Drug Policy at the 54th World Health Assembly

Increasing and Sustaining Access to Essential Medicines

Globalisation: at what price?
Globalisation has resulted in great disparities in which some countries and individuals benefit greatly, and many others do not. Its harmful effects fall disproportionately on the poor. In no area is this polarised situation easier to see than in access to essential medicines. Today more than two billion people in developing countries have no access to needed drugs. They lack access for a number of reasons, but mainly because drug prices are high and they do not have the money to buy. Ironically, the retail prices of several essential drugs are higher in poor, developing countries than in affluent, developed countries. [i]

National governments need to address globalisation's negative consequences on public health, yet globalisation and international trade agreements have hampered their ability to respond. In the past few years, many developing countries have been hindered in applying legal options to increase access because of intense economic and political pressure placed upon them by a number of powerful governments and related business interests. For example, a recent US government complaint about Brazil brought before the World Trade Organization (WTO) Disputes Settlement Body could harm the country's AIDS programme that is largely based on its ability to manufacture affordable treatment. Such a legal challenge also intimidates other countries seeking Brazil's assistance in finding ways to produce needed medicines.

How the poor pay for globalisation
* In more than 30 countries, public spending on medicines is less than US$2 per person per year. [ii]
* More than one-third of the world's population still lacks access to essential drugs. In the poorest parts of Africa and Asia this figures climbs to 50%. [iii]
* In developing countries and transitional economies, 50%-90% of drugs are paid for out-of-pocket. [iv]
* Less than one in three developing countries have fully functioning drug regulatory authorities. [v]

Improving access in a sustainable way
News reports in the past few months have been filled with pharmaceutical company offers to negotiate discounts on treatments for highly visible diseases such as HIV/AIDS, malaria and tuberculosis. However, the fact that more than one out of three people in the world still have no access to essential drugs cannot be solved by negotiating price discounts, country by country, company by company, and drug by drug. Until companies are willing to disclose how they arrive at prices, which will allow any negotiations to begin from a level playing field, price-determined access will not be improved in an equitable or sustainable way. HAI calls for lower drug prices as part of wider initiatives and reforms that address all aspects of health system strengthening. At present the fragile state of health services deny access and prevent adequate health care for the majority of citizens in developing countries.

The need for generics
Drug prices decrease when there is generic competition. For example, in Brazil, the prices of certain anti-HIV drugs plummeted by 82% within five years after the country had started local production. Lower prices enabled the government to provide free HIV treatment to those Brazilians who needed it-a strategy that has contributed to an overall lowering of the rate of infection [vii]. The promotion of generic manufacture, local production, local working [viii] and early working [ix] of patents are all complementary strategies required to increase and sustain access.

Examining drug prices
Member states need much more information about how drugs are priced. Several surveys on retail prices of essential drugs have reported wide price variations between countries. The retail prices of several essential drugs have been found to be higher in developing countries within Africa and Latin America than in the wealthy industrialised states. [x]

Conditions for access
WHO has set out four conditions that must be met to increase and ensure sustainable access to needed medicines [vi] :
* rational selection based on a national essential drugs list and treatment guidelines
* affordable prices for governments, health care providers and consumers
* sustainable financing through equitable funding mechanisms, such as government revenues or social health insurance
* reliable supply systems incorporating a mix of public and private supply services.

HAI has argued that these wide variations are due to the industry's arbitrary manner of setting prices in order to maximise profits. The drug industry has denied this and instead claims that the variations are due to local factors including taxes, duties, wholesale costs and retail mark-ups. Since negotiations on price discounts are based on the manufacturer's selling prices (MSPs), information is needed about the relationship between retail prices and MSPs which are set by the manufacturers based on their own confidential cost data.

The WHO-NGO Roundtable on pharmaceuticals will collect more data on drug prices in a project coordinated by HAI. It will develop a new, standardised methodology to collect drug pricing information in middle and low-income countries.

A closer look at the Accelerating Access initiative
Last year, five multinational drug companies and five international agencies [xi] launched the Accelerating Access Initiative to great fanfare as the corporations' answer to increasing access to antiretroviral drugs in poor countries by reducing prices.

Differential pricing
Differential pricing, companies charging different prices in different markets according to purchasing power, has been put forward as a possible way to improve access in developing countries. Depending upon their own situation, developing countries may choose to negotiate differential prices for crucial drugs in the coming months and perhaps years. Countries should see it as one of many available tools such as parallel importing and compulsory licensing which are useful to increase access. But differential pricing mechanisms should not include onerous conditions, such as forcing poor countries to surrender their rights guaranteed under the TRIPs agreement. [xvii] Advantageous prices should be available to mission hospitals, company health schemes and insurance schemes in addition to the public sector health services.

