Thursday, March 13, 2008

CL and Government use

When you work hard to hopefully earn big income for your kids or for a dream house or for a dream vacation, and you have to surrender a big portion of your income to the state in income taxes alone, you may feel bad because the politicians and other government administrators who invented and implemented the compulsory payment to the state have other priorities which are different from your personal priorities and

The same way, when you invented something revolutionary or miraculous, say an immune system-boosting rice variety, or a medicine that can cure AIDS or prostate cancer at a period three times faster than currently popular medicines, then the state will expropriate your property rights to such invention, you will also feel bad. All the big investments and risk-taking, all the years that you waited to test, re-test, and develop such inventions, all the sacrifices. If you failed to develop the medicine that you wanted, you simply lose money and other career opportunities. And if you succeeded, the state will simply expropriate the fruits of all your efforts and sacrifices and use it for some government or crony corporations, or other copycats
who never risked big money and time, to benefit.

Compulsory licensing (CL) is a tool used by some governments to use a patented invention or medicine without the approval of the patentee, usually at government-dictated compensation. The rationale is that many people are too poor to afford the expensive but effective and safe medicines. Come to think of it, products and medicines that are targeted for CL are only those effective ones. For instance, if there are 100 different medicines available in the country to cure AIDS or breast cancer or hypertension, the state will not issue CL to those medicines that are in the bottom of physicians' and patients' list. Rather, the state will issue CL only to the top five or top 10 most effective medicines, and it is those effective medicines that are priced higher precisely because the amount of investments and risks devoted to bring those medicines to the drugstore shelves were very high if not very prohibitive.

The case of the Thailand government's actions is an example. In 2006, the military government there declared that it could not afford several brand-name drugs to treat AIDS and heart disease. This was hardly plausible as the government refused massive discounts from the drugs' patent-holders. Thai leaders also rejected drug-purchase money offered by the Global Fund to Fight AIDS, Tuberculosis, and Malaria.

The state-owned Government Pharmaceutical Organization (GPO) issued CL to selected medicines, suspended the drugs' patents, and started making knock-offs. Local copies like these seldom win safety certification from the World Health Organization. And Thailand's GPO had a tragic track record. In 2005, scientists reported that the firm
had given Thais afflicted with AIDS received poor-quality medicines that may have increased the number of drug-resistant cases. That same year, the GPO took in US$35 million in profits from copied medicines.

Here in the Philippines, the proposed new legislation on "cheaper/affordable medicines" bill is not even planning to strengthen the CL system that is currently provided in the country's Intellectual Property Code (IPC). The proposed bills, which are now in the bicameral conference committee, is doing away with CL because
Philippine experience in CL shows that "it takes a long period of time to get approval because of procedural delays caused by appeals by the patent owners" (Senate Committee Report No. 6).

So what it proposed is "government use" where the CL approval procedures will be skipped and the Philippine government can just appropriate a patented drug and use it for whatever purpose. In addition, the "government use" provision will have a solid legal cover � exemption from granting of temporary restraining orders (TRO) and
preliminary injunctions, except when issued by the Supreme Court.

Abrogatory moves or attempts by governments like this, is sure to discourage the entry of more medicine innovator companies. Who will spend hundreds of millions of dollars and many years of clinical trials and development, to invent very effective and safe medicines against evolving killer diseases, when the state can come in anytime for some frivolous reasons and expropriate your invention?

What these proposals and attempts will attract are non-innovator drug companies, copycats, and traders/importers of very cheap but unsafe medicines.

If governments are sincere in making quality medicines be made more available and more affordable to the people, first thing they should do is to drastically cut, if not abolish, some or all of the taxes on medicines. Second is to strengthen the intellectual property right (IPR) system that attracts and protects medicine innovator companies, so that they will come into the country, many of them, and let them compete among each other, which will compel them to provide big discounts, which makes quality and safe medicines more affordable. Then the country will not court disaster by having less effective, if not harmful but very cheap, medicines.

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