Universities Allied for Essential Medicines
Frequently Asked QuestionsEAL Specific Questions
- Aren't universities the wrong place to start trying to solve the access problem? Isn't the real issue industry, or trade law, or infrastructure?
- If a university takes a stand on this issue, won't industry partners refuse to deal with them?
- How does the EAL measure an access gap?
- Won't the EAL kill innovation for diseases affecting developing countries?
- If many drugs are not patented in the world's poorest countries how is the EAL relevant in these situations?
- If Universities ultimately hold the patent for a given drug, why is it necessary to even negotiate with drug companies to allow for generic manufacture and distribution? Couldn't universities simply directly license their patents to third parties for generic distribution?
- How would pharmaceutical companies react to the EAL? Don't they have a valid concern about parallel importing?
- What part of the market are we talking about, exactly?
- If drug companies are already implementing some differential pricing schemes, what role do universities have to play in this?
- Will parallel importing become a problem when allowing generic production of patented medicines in low and middle income countries?
- Are there any examples of university action making a difference?
- Will universities or pharmaceutical companies be liable for drugs produced generically under the EAL?
- Why is the University of Pennsylvania a good place to implement the EAL?
- Where do vaccines fit into UAEM policies?
EAL Specific Questions
Aren't universities the wrong place to start trying to solve the access problem? Isn't the real issue industry, or trade law, or infrastructure?
Yes and no. Changing university policy alone is of course not enough, but it can help, both by removing potential barriers to access, and by setting an example. Universities are essential to the world's drug development system, and engage in much of the world's basic research. They're successful at it because their norms are different than those of industry - more cooperative, more open, and dedicated to the public good, rather than profit. Many of the most important medical innovations have some connection to universities. In some cases, universities have rights to drugs and processes right now that, if they took the right steps, could be made more accessible. In other cases, adopting a policy will be preventative medicine, to ensure that problems do not arise, and that the university is remaining true to its mission.
If a university takes a stand on this issue, won't industry partners refuse to deal with them?
The simple answer is, no. If universities act collectively, they can maintain their integrity even in the face of opposition from industry—they have done it before, successfully establishing the norm that industry should not be able to require lengthy publication delays periods for research they sponsor at universities. While industry may not need any particular university, they do need universities as a whole. Furthermore, negotiations on particular licenses are very particular to the circumstance and invention—sometimes universities will have lots of bargaining power, other times they won't. But even where their power is weakest, industry should not be dissuaded by an access-friendly policy. There are almost no profits to be made in non-OECD countries and many benefits to the university and company that handle the access issue wisely.
How does the EAL measure an access gap?
The EAL does not require for an access gap to be established. This was a consideration in the drafting of the license but the data required to objectively establish an access gap is not fully accessible or completely reliable. Instead, the EAL operates on a very simple principle. In all low and middle income countries, if someone wishes to compete with the licensee to supply the end product (final drug), they must only notify the university and licensee and then they will be granted an open license for manufacturing, selling, exporting, and importing.
Won't the EAL kill innovation for diseases affecting developing countries?
No. Unfortunately, there is already a real dearth of research on diseases that affect the world's poor. The problem is market failure—and since patents in developing countries aren't making anyone any significant amount of money, even eliminating those profits altogether wouldn't hurt innovation (because there is none). In very rare instances, universities may need to override access-friendly default rules in order to ensure that a product makes it to market, and we would support that—but these cases will be few and far between, if they exist at all.
If many drugs are not patented in the world's poorest countries how is the EAL relevant in these situations?
Even if there are no patents in a specific country other barriers may exist. Under the EAL regulatory barriers are lifted through open licensing of any property data held by the university or licensee. Importantly, since a country may not have the infrastructure to manufacture a drug within its own boards the EAL lifts manufacturing barriers. The EAL provides for open licensing of the right to manufacture in any country for export to low and middle income countries.
If Universities ultimately hold the patent for a given drug, why is it necessary to even negotiate with drug companies to allow for generic manufacture and distribution? Couldn't universities simply directly license their patents to third parties for generic distribution?
It is very rare that only one patent goes into making a new drug and that therefore the power is solely in the hands of a university. More often is the case that the university has a patent for a very early stage component of the drug. In developing the drug the pharmaceutical company will take out several more patents for further developments along the away. In addition to those additional patents taken out in the initial manufacturing of the drug, any subsequent improvements on the drug such as a better formulation that might reduce it to once a day dosage or the development of a pediatric form will also be separately patented. In a traditional licensing agreement the university has very little power over the pharmaceutical company's patents related to the drug.
How would pharmaceutical companies react to the EAL? Don't they have a valid concern about parallel importing?
Pharmaceutical companies will have probably voice a concern over parallel importing (low-priced generics produced under the EAL finding their way into the black market in developed countries), but is this concern valid? Not really. New regulatory barriers and customs regulations have minimized the threat of this, so the idea is being used more as a political excuse than as a practical concern. This concern finds little empirical support, and can be addressed in the same manner that the WTO has elected to treat the issue: requiring use of different packaging, pill color, and shape in different countries to facilitate identification ofillegal importations.
What is a patent?