Developing an overall health strategy
Lowering drug prices is crucial, but it is just one element. As WHO's Director General stated, "It would be naive, however, to think that the cutting of prices of medicines is enough. The prospect of cheaper medicines stimulates demand for care, and this will actually increase the need for resources." [xviii] To ensure access to needed drugs, countries need to formulate and implement national drug policies (NDPs) based on the essential drugs concept. Member states benefit from NDPs that are a component of a national health policy. Governments must make a commitment to maintaining and improving healthcare services and to give priority to primary health care. And international donors should support efforts aimed at reconstruction of health services.

The key components of an NDP that will ensure regular access to essential drugs for the population include:

• sustained participation of consumers in the formulation and implementation of NDPs
• sound drug supply management and distribution systems, supported by strengthened human resources development
• cost-effective selection of essential drugs
• use of generic names
• centralised, pooled bulk purchasing of generic drugs through international tenders
• sub-regional and regional cooperation
• drug pricing policies
• national legislation that includes mechanisms allowing voluntary licensing, compulsory licensing, parallel importing and early working of patents, local working, importation and tax incentives for local production
• health care financing
• improved regulations, including improved enforcement and monitoring

The need for research and development on neglected diseases
At the recent WTO/WHO workshop on differential pricing, the participating NGOs called for a new global convention on research and development to assist both public and private sector research. [xxix] The convention would create a new mechanism to increase global R&D funding in a way consistent with access to medicines and health needs by encouraging research on neglected diseases.

WHO's record on access
The need to increase access to essential medicines including new drugs has been reaffirmed by a number of World Health Assembly (WHA) resolutions. Most recently in May 1999, the WHA adopted resolution 52.19 on the Revised Drug Strategy. It took note of member states' concerns about the impact of relevant international agreements, including trade agreements, on local manufacturing capacity and on access to and prices of pharmaceuticals in developing and least developed countries. It requested the Director General to cooperate with member states, at their request, and with international organisations in monitoring and analysing the pharmaceutical and public health implications of relevant international agreements, including trade agreements, so that member states could effectively assess and subsequently develop pharmaceutical and health policies and regulatory measures that address their concerns and priorities, and are able to maximise the positive and mitigate the negative impact of those agreements. Now, more than 19 months since the last WHA resolution on the Revised Drug Strategy was approved (May 1999) there is a need to evaluate how well it has been implemented.

In accordance with this resolution, WHO is now using the following four questions to monitor and analyse the effects of globalisation and trade agreements on the pharmaceutical sector: [xix]

• Are newer, essential drugs more expensive than they would have been if not under patent?
• Is the introduction of generic drugs being slowed?
• Are more new drugs for neglected diseases being developed?
• Are transfer of technology and direct foreign investment in developing countries increasing or decreasing?

WHO has also argued that current intellectual property standards, historically derived from those of developed countries, are not necessarily appropriate for countries struggling to meet health and development needs. It has proposed that developing countries should therefore use the flexibility of TRIPs provisions and its safeguards to protect public health. [xx]

While these developments are encouraging, WHO needs to take on a much more active role in supporting the Revised Drug Strategy.

Growing global concern about trade's impact on health
Before the failure of the Seattle Ministerial in late 1999 and the successful exposure of the US Presidential candidate Al Gore's involvement in pressuring South Africa to accept TRIPs-plus policies, the European Union's and the US's support for TRIPs strongly favoured pharmaceutical companies. The US even regularly attempted to intimidate governments, such as South Africa, with trade sanctions when they tried to pursue WTO-compliant options under TRIPs. [xxi] But these positions are changing. The US has ended trade sanctions pressures on developing countries, a position that the current Bush administration has publicly reaffirmed. [xxii] The European Parliament has publicly supported countries' rights to use compulsory licensing and parallel importing and early working of patents. It also reaffirmed that these useful options for securing drugs at lower prices are allowable under WTO rules. [xxiii]

In addition, in August 2000, the UN Sub-Commission for Protection and Promotion of Human Rights declared that the current TRIPs agreement violated human rights and called on all governments and economic policy forums to take international human rights obligations and principles fully into account when formulating economic policy. In April, a Brazilian resolution calling on governments to promote affordable access to HIV/AIDS medications as a basic human right was overwhelmingly approved by the UN's Commission on Human Rights. [xxiv]

