“It was a business decision. It was about money. And screw you.” – A journalist said after talking to Martin Shkreh the CEO of Turin, the US-based pharmaceutical company. The company shocked the US when it raised the price of daraprim, a 62 years old medicine by 5000% from $13.5 to $750 per tablet. The US Pharmaceutical companies association (PhRMA) was quick to tweet that “.@TuringPharma does not represent the values of @PhRMA member companies.”So is PhRMA right?
In reality Turin represents a typical symptom of the same disease: putting profit before patients. Otherwise how can we explain the escalating price of new (and sometimes old) medicines not only in Europe and US but also in low and middle income countries? Take Gilead’s medicine that cures hepatitis C as an example. Sofosbuvir (marketed as Sovaldi) was launched at $1000/pill/day. Even at the reduced price offered to some countries, the price is too high. We estimated that treating just half patients suffering with hepatitis C would have cost the Egyptian ministry of health nearly two thirds of its budget.
New cancer medicines are reaching the market at exorbitantly priced and thus unaffordable in most countries even in Europe and the US. NICE, the body that advises the UK’s NHS on medicines rejected Roche’s breast cancer medicine trastuzumab emtansine (Kadcyla) not because of ineffectiveness but because of its high price. Needless to say the price is far beyond the dreams of patients in developing countries.
Patients and advocates for access to medicines have been campaigning on access to medicines in developing countries for years. Their success is clear when the price of the anti-HIV cocktail dropped from US$ 10,000/patient/year to around US $100. Now similar actions have started in rich countries too. One of these groups sent a letter to Jeremy Hunt the UK secretary of health urging him to issue a compulsory license that enables the importation of cheaper versions of the same medicine so that women are not denied a life saving treatment.
Having “temporary” monopoly over pricing seems to be not enough for pharmaceutical companies. Pharma lobbyists carry significant influence in the corridors of power pressurising governments to design and enforce rules that exceed what is already agreed at the WTO through the TRIPS agreement.
Intense lobbying to increase intellectual property rules in free trade agreements has created global public anger. Last September a cancer patient was arrested when she was accused of disrupting the negotiation of the Trans-Pacific Partnership (TPP). The recently concluded TPP negotiations were carried out over more than five years in secret and the text will only be available for elected bodies and the public when it is ready for signing.
Free trade agreements (FTAs) like the TPP are notorious for expanding corporate powers at the expense of public health and the public interest. For example, the FTAs allow corporations to sue governments over measures to promote access to medicines (such as price controls, reimbursement decisions, marketing approvals, and drug safety decisions, or stricter patentability standards). Corporations argue that such measures would damage their investments, which they insist must be protected by the FTAs. This is already happening as Eli Lily has taken the Canadian government to court over government action to make some drugs affordable.
Similar damaging FTAs are currently being negotiated –also behind closed doors- between the EU and Thailand, India and the US.
Moreover, when developing countries try to use legal tools to control or decrease prices, they are put under huge pressure from rich countries under the influence of ‘big pharma’. When Thailand issued compulsory licensing for key medicines to treat HIV and cardiovascular diseases, ‘big pharma’ launched intense pressure on the country to revoke the decision. Under the influence of ‘big pharma’, the US trade representative put Thailand on the Special 301 ‘Priority Watch list’ of countries, which subjects countries to extreme pressure from the US government. Pharma’s influence on the EC resulted in pressure from the European Commission on the Thai govt to change its decision.
Recently some Members of US congress wrote to the US administration urging it to put pressure on India to change its national intellectual property law in order to strengthen monopoly protections on pharmaceuticals. The law had previously been challenged in court by one pharmaceutical company but the court turned the claim down. Changing the Indian law by increasing intellectual property protection will deprive patients from access to needed medicines not only in India but also in the rest of the developing countries. India is considered “the pharmacy” of developing countries.