According to the US Patent and Trademark Office (PTO): "A patent for an invention is the grant of a property right to the inventor, issued by the PTO." The term of a new patent is SO years from the date on which the application for the patent was filed in the United States or, in special cases, from the date an earlier related application was filed, subject to the payment of maintenance fees. US patent grants are effective only within the US, US territories, and US possessions. The right conferred by the patent grant is, in the language of the statute and of the grant itself, "the right to exclude others from making, using, offering for sale, or selling" the invention in the United States or "importing" the invention into the United States. What is granted is not the right to make, use, offer for sale, sell or import, but the right to exclude others from making, using, offering for sale, selling or importing the invention. The theory is that the higher prices that patents allow companies to charge provide incentives to develop and commercialize new products.
What is parallel importing?
Parallel importing is importing cheaper medicines in order to take advantage of the fact that patented drugs are sold at different prices in different countries.
Parallel importing is allowed under the TRIPS agreement. (Parallel importing is what busloads of senior US citizens do when they go to Canada to fill their prescriptions - buying the same brand-name drugs in a country where they are less expensive.)
What part of the market are we talking about, exactly?
Low and Middle Income(LMI) countries, which make up 88.3% of the world’s population, account for only 5-7% of the overall pharmaceutical market. This is overall bulk sales, however. Pharmaceutical companies make only a tiny part of their profits in these countries, either because of lower prices or because there is simply not enough demand in particular countries. These statistics represent the market failure that is causing many of the world’s neediest populations to lack necessary medicines. The flip side of this point is that pharmaceutical companies still have a profit-incentive to develop drugs for only high-income countries, while allowing generic competition in the rest of the world.
If drug companies are already implementing some differential pricing schemes, what role do universities have to play in this?
It is true that recent pressure has convinced pharmaceutical companies to lower their prices for selected drugs in the developing world and in some cases allow generic production of particular drugs there. There is still a very important gap, however. While the cost of a year’s worth of anti-retroviral drugs (against HIV) in South Africa has been lowered to US$ 199 in recent years, second-line therapy remains at an unattainable US$2,500 per year. This is a pattern seen in most of the newest drugs, which can arrive in the developing world decades after they are saving lives in high-income countries. Today, fewer than 10% of Africans in need of treatment for HIV infection are receiving it, and new innovations such as a non-refrigerated version of the ARV Kaletra is not available in Africa. Universities, which are at the forefront of creating new medical innovations, can change this picture from the first step in the drug pipeline.
Will parallel importing become a problem when allowing generic production of patented medicines in low and middle income countries?
Diversion from poor countries is rarely observed. Generic drugs have been produced in India for decades without apparently infiltrating or undermining Western markets. (Review of court cases by Andrew Farlow, Oxford University: ‘Costs of Monopoly Pricing Under Patent Protection’, Presentation at Columbia University, slide 19.) The only significant media reports of diversion have been shown to be overblown. GlaxoSmithKline charged that 36000 packages of HIV/AIDS medicines worth approximately $18 million were found to have been diverted from West Africa to the EU. (Naik, Asian Wall Street Journal; Boseley and Carroll, The Guardian; ‘HIV Drugs for Africa Diverted to Europe,’ Washington Post.). GlaxoSmithKline sued a legal parallel trader named Dowelhurst for this violation. In the court case, it turned out that 99% of the packages handled by Dowelhurst were not part of Glaxo’s charitable access initiative but rather ordinary commercial sales at prices approximating EU prices. Also, Glaxo did not label the packages as ineligible for sale or re-importation in the EU. (Outterson, Yale Journal of Health Policy, Law, and Ethics 2005). Insofar as diversion is a concern, it can be addressed in the same manner that the WTO has—by requiring use of different packaging, pill color, and pill shape in different countries to facilitate the identification of illegal imports. (‘Implementation of Paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public Health’, World Trade Organization 2003.)
Are there any examples of university action making a difference?
Yale and Bristol Meyers Squib reduced the price of stavudine (d4T) in South Africa by more than 95% by agreeing not to enforce the patent there. Though it took pressure from students, the researcher who discovered the drug, and Doctors Without Borders, both Yale and BMS benefited from the positive publicity generated by their arrangement. These trailblazing efforts led the way for the reduction in price of many other drugs, which together enabled non-governmental organizations as well as governments to begin treating people infected with HIV in developing countries. Yale continues to have strong and healthy ties to the pharmaceutical companies, and Pfizer has recently built a new $35 million dollar Clinical Research Unit in cooperation with Yale.
Will universities or pharmaceutical companies be liable for drugs produced generically under the EAL?
As there will be no directrelationships between pharmaceutical developers and generic manufacturers as part of the EAL, and the creation of the generic market is automatic and open, neither Penn nor the pharmaceutical developer should be in any way legally liable for the actions of generic manufacturers. The EAL should not set up any unique liability situations not currently seen in the pharmaceutical market.
Why is the University of Pennsylvania a good place to implement the EAL?
The University of Pennsylvania is one of the foremost research universities in the country, and has the potential to be a leader in addressing both the access gap and the research gap. The university’s researching power can be quantified in its impressive total research budget of $756 million dollars in 2004. A full $651 million of the above came from federal agencies, and $60 million came from foundations and associations. These public monies present a further moral imperative that the university consider the public good, both nationally and globally, in deciding their intellectual transfer policies.
Where do vaccines fit into UAEM policies?
Vaccines are a special case in that they are important for both the developing and developed world, but their lack of profit potential has made pharmaceutical success difficult. The economic reality of this market, coupled with liability concerns and high manufacturing costs (manufacturing fixed costs represents roughly 60% of the expenditure per dose), many pharmaceuticals companies have exited the market. In cases where new vaccines have actually reached the market, prices can be prohibitive. Vaccines would likely be best addressed with policies under our Research Gap proposals.