The Director General of the World Trade Organization has also publicly recognised the need for developing countries to use available options under TRIPs to address pressing health problems. [xxv] And just a few weeks ago, growing public pressure finally forced 39 multinational pharmaceutical companies to abandon their legal case against the South African government. The case involved legislation allowing importation of affordable medicines and increased use of quality generic drugs. In the three years that the industry held up the legislation, more than 400,000 South Africans died of HIV/AIDS, almost all of them without access to affordable treatment. [xxvi]

Updating the Essential Drugs List
The essential drugs concept is based on the knowledge that only 250 or so existing medicines provide effective treatment for more than 90% of illnesses. Essential drugs are defined as "those drugs that satisfy the health care needs of the majority of the population, at a price they and the community can afford, they should therefore be available at all times and in adequate amounts, and in appropriate dosage forms." [xxi]

Renegotiating TRIPs
TRIPs, under the original agreement, provided for a review of its implementation in 2000. During the current review, negotiators must consider developing countries' need to have more flexible patent regimes to protect public health and ensure development of local productive capabilities. For example, compulsory licensing should be allowed to cover the exportation from a country that has manufacturing capacity to a country that issues the license but does not have such capacity. Without such a modification, compulsory licensing has no meaning in many poor countries.

HAI welcomes the successful African initiative to bring about a special session on access at this June's meeting of the WTO TRIPs Council. This will mark the first time that countries will discuss how the TRIPs agreement's requirements can be reconciled to the health needs in developing countries. [xxvii] NGOs, including HAI, will use this forum to call for an extension to the deadline for least developed countries to comply with the TRIPs agreement and to design mechanisms to ensure research and development for neglected diseases in developing countries. HAI supports a review of TRIPs to ensure that global intellectual property protection rules positively support, rather than undermine, public health.

Patent rights are not inalienable and governments use compulsory licensing and parallel importing often in many countries. Compulsory licenses are issued regularly by governments to broaden access to technologies and information in order to achieve a number of public purposes. As one expert wrote "One should not forget that patents represent an interventionist instrument, ultimately for the sake of community welfare. Thus intervention to restrict some of the effects of patents may be required, when the community welfare is [no] longer served." [xxviii]

Working towards sustainable solutions
The current HIV/AIDS pandemic has centred on the ad hoc solution of lowering the prices of anti-retrovirals and other drugs needed to treat the disease and related infections. While there is a need to address this urgent health catastrophe now, member states and the WHO must also look ahead to longer-term issues involving access.

For most of the two billion people still lacking access to essential medicines, differential pricing or prices at cost will not provide the drugs they need. One public policy to aid access to essential drugs is the creation of public health insurance schemes. There is also a need to examine self-reliance in the overall pharmaceutical supply system. Developing insurance schemes, supporting greater use of generics, local manufacturing, early working of patents and parallel importing are all means to lower prices and improve access to drugs.

Recommendations for Action

For Member States:

• Countries should use available evidence and global support to make the safeguards provided in the TRIPs agreement - voluntary licensing, compulsory licensing and parallel imports - operational within their national legislation.
• Member states should enact laws and regulations that promote local and generic manufacture, including generic labelling, concessionary importation and tax schemes for local manufacture of essential drugs and local working.
• Governments should adopt regulations that require companies to break down prices in responding to tenders or otherwise negotiating prices with governments.
• Member states should ensure direct participation of civil society in the formulation and implementation of health policies in order to strengthen them and improve their effectiveness.
• Member states are encouraged to request WHO to convene negotiations by the end of this year for a new global convention on research and development to strengthen both public- and private-sector research. Additional national efforts to support R&D could include publicly funded R&D and setting mandatory R&D requirements for companies.
• Developing countries need to achieve self-reliance by strengthening their overall pharmaceutical supply system.
• National drug legislation should be in place to give legal support to a national drug policy based on the concept of essential drugs.

For WHO:

• The organisation should assist member states in obtaining data on worldwide pharmaceutical research and development (R&D), innovation and production so that they can use it when exploring their options to improve access.
• It should also work with member states to provide information about how drugs are priced, including information about the relationship between retail prices and MSPs.
• WHO needs to provide member states with model laws and regulations on compulsory licensing and other legal measures to overcome barriers to access involving expensive medicines. It should also provide advice to countries about their best legal options to maximise drug availability and protect public health.
• The organisation should organise a new global convention on research and development on neglected diseases. WHO should play a leading role in defining a needs driven research agenda to help policy-makers, funding agencies and the research community set research priorities that will address the pharmacotherapy needs of developing countries.
• WHO should be commended for initiating the EDL review process now underway, and it should share this information with member states as soon as possible in order to promote early endorsement of the review recommendations, which include improved transparency in the selection process and improved and additional information that will help national adaptation of the model list to local needs.
• More work needs to be done in developing databases on essential drug prices and raw materials. WHO can play a role in assuring the quality of sources and co-operating with the World Intellectual Property Organization (WIPO) for patent status information.
• The current access situation demands that the WHO report on the implementation of the RDS on an annual basis.
• The organisation should continue to actively monitor and analyse the impact of international trade agreements on access to pharmaceuticals and support developing member states to use the safeguards in the TRIPs agreement.
  