The root of the companies’ monopoly power and influence is the current model for funding for research and development (R&D) of medicines. Pharmaceutical companies justify the high prices of medicines by the need to recover the R&D costs. Yet the actual cost of R&D is kept as a big secret by the industry. In reality it is becoming increasingly clear that medicine pricing is not determined by production costs and a profit margin, but by what the market can bear.
Clearly the current R&D system is failing patients and health providers all over the world. It is high time that global leaders work for an alternative system that separates the financing of R&D from pricing the resulting medicines. It cannot be left to the pharmaceutical industry to cater only to those who can afford to pay high prices- practically deciding who lives and who dies.
 Trade Related Aspects on Intellectual Property Rights
A recent Oxfam report states that by 2016, 1% of the world population will own more wealth than the rest of us combined. This economic injustice is intertwined with gender inequality, and also with inequality in access to education and health. Inequality in access to medicine is a key feature of this global inequality.
Medicine: A hugely profitable business: Medicines, so critical for saving lives and protecting public health, can also deliver eye-watering profits. In 2013 the 10 leading pharmaceutical companies had combined revenue of US $440 billion. The biggest pharmaceutical company in the world, Pfizer, generated US $50 billion of revenue and US $22 billion profit in 2014. Such profits flow from the prices set for some of the newer medicines. In 2014 Gilead Sciences set the US price of its new drug to treat Hepatitis C at US $1000 per pill, or US$ 84,000-110,000 per treatment, a price that generated sales worth US $10 billion in 2014 for this medicine alone. It is worth remembering that approximately 150 million people are infected with hepatitis C, 75% of whom live in Low- and Middle-Income Countries (LMICs), and that about 350,000 of these die each year.
New cancer medicines allow big pharma to charge more than US $100,000 per treatment. These astronomical prices have become unaffordable even in rich countries. The UK has refused to reimburse several cancer medicines due to exorbitant prices. An op-ed co-signed by 100 leading oncologists in the prestigious journal Blood in 2012 called for a reduction of cancer medicine prices, which they deemed economically unsustainable. These unprecedented prices turn life-saving medicines into a highly profitable business.
The collective wealth of billionaires with interests in the pharmaceutical and health sectors increased from US $170bn in 2013 to US $250bn in 2014, a 47% increase and the largest percentage increase in wealth of the different sectors on the Forbes list. The World Bank estimated that the economic costs of the Ebola outbreak to Guinea, Liberia and Sierra Leone was US $356m in lost output in 2014, and that this will increase to US $815m in 2015 if the epidemic cannot be quickly contained. The greatest increase in wealth by a single pharma-related billionaire between 2013 and 2014 could pay the entire US $1.17bn cost for 2014–15 three times over. With such huge amounts of money at stake, the pharma sector does everything in its power to ensure that rules and policies are in place to maintain the status quo.
When company lobbyists hijack the decision-making process: Large sums are spent by the pharmaceutical industry in lobbying health-related decision-makers. In 2013, the pharmaceutical and healthcare sector spent more than US $487 million on lobbying in the US alone, more than was spent by any other sector in the US. The same sector spent US $260 million on campaign contributions during the election cycle of 2012. In Europe, the pharmaceutical industry employs around 220 lobbyists and an army of lobbyists covers Capitol Hill. They aim to maintain monopoly controls that allow high prices for as long as possible.
The pharmaceutical sector also lobbies the governments of the US and the EU to expand companies’ intellectual property (IP) monopoly power through the negotiation of Free Trade Agreements (FTA). These FTAs seek to restrict governments’ ability to use policy tools that promote access to affordable medicines, which has been condemned by the World Health Organization’s (WHO) Director Margaret Chan.
Countries are also put under pressure to strengthen their IP rules outside trade negotiations.
This is the case with the US pressure to reform India’s balanced IP law, threatening to shut down the “pharmacy of the developing world”. The “Pharma Gate” scandal in South Africa in 2014 revealed leaked emails showing that Pharmaceutical Associations based in South Africa and the US (PhRMA) hired a powerful US lobby firm to derail South African IP law reform that facilitated access to generic medicines.
