS, Tuberculosis and Malaria – with access to multiple suppliers globally – is able to secure.

Relying on the Attaran study, Urbach simply asserts that "[t]he best price is more likely to be obtained through voluntary negotiations". But as an economist, he ought to know that successful negotiations do not occur without leverage. In circumstances where there is only one supplier of a life-saving medicine, having some leverage can help convince the supplier to charge less. And that’s where an easy-to-use compulsory licensing system comes into play, by making it clear that failed negotiations will result in a loss of market exclusivity.

It is important to deal with Urbach’s next false claim, that the state "wants to make it easier to expropriate IP from innovators by bypassing the courts". Significantly, our Constitution contemplates the expropriation of property in certain circumstances. That said, the granting of a compulsory licence does not amount to expropriation.

At most, insofar as existing patents are concerned, the granting of a compulsory licence would constitute a lawful deprivation of property. But for patents still to be granted (under an amended legislative framework), the right to the intellectual property – a state-sponsored guarantee of market exclusivity – will simply not extend to the circumstances in which compulsory licences may be issued under the amended law.

Let’s put this simply: there is no question of courts being bypassed. While the draft policy contemplates the granting of a compulsory licence by an administrative body, as international law permits, any decision to issue a licence would be subject to review by the courts. Should a compulsory licence have been issued unlawfully, it would be set aside.

In a classic example of "whataboutery", Urbach points to systemic problems with SA’s medicine regulatory system as the real barrier to access. Of course, unjustifiable delays in the registration process must be overcome, as must all other obstacles to access, such as capacity constraints in the public health system or the shortage of qualified medical personnel in the workforce. But to suggest that any one of these problems is justification for leaving the patent system untouched is ludicrous, since even if all of these problems were to be tackled, it would be of no assistance to the person who is unable to afford the cost of a patented medicine.

While it is true that the cost of medicine development is high, there is absolutely no consensus that it is anywhere near $2.5bn, the figure Urbach cites, attributed to Prof Kelly Chibale. That figure, which was recently repeated by US President Donald Trump, comes from a Tufts University study headed by Joseph DiMasi. The study is highly contested, not in the least because it was funded by the same industry towards which its findings are (coincidentally) very favourable.

To put this study in proper context, a leading civil society organisation, Knowledge Ecology International, characterised it as "part of a public relations campaign by the drug companies to justify high prices". Médecins Sans Frontières was clearer: "If you believe the Tufts analysis, you probably also believe the earth is flat."

Only last month, the latest of several alternative analyses was published in the Journal of the American Medical Association, indicating that the cost of bringing a new medicine to market is in the region of $600m, or less than 20% of the Tufts estimate.

Regardless of the controversy associated with this number, what is true — and so far unaccounted for — is the contribution of public and philanthropic money towards the pharmaceutical development process. The industry’s most famous secret is that taxpayers of rich countries and private donors subsidise most basic medical research. This is also true in respect of Chibale’s centre, funded by organs of state (such as the National Research Foundation, the Medical Research Council, the Technology Innovation Agency and the University of Cape Town), the Bill & Melinda Gates Foundation, the Medicines for Malaria Venture and two private pharmaceutical companies (Celgene and Merck).

It is a shame that Urbach finds it necessary to wilfully malign the draft intellectual property policy, putting up straw men he then takes great delight in knocking down. Contrary to his claim, the aim of the draft policy is not to "make it more difficult to register patents, easier to ‘break’ patents, and to limit the remedies available to patent holders". Instead, the aim is to develop and implement a policy, consistent with SA’s international obligations, that seeks to achieve a balance between creating incentives to innovate on the one hand and ensuring access to innovative products on the other.

Insofar as medicines and related products are concerned, the right to have access to health care – in section 27 of the Constitution – demands no less.

• Berger is a member of the Johannesburg Bar and serves on the expert advisory group of the Medicines Patent Pool. Prabhala is a fellow of the Shuttleworth Foundation and works on innovation and access to medicines in India, Brazil and SA with the AccessIBSA project.