A closer look at the Accelerating Access initiative

Last year, five multinational drug companies and five international agencies [xi] launched the Accelerating Access Initiative to great fanfare as the corporations' answer to increasing access to antiretroviral drugs in poor countries by reducing prices.

The problem is that the initiative required governments to negotiate bilaterally with individual companies, drug by drug, in order to obtain their discounts. To date only five countries, Mali, Cote d'Ivoire, Rwanda, Senegal and Uganda, have negotiated price reductions with four companies to make antiretrovirals available at lower prices. While the companies agreed to an 80% reduction, the discount was based on their highly inflated initial retail prices. At US$720-US$1,320 per person per year, these multinational cocktail prices are still higher than the price offers of US$600, US$347 and US$285 of three different Indian generic manufacturers. [xii]

Only 300-400 people will benefit in Mali this year, out of 350,000 infected with HIV in that country. They will join the 120 lucky ones in Senegal and 1,300 in Uganda who will obtain ARVs as the result of this initiative." [xiii] Africa has more than 25 million HIV-infected people. A major initiative that provides access to only 2,000 people is quite clearly not an adequate response to the overwhelming challenge that faces African governments.

The initiative diverts governments from more effective and sustainable solutions, such as bulk procurement, compulsory licensing [xiv], parallel importing [xv] and enhancing incentives for local drug manufacturers to produce essential drugs.

Corporate initiatives set up in partnerships with UN agencies can be harmful as they can reinforce and expand companies' control over drug prices. As one industry source admitted "By negotiating with each country individually we get the best possible deal. Don't forget most drug companies have now got specific programmes through which they can channel aid in the form of free drugs, free equipment and providing qualified medical help. But ultimately patents are being protected and profits ensured." [xvi] WHO and other agencies need to recognise that these initiatives do not increase access in any meaningful and sustainable way.

Updating the Essential Drugs List

The essential drugs concept is based on the knowledge that only 250 or so existing medicines provide effective treatment for more than 90% of illnesses. Essential drugs are defined as "those drugs that satisfy the health care needs of the majority of the population, at a price they and the community can afford, they should therefore be available at all times and in adequate amounts, and in appropriate dosage forms." [xxx]

The WHO Model List of Essential Drugs, begun in 1977 and updated every two years, provides a reference list for member states to use as a model in developing their own national essential drugs lists. The model currently is made up of a core list and a complementary list. During the last update in 1999, the WHO Expert Committee on Essential Drugs called for a review and revision of the methods for updating and disseminating the model list. This process is now underway. Interest in the revisions has increased since 1999, primarily because of attention given to the very limited number of anti-retrovirals on the model list.

WHO held a meeting in March to address this recommendation to review and possibly modify the model list. One goal was to improve the means for the model list to be used by national authorities not only as a model list of products but also to provide a model process for the selection of drugs. Meeting participants also decided that the list should provide more transparency, in the form of additional information, to aid national selection committees in understanding in more detail why a drug is on the list, including important considerations about its selection.

The meeting participants made the following recommendations:

• Increased transparency of the drug selection process. A request to include a drug will be done through an application form that will require evidence of why the drug should be on the list (safety, quality, efficacy and cost effectiveness at clinical level).
• Additional drug information. Selected drugs must also be accompanied by relevant information detailing why it has been approved for inclusion.
• Review of current list. Drugs presently on the list are to undergo the proposed updated selection and evaluation procedure.
• Maintenance of the two-part list. The core list will have information on clinical (not trial or registration data) cost effectiveness (cost per cure, per month or per prevention), quality and safety. The complementary list will clearly explain why a drug is on that list and not the core list. It will include drugs that have higher costs.

HAI calls upon WHO to adopt these proposed revisions to strengthen the existing model list in ways that make it easier for countries to use it effectively in determining their own national essential drugs lists. These changes make the selection process more transparent, the addition of helpful information to assist countries' understanding of the basis for selection, especially for drugs on the complementary list will aid national authorities to develop their own lists and maintaining the two-part list preserves the core functions of the EDL.