Big pharma should focus on what it’s supposed to do: create useful new medicines to support public health at affordable prices: Pharmaceutical companies play a critical role in public health through creating medicines that save and improve the quality of life. But increasingly the industry has lost its way, concentrating on ‘blockbuster’ products, and spending money on marketing and lobbying for ever stronger monopoly rights. The current system, which is supposed to incentivize R&D by granting 20-year patents on innovative medicines, fails to meet the public health need for affordable medicines. R&D is invested where large profits can be made – often products are priced so that only a small proportion of the needs are met – while diseases that affect primarily poor countries are sidelined. Only 10% of the world R&D is spent on diseases that affect 90% of the world population. It is estimated that more than one billion people affected by neglected tropical diseases fail to get the treatment they need.
Three pharmaceutical companies (GSK, Johnson and Johnson, Novartis) made the greatest financial contribution to the Ebola relief effort, donating more than $3 million in cash and medical products. Although laudable, these same three companies together spent more than US $18 million on lobbying activities in the US in 2013. The non-existence of a treatment or vaccine for Ebola resulted from lack of R&D investment and the absence of a financially profitable market. The industry employs great scientists and researchers whose creativity is channeled to products for highly profitable markets instead of services for the vast numbers of people worldwide who are still denied the benefits of new technologies. Their plight should be the number 1 priority of all actors who have a part to play, including the pharmaceutical companies.
Winnie Byanyima, the head of Oxfam International, rightly put it in Davos: “Let the companies stop lobbying, and put the money into medicine!“. The Oxfam Even It Up campaign seeks to consign to the history books the statistic that 1 person out of 3 does not have access to needed medicines.
The following trade negotiations are currently undergoing: EU-Thailand FTA, EU-India FTA, the Transatlantic Trade and Investment Partnership (TTIP), the Trans-Pacific Partnership (TPP).
India’s balanced IP law allowed its generic industry to lower the price of Antiretroviral treatments by 99 % since 2000, bringing the cost of treatment to below $100 per person per year
Cancer, a global cause of death and suffering is on the rise. WHO estimates that cancers accounted for 8.2 million deaths in 2012 which is projected to increase to 11.5 million deaths by 2030. The majority of cancer mortality and morbidity (70% of deaths and 60% of new cases in 2012) is in developing countries. Weak access to prevention and to early diagnosis exacerbates illness in these countries. Moreover, the high cost of treatment pushes people deeper into poverty, resulting in a rising inequality.
A report on the pricing of medicines for cancer treatment by Ellen‘t Hoen discusses the unsustainability of the high prices of newer medicines. The report also provides evidence of a problem that is looming large not only in low- and middle-income countries (LMICs) but also in wealthy countries.
The report points out that while numbers of cancer deaths are reducing in wealthy countries because of access to early diagnosis and treatment, the incidence and prevalence is increasing in developing countries. In India it is projected that the number of patients with cancer will reach 1.1 million by 2020. When cancer medicines are priced out of the reach of most people living in developing countries, it compounds the challenges of accessing treatment, exacerbating illness and contributing to preventable suffering.
Even in rich countries the prices of newer cancer medicines are being questioned against a backdrop of escalating health care costs. For example, the recent decision to delist 16 medicines from the UK’s Cancer Drug Fund has elicited furious debate about the high price tag of treatments that deliver limited clinical benefits and equity in providing access to all patients under the NHS.
Access to anticancer medicines is aggravated the world over by intellectual property rights held by pharmaceutical companies and by companies’ pricing strategies. Multinational pharmaceutical companies holding the intellectual rights to new medicines justify high and often exorbitant prices as a necessary means to recover research and development (R&D) costs. However, this explanation is not possible to verify since transparency about costs is lacking. In addition, public funding contributes significantly to the development of new cancer medicines. The report contrasts the best estimates of Novartis’ R&D expenditure on imatinib (Glivec), $38-96 million, with the sales of the drug in 2012 which came to $4.7 billion. Pricing to maximise profits has proven to be very lucrative for pharmaceutical companies. The industry’s global oncology sales were worth $61.45 billion in 2012 and are expected to increase to $81.3 billion by 2018.
There is now a global consensus that the current R&D model that maintains monopolies and leads to high prices of medicines is broken. New ways of financing biomedical innovation that de-link the cost of R&D from the price of the product are being debated and piloted at the WHO.
Yet there is intense pressure on governments that are taking measures to increase affordability and access to medicines from the pharmaceutical industry and the governments protecting its interests. The current pressures on India are a prime example.
The US government, on behalf of the commercial interests of its pharmaceutical companies, is engaged in an intense effort to undermine India’s use of public health safeguards enshrined in India’s intellectual property regime. The industry seeks to force the introduction of TRIPS-plus provisions (such as data exclusivity and patent linkage) that will prolong monopolies on medicines and delay generic entry into the market. India has now been stopped from advancing a compulsory license for an anti-leukaemia medicine, dasatinib.
Experiences from the global fight for HIV treatment over the last decade have taught us that generic competition is the most robust and effective way of bringing down the price of medicines. If the US government is successful in imposing its demands on India, the generic supply of life saving medicines and the health of people living in India and other developing countries will be seriously threatened.
The Access to Cancer Treatment report presents evidence of the scale of the problem of access to cancer medicines and recommends how it may be tackled. What is clear is that we are at a tipping point where high prices for cancer medicines and the resulting lack of access to treatment are neither justified nor acceptable. The stage is set for the governments to act in favour of patients and to find workable solutions to what has become one the greatest challenges to equity and access to medicines in our time. Will we act?
In 2001, I stood in the UN building in front of a huge picture of a woman dying with somebody next to her holding her hand. The writing under the poster read: “you mustn’t die alone”. I wanted to shout: “she mustn’t die full stop”. At that time the new antiretroviral medicines had started to work miracles, bringing people from their deathbeds back to life. Yet as a Ugandan doctor truly said: ‘the medicine is in the North but the disease is in the South’. The pharmaceutical industry was happy to sell the medicines at very high prices in rich countries while turning a blind eye to the rest of the world.
It was largely thanks to a huge global mobilisation of civil society led by people living with HIV that leaders and pharmaceutical companies started to feel embarrassed about denying access to life-saving medicines to millions of people. But it was only after generic competition kicked in that access to medicines became something policymakers talked about. An offer by an Indian company to sell a cocktail of the three basic medicines for one dollar a day slashed the prices of antiretrovirals, meaning that today over 9 million people are on treatment,, including over 7 million in Africa.
Generic competition was possible because India had not at that time implemented the Trade Related Aspects on Intellectual Property Rights (TRIPS) and thus was able to manufacture the medicines. Since adopting TRIPS, India’s ability to produce medicines has been limited. Yet the country has been under immense pressure from multinational pharmaceutical companies, the US and the EU to tighten its IP rules even further and thus to limit access to medicines to those who need them.
It seems that the world is obsessed by granting more and more monopoly power to pharmaceutical companies rather than by investment in research and development (R&D) for medicines and vaccines that are needed for public health.
For this reason Ebola is the other side of the coin to HIV as the intellectual property rights system allows the market to shape R&D priorities, rather than public health needs. That same system allows companies to charge high prices that are unaffordable in developing countries as the HIV crisis taught us.
The fear of Ebola crossing borders and affecting people in the US and Europe has changed the situation – clearly there is now a market for travelers, but more importantly the threat of a global epidemic means that donors may be willing to pay for products that contain the spread of Ebola and other hemorrhagic fevers.
The most promising vaccines that are now being rushed through clinical trials have been developed with public money, mainly from the governments of the US, Canada and the UK.
It is not ethical, sustainable nor safe to leave commercial interests decisions and financing for R&D for products, capable of modifying global health threats, to be dictated by the commercial interests of pharmaceutical companies.
Governments, under pressure from multinational companies, have agreed to a profit -based system (TRIPS) instead of looking for more innovative ways of financing R&D.
Throughout the history of medicine’s development, public funding has played an essential role in developing breakthrough medicines, including for the treatment of HIV and now prevention of Ebola. We need to change the present monopoly ownership system to allow public funds their proper place in stimulating accessible and affordable technologies that make our world a safer and more humane place.
Today, 29 September, Cecilia Malmström will be auditioned by the European Parliament (EP) to confirm if she is to become the European Commission’s (EC) new Trade Commissioner. This is a very timely moment for the release of a joint paper by Oxfam and Health Action International Europe (HAI) on the impact of European Union (EU) trade policies on access to medicines, both in Europe and far beyond.
Stakes are high for Ms. Maelstrom who will be leading the EC Directorate-General for Trade’s (DG-Trade) agenda for the next five years. This will include negotiating Free Trade Agreements (FTAs) with other countries on behalf of EU Members States. She will be especially in the spotlight over the negotiation of the controversial FTA between the EU and the US that will affect millions of people: the Transatlantic Trade and Investment Partnership (TTIP).
Leaked documents clearly show that the TTIP is a huge threat to European public health systems, due to its clear favouring of pharmaceutical companies’ commercial interests. One objective of the Pharmaceutical lobby is patent harmonization based on US law. This would mean more patents and less generic competition, thus more monopolies and unaffordable medicines. Another item on Pharma’s negotiating wish list is a ‘voice’ in EU Member States’ pricing and reimbursement policies. Increased companies’ voice in medicine would challenge Member states’ ability to take measures, such as price control, to control expenditure on medicines. Moreover, the Pharma lobby is seeking to restrict public access to clinical trials data, undermining the EU’s recent efforts to foster transparency in this area.
One of the TTIP’s most controversial elements is the inclusion of an Investor-State Dispute Settlement (ISDS) mechanism. ISDS gives foreign investors the right to sue governments for compensation if laws, policies, court decisions or other actions interfere with expected profits from investments. Governments’ actions such as price control or patentability standards could be challenged in court. While it may seem extreme, this threat is far from hypothetical. Following the legitimate invalidation of two of its patents, the American pharmaceutical company Eli Lilly is suing Canada for 500 million Canadian dollars compensation under the North American Free Trade Agreement ISDS provision.
More worryingly still, the impact of the TTIP will not stop at EU or US borders. The TTIP would set a new global standard for strict intellectual property (IP) protection around the world, which could be imposed on developing countries through other trade deals.
FTAs have regularly been used by DG-Trade to introduce strict investment and IP rules (so-called “TRIPS-plus” measures), which go beyond the internationally-agreed IP standards set by the World Trade Organization. Such standards promote the commercial interests of the pharmaceutical industry even at the expense of public health. (See the EC’s latest document on the pharmaceutical industry).
The EC’s brand new strategy on IP enforcement in third countries explicitly describes IP as a means to boost Research and Development (R&D) and economic growth in the EU, ignoring how IP can also hinder innovation and competition. The proposed measures to enhance the enforcement of IP rights include FTAs and the identification of “priority countries”, as per the notorious US Special 301 report. The EU list includes India and Thailand, two countries which have sought to balance IP rules and public health needs. The list foresees possible financial sanctions for countries repeatedly “infringing” IP rights. Sanctions could include restricting third countries’ participation in, or funding from, specific EU-funded programmes.
India and Thailand have bitter experiences of the EC heavy-handed approach to IP rights. Negotiations for a FTA between the EC and India started in 2009 and are currently on hold. India’s progressive IP law only grants patents for ”real” innovation (i.e. it rejects patents on products too similar to an existing product). This has allowed the country’s vibrant generic pharmaceutical sector to play an important role in driving the prices of medicines down in developing countries. As “the pharmacy of the developing world”, India provides over 80 percent of the world’s generic anti-retroviral medicines to treat HIV/AIDS. The EC’s attempt to impose TRIPs-plus provisions in the EU-India FTA caused a great outcry throughout the world, thankfully forcing the EC to backtrack on some of the most controversial provisions.
Yet, despite the EC’s commitment to stop pushing for TRIPS-plus measures in subsequent FTAs, the FTA being negotiated with Thailand since March 2013 (also currently on hold due to the military coup) contained similar controversial provisions. Instead of supporting Thailand’s good track record of pro-public health policies and its use of TRIPs flexibilities to improve access to medicines, the EC tried to stop Thailand’s use of these legal, internationally-agreed measures.
Negotiations with both countries will resume in the near future.
DG Trade – aligned with the pharmaceutical industry- portrays IP as the panacea to boost investments in R&D, thus justifying the inclusion of TRIPs-plus provisions in FTAs. However, it is clear that the current R&D system, which relies heavily on the profits generated by expensive, unaffordable medicines to provide incentives for innovation, fails to meet public health needs.
The current Ebola crisis and the controversy surrounding wildly unaffordable new medicines to treat Hepatitis C, clearly illustrate the R&D crisis. No medicines or vaccines are currently available to deal with the Ebola virus due to the lack of a market incentive; Ebola only affects some of the world’s poorest countries, where no company could ever make a profit. In the meantime, the pharmaceutical company Gilead priced its new and highly-effective medicine to treat Hepatitis C (marketed as Sovaldi) at $84,000 for a 12-week course. Even the discounted price that Gilead offered to some countries is still too high to treat all patients.
This raises serious questions about a system based on monopoly that keeps effective medicines from reaching the people that need them. Clearly alternative R&D models which are geared to address health needs must urgently be explored.
The coming five years represent an important opportunity for the EU to lead on trade and R&D policies which meet health needs, and which don’t favour commercial interests over patients’ needs.
Oxfam and HAI Europe urge the future Trade Commissioner Cecilia Maelstrom, to resist the pharmaceutical lobby and to ensure trade policies are aligned with the EU’s development and (global) health objectives. To reach this aim, DG Trade should ensure better coherence and coordination of work with other DGs. The newly elected parliament must ensure that EU trade and R&D policies prioritise access to medicines for all citizens around the world.
 For a detailed analysis, see: Commons Network, HAI et al. (2014) ‘The Trans Atlantic Trade and Investment Partnership (TTIP): A Civil Society response to the Big Pharma Wish list’, joint position paper, http://www.prescrire.org/Docu/DOCSEUROPE/20140324CivilSocietyResponseBigPharmaWishList_final.pdf
 C. Gerstetter, M. Mehling, A. Eberle and K. Salès (2013) ‘Legal implications of the EU-US trade and investment partnership (TTIP) for the Acquis Communautaire and the ENVI relevant sectors that could be addressed during negotiations’, EP Directorate General for Internal Policies, http://www.europarl.europa.eu/RegData/etudes/etudes/join/2013/507492/IPOL-ENVI_ET(2013)507492_EN.pdf
 See USTR website: http://www.ustr.gov/about-us/press-office/press-releases/2014/April/USTR-Releases-Annual-Special-301-Report-on-Intellectual-Property-Rights
 In 2001, the WTO ministerial conference adopted the Doha Declaration on TRIPS and Public Health. It affirms that the WTO rules on IP should not prevent countries from taking measures to protect public health.
Doha Ministerial Declaration on the TRIPS Agreement and Public Health, WT/MIN(01)/DEC/W/2, 14 November 2001, http://www.wto.org/english/thewto_e/minist_e/min01_e/mindecl_trips_e